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Oral Answers to Questions
(7 years, 10 months ago)
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Andrea Jenkyns (Morley and Outwood) (Con)
1. What plans the Government have to lead the international response to the recommendations of the final report of the Review on Antimicrobial Resistance, published in May 2016.
Maggie Throup (Erewash) (Con)
16. What plans the Government have to lead the international response to the recommendations of the final report of the Review on Antimicrobial Resistance, published in May 2016.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
The O’Neill AMR review is galvanising global awareness, as I have seen for myself, and it is greatly to the Prime Minister’s credit that he showed the foresight to commission it. The UK continues to play a global leadership role on antimicrobial resistance. We co-sponsored the World Health Organisation’s 2015 global action plan on AMR, we created the Fleming fund to help poorer countries to tackle drug resistance, and we are now championing action, including taking forward the O’Neill review’s recommendations, through the United Nations, the G7, and the G20.
Andrea Jenkyns
I recently met biotech firm Matoke Holdings, which has developed a new technology—reactive oxygen technology. It has found that this technology forms the basis of a whole new generation of antibiotics that has been proven to combat multi-resistant bacteria, including MRSA. This is an incredibly exciting development. Will my hon. Friend and her team agree to meet Matoke Holdings to hear about the new technology and the pace at which it has developed? What are the Government doing to support research into new antibiotics?
Jane Ellison
My hon. Friend will be aware that a key focus of the O’Neill review was how to incentivise the development of new antimicrobials. It is scary to think that there has not been a new class of antibiotics for some decades now. The Government are funding an extensive AMR research programme. Matoke Holdings has been in contact with the Department, and we are in the process of arranging a meeting to discuss reactive oxygen technology in the coming weeks. My ministerial colleague the Under-Secretary of State for Life Sciences has indicated that he would also be happy to have such a meeting.
Maggie Throup
I recently hosted a parliamentary drop-in session to highlight the benefits of C-reactive protein testing as a way of reducing the number of antibiotics inappropriately prescribed in primary care. Will the Minister agree to look again at the case for rolling out CRP testing as standard across primary care as part of the Government’s strategy to tackle antimicrobial resistance?
Jane Ellison
My hon. Friend is right to champion these new technologies. In fact, the Department has already invested in research into CRP. We look forward to seeing what that brings and, in due course, to seeing how it might move forward. It is very much already on our radar.
Andrew Gwynne (Denton and Reddish) (Lab)
There is an impending public health issue in this regard, not least with strains of gonorrhoea, for example, that are starting to show resistance to antibiotics. A number of doctors are incredibly concerned about this. What more can be done to incentivise research and development to ensure that this public health concern does not become a public health crisis?
Jane Ellison
The hon. Gentleman, who knows a great deal about these matters, is right. Incentivising discovery is absolutely at the heart of the O’Neill review. O’Neill has made a series of recommendations about unblocking the drugs pipeline, and we will respond to that in full. It is a critical issue. In the meantime, conservation of the antibiotics we have and sensible prescribing is critical to making sure that, as the hon. Gentleman says, drug-resistant strains of gonorrhoea, for example, do not take hold.
Chris Leslie (Nottingham East) (Lab/Co-op)
This is an incredibly important issue on which I urge the Minister to communicate with the public more effectively, because inappropriate use of antibiotics could have severe effects. Some of the medical interventions that are reliant on antibiotics, whether gut surgery, joint replacements, caesarean sections or chemotherapies, could become too dangerous to perform if we do not get this right.
Jane Ellison
That is exactly right. Things we take for granted now could become risky procedures again. Globally, old diseases could make a comeback because of drug resistance—diseases such as TB which, around the world, people are winning the battle against. This is why it is so important to pay tribute to the Prime Minister’s foresight in commissioning the independent review and taking this issue global. The Government, along with the chief medical officer, are championing this at an international level, but, at the same time, we are not resting closer to home, where we are working with GPs and so on to deal with the prescribing issue. However, it is a big challenge and the hon. Gentleman is right to highlight it.
David Tredinnick (Bosworth) (Con)
Is my hon. Friend aware that there is strong evidence that herbal medicine can help treat conditions currently treated by antibiotics, but there is a desperate need for more research? Is she also aware that homeopathic medicine can do the same, particularly with upper respiratory tract infections, and that homeopathic treatments are now the second largest medical system in the world, according to the World Health Organisation?
Jane Ellison
The Government are always interested in anything that can be proven to be cost-effective and efficacious.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
Millions of people around the world are dying annually from resistant infections. In the light of that and the positive correlation between antibiotic resistance rates and antibiotic consumption, urgent action needs to be taken. What steps and cross-departmental work is the Minister taking to address the findings of the Review on Antimicrobial Resistance and to reduce the unnecessary use of antimicrobials in agriculture?
Jane Ellison
There is consensus on the importance of this issue. It is worth highlighting the work that the Government are doing internationally, through the creation of the Fleming fund, in which we are investing £265 million, to help poorer countries to tackle drug resistance and to make sure that we have proper monitoring systems in place. Without a baseline to understand where we are even starting from, it is very difficult. We will respond more fully to all the issues highlighted by the hon. Lady when we respond formally to the O’Neill review, but it goes without saying that we are trying to take this work forward internationally and we are working towards further meetings at the United Nations this autumn.
Chris Green (Bolton West) (Con)
2. What assessment his Department has made of the uptake of the Target antibiotics toolkit among NHS commissioners and GPs.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
Continuing with the same important theme, it is excellent to see Parliament taking such a close interest in antibiotic resistance. In England, 60% of clinical commissioning groups reported reviewing the Target toolkit, which has been designed to help GPs in particular, in a primary care survey in November 2014. A patient safety alert went to providers and commissioners in 2015, highlighting the importance of programmes such as Target. The House might be interested to know that the Target programme gives GPs help in understanding how to deal with the pressure from patients, because a lot of inappropriate antibiotic prescribing comes from the pressure from patients to walk away with an antibiotic script. Work is being done, but we know that we have more to do.
Chris Green
I thank the Minister for her reply. Disappointingly, the most recent data show Bolton to be one of the highest prescribers of antimicrobial agents in Greater Manchester, and it is in the highest quartile nationally. Although Bolton CCG has seen reductions in antibiotic prescribing following guidance given to GPs, when will the Target antibiotics toolkit be fully implemented across all CCGs in England?
Jane Ellison
Public Health England is doing a huge amount of work on this. There has been a very welcome drop in prescribing in the last year and that appears in the data available for this year. That gives us encouragement. Of course, 79% of antibiotic prescribing occurs outside hospital, so my hon. Friend is right to highlight general practices. I draw his attention to Public Health England’s Fingertips portal, which allows both providers and commissioners to assess how they are doing compared with other areas locally. That is allowing us to see where we have particular problems. It varies around the country and Public Health England is leading the action being taken in that regard.
Chris Evans (Islwyn) (Lab/Co-op)
The growth of antibiotic resistance is a massive problem worldwide, as the Minister knows. No new antibiotics have been classified for more than 25 years. This is a real problem, as antibiotic resistance increases. What are the Government doing to address the issue?
Jane Ellison
As I have said, it was our Prime Minister who commissioned the independent O’Neill review, showing astonishing foresight, and that review is now galvanising the discussion. I was at the World Health Assembly in Geneva in May, and the review was the talk of Geneva. Lord O’Neill presented it to many delegations from around the world and we now need to move forward. As well as working on human health, we are also looking to work with animal health organisations, as we take forward the very important recommendations on prescribing and the use of antibiotics as growth stimulators.
Martyn Day (Linlithgow and East Falkirk) (SNP)
3. If he will make an assessment of the potential effect of the UK leaving the EU on the availability of NHS services for (a) EU nationals living, studying and working in the UK and (b) UK citizens abroad.
The Secretary of State for Health (Mr Jeremy Hunt)
Before I start, the House will want to mark an important milestone, which is that this year, alongside Arnold Schwarzenegger, Brian May, Camilla Parker Bowles and Meat Loaf, the NHS is 68 years old, and its birthday is, in fact, today. I know that we will all want to wish the NHS and all who work there a very happy birthday.
As long as the UK is subject to EU law, current arrangements remain in place. As we move to a new relationship with Europe, our guiding principle will be to get the best possible deal for British citizens who live and work in, and who visit, EU countries. An EU unit will be set up in the Cabinet Office and will report to the Cabinet, and my Department will feed into its work.
Martyn Day
I am aware that nothing will change for the next two years, but what is the Secretary of State’s proposal for reciprocity of access to healthcare within the EU, and does he envisage the £500 NHS immigration health surcharge applying to EU nationals already living in the UK?
Mr Hunt
The health surcharge that this Government have instituted for people on long-term visas to come and work and live in the UK is the right thing to do, because it is important that everyone makes a fair contribution to the cost of NHS services. In terms of future arrangements for EU nationals in the UK, that would obviously be subject to the negotiations that now happen, and a very important part of those negotiations will be access to the EU health systems for British citizens currently living in EU countries.
Mr Philip Hollobone (Kettering) (Con)
Will the Secretary of State tell the House how many EU nationals work in the national health service and how many EU nationals use the national health service? Is it not the case that the number of eastern Europeans, especially, coming to this country has simply overwhelmed GP practices and A&E centres up and down the country, and now we have got a chance to redress the balance?
Mr Hunt
Without wanting to reopen the debate that concluded on 23 June, the overwhelming view in the NHS is that we are very lucky to have the incredible support of 110,000 EU nationals working in the health and social care system. I want to put on record to this House what a fantastic job they do and how much we are all in their debt.
Norman Lamb (North Norfolk) (LD)
Very many of those 110,000 people are now acutely anxious about their future in this country, because of the despicable suggestion that they should be used as a bargaining pawn in negotiations with the EU. Will the Secretary of State ensure that the Government, as a matter of urgency, guarantee their future in this country doing their dedicated work in our NHS and care system?
Mr Hunt
I can reassure the right hon. Gentleman that we are incredibly aware of the brilliant work that EU nationals do, not just in the NHS but in the social care system, which he was responsible for, in care homes up and down the country. We recognise that, and I hope that he will be reassured by statements made by the Foreign Secretary and the Home Secretary yesterday that we want to find a way of allowing those people to stay in the UK for as long as they wish to. We recognise the incredibly valuable contribution that they make, and we are confident in the negotiations ahead that we will be able to secure the outcome that they and we all want.
Heidi Alexander (Lewisham East) (Lab)
The last time the Secretary of State and I had an exchange in this Chamber, I suggested to him that it might be the final time we would face each other over the Dispatch Box. Although I was clearly prescient, it has not quite turned out the way I thought it would.
Following the results of the referendum, will the Secretary of State say whether he still intends to introduce an NHS charges Bill as outlined in the Queen’s Speech? Does he agree that migrants give more to the NHS than they take, that their contribution should be welcomed and that our NHS simply could not survive without them?
Mr Hunt
I enjoyed our many exchanges in this House, and it is a loss on our side as well that they will not continue. I would like to welcome the hon. Lady’s successor to her post, and I hope that I will have a chance to do so again when she asks a question later.
I agree with the hon. Member for Lewisham East (Heidi Alexander). Migrants, or the people who work in the NHS who come from different countries, make an extraordinary contribution. It is fair to say that the NHS would fall over without the incredible work that they do. It is also true that the British people voted to control migration on 23 June, and we have to accept that verdict. In terms of the NHS and social care system, I did not hear, and I have not heard in my time as Health Secretary, enormous amounts of worry about the pressure of migration on NHS services, because on the whole migrants tend to be younger and fitter people. While accepting the verdict of the British people and what they said on 23 June, the important reassurance that we now need to give is to the many people from outside the UK who make a fantastic contribution to the running of our health and care system.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
The Secretary of State may be aware that in the wake of the Brexit vote NHS commissioning bosses have delayed funding for vital medicines and services because of the fall in the value of the pound. One affected patient is Abi Longfellow, the teenager who won her battle for a wonder drug thanks to a campaign by the Sunday People. Abi currently spends 11 hours a day on a dialysis machine and was due to start on a drug that would give her a fighting chance with a kidney transplant. We were all aware that the pound might fall post referendum, so will the Secretary of State explain why no contingency plans were put in place and what he will do to ensure that, despite the Brexit vote, patients like Abi receive the lifesaving treatments and medicines that they need?
Mr Hunt
First, I welcome the hon. Lady to her position. She is the third shadow Health Secretary I have faced in less than a year, and I am beginning to worry that it may be something personal. I wish her well; she knows the brief extremely well and has campaigned on it a great deal in her long parliamentary career. I will look into the case she brought up. I would not want anyone to be deprived of vital lifesaving drugs because of exchange rate fluctuations. The whole British economy, including the NHS, will have to deal with the economic shock that we may now face as a result of the Brexit vote. But now that the decision has been taken by the British people we must look for the opportunities for the UK and the NHS, and not simply worry about the uncertainties, although there will be lots of things we have to deal with.
John Howell (Henley) (Con)
4. What plans his Department has to increase capacity in general practice and primary care.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
6. What plans his Department has to increase capacity in general practice and primary care.
David Warburton (Somerton and Frome) (Con)
10. What plans his Department has to increase capacity in general practice and primary care.
The Secretary of State for Health (Mr Jeremy Hunt)
We will be investing an extra £2.4 billion a year in general practice by 2020-21, a 14% increase in real terms. The General Practice Forward View, published earlier this year, sets out a package of support for general practice to boost the workforce, drive efficiencies in workload and modernise primary care infrastructure and technology.
John Howell
General practitioners in Henley have recently written a letter to all their patients pointing out the difficulties they face in fulfilling their workload. Will the Secretary of State explain what the Government are doing about that and how what they are doing will help?
Mr Hunt
I am happy to do so. I recognise the picture that my hon. Friend paints—not just in Henley but across the country—of a huge increase in GPs’ workload, which they are finding extremely challenging. What have we done? We have almost 1,300 more GPs working and training in the NHS compared with 2010. We have said that by the end of this Parliament we will seek to make available an additional 10,000 primary and community care staff, including 5,000 doctors working in general practice and 1,000 physician associates. We recognise the problem and are doing something about it.
Michael Tomlinson
Given proposals for significant increases in housing across Dorset, my constituents are rightly concerned about access to services, including to GPs. Will the Secretary of State reassure me and my constituents that housing numbers will be taken into account when assessing provision and increasing capacity of general practice in Poole and Dorset?
Mr Hunt
I am happy to give my hon. Friend that assurance. NHS England looks at areas of new housing very carefully when deciding where to invest additional resources for new GP practices. I recognise those concerns. I was in Dorset at the weekend. It is a lovely place that many people retire to, and of course older people tend to use the NHS more, so it is very important that that is reflected in our investment patterns.
David Warburton
Having met GPs, health centre managers and patient groups in Frome, Wincanton and Somerton in my constituency, I know that GP recruitment is a serious problem in Somerset. What measures is the Department putting in place to address both that issue and the additional challenge of excessive agency costs, both of which are placing a considerable strain on rural health providers?
Mr Hunt
I am happy to do that—I visited a GP practice with my hon. Friend in the run-up to the last election, and I know the close interest that he takes in this issue. As I said, we are making huge efforts to recruit more GPs during this Parliament, and to do that we must increase the number of medical school graduates to 3,250 a year. We are making progress in that direction, and we have also introduced tough new rules on the use of agencies, including maximum hourly rates for agency doctors and nurses.
Mr Dennis Skinner (Bolsover) (Lab)
Will the Secretary of State do something about the Hardwick commissioning group in north Derbyshire? I met it a week last Friday to talk about dementia care, which he knows is due to change a little, according to the local authorities and so on. Will he tell the group that the mad idea to close Bolsover hospital, and the hospital in Bakewell in Derbyshire Dales, should be stopped? Will he tell Hardwick commissioning group that it has gone beyond its terms of reference, and that those hospitals should remain open?
Mr Hunt
I recognise the important role that community hospitals play in many of our constituencies, and that role will change as we get better at looking after people at home, which is what people want. We can all be proud of significant progress on dementia in recent years. Dementia diagnosis rates have risen by about 50%—indeed, we think we have the highest diagnosis rates in the world. However, it is not just about diagnosis; it is about what happens when someone receives that diagnosis, and the priority of this Parliament will be to ensure that we wrap around people the care that they need when they receive that diagnosis.
Barbara Keeley (Worsley and Eccles South) (Lab)
The Health Secretary has just promised 5,000 new GPs, and GP Forward View mentions recruiting 500 GPs from overseas. I understand that Lincolnshire GP leaders are looking to recruit GPs from Spain, Poland and Romania. As we have heard, EU nationals who live in the UK and work in the NHS are seen by the Home Secretary as bargaining chips, which has made them incredibly nervous about their status. How successful does the Health Secretary think that that GP recruitment will be?
Mr Hunt
This is a time when all sides of the House should be seeking to reassure many people from other countries who do a fantastic job in our NHS that we believe they will have a great future here. The Home Secretary has prioritised doctors, paramedics and nurses in the shortage occupation lists, and in all countries that have points-based systems—look at what happens in Australia or Canada—the needs of the health service and health care system are usually given very high priority.
Keith Vaz (Leicester East) (Lab)
Mr Speaker, let us note another milestone this year: your election yesterday as a freeman of the City of London. We look forward to you bringing your own flock of sheep to Westminster in future.
The Secretary of State will know that we are facing a diabetes crisis, and by 2025, 5 million people will have been diagnosed with diabetes. There are 32,000 pharmacies in the United Kingdom, with 13,000 community-based schemes. Given that 99% of the population live near a pharmacy, does the Secretary of State agree that more diabetes work should be given to pharmacies, to try to ease the burden and pressure on general practitioners?
Mr Hunt
There is a lot of potential in what the right hon. Gentleman says. The financial pressures on the NHS and general practice mean that this is the right moment to rethink the role of pharmacies, and consider whether we can be better at tapping into the incredible skills that pharmacists have as trained clinicians, which I do not think we make the most of. He is right to say that diabetes and childhood obesity is a big priority for the Government, and I hope we will be able to inform the House more about that soon.
Imran Hussain (Bradford East) (Lab)
5. How much funding he plans to make available for the proposed pharmacy access scheme.
The Minister for Community and Social Care (Alistair Burt)
We intend to announce details of the pharmacy access scheme, including funding, as part of a wider announcement on community pharmacy in 2016-17 and beyond.
Imran Hussain
Pharmacies play an important role in our community healthcare system. An accessible pharmacy is particularly important for those with mobility issues and for those from communities with a greater propensity to experience health inequalities. However, the planned changes to pharmacy funding risk closing the pharmacies that serve these groups. Will the Minister give me a direct assurance that the pharmacy access scheme will be properly organised and that no pharmacies serving those vulnerable groups will close because of changes in funding?
Alistair Burt
The hon. Gentleman is right to praise the role pharmacies play and right to identify that we must do all we can to ensure that those who are most vulnerable retain the excellent access they currently have. The national formula on access proposal will be used to identify those pharmacies that are most geographically important for patient access, taking into account isolation criteria based on travel times and distances, and population sizes and needs. Both deprivation and isolation will be covered in the access formula.
Kevin Barron (Rother Valley) (Lab)
Given that the access scheme could potentially alter the situation for community pharmacies, will the Minister consider more money than was originally proposed for community pharmacy budgets to stop any shock from the cuts we are expecting later this financial year?
Alistair Burt
There are no changes to the funding issues announced when the review of pharmacies started on 15 December. As my right hon. Friend the Secretary of State said, we are hoping to make an announcement on pharmacy when we can. I am aware that pharmacy is waiting for that.
Will Quince (Colchester) (Con)
7. What progress his Department has made on improving the safety of maternity care.
The Secretary of State for Health (Mr Jeremy Hunt)
Since 2010, we have invested £37 million in improving the physical environment of over 140 maternity units and purchasing equipment to improve safety. We now have 2,103 more midwives in the NHS and 6,400 more in training than in 2010.
Will Quince
Expectant parents in Colchester are among the first in the UK to have hypnobirthing courses—I recently attended one myself. What consideration has the Secretary of State given to the effectiveness of hypnobirthing in improving maternity safety?
Mr Hunt
A variety of pioneering techniques, which could make a huge difference to women’s experience of birth, are emerging. I am delighted that we are seeing lots of experimentation and innovation. I would particularly like to pay tribute to my hon. Friend’s trust, which is in special measures and has been through a very difficult period. The fact that it is still managing to do this kind of innovation is wholly to be commended.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Has the Secretary of State seen the Autism Commission report on barriers to healthcare for people with autism? In maternity care and all other care there are very severe barriers that, with the right will and the right action, we can overcome. Will he read the report and talk to me about it?
Mr Hunt
I am more than happy to do so. In fact, we have a copy of the report right here, which my Minister of State has handily given to me. When I was shadow Minister for disabled people, I had a lot of contact with parents of autistic children and with people on the autistic spectrum themselves. The hon. Gentleman makes a very important point.
Peter Heaton-Jones (North Devon) (Con)
The maternity unit at North Devon district hospital in Barnstaple in my constituency is one of the services being reviewed under the current Success Regime. Can the Secretary of State reassure me and my constituents that maternity care, and the safety thereof in what is a geographically huge region, will be the first priority under this review?
Mr Hunt
I can absolutely assure my hon. Friend on that. I know there are very big national and global events happening right now, but I want to tell the House that over the next month one of my big priorities will be to do something to improve our record on maternity safety. We have made huge progress in reducing stillbirth rates and so on, but maternity safety is still not as good as it should be and certainly not as good as in other countries in western Europe. This is an absolute priority and I hope to be able to inform the House more on this before recess.
Alison Thewliss (Glasgow Central) (SNP)
As the chair of the all-party group on infant feeding and inequalities, I welcome the new guidance issued by Public Health England, in conjunction with UNICEF Baby Friendly, on the commissioning of infant feeding services. I welcome in particular the recognition of raising infant feeding at the antenatal stage. Will the Secretary of State explain what resources the Department of Health is putting in to promote the guidance and increase breastfeeding at local levels?
Fiona Mactaggart (Slough) (Lab)
8. How many staff working in the NHS have been recruited from other European countries in the last 12 months; and if he will make a statement.
The Parliamentary Under-Secretary of State for Health (Ben Gummer)
There are no centrally held data on the countries from which NHS staff are recruited, but self-reported nationality data suggest that 15,723 non-UK European nationals joined the NHS in England and that 7,900 left, leaving a net increase of 7,800. As the Minister responsible for the NHS workforce, may I say that every single one of them is very welcome in, and provides an invaluable contribution to, our NHS?
Fiona Mactaggart
The problem is that the Immigration Minister’s waffle yesterday and Ministers’ warm words today are not giving confidence to these vital NHS employees. Has the Minister spoken to the Immigration Minister to request that he guarantee permanent residence to every EU national working in the NHS so that they can have the security that they—and we, their patients—need?
Ben Gummer
The Home Secretary is well aware of the enormous contribution that EU nationals make to the NHS. We all have a duty to undo the damage done during the referendum campaign and the poisonous atmosphere that exists in some parts of our communities and to thank personally—I will be doing so myself—EU nationals working in the NHS for their hard work and dedication so that they feel valued by each and every one of us.
Dr Philippa Whitford (Central Ayrshire) (SNP)
There has been a 27% surge in trainee applications to NHS Scotland because of the conflict around the junior doctors contract in England, and now doctors and academics from the EU are not taking up posts here because of the Brexit vote. With a one-in-four rota gap in many specialties, how does the Minister plan to sustain the current service, let alone extend it?
Ben Gummer
As much as I admire and like the hon. Lady, my opposite number on the Scottish National party Benches, I think that the behaviour of some of her colleagues in Scotland during the junior doctors dispute was not in the spirit of concord by which we try to establish relations with the devolved Administrations. I do not recognise the figures she quoted about junior doctors—I am glad that we have recruited well in this country during this difficult period—but I know that she will want to thank the British Medical Association for its work in bringing the dispute to an end. I hope that in the next few days we will come to a conclusion suitable for everyone.
Dr Whitford
I thank the Minister for that and for his welcome to EU nationals here, but with the Secretary of State merely repeating what the Immigration Minister said yesterday and given what the Home Secretary has said, does he not understand the urgent situation facing EU nationals working here? With more than 100,000 of them, do we not want to give them security of residency now to avoid haemorrhaging vital staff from the NHS?
Ben Gummer
The Home Secretary said she was confident we could get a deal ensuring that they could stay, but we need a new Prime Minister able to start the negotiations caused by the decision of the British people on 23 June. I say in my capacity as a Health Minister— the House has heard from other Members, including the Secretary of State—that we have full confidence in the EU nationals working in the NHS and wish to praise their contribution, which makes the NHS a better organisation.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
The head of the NHS, Simon Stevens, has strongly defended the role of immigrants in the NHS, saying that there has never been a time in its 68-year history when the NHS has not
“relied on committed employees from around the world”.
One of these employees was my own mother, who migrated from Jamaica to the UK in the 1950s to be a pupil nurse. Workers from the EU and other countries are the backbone not just of the NHS but of our social care system, which is facing many challenges. Does the Minister agree that we should be thanking these hard-working individuals for their service, not leaving them with questions about their status and job security?
Ben Gummer
I agree entirely with the hon. Lady that we should be thanking EU nationals working in the NHS and social care system. She herself is evidence of the enormous contribution of migrant labourers, not just in the first generation but in subsequent ones. We, as a nation and a House, should be grateful for it. This is a difficult time for many EU nationals in this country, and we should be thanking them not just for the numbers but for the special qualities they bring. In my constituency, the amazing Portuguese nurses in Ipswich hospital bring qualities and skills that some of our own nurses in our own country do not possess in our own hospitals.
David T. C. Davies (Monmouth) (Con)
9. What the cost to the public purse was in 2015-16 of providing interpreters for people using the NHS who did not speak English.
The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)
Until now, data on NHS foreign language translation and interpretation have not been gathered centrally, but I am delighted to say that, as a result of the representations of my hon. Friend and other colleagues, we have changed that, and NHS England is now conducting a major piece of work looking at both commissioning and provider organisations’ expenditure as part of a procurement review. It is worth saying that in view of the importance of effective communication in good diagnosis, informed consent, safeguarding and public health, it is in all our interests that all our patients understand what the doctors and clinicians are saying to them.
David T. C. Davies
I am grateful for that answer, but may I respectfully suggest to the Minister that if we are to have a serious discussion about the costs and the impacts of large-scale migration into the UK on the NHS, we must have access to figures on this cost and we should not have to wait months and months to get them? The figures must be out there somewhere.
George Freeman
My hon. Friend will find no more passionate champion of good data in the NHS than myself. He makes an important point about getting on with this, and I have already signalled to the team in NHS England that we will need to get a grip on this quickly, not least so that the new Administration implementing the Brexit decision will know the figures and have them to hand.
Philip Davies (Shipley) (Con)
I made a recent freedom of information request to my local hospitals to find out the cost of interpreters. Airedale hospital reported that last year the cost was almost £200,000 and I suspect that, when I receive an answer, it will be even higher at Bradford royal infirmary. This money could be better spent on patient care. Surely it is better for these patients, if they want to contribute to the British way of life, to be able to speak English themselves. What is the Minister’s Department doing with other Government Departments to make sure that people who live in this country can speak English so that money for the NHS goes to the purposes for which it was intended?
George Freeman
Let me gently and respectfully point out that those who work in the NHS and the leaders responsible for it have made it very clear how dependent it is on people who come to work here in the NHS from overseas. Under the terms of our own mandate and indeed our own laws, the NHS has a duty to make sure that it provides proper diagnosis and treatment for all our citizens. For public health and safety, it is in nobody’s interests for citizens of the UK not to be able to integrate, deal with and get proper diagnosis from the system. My hon. Friend’s wider points about the speaking of English are well made, but they are not relevant to this particular question.
Kelly Tolhurst (Rochester and Strood) (Con)
11. What steps his Department plans to take to improve local dispensing arrangements.
The Minister for Community and Social Care (Alistair Burt)
For improving local dispensing arrangements, patients need to receive their NHS prescribed medicines promptly, efficiently, conveniently and to high quality. NHS England is responsible for ensuring that there are adequate arrangements in place for the dispensing of medicines so that this happens across the country. We keep this under constant review.
Kelly Tolhurst
I have been contacted by a number of disabled constituents who have encountered difficulties receiving dispensed drugs from their local GPs because they fall outside geographical criteria as of last year, therefore adding a significant financial burden. Given instances where dispensing GPs have blocked the arrival of some local pharmacies in parts of my constituency, will the Minister give some consideration to how this discrepancy could be remedied?
Alistair Burt
I am sorry to hear about the difficulties of my hon. Friend’s constituents. There is a provision within the regulations to enable patients who have serious difficulty in getting to a pharmacy because of the distance involved or the lack of transport to receive dispensing services from a doctor. Doctors should certainly not be blocking the addition of local pharmacies. If my hon. Friend writes to me, I can look into the matter in greater detail.
Jim Shannon (Strangford) (DUP)
Taking into account the immeasurable value that community pharmacies provide for some of the most vulnerable people in sections of our society, does the Minister agree that, when it comes to Government budgets, these dispensing services should be included in any ring-fencing that goes on around front-line services?
Alistair Burt
The hon. Gentleman’s support for these services is well known and what he says is right. The regulations do protect the more vulnerable, but when I next look at them, I will make sure that they fulfil his requirements.
Dr Rosena Allin-Khan (Tooting) (Lab)
12. What assessment he has made of the potential effect of the proposed removal of NHS bursaries on the number of applications from mature students for nurse training places.
The Parliamentary Under-Secretary of State for Health (Ben Gummer)
Mature students represent a significant proportion of the nursing, midwifery and allied health professions’ workforce. Looking at what happened following the introduction of the maximum £9,000 per annum tuition fees in 2012, the latest UCAS data for last year show that full-time mature student numbers have now significantly exceeded previous levels.
Dr Allin-Khan
I am proud to have served on the front line of our national health service for the last 10 years, and to ask my first question on its 68th birthday.
St George’s hospital in my constituency is operating at a significant deficit, partly owing to expensive agency staff costs. Does the Minister agree that cutting NHS bursaries for nurses, midwives, radiographers and other allied health professionals will prevent the recruitment and retention of high-quality trained staff and make the problem worse?
Ben Gummer
I welcome the hon. Lady to her seat. She fought a courageous campaign, and it is good to see her in the Chamber. She brings expertise to the House, which is also very welcome.
I agree with the first part of the hon. Lady’s question—the deficit at her local hospital is indeed partly caused by the excessive costs of agency nurses, and we are trying to put a cap on those costs—but I am afraid I disagree with the second part. I believe that changes in nurse bursaries will enable us to get more nurses and healthcare professionals into the NHS. There has been a similar development in the rest of the higher education sector, and I want to replicate that success in the NHS so that we can provide it with the workers that it requires.
Justin Madders (Ellesmere Port and Neston) (Lab)
I, too, am delighted to welcome my hon. Friend the Member for Tooting (Dr Allin-Khan) to her seat. Her recent experience on the front line of the NHS will be of great value, and we in the Labour party pride ourselves on listening to NHS staff. Let me also put on record my thanks to my hon. Friend the Member for Lewisham East (Heidi Alexander) for the excellent job that she did as shadow Secretary of State.
I must challenge the Minister again about the impact of this policy on mature students. According to an answer given to me by his colleague the Minister for Universities and Science, in 2010-11 there were 740,000 enrolments in higher education among people aged 21 or over. Let me ask a simple question: in 2014-15, after tuition fees trebled, was the number of enrolments among mature students higher or lower?
Ben Gummer
I echo the hon. Gentleman’s remarks about the hon. Member for Lewisham East (Heidi Alexander). She gave the House admirable assistance in challenging the Government, and I regret her loss from the Opposition Front Bench.
The latest figure from UCAS, for 2015, shows that the number of mature student applications has risen since the introduction of £9,000 tuition fees, but the hon. Gentleman is right to identify that factor as a challenge in relation to our new plans. That is why we asked open questions during the consultation, and I hope that, now that it has closed, we shall be able to respond to those questions to ensure that we can give the best possible assistance to mature students who want to become nurses.
Justin Madders
According to the universities Minister, the number of mature students enrolling in universities has fallen by 22%. If that were repeated in the health sector, what is already a staffing crisis would become a catastrophe. The Minister has said that an extra 10,000 training places will be created during the current Parliament, but everything I have heard from the Government suggests that that figure was plucked out of thin air. What is the baseline figure for the Minister’s claim—10,000 more places compared to when?
Ben Gummer
There will be 10,000 additional places over the five years from when the policy was announced last year, and that will give NHS organisations throughout the country the assistance that will enable them to bring down their agency costs. It is only through such bold initiatives that we can reform the NHS for the betterment of patient care throughout the country.
Margaret Greenwood (Wirral West) (Lab)
13. What assessment his Department has made of the potential effect of measures to reduce the size of NHS deficits on NHS staff numbers.
The Parliamentary Under-Secretary of State for Health (Ben Gummer)
Trusts and foundation trusts are responsible for ensuring that their workforces are affordable, given the financial control totals that have been set for this financial year. We are clear about the fact that the first priority in the reduction of provider deficits will be to reduce unsustainable spending on high-cost temporary staff.
Margaret Greenwood
Five per cent. of NHS workers in England come from the European Union. What steps is the Minister taking to ensure that every effort is made to retain those skilled workers, and will he provide them with the confirmation of their permanent employment status that they so urgently need?
Ben Gummer
At the risk of repeating what the Secretary of State and I have said previously, we very much welcome the contribution of all EU nationals working in the NHS. It is for the process of the negotiations to establish the precise status of everyone, both EU nationals and British nationals working abroad. That was not my choice at the referendum, but the decision has been made by the British people. I hope that the hon. Lady will take comfort from what the Home Secretary has been clear about: that she hopes to be able to secure a deal so that we can retain EU nationals in this country.
Mr David Burrowes (Enfield, Southgate) (Con)
Can the Minister confirm that the challenge to NHS budgets will not compromise in any way the provision of sufficient consultants and middle-grade doctors to not only keep North Middlesex hospital open, but to provide sufficient care to patients and proper quality training to trainee doctors?
Ben Gummer
The problems at my hon. Friend’s hospital are a result of management issues and long-running troubles that the hospital has encountered. I hope we will be able to fix them in the short term and provide long-term solutions, which I will be briefing about in the days to come.
Several hon. Members rose—
Mr Speaker
Order. Progress has been rather slow today, but I want to accommodate one further inquiry. I call Karin Smyth.
Karin Smyth (Bristol South) (Lab)
14. What steps he is taking to ensure that forward budget planning in his Department is robust.
The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)
In the autumn statement and the Budget the Government fully funded NHS England’s five year forward view. We have committed to an extra £10 billion in-year by the end of this Parliament. Furthermore, we have frontloaded it, as we were asked to do by NHS England, with £6 billion extra by the end of 2016-17 with an extra £4 billion for technology funding.
Karin Smyth
I thank the Minister for his answer. Having published reports on seven areas of the Department’s work since January, members of the Public Accounts Committee, of whom I am one, were looking forward to the publication of the annual accounts with some anticipation. It is becoming clear that Brexit’s impact on staffing, procurement and medicines will be huge, so what is the Minister doing to assess and mitigate the risk to the 2016-17 budget and will this be made clear in this year’s published accounts?
George Freeman
May I first make it clear, as the Prime Minister has done, that nothing immediately changes? We are still full voting-right members of the European Union, and nobody in the system needs to worry about any immediate changes. The Government are putting together a plan for handling the negotiations that now need to be taken forward, and for my own part I as a Minister in the Department have convened a workforce to look at the issues around medicines access. There are three things we need to do: first, to reassure people that this country has a very strong life science and healthcare research system and economy; secondly, to make sure that we negotiate our new relationship with the EU in a way that works; and thirdly, to take advantage of the regulatory freedoms that we now have to make sure that this country is the very best country in the world in which to develop those innovations.
William Wragg (Hazel Grove) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Health (Mr Jeremy Hunt)
As we plan a new relationship with the EU, this Government will continue to ensure that the NHS is given the priority and stability it deserves. I have already sent a message of reassurance to all NHS staff, emphasising the vital role played by the 110,000 EU nationals working in our health and care system. To be able to allow them to continue making their outstanding contribution will be a key priority in our negotiations, and we are confident they will be able to remain in this country as long as they wish. Whatever other changes are happening at a national or international level, the commitment of the British people and this Government to our NHS and its brilliant staff remains unwavering.
William Wragg
A report published yesterday by the health journal Pulse showed that last year two thirds of young people referred by their GP for mental health services received no treatment, and moreover a third were not even assessed. I am a strong supporter of this Government’s commitment to improving mental health care, so what reassurance can the Secretary of State give today that results in child and adolescent mental health services will improve rapidly?
Mr Hunt
My hon. Friend is right to draw attention to that issue. We, too, are very proud of the progress we have made on mental health, with 1,400 more people accessing mental health services every day than six years ago, but there is a particular job to do with children and young people’s mental health, and we are putting £1.4 billion into that during the course of this Parliament—and there is a specific plan for the Manchester area, which I think will help my hon. Friend’s constituents.
Justin Madders (Ellesmere Port and Neston) (Lab)
It seems that almost every day there is another report about the deteriorating condition of NHS finances. Today we hear of a survey by the Healthcare Financial Management Association that said 67% of clinical commissioning group finance officers reported a high degree of risk in achieving their financial plan for the year, so does the Secretary of State now accept that the Government need to commit more funds to the NHS?
Mr Hunt
We have accepted that, which is why in our manifesto at the last election we were committed to putting £5.5 billion more into the NHS than was being promised by the hon. Gentleman’s party, but we have to live within the country’s financial envelope, because we know that without a strong economy we will not have a strong NHS. We will continue to make sure we get that balance right.
Andrew Stephenson (Pendle) (Con)
T5. In May, the Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison), gave me a very encouraging answer about improving the treatment and diagnosis of Lyme disease. Will she meet me and other concerned colleagues to discuss what more can be done to tackle that terrible condition?
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
I am pleased to report that the commissioning of the systematic reviews of the diagnosis and treatment of Lyme disease, which I mentioned at that time, is under way. We expect that work to start in the autumn, and the researchers will approach relevant stakeholders. Once that work is under way, I would be happy to organise a meeting for colleagues at which the experts leading it can brief them further.
Patrick Grady (Glasgow North) (SNP)
T3. Will the Secretary of State join me in welcoming the formation of the all-party parliamentary group on blood donation? Will he agree to take part in and perhaps give evidence to its inquiry into the criteria for blood donation, particularly those regarding men who have sex with men?
Jane Ellison
As Members will know, the Department has asked the Advisory Committee on the Safety of Blood, Tissues and Organs—SaBTO—to review the donor selection criteria for blood donation that relate to men who have sex with men. SaBTO has approved the remit, the terms of reference and the work streams, and it is cracking on. It has a second meeting coming up later this month. The chair of the working group has written to the chair of the all-party group, welcoming its inquiry and inviting it to contribute evidence during the autumn.
Andrea Jenkyns (Morley and Outwood) (Con)
T7. To expand on the question asked by the shadow Secretary of State, I too would like to raise the case of my constituent Abi Longfellow who suffers from dense deposit disease and is awaiting a decision by the NHS’s specialised commissioning body. She and her family have been subjected to frequent delays and miscommunications. I first met Health Ministers, NICE and NHS England a year ago to discuss Abi’s situation. What steps will the Government take to ensure that decisions on treatments such as this are taken in a timely fashion and that families are kept updated on the progress of those decisions?
The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)
My hon. Friend raises an important point. NHS England is currently unable to take final decisions on this year’s new treatments, including this particular drug, until the courts have decided whether pre-exposure prophylaxis HIV prevention should compete with other candidate drugs. She makes an important point about timeliness, and that is why I am leading an accelerated access review to speed up the way in which such decisions are taken.
Martyn Day (Linlithgow and East Falkirk) (SNP)
T4. In March, the Scottish Government made a commitment to substantially increase the financial support for the victims of contaminated blood. Initially, that will have to be administered through the current system, but the Department of Health appears to be dragging its feet. Will the Secretary of State explain the cause of the hold-up and say how he plans to expedite these payments to people with life-threatening illnesses?
Jane Ellison
No one is dragging their feet and we are trying to get this matter sorted out. I have had a number of discussions with the Cabinet Secretary for Health and Sport, Shona Robison, most recently last Thursday. We are working together to facilitate the increased payments, using the current scheme administrator. We want the payments to be made as quickly as possible to people who were infected in Scotland and across the UK. Officials in the Department of Health and officials in Scotland are working closely together to expedite the matter.
Sir Edward Leigh (Gainsborough) (Con)
T8. Community hospitals such as John Coupland in Gainsborough are very popular, yet health authorities seem intent on centralising services. Will the Secretary of State today make clear his absolute commitment to supporting local community hospitals and giving them work, and state that there will be no closures without his personal authorisation?
The Parliamentary Under-Secretary of State for Health (Ben Gummer)
Community hospitals form an important part of the NHS landscape and are valued by local communities, many of which have contributed to them through their fundraising efforts. The Secretary of State has to abide by the decisions of the Independent Reconfiguration Panel and the advice of clinicians, but it is clear that community hospitals that evolve and modernise will have a place in the NHS in the future.
Margaret Greenwood (Wirral West) (Lab)
T6. The cancer drugs fund is due to be handed back to NICE later this month. In May, 15 leading UK cancer charities published an open letter detailing their concern that that would see patients missing out on clinically proven cancer drugs because the NICE system is outdated and no longer fit for purpose. Will the Secretary of State agree to carry out a wide-ranging review of NICE’s health technology appraisal process for cancer drugs to ensure that all cancer patients can access the drugs they need?
George Freeman
I am delighted to assure the hon. Lady that as part of the accelerated access review, we are considering how we can ensure that the £1 billion commitment to the cancer drugs fund is used to accelerate through the most effective treatments, and, through the new system that NHS England is putting in place, to make sure that patients get access to better drugs more quickly.
Mr David Davis (Haltemprice and Howden) (Con)
T9. The Royal Free London NHS Foundation Trust recently signed an agreement to share 1.6 million patient records with Google’s DeepMind subsidiary. The data include medical history, HIV status, past drug overdoses, abortions, and all pathology, radiology and visit records. It is claimed that the data are anonymised, which is impossible given the nature of the data, and no permission was obtained from patients. It is also claimed that the agreement was made under the Secretary of State’s guidelines. Will he tell the House what he is doing to protect the privacy of such information?
Mr Jeremy Hunt
I am very happy to do so. My right hon. Friend has campaigned long and hard, and rightly so, on such issues. The truth is that the guidelines under which the NHS operates for the sharing of patient-identifiable data are not as clear as they need to be. That is why I asked the Care Quality Commission to undertake an independent investigation into the quality of data protection by NHS organisations and Dame Fiona Caldicott to update her guidelines. I hope that we will have news on that soon and certainly before the summer recess, which will please my right hon. Friend.
Nick Thomas-Symonds (Torfaen) (Lab)
Happy 68th birthday to the NHS and thank you to its creator, Labour’s Aneurin Bevan.
According to research by the British Lung Foundation, the mortality rates for lung disease have not improved over the past 10 years. Will the Secretary of State take a lesson from the Welsh Government, which have put in place a specific strategy and delivery plan to tackle the issue?
George Freeman
The hon. Gentleman will know that the Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison), opened an exhibition on this topic yesterday and that the Chancellor recently put an extra £5 million into mesothelioma research. Through the National Institute for Health Research, the Government are committing to invest in that disease area. We are also committed to ensuring that we drive up both research and better treatment for such diseases.
Dr Sarah Wollaston (Totnes) (Con)
Prevention of ill health has to be given a higher priority if the NHS is to meet the challenges set out in the five year forward view. Central to that will of course be the childhood obesity strategy. Has the Secretary of State had any discussions with the Prime Minister about the strategy’s future? Is he in a position to take over the strategy should No. 10 become distracted?
Mr Jeremy Hunt
I welcome my hon. Friend’s close interest in ensuring that this important agenda does not get swept aside. I can assure her that we have had many discussions inside Government about what to do. There is a strong commitment to take it forward as soon as possible, and I hope that she will get some good news on that front before too long.
Ms Margaret Ritchie (South Down) (SDLP)
Will the Minister responsible for public heath confirm when a statement on contaminated blood will be made to the House, and in particular on the response to the consultation that closed in April?
Jane Ellison
I am not in a position to be specific about when we can make a statement, but I can give the hon. Lady and other interested Members the absolute assurance that we continue to look closely at the issue. We have read every single response that we have received. I was at a well-attended all-party group meeting on 25 May and gave people a sense of the direction of travel of our analysis. I hope to keep the House updated.
Dr James Davies (Vale of Clwyd) (Con)
Will the Minister confirm how he plans to implement the General Practice Forward View? Will he also confirm that sustainability and transformation plans will be returned to for further development if they fail to deliver the investment in general practice mandated by the forward view?
The Minister for Community and Social Care (Alistair Burt)
Yes indeed, we are developing detailed plans to implement the 80-plus commitments set out in the General Practice Forward View, which has been widely welcomed. The development of GP practices will be incorporated into sustainable plans.
Derek Twigg (Halton) (Lab)
There is a shortage of GPs across the country, but certain areas, especially deprived areas such as Halton, have a high rate of sickness, in particular respiratory diseases and cancer. Is any action being taken to target those areas? Has the Minister had any discussions about that with NHS England?
Alistair Burt
Although there is a general shortage, to which my right hon. Friend referred when speaking about the work being done to recruit, retain and return GPs, bursaries are available in particularly difficult areas as incentives for people to go to such areas. NHS England concentrates on trying to ensure that under-doctored areas are properly resourced.
Amanda Solloway (Derby North) (Con)
The recently published Mental Health Taskforce report recommended that NHS England should by 2021 support at least 30,000 more women annually with specialist mental healthcare during the perinatal period. Will my right hon. Friend assure me that the Department will be working to reach that target?
Alistair Burt
I thank my hon. Friend for her question. Thanks to the Prime Minister’s excellent initiative in relation to perinatal mental health and the £390 million extra added to that, I can indeed confirm that work is already under way to increase the number of beds in the 15 existing perinatal mental health units. There are plans for three more in the south-west, the east of England and the north-west. This has been an important initiative, and perinatal mental health is very high up among my priorities and those of the NHS.
Several hon. Members rose—
Mr Speaker
Order. Despite the fact that we are late, I am keen to try to satisfy the inquisitorial appetite of colleagues, but can do so best if they are each now very brief.
Emma Reynolds (Wolverhampton North East) (Lab)
What is the Health Secretary doing to ensure that the NHS gets the £350 million a week that it was promised during the referendum campaign?
Mr Jeremy Hunt
I am a little stumped, because I was never really sure whether we would see that money. All I can say is that I am committed to successful negotiations with the EU, and I am delighted that a number of people who championed the Brexit vote have said that any extra funding should go to the NHS.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
As we celebrate the 68th birthday of the NHS—one of the Labour party’s proudest achievements—let us not forget the fact that there are thousands of people across our country with mental health conditions who continue to face stigma, discrimination and prejudice. Recent reports tell us that young people are waiting up to a decade to receive the appropriate treatment, and future plans for children and young people’s mental health are not up to scratch. Will the Minister please tell us how many more NHS birthdays will have to pass before real equality for mental health is secured?
Alistair Burt
How I miss the hon. Lady sitting on the Opposition Front Bench with her questions on mental health. I pay tribute to the exceptional work that she has done in this particular area. The £1.25 billion extra that is going into children and young persons’ mental health over the course of this Parliament—I along with other Members in the House have absolutely fought to make sure that it stays in the plans—will help. We have done more work than ever before in relation to combating stigma, but she is right to raise that, as it is essential that we do. It is also essential that the money that is provided centrally goes through clinical commissioning groups into mental health spending, and I am quite sure that she and I will make sure that happens.
Alison McGovern (Wirral South) (Lab)
The Secretary of State and others have sought to reassure us that nothing changes immediately with Brexit, but that is not right for the NHS. The impact on the economy is already clear, and that will have a knock-on effect on our health service. That is why I will meet local leaders in Wirral on Friday to try to formulate a Brexit plan for the NHS. Will the Secretary of State receive that plan and take all necessary steps to protect the health service in Wirral?
Mr Jeremy Hunt
Of course, and we will take every step necessary to protect the NHS throughout the country, because it remains our most important public service. I am sure that, economically, the period ahead will be difficult, but now that we have had the argument and the British people have made their decision, it is also important that we talk up the opportunities from the new relationships that we may have in the future, and the extra funding that those could generate for the NHS, and I certainly hope that that is what happens.
Mhairi Black (Paisley and Renfrewshire South) (SNP)
An elderly constituent of mine came to my surgery to explain that, sadly, her husband had passed away as a result of being infected with hepatitis C during the contaminated blood scandal. She has applied to the Skipton Fund four times, and has been turned down because her husband’s medical records have been destroyed since his death. Can the Minister offer any advice on how I can best move forward with this? I am also happy to meet her to give her more background information.
Jane Ellison
I think the latter suggestion might be the better one. I am happy to meet the hon. Lady and talk about the matter in more detail.
Point of Order
(7 years, 10 months ago)
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The Minister for Community and Social Care (Alistair Burt)
On a point of order, Mr Speaker. As there is a slightly more relaxed atmosphere, I wonder whether the House will indulge me as I offer a broad thank you. Twenty-four years and one month ago, I answered my first oral questions as a junior Minister, and now I have just completed my last one. This is not a sudden post-Brexit resignation—it is not catching. A few weeks ago, I made it clear to the Secretary of State, the Prime Minister and the Chief Whip that, after the referendum, I would not seek a post in what I expected to be a reshuffled Government. In the event, I hope to carry on with my duties until September, but that was my last oral questions. Therefore, in taking the chance that most Ministers do not get because we never know when the end will come, I thank colleagues for their forbearance over many years in subjects as varied as child support, disability, and the Arab spring—and in the relentless pursuit of mental health data by the hon. Member for Liverpool, Wavertree (Luciana Berger). I am looking forward to taking part in more questions from another seat in the Chamber, and I wish all colleagues very well indeed.
Valerie Vaz (Walsall South) (Lab)
Further to that point of order, Mr Speaker—
Mr Speaker
I will come to the hon. Lady’s point of order, but first let me say that although that is a relatively unconventional way of expressing appreciation, the Minister of State was typically courteous in signalling in advance to me his wish to do so, and I simply want to say to the right hon. Gentleman—I think I can say it without fear of contradiction, and it was evident from the response to his point—that he is an extremely popular and respected Minister who commands widespread affection and loyalty in all parts of the House. We very much look forward to his continuing contributions, albeit in the future from the Back Benches. I thank him for what he said and the way in which he said it.
Valerie Vaz
Exactly on that point, Mr Speaker, may I, on behalf of everyone on the Opposition Benches, pay tribute to the right hon. Gentleman? He has been an absolutely fantastic Minister and he is a brilliant MP. Long may he continue.
Mr Speaker
That is extremely welcome and I thank the hon. Lady for what she has said.
Teachers Strike
(7 years, 10 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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Nic Dakin (Scunthorpe) (Lab)
(Urgent Question): To ask the Secretary of State to make a statement on today’s teachers strike and its impact on children, parents and school communities.
Let me first declare my interest as a retired NUT member. Not only have we had the first junior doctors strike on this Government’s watch, but today we have failure in another public service, with a teachers strike. Sadly, this Government have relished attacking—
Mr Speaker
Order. I do not wish to disrupt the flow of the hon. Gentleman’s eloquence or the eloquence of his flow, but at this point all he needs to do is ask his urgent question. His more detailed supplementary will come after he has heard what the Minister has to say, in which I am sure he is extremely interested.
The Minister for Schools (Mr Nick Gibb)
There is absolutely no justification for this strike. The National Union of Teachers asked for talks, and we are having talks. Since May, the Department for Education has been engaged in a new programme of talks with the major teaching unions, including the NUT, focused on all the concerns raised during the strike. Even before then we were engaged in round-table discussions with the trade unions, and both the Secretary of State and I meet the trade union leaders regularly to discuss their concerns.
This strike is politically motivated and has nothing to do with raising standards in education. In the words of Deborah Lawson, the general secretary of the non-striking teacher union Voice, today’s strike is a
“futile and politically motivated gesture”.
Kevin Courtney, the acting general secretary of the NUT, made it clear in his letter to the Secretary of State on 28 June that the strike was about school funding and teacher pay and conditions, yet this year’s school budget is greater than in any previous year, at £40 billion—some £4 billion higher than 2011-12. At a time when other areas of public spending have been significantly reduced, the Government have shown our commitment to education by protecting school spending.
We want to work with the profession and with the teacher unions, and we have been doing that successfully in our joint endeavour to reduce unnecessary teacher workload. With 15,000 more teachers in the profession than in 2010, teaching remains one of the most popular and attractive professions in which to work. The industrial action by the NUT is pointless, but it is far from inconsequential. It disrupts children’s education, inconveniences parents, and damages the profession’s reputation in the eyes of the public, but our analysis shows that because of the dedication of the vast majority of teachers and headteachers, seven out of eight schools are refusing to close.
Our school workforce is and must remain a respected profession suitable for the 21st century, but this action is seeking to take the profession back in public perception to the tired and dated disputes of the 20th century. More importantly, this strike does not have a democratic mandate from a majority even of NUT members. It is based on a ballot for which the turnout was just 24.5%, representing less than 10% of the total teacher workforce.
Our ground-breaking education reforms are improving pupil outcomes, challenging low expectations and poor pupil behaviour in schools, and increasing the prestige of the teaching profession. This anachronistic and unnecessary strike is a march back into a past that nobody wants our schools to revisit.
Nic Dakin
Not only have we had the first junior doctors strike on this Government’s watch, but today we have failure in another public service with the teachers strike. Sadly, this Government have relished attacking education professionals, undermining them and describing them as “the blob”, instead of engaging with them and celebrating their role in driving up individual child and school performance. At a time when people have a right to look to Government for stability and security, a breakdown of trust among teachers and a strike of this nature is most unfortunate.
At the heart of this is concern felt by people on the frontline, be they teachers, head teachers or parents, about future school budgets. Everyone knows that despite the Secretary of State’s protestations, school budgets are going to fall in real terms, year on year, up to 2020. Head teachers know it, parents know it, and the Institute for Fiscal Studies has confirmed it. The only person who is shoving her head in the sand in total denial is the Secretary of State. That failure of Government has resulted in what we are witnessing today—massive disruption, classes cancelled and pupils sent home.
The Chancellor has made it clear that he is tearing up his fiscal rules. As my hon. Friend the Member for Manchester Central (Lucy Powell) asked yesterday, will the Government now commit to securing our children’s future by reversing the planned cut in funding and securing the necessary cash for our nation’s children? As I asked yesterday, will the Minister commit to publishing the Government’s response to the School Teachers Review Body by the end of this academic year so that head teachers can plan effectively?
It is clear that the Government have lost the plot. They have a problem with teachers—they cannot recruit or retain enough, and they have lost teachers’ confidence in large numbers. It is clear today that our children, who are our future, are paying the price of Tory education failure.
Mr Gibb
It is nice to hear from the shadow shadow Schools Minister on the fourth row of the Opposition Benches. The only people who are undermining the teaching profession are the leadership of the National Union of Teachers. I am disappointed that the hon. Gentleman is jumping on this dispute to make cheap political points, instead of joining the Government and condemning this unnecessary and pointless strike. Will he now say that he opposes this strike by the NUT, which is disrupting children’s education and inconveniencing parents?
Finally, just to respond to the hon. Gentleman’s point about the School Teachers Review Body report, we will publish the report, together with our response and a draft revised school teachers pay and conditions document, as soon as we have completed our consideration of it.
Mark Pawsey (Rugby) (Con)
Parents do not know why many teachers have gone on strike, and I am sure many of the teachers themselves do not understand why this strike is taking place. What parents do know is how difficult it is to make arrangements for childcare at short notice. Will the Minister pay tribute to the many teachers who are in work today, doing the right thing by their pupils?
Mr Gibb
My hon. Friend is right. These strikes not only damage children’s education, with every extra day of school missed damaging the outcomes for those children, but hugely inconvenience working parents, who have to make childcare arrangements or take a day off work in order to look after their children. So I share my hon. Friend’s comments, and I pay tribute to the vast majority of teachers and head teachers who are working today, resulting in seven out of eight schools refusing to close.
Angela Rayner (Ashton-under-Lyne) (Lab)
As in the case of the junior doctors dispute, I am sure that the general public watching this debate will see through this Government’s mirage and their fascination with what they seem to think is the picture out there. Taking strike action is one of the most difficult decisions any teacher makes. No one takes that decision lightly, but teachers have said enough is enough. They are fed up with the cuts, which 70% of heads say are directly affecting educational standards. Will the Minister now accept that class sizes are increasing, pupils are getting less choice about the subjects they learn, jobs are going and children are getting less individual time with staff?
I find the Minister’s faith in the free market’s ability to decide teachers’ salaries touchingly naive, on a day when the pound has fallen to a 31-year low. Can he tell us whether there is any limit to how far he is prepared to see teachers’ salaries fall? Meanwhile, the Secretary of State has refused to say anything about what will happen to teachers’ pay and conditions in September, and we have still not heard anything about that from the Minister. We are less than a month from the end of term, so will he finally end the uncertainty and update the House on what teachers can expect?
Unfortunately, the Secretary of State seems to be spending more time on the Justice Secretary’s campaign for the Tory leadership than on her day job. Will the Minister now agree to get around the table and thrash out a better deal for the next generation, which is what every parent across the country wants? The working conditions of our teachers are the learning conditions of our children, and our children deserve the very best.
Mr Gibb
What the public are seeing is a Labour party that is equivocal about whether it agrees with strike action that is disrupting children’s education. The hon. Lady is not prepared to condemn strike action that is not only damaging children’s education but hugely inconveniencing working parents, who have to make alternative arrangements for looking after their children.
The hon. Lady talks about class sizes, but the average infant class size has remained at 27.4—unchanged from 2015. Indeed, of the 3,066 infant classes with 31 or more pupils, 80% have just 31 pupils, and that is because of the flexibility we have built in to allow one or two extra children—for example, twins—to have access to those schools. Will the hon. Lady condemn that policy?
I have said that we will publish the STRB report when consideration of it is complete. We will consult teachers and stakeholders about the future of the STRB and about the arrangements when all schools are academies. However, let me give the hon. Lady one final chance to say, on behalf of the Labour party, that it condemns this unnecessary and futile strike by the National Union of Teachers.
Mr Philip Hollobone (Kettering) (Con)
Working mums and dads in my constituency will today be hugely inconvenienced by this completely unnecessary strike action. Many of them work in the local NHS and in local public services and social services, and their patients and customers will be inconvenienced by their absence as part of a politically motivated strike that is, frankly, an embarrassment to many members of the NUT itself. Will my hon. Friend the Minister praise those teachers who have walked across picket lines today to teach children in our local schools? They are the shining example, not the NUT.
Mr Gibb
Yes, my hon. Friend is absolutely right. Nothing is more important than ensuring that young people get a good education—that they master the basics of reading and writing, get good GCSEs and are prepared for life in modern Britain. I do pay tribute to all those teachers who have gone into work today, despite the NUT’s action, which is based on a ballot of less than 25% of its members. We want to make sure that no child’s education is disrupted, and I pay tribute to the fact that seven out of eight schools have refused to close.
Carol Monaghan (Glasgow North West) (SNP)
This strike by teachers is significant. This group of people have gone into a vocational and caring profession. They are not driven by money, but they do seek to be recognised and valued for the job they do. The ongoing erosion of teachers’ pay and conditions and their increasing workload make their vocation hard to live out, particularly when they could earn more and have better terms and conditions working in the local supermarket. It is easy to say at the Dispatch Box that teachers are valued, but actions have to match the rhetoric. Yesterday in Education questions, I asked the Minister a question, and I repeat it today: what is he doing to ensure that teachers have a nationally guaranteed level of pay? How is he working with teachers to reduce their workload? How is he protecting their terms and conditions, such as maternity and sick pay?
Mr Gibb
Kevin Courtney, the acting general secretary of the NUT, has made it clear that the dispute is about pay and conditions. On workload, what is disappointing about the strike is that we have been working extremely closely and constructively with all the teacher unions to tackle unnecessary workload. As a consequence of our discussions, we have established three workload groups, staffed by highly experienced teachers and headteachers. We have looked at data management, planning and dialogic marking. Those groups have all reported, and we have accepted all their recommendations. That will have a genuine effect on the top three workload issues highlighted by the Secretary of State’s workload challenge, to which 44,000 teachers responded. On teachers’ pay and conditions, as we move into a situation where more and more schools become academies, we will consult with the profession about the future of the STRB process.
Philip Davies (Shipley) (Con)
If the shadow Secretary of State is right that strike action is always a big and difficult decision, is it not about time that strike action is not allowed when such a derisory proportion of members—in this case, 24%—vote for it, particularly given the huge disruption it causes to pupils’ education, to parents’ lives and to other teachers, who have to cover for those who are out on strike?
Mr Gibb
My hon. Friend is absolutely right. The Trade Union Act 2016 will ensure that industrial action in essential services gets the go-ahead only after a ballot of at least 50% of members. Bearing in mind that the turnout for this ballot was just 24.5%, this strike would not be legal if the new regulations had taken effect. We are consulting with stakeholders on the regulations, and the thresholds are likely to come into force later this year.
Dawn Butler (Brent Central) (Lab)
I received a message today from Nicola, a teacher—I am sure her class is not full of twins—who said that she is trying to work out how to fit next year’s class of 34 into a room with furniture for just 28 children, while also making leaving cards for four members of staff. What does the Minister have to say to Nicola?
Mr Gibb
What I would say is that the percentage of pupils in infant classes of more than 30 is 5.8%, which is down from 6.2% in January 2015. In the last five or six years, we have created 600,000 more school places. We have doubled the amount of capital going into creating new school places, compared with that spent by the previous Labour Government. Incidentally, they removed 200,000 primary school places, which is the problem we have had to tackle, and they did not plan for the increased birth rate.
Alex Chalk (Cheltenham) (Con)
Our teachers do a fantastic job, but does the Minister agree that there are ways to protest that do not involve damaging children’s education and inconveniencing parents? Does he agree that there has to be the strongest possible justification for such drastic action and that that threshold has not been met in this case?
Mr Gibb
My hon. Friend is absolutely right. Ministers in the Department are always open to having discussions with trade union leaders. We have one-to-one discussions, we attend the new programme of talks and we attend the roundtable talks. Officials also have regular talks with the trade unions. This is not a necessary strike, because those discussions are always taking place. This has more to do with the internal workings of the NUT than with the real pay and conditions of teachers in this country.
Mr Dennis Skinner (Bolsover) (Lab)
Has the Minister not got a cheek to be talking about 20,000-odd teachers deciding to strike for a moment or two, when he is part of a Government who are going to let only 120,000 people decide the Prime Minister, instead of having a general election? Does he agree with that?
Chris Elmore (Ogmore) (Lab/Co-op)
This is an England-only strike. There are no strikes in Wales, Scotland or Northern Ireland, because their devolved Governments listen to and respect teachers. Standards have increased in Wales year on year, and the gap with England is closing. Where teachers are valued and listened to, that does not lead to strike action. The Minister should follow the lead of the devolved nations in supporting all teachers.
Mr Gibb
The problem with education in Wales is that standards are behind those in this country. In fact, yesterday we were asked what advice we could give to the Welsh Government about our academies programme, our reforms to the curriculum, and our reforms of GCSEs and A-levels, which are resulting in higher and improving standards in this country. The gap, I suspect, is widening.
Jenny Chapman (Darlington) (Lab)
As we now have a Chancellor talking about post-Brexit largesse, what do Ministers intend to do to ensure that the projected schools funding cuts are prevented?
Mr Gibb
We have protected school funding on a per-pupil basis. School funding is now at £40 billion—the highest it has ever been, and £4 billion more than in 2011-12. Because of the decisions that the Chancellor took in his Budgets, particularly the June 2010 Budget, we are not facing, and have not faced, the crisis facing countries such as Greece that had the same deficit as a percentage of the budget. We have not faced their crisis of closing schools, slashing salaries, and cutting numbers of teachers; we have maintained stability in our system. The average class size has remained stable in that period despite the fact that we have also created 600,000 more school places.
John Pugh (Southport) (LD)
There is a section of the Government that does not believe in experts, but, for the record, is the Minister really contradicting the Institute for Fiscal Studies, which predicts an 8% fall by 2020 in school budgets, in real terms?
Mr Gibb
We are aware that there are costs that schools have to face in the coming years, but we have protected school funding. If we look across Whitehall, we see the reduction in spending that we have had to secure to tackle the record public sector deficit that we inherited in 2010—£156 billion, or 11% of GDP. It is now down to less than 4% of GDP, thanks to those savings. We have issued significant guidance to schools about how they can manage their budgets and procure savings and efficiencies in the way they run their schools to meet these challenges.
Toby Perkins (Chesterfield) (Lab)
I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on ensuring that the Government are held to account on the failure in education policy, which is very important. The Minister should know, as he articulated, how real the demoralisation is of teachers in our schools. Have the Government made any assessment of the impact on our children’s education of how demoralised teachers are? Why do the Government not take serious steps to try to lift the morale of teachers rather than constantly denigrating them in this Chamber?
Mr Gibb
No one on the Government Benches is denigrating teachers. Teachers in this country are a much respected profession who are providing a very high, and improving, quality of education to young people. We have reformed the primary curriculum and the secondary curriculum, and we have reformed GCSEs, putting them on a par with the best qualifications in the world. The teaching profession has responded magnificently to those new challenges. Today we have published the key stage 2 results on a pupil basis, and we see that two thirds of pupils are now meeting the new expected standards in reading and 70% of pupils are meeting the new expected standards in mathematics. That is a tremendous achievement given the very significant rise in the expectations and rigour of the new primary curriculum.
Diana Johnson (Kingston upon Hull North) (Lab)
Just to be clear, does the Minister accept the IFS’s prediction that school budgets will fall by over 8% up to 2020—yes or no?
Mr Gibb
School budgets have been protected. We are spending £40 billion, and we have said that per-pupil funding for schools is protected throughout this Parliament. Schools will face increased costs of salaries, pension contributions and national insurance, but we have provided advice to them about how they can meet those challenges to procure more efficiently and to make sure that their staffing arrangements provide the best education within their budgets. We have protected school funding throughout this Parliament.
Steve Rotheram (Liverpool, Walton) (Lab)
Perhaps I need to declare an interest, as my sister is a teacher. With regard to why she would go on strike, it is not just about her terms and conditions—it is about the pupils to whom she believes she has a responsibility. The Minister has mentioned record budgets. Will he confirm or deny whether, in real terms, the budget has gone up per pupil?
Mr Gibb
It has gone up in real terms overall, as I have said, and £40 billion is the highest ever level of spending. We have had to take some very difficult public spending decisions over the past six years because of the mismanagement of the public finances by the Labour Government—a party and a Government whom the hon. Gentleman supported. As a consequence of taking those difficult decisions, we are not facing the challenges that other countries in Europe that have had similar levels of public sector deficit have had to face.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I think that our constituents would expect us to try to cool the temperature here. Those of us who have been around in education for some time know that previous Labour Governments have had their disagreements with the NUT. The fact of the matter is that there are a lot of unhappy teachers out there at the moment, and they do have some real concerns. This is an important statement. Indeed, what other statement could have got the whole ragtag and bobtail that remains of the Government Front Bench here at one time? This is a serious matter. Let us cool the temperature, talk to teachers, meet their concerns, and get them back to work.
Mr Gibb
I totally agree with the hon. Gentleman and former Chair of the Education Committee; he is right. We do talk to the teaching profession. We have regular discussions. The Secretary of State and I, and other Ministers, regularly visit schools up and down the country and talk to teachers. There is no question but that the reforms that have been put in place over the past five or six years have been very significant; we do not resile from stating that. It was important that we raised standards of reading and arithmetic in primary schools, that we reintroduced grammar into the primary curriculum, and that we revised and improved the curriculum in secondary education. We have to make sure that our young people are prepared for life in modern Britain and prepared to compete in an increasingly competitive global jobs market, and we are delivering on that. I am delighted by the way in which the profession has responded to those challenges.
Julie Cooper (Burnley) (Lab)
Does the Minister agree that teachers are the experts in education, and that when these professionals have genuine concerns that funding cuts are damaging the education of our children, it would be irresponsible of them not to make those concerns known to Government? If the teaching profession had the respect and the ear of this Government, they would not be in the position of having to take last-resort strike action to protect the education of our children.
Mr Gibb
No, I think that is an anachronistic approach to discussing important political issues. We have regular discussions with the teacher unions. We have all kinds of reference groups of representative teachers whom we meet regularly in the Department for Education. We are very aware of teachers’ concerns about the changing curriculum and worries about workload. We had a workload challenge to which 44,000 teachers responded. We take all these issues very seriously, and we respond to concerns. We do not want to go back to the 1980s and have strikes as a way of engaging in issues of concern. They are not necessary, and most teachers agree with that.
Louise Haigh (Sheffield, Heeley) (Lab)
The Minister can say all he likes about school budgets going up, but the facts on the ground paint a very different picture. One of the schools in my constituency has had to close down its summer school, which was deliberately targeted at helping deprived students to catch up before the beginning of the school year. Will he look at that example, and other examples that other hon. Members are sure to raise, to make sure that the funding cuts do not impact on deprived students, in particular?
Kate Green (Stretford and Urmston) (Lab)
Schools in my constituency are affected by industrial action today, and governors have been clear with me and with parents that it is funding pressures, particularly in relation to children with special educational needs, that are forcing them to make redundancies to balance their budgets. Will the Minister guarantee that the needs of children with special needs are adequately funded?
Mr Gibb
We want to make sure that the education of those children in particular, and that of all vulnerable children, is protected. One of the reasons we introduced the pupil premium, which provides £2.5 billion a year, was to make sure that funding goes to the most vulnerable children in our school system. We are consulting on the national funding formula and on the high needs funding formula. That consultation has closed and we will respond to it shortly.
Fiona Mactaggart (Slough) (Lab)
My impression is that the Minister is prepared to hand out blame but not to accept it. He says that this action is damaging children’s education and disrupting parents, but his Government’s decision to impose on primary teachers of key stage 2 a new four-year curriculum that they had only two years to deliver led to a chaotic series of results, which were published today. The results have upset parents and they are much worse than the Secretary of State predicted. Does that not harm children’s education more than the antics of the NUT today?
Mr Gibb
No, it does not. The new curriculum is essential if we are to prepare young people for life in modern Britain and equip them to do well at secondary school. The previous levels did not ensure that children, including those reaching level 4 at the end of key stage 2, went on to get at least five good GCSEs. This curriculum is much more rigorous and it has been designed to be on a par with the best education jurisdictions in the world. Some 66% of pupils are already meeting the new expected standard in reading, while 70% are meeting it in maths and 72% in grammar, punctuation and spelling. I think that teachers have done a great job in preparing pupils for this new, more demanding curriculum.
Mike Kane (Wythenshawe and Sale East) (Lab)
Brilliant former colleagues of mine have been brought to their knees by the unmanageable and exhaustive workloads introduced by this Government. Given that more teachers left the profession than joined it last year, does the Minister accept the link between teachers’ morale and the huge numbers leaving the profession?
Mr Gibb
Let me give the hon. Gentleman some facts: in 2015, 43,000 teachers left the profession—some due to retirement, while others went into other walks of life—but 45,000 entered it. Some 14,000 people returned to the profession, which is a higher number than the 11,000 in 2011. I do not recognise the picture painted by the hon. Gentleman. Whenever I visit universities and schools and make public statements, I talk up the profession, to encourage young graduates and sixth formers to think about a career in a very important and highly respected profession.
Andrew Gwynne (Denton and Reddish) (Lab)
I do worry about the Minister’s arithmetic capabilities when he sets himself against the IFS, which has clearly said that school budgets will be cut by 8% in real terms by 2020. That is one side of the equation. The other side, as my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) has said, is teacher morale, which has been compounded by some of the changes to the curriculum and the additional workload. Why have Ministers set their face against the teaching profession in this way? Have they not today reaped what they have sown?
Mr Gibb
I accept that the changes implemented in the past five years have been radical. They have taken many years to prepare. The primary curriculum was published in 2013 and became law in September 2014, and the first assessment of it took place in May 2016. The first teaching of the English and maths GCSE reforms began in September 2015, after four or five years of preparation, and the first teaching of a number of other subjects will take place this September. I understand the work involved in preparing for a new specification and a new curriculum, but the changes are hugely important and they will have a dramatic impact on the standard of education in our state schools in the year ahead. That is a prize well worth delivering, and I hope that the hon. Gentleman will support higher academic standards in our state schools.
Margaret Greenwood (Wirral West) (Lab)
In encouraging people to go into teaching, what reassurance can the Minister give to those who want to teach art, drama and music that there will be departments that require their services in the years ahead?
Mr Gibb
There was a Westminster Hall debate on this issue yesterday, during which I set out the figures for art and design and for music. They show that the take-up and entry figures for those subjects have remained stable, notwithstanding the introduction of the EBacc combination of core academic subjects. It is important that more young people take those core academic subjects of maths, English, science, a humanity subject and a modern foreign language at GCSE. That is what happens in a number of high-performing jurisdictions around the world. We want our young people to be competent in a foreign language. That is why we set a target that 90% of pupils will be taking the EBacc combination by 2020, but that does not mean that there is no space or time in the school curriculum for those important creative arts subjects.
Bill Presented
Digital Economy Bill
Presentation and First Reading (Standing Order No. 57)
Secretary John Whittingdale, supported by the Prime Minister, Secretary Sajid Javid, Secretary Stephen Crabb, Secretary Greg Clark, Secretary Nicky Morgan, Secretary Amber Rudd, secretary Elizabeth Truss, Matthew Hancock, Mr David Gauke and Mr Edward Vaizey, presented a Bill to make provision about electronic communications infrastructure and services; to provide for restricting access to online pornography; to make provision about protection of intellectual property in connection with electronic communications; to make provision about data-sharing; to make provision about functions of OFCOM in relation to the BBC; to provide for determination by the BBC of age-related TV licence fee concessions; to make provision about the regulation of direct marketing; to make other provision about OFCOM and its functions; and for connected purposes.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 45) with explanatory notes (Bill 45-EN).
Business without Debate
Wales Bill
(7 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
14:41 - The Committee divided: - Ayes: 41 / Noes: 270 - Question accordingly negatived.
14:54 - The Committee divided: - Ayes: 217 / Noes: 274 - Question accordingly negatived.
17:29 - The Committee divided: - Ayes: 294 / Noes: 228 - Question accordingly agreed to.
17:44 - The Committee divided: - Ayes: 181 / Noes: 285 - Question accordingly negatived.
17:58 - The Committee divided: - Ayes: 285 / Noes: 7 - Question accordingly agreed to.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I beg to move amendment 17, page 1, leave out lines 5 to 9 and insert—
“In section 1 of the Government of Wales Act 2006 (the Assembly), after subsection (1), insert—”.
The amendment changes the place in the Government of Wales Act 2006 in which the text inserted by Clause 1 appears. Rather than in section 92A, references to the permanence of the Assembly would appear in section 1 of the Government of Wales Act 2006.
The First Deputy Chairman of Ways and Means (Mrs Eleanor Laing)
With this it will be convenient to discuss the following:
Amendment 8, page 1, leave out line 8 and insert “CONSTITUTIONAL ARRANGEMENTS FOR WALES”.
This amendment amends the title of the new Part 2A inserted by Clause 1 in consequence of the proposal in amendment 7 to require the review of the functioning of the justice system in Wales.
Amendment 18, page 1, line 10, leave out
“and the Welsh Government are”
and replace with “is”.
The amendment gives effect to separate provisions relating to the National Assembly for Wales, as the Legislature, and the Welsh Government, as the Executive.
Amendment 19, page 1, line 14, leave out “and the Welsh Government.”
The amendment gives effect to separate provisions relating to the National Assembly for Wales, as the Legislature, and the Welsh Government, as the Executive.
Amendment 20, page 1, line 16, leave out
“and the Welsh Government are”
and replace with “is”.
The amendment gives effect to separate provisions relating to the National Assembly for Wales, as the Legislature, and the Welsh Government, as the Executive.
Amendment 21, page 1, line 18, at end insert—
“( ) In section 45 of the Government of Wales Act 2006 (the Welsh Government), for the words in subsection (1) before paragraph (a) substitute—
(1) There is to be a Welsh Government or Llywodraeth Cymru.
(1A) The Welsh Government is a permanent part of the United Kingdom’s constitutional arrangements.
(1B) The purpose of subsection (1A) is, with due regard to the other provisions of this Act, to signify the commitment of the Parliament and Government of the United Kingdom to the Welsh Government.
(1C) In view of that commitment it is declared that the Welsh Government is not to be abolished except on the basis of a decision of the people of Wales voting in a referendum.
(1D) The members of the Welsh Government are—”.”
The amendment gives effect to separate provisions relating to the National Assembly for Wales, as the Legislature, and the Welsh Government, as the Executive. The amendment changes the place in the Government of Wales Act 2006 in which the text relating to the permanence of the Welsh Government would appear.
Amendment 22, page 1, line 18, at end insert—
“( ) In the Government of Wales Act 2006, after Part 2 (the Welsh Government) insert—”.
The amendment is required as a consequence of changing the location of the provision relating to the permanence of the Assembly.
Amendment 5, page 2, leave out lines 1 to 6 and insert—
“Part 2B
Separation of the Legal Jurisdiction of England and Wales
Introductory
92B New legal jurisdictions of England and of Wales
The legal jurisdiction of England and Wales becomes two separate legal jurisdictions, that of England and that of Wales.
Separation of the law
92C The law extending to England and Wales
(1) All of the law that extends to England and Wales—
(a) except in so far as it applies only in relation to Wales, is to extend to England, and
(b) except in so far as it applies only in relation to England, is to extend to Wales.
(2) In subsection (1) “law” includes—
(a) rules and principles of common law and equity,
(b) provision made by, or by an instrument made under, an Act of Parliament or an Act or Measure of the National Assembly for Wales, and
(c) provision made pursuant to the prerogative.
(3) Any provision of any enactment or instrument enacted or made, but not in force, when subsection (1) comes into force is to be treated for the purposes of that subsection as part of the law that extends to England and Wales (but this subsection does not affect provision made for its coming into force).
Separation of the Senior Courts
92D Separation of Senior Courts system
(1) The Senior Courts of England and Wales cease to exist (except for the purposes of section 6) and there are established in place of them—
(a) the Senior Courts of England, and
(b) the Senior Courts of Wales.
(2) The Senior Courts of England consist of—
(a) the Court of Appeal of England,
(b) the High Court of England, and
(c) the Crown Court of England, each having the same jurisdiction in England as is exercised by the corresponding court in England and Wales immediately before subsection (1) comes into force.
(3) The Senior Courts of Wales consist of—
(a) the Court of Appeal of Wales,
(b) the High Court of Wales, and
(c) the Crown Court of Wales, each having the same jurisdiction in Wales as is exercised by the corresponding court in England and Wales immediately before subsection (1) comes into force.
(4) For the purposes of this Part—
(a) Her Majesty’s Court of Appeal in England is the court corresponding to the Court of Appeal of England and the Court of Appeal of Wales,
(b) Her Majesty’s High Court of Justice in England is the court corresponding to the High Court of England and the High Court of Wales, and
(c) the Crown Court constituted by section 4 of the Courts Act 1971 is the court corresponding to the Crown Court of England and the Crown Court of Wales.
(5) References in enactments or instruments to the Senior Courts of England and Wales have effect (as the context requires) as references to the Senior Courts of England or the Senior Courts of Wales, or both; and
(6) References in enactments or instruments to Her Majesty’s Court of Appeal in England, Her Majesty’s High Court of Justice in England or the Crown Court constituted by section 4 of the Courts Act 1971 (however expressed) have effect (as the context requires) as references to either or both of the courts to which they correspond.
92E The judiciary and court officers
(1) All of the judges and other officers of Her Majesty’s Court of Appeal in England or Her Majesty’s High Court of Justice in England become judges or officers of both of the courts to which that court corresponds.
(2) The persons by whom the jurisdiction of the Crown Court constituted by section 4 of the Courts Act 1971 is exercisable become the persons by whom the jurisdiction of both of the courts to which that court corresponds is exercisable; but (despite section 8(2) of the Senior Courts Act 1981)—
(a) a justice of the peace assigned to a local justice area in Wales may not by virtue of this subsection exercise the jurisdiction of the Crown Court of England, and
(b) a justice of the peace assigned to a local justice area in England may not by virtue of this subsection exercise the jurisdiction of the Crown Court of Wales.
92F Division of business between courts of England and courts of Wales
‘(1) The Senior Courts of England, the county courts for districts in England and the justices for local justice areas in England have jurisdiction over matters relating to England; and (subject to the rules of private international law relating to the application of foreign law) the law that they are to apply is the law extending to England.
(2) The Senior Courts of Wales, the county courts for districts in Wales and the justices for local justice areas in Wales have jurisdiction over matters relating to Wales; and (subject to the rules of private international law relating to the application of foreign law) the law that they are to apply is the law extending to Wales.
92G Transfer of current proceedings
(1) All proceedings, whether civil or criminal, pending in any of the Senior Courts of England and Wales (including proceedings in which a judgment or order has been given or made but not enforced) shall be transferred by that court to whichever of the courts to which that court corresponds appears appropriate.
(2) The transferred proceedings are to continue as if the case had originated in, and the previous proceedings had been taken in, that other court.”
This amendment replaces the Bill’s proposed recognition of Welsh law with provisions to separate the legal jurisdictions of England and of Wales, as drafted by the Welsh Government.
Amendment 9, page 2, line 1, after “law” insert
“and review of the justice system in Wales”.
This amendment amends the heading of Clause 1 in consequence of the proposal in amendment 7 to review the functioning of the justice system in Wales.
Amendment 7, page 2, line 3, at end insert—
“(2) The Lord Chancellor and the Welsh Ministers must keep the functioning of the justice system in relation to Wales under review with a view to its development and reform, including keeping under review the question of whether the single legal jurisdiction of England and Wales should be divided into a jurisdiction for Wales and a jurisdiction for England.
(3) In exercising their duty in subsection (2) the Lord Chancellor and the Welsh Ministers must have regard to—
(a) divergence in the law and its administration as between England and Wales,
(b) the need to treat the Welsh and English languages on the basis of equality, and
(c) any other circumstances in Wales affecting operation of the justice system.
(4) The Lord Chancellor and the Welsh Ministers may appoint a panel to advise them on the exercise of their functions in this section.
(5) The Lord Chancellor must make an annual report on the functioning of the justice system in relation to Wales to the Welsh Ministers.
(6) The Welsh Ministers must lay the report before the Assembly.
(7) The Lord Chancellor must lay the report before both Houses of Parliament.”
The provision in the Bill recognises the existence of a body of Welsh law made by the Assembly and the Welsh Ministers. The new subsections to be inserted after that provision by this amendment require the Secretary of State to keep the justice system as it applies in relation to Wales under review with a view to its development and reform, having regard in particular to divergence in the law as between England and Wales.
Amendment 10, page 2, leave out lines 4 to 6.
This amendment removes subsection (2) of the proposed new section 92B of the Government of Wales Act 2006 (recognition of Welsh law). Subsection (2) seeks to explain the purpose of subsection (1) of that section.
Clause 1 stand part.
Amendment 23, in clause 2, page 2, line 12, leave out “normally”.
This amendment removes the word “normally” from the recognition that the Parliament of the United Kingdom will not normally legislate on devolved matters without the consent of the National Assembly for Wales.
Amendment 3, page 2, line 12, leave out “legislate with regard” and insert “enact provisions relating”.
This amendment is a consequence of amendment 4, which defines the meaning of “devolved matters”.
Amendment 24, page 2, line 13, after “Assembly” insert—
“(a) there is an imminent risk of serious adverse impact on—
(i) the national security of the United Kingdom, or
(ii) public safety, public, animal or plant health or economic stability in any part of the United Kingdom,
(b) the legislation specifically addresses that risk,
(c) the imminence of the risk in relation to Wales makes it impractical to seek the consent of the Assembly,
(d) no Bill has been passed under section 110(1)(a) specifically to address the risk, and
(e) no subordinate legislation specifically to address the risk has been laid before the Assembly and has come into force.”
This amendment specifies the circumstances in which Parliament can legislate on devolved matters on behalf of the National Assembly for Wales without its consent.
Amendment 4, page 2, line 13, at end insert—
“(7) For the purpose of subsection (6), a provision relates to a devolved matter if the provision—
(a) applies in relation to Wales and does not relate to a reserved matter.
(b) modifies the legislative competence of the Assembly, or
(c) confers a function on, or removes or modifies a function of, any member of the Welsh Government.”
This amendment defines the meaning of “devolved matters” for the purpose of the statutory recognition of the convention about Parliament legislating on devolved matters proposed by Clause 2.
Amendment 25, page 2, line 13, at end insert—
“(7) In this section, “devolved matters” means matters that—
(a) are within the legislative competence of the Assembly;
(b) modify the legislative competence of the Assembly;
(c) modify a function of the Assembly;
(d) modify a function of a member of the Welsh Government exercisable within devolved competence (and “within devolved competence” is to be read in accordance with section 58A).”
The amendment defines devolved matters for the purposes of Clause 2.
Clauses 2 and 4 stand part.
Amendment 26, in schedule 4, page 94, line 10, at end insert—
“National Assembly for Wales Commissioner for Standards.”
The amendment adds the National Assembly for Wales Commissioner for Standards to the list of Wales public authorities.
Amendment 27, page 94, line 10, at end insert—
“National Assembly for Wales Remuneration Board.”
The amendment adds the National Assembly for Wales Remuneration Board to the list of Wales public authorities.
Schedule 4 stand part.
Liz Saville Roberts
Diolch yn fawr, Dirprwy Lefarydd. Nineteen years have passed since the 1997 referendum to establish the Assembly. It is now clear that to have our own democratically elected Government and legislature is the settled will of the people of Wales. I note with disappointment and surprise the Secretary of State’s recent refusal of an invitation from the Chair of the Assembly’s Constitutional and Legislative Affairs Committee to give evidence on the Bill. I would argue that now, especially, is the time for co-operation and the sharing of knowledge.
Clause 1 is a very welcome addition to the Welsh devolution dispensation. Any clause to recognise the permanence of the institution is, of course, overdue. Amendments 17 to 22 are not controversial, and they deal with two technical issues. First, amendment 17 and amendment 22, which is consequential on amendment 17, change the place in the Government of Wales Act 2006 in which the text of clause 1 would appear. I know that the Presiding Officer in the Assembly, Elin Jones, has made this point, and I share her view that the declaration of the permanence of the Assembly should be given prominence in the Bill. Placing it in section 1 of the 2006 Act would achieve that.
Secondly, amendments 18 to 21 reflect the constitutional separation of the legislature, the National Assembly of Wales, and the Executive, the Welsh Government, by dealing with them in separate new provisions to be inserted into those parts of the Government of Wales Act 2006 that deal respectively with the Assembly and the Government. These are probing amendments and we do not intend to press them to a vote, but I hope that the Secretary of State will agree to accept these proposals and to table his own amendments at the next stage.
I do, however, intend to press amendment 5 to a Division. This amendment deals with what was perhaps the key focus of the prelegislative stage of the Bill and remains, in our view, the main reason that it fails to achieve what the Secretary of State has said he wanted to achieve: that is, to produce a lasting devolution settlement for Wales.
Since the original Government of Wales Act 1998, we have been forced to change the devolution dispensation four times. If enacted, this Bill will become the fifth dispensation. The perpetual modifications have been necessitated by sustained reluctance from successive UK Governments, both Labour and Tory, to legislate with the long term in mind. Although all of Wales’s devolution Acts were described as settlements to settle the debate for a generation, not one of them has achieved that aim. It is clear to me that this Bill will continue that trend, unless, of course, the Secretary of State changes course.
Many, if not most, of the criticisms of the Bill made by politicians, lawyers, civil society and academics alike have been of clauses or sections that have been justified as necessary by the Secretary of State in order to maintain the single unified legal system of England and Wales. The inclusion of clause 3—this will be discussed next week—and in particular its much debated necessity test is down to the fact that the Welsh legislature operates within a shared jurisdiction. The inclusion of clause 10, on justice impact tests, which have been subject to questioning and criticism since the publication of the latest Bill, is down to the fact that justice is a reserved matter—a reservation that is apparently necessary to safeguard the shared jurisdiction. These are among the contents of the Bill that are intended to prevent the Assembly from making any provisions that will impact on so-called public authorities. Again, these are in the Bill to protect the unified legal jurisdiction. As the Wales Governance Centre and University College London report stated:
“Complexity is piled on complexity...the potential for legal challenge casts a long shadow”.
I remind the House that Wales is unique in the world in having a primary law making legislature without a jurisdiction. Scotland has a wholly separate legal jurisdiction, and the Scottish settlement is simpler as a result. It avoids the complex and unnecessary exceptions and reservations. The relative stability of the Scottish devolution settlement, when compared with the turmoil in Wales, is stark. It is rare that Wales passes a law without the threat of legal challenge from somewhere.
If there were a practical need to maintain the unified legal system, it would be worth making these compromises elsewhere in the Bill and perhaps worth the legal battles. However, I have yet to hear a genuine, practical reason for doing so. The most frequently made argument against creating a separate Welsh jurisdiction is that it is unnecessary and costly, and that divergence between the law as it applies to Wales and the law as it applies to England is minimal. To those who make those arguments I say two things. First, to say that divergence is minimal is to continue the short-term approach of previous Governments and to ignore the fact that divergence will do nothing but increase as the Assembly continues its work and as the institution gains more maturity and responsibility.
Mr Mark Williams (Ceredigion) (LD)
Like the hon. Lady, I am a member of the Select Committee on Welsh Affairs, and I can back up, to a large extent, what she is saying. Was she as surprised as I was by the body of evidence that came from civil society, the legal profession and beyond during our Select Committee inquiry into the now redundant Wales Bill?
Liz Saville Roberts
I agree entirely with the hon. Gentleman. The sheer weight of that evidence underlines the fact that we struggled to find other points of view.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Amendment 5 is very well worded, if I may say so, because it was drafted, word for word, by the Labour Government in Cardiff. They wanted a separate legal jurisdiction for Wales, and they promised it as a major pledge before the Assembly election. What does my hon. Friend think it will say about the authority of Carwyn Jones among his colleagues here in London if the Labour party does not support that amendment today?
Liz Saville Roberts
I agree with my hon. Friend. I would expect there to be some concordance between both points of view, but that seems not to be the case.
Paul Flynn (Newport West) (Lab)
What the hon. Lady has said is entirely fair, but we must come to a practical conclusion. It is clear that the undertaking we gave as a party to support the line taken by Plaid Cymru still stands, but the practical problem is that the Government have firmly rejected it. In these circumstances, the sensible thing to do is to seek a compromise between the two positions, and that is what our amendment is designed to do.
Liz Saville Roberts
It is unfortunate to hear that argument in relation to standing up for Wales. On the one hand we have a Secretary of State who will not meet the Committee in the Assembly, and on the other hand we have a parliamentary Labour party that is not standing up for its colleagues in Wales.
But we move ahead. The second argument that I would use to those who argue against a separate Welsh jurisdiction is that, in many ways, the significance of divergence is beside the point. It is evident that these complex clauses and tests have to be included throughout the new Bill simply to accommodate the fact that Wales does not have a separate legal jurisdiction. Such clauses and tests, incidentally, have been described by distinguished legal experts, as I have mentioned, as
“a failure of comparative legal method”,
and according to the constitution unit they
“jar with basic constitutional principle”.
The inclusion of those clauses specifically because of the need to shore up the unified legal system is reason enough in itself, I would argue, to create a Welsh jurisdiction. To argue that it is unnecessary is to disregard completely the wealth of evidence that has emerged since the publication of the draft Bill last autumn. Stubbornly resisting that evidence will only lead to continued cases in the Supreme Court. I challenge anyone to justify making a Government accountable to a judge rather than to a legislature, but the Bill effectively enshrines such resort in law.
As our explanatory statement makes clear, amendment 5 was drafted by the Welsh Government, and it was included in annex C to the report by the constitution unit at UCL and the Wales Governance Centre earlier this year. I am, as I have mentioned, therefore very surprised to see the amendments tabled by Labour Members, which go against the views of their own party in Wales. I recognise that the official Opposition Front-Bench team has been through something of a reshuffle recently, and I am, incidentally, very pleased to hear that the hon. Member for Newport West (Paul Flynn) has finally been offered the job that he should have been given a long time ago. I take this opportunity to welcome him to his post.
Susan Elan Jones (Clwyd South) (Lab)
There is a conciliatory note in what the hon. Lady says. In this great new world of conciliation, does she agree with her party leader in Cardiff, Leanne Wood, that what we need at this time is greater working together, even if it sometimes means in Cardiff greater working together between Plaid and Labour?
Liz Saville Roberts
I am sure we will work together when it is for the best for Wales, but I understand that that is not the case in Cardiff, and Plaid Cymru will, of course, be standing for the arguments that we believe in our hearts to be for the best for Wales.
To reiterate, I ask the shadow Secretary of State for Wales to support our amendment, which will implement what his colleagues in the Welsh Government have been calling for. We have had the prelegislative scrutiny, and the evidence is there. It is clear that we must act to create a new Welsh jurisdiction, and the amendments tabled by Labour would simply kick the issue into the long grass. As I have said, Plaid Cymru is far from alone in making this call. The evidence supports our position and the Labour-run Welsh Government have called for this step—the wording on the amendment paper is theirs.
David T. C. Davies (Monmouth) (Con)
I begin by genuinely welcoming the two new members of the Opposition Front-Bench team. One, the hon. Member for Swansea East (Carolyn Harris), I have not known for that long, but she has always shown her willingness to work in a non-partisan way when that is called for. The hon. Member for Newport West (Paul Flynn) and I go back many decades. Although we have never really agreed, I think it is wonderful that he has found his way on to the Front Bench. I suspect it will take me even longer than him to get there, but you never know. We might even see a nonagenarian on the Front Bench one of these days, and I will put myself up if I am still here.
I will address the thrust of the Plaid Cymru amendments—most importantly, amendment 21 and the general view that Plaid Cymru Members want to underline the absolute permanence of the National Assembly for Wales within the British constitution. I speak as someone who campaigned against the Welsh Assembly—I was one of the leaders of the campaign against it, back in 1997—and voted against it. Subsequently, there was a discussion among those of us in the no campaign about what we should do next. After all, the Assembly had gone through on a turnout of only 50%, with a majority of less than 1%. About 25%—just one in four—of the Welsh public had voted for a National Assembly of Wales. There were discussions about whether we should demand a rerun, or take to the streets and protest that such an enormous constitutional change was taking place with the support of just one in four of the population. We discussed all those things and the anger that we felt about the plan for the Assembly going ahead.
We decided in the end that we needed to show some humility. It was not a case of whether we were right or wrong but of listening to the will of the Welsh public. Subsequently there was a referendum a few years later, when I campaigned against further powers for the Welsh Assembly. I do not like to say that I was wrong—no politician ever does—but I accept fully that I was on the losing side and that, once again, the Welsh public had spoken and made clear their support for a Welsh Assembly. I therefore wish to say that, as someone who was probably more anti the Welsh Assembly than anyone else in this Chamber—well, I would have said that a few years ago but now I am not so sure—I totally and utterly accept that the Welsh Assembly is there, and there to stay.
Despite my constitutional misgivings about the Assembly, and the fact that I predicted at the time that it would always be seeking more powers every couple of years, I have always thought that were obvious advantages to having a body that could take some control over matters that affect the people coming to see us in our surgeries. People always want to talk about health services and the NHS, for example, and I have always thought it easier to get hold of a Minister in the Welsh Assembly than Ministers in Parliament, probably because they do not have quite as much to do. Members of the Welsh Assembly are generally able to be in their constituencies more often than Members of Parliament, for obvious logistical reasons. There were always some advantages to be had; my concern was that we had left the English question unanswered, although we are starting to address that now.
I want to make it clear that I believe that it would be constitutionally outrageous for any party to come along and try to get rid of the Welsh Assembly. I certainly would not support that. I do not for a second think it is realistic to hold another referendum on the principle of whether we have a Welsh Assembly. I was on the losing side of that argument. Whether I was right or wrong is immaterial; I fought that case, I lost, and the people of Wales have spoken.
Chris Davies (Brecon and Radnorshire) (Con)
I am delighted to hear my hon. Friend’s comments, and one always listens to every word he says. Does he regret that there was no mechanism in the first Wales Bill to allow another look at whether the Assembly should exist?
David T. C. Davies
There was no mechanism but there was a second referendum a few years later. I forget the percentages, but a much clearer level of support was expressed for the Welsh Assembly in that referendum. Realistically, now, by the time of the next election there will be people who have lived their entire lives with a Welsh Assembly. I do not think that it is a greatly loved institution, but it is not greatly hated, either. It is just accepted, as part of the furniture.
The only point I would make to the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) is this. Regardless of whether her amendment 21 gets the support of the Committee today, I think it is absolutely inconceivable that there will ever be any attempt to get rid of the Welsh Assembly. It is our duty to work with it and to remember what the Welsh public have said to us twice through referendums. I hope that we will all take the same view about all referendums in which the Welsh public have expressed their voice.
Nick Thomas-Symonds (Torfaen) (Lab)
I will speak in favour of amendments 9, 7 and 10. It is always a pleasure to follow my constituency neighbour, the hon. Member for Monmouth (David T. C. Davies). I welcome my hon. Friend the Member for Newport West (Paul Flynn) to the Front Bench. He follows in a fine tradition of octogenarians serving in the Labour Front-Bench team. The one who sprang to my mind was Lord Addison, who left the Attlee Government in 1951 at the age of 82. I am sure that in my hon. Friend we have a fine 21st century successor to Lord Addison. When I first came to this House, I thoroughly enjoyed reading my hon. Friend’s book “How to be an MP”; I look forward to the sequel, “How to be a Front Bencher”.
I will speak on the issue of a separate legal jurisdiction for Wales. The hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) spoke about the wording of amendment 5. When the Wales Bill still contained the vast number of necessity tests that it did, there was a more powerful argument for a separate legal jurisdiction, but now that the necessity tests have been all but removed, save in two very specific circumstances, I do not think that any urgency for that remains. That allows us the chance to move forward far more pragmatically.
We have to be absolutely clear about the consequences of having a separate legal jurisdiction. I should say that prior to coming to this House I spent 11 years as a practising barrister in Cardiff and am still a door tenant, though non-practising, at Civitas Law. I have looked at situations where the permission of the court would be required to serve outside the jurisdiction—in other words, an additional barrier to access to justice would exist—if there was a separate legal jurisdiction. The list includes interim remedies, contracts, claims in tort, enforcement, claims about property within jurisdiction, trusts, claims by Her Majesty’s Revenue and Customs, claim for costs order in favour of, or against, third parties, admiralty claims, claims under various enactments, and claims for breach of confidence or misuse of private information. All those areas would require permission to serve outside the jurisdiction. That may have been rather a legal list, but let us think of its practical consequences. For example, let us suppose a constituent from Torfaen goes to Bristol and falls over. They will be put in a complicated legal position.
Health is also a cross-border issue. If someone who lives in Wales crosses the border for treatment, there will be complications in cases of medical negligence. When people from Wales drive to London on the M4 and if they have an accident on the other side of the Severn bridge, that will have suddenly taken place in a different jurisdiction. If someone buys a washing machine or some other product from England, consumer protection law will cause complications for someone in Wales who is seeking a remedy for a problem.
Hywel Williams (Arfon) (PC)
In his research, has the hon. Gentleman come across figures for how many cases are held in Wales compared with the number of cross-border cases?
Nick Thomas-Symonds
At the moment, anyone who issues a claim would have a choice about where to issue it. For example, when I practised in Cardiff, it was easy for me to issue something to my client in Bristol if I wanted to, so in a sense those statistics do not really add any meaning to my argument. Companies would have an element of uncertainty introduced to their business if they were to trade on a cross-border basis—the last thing I want is for Offa’s Dyke to become an additional barrier to access to justice.
Jonathan Edwards
The hon. Gentleman will be aware that Scotland and Northern Ireland have their own separate legal systems. Using his vast experience in that field, how does he think they should overcome those problems? I have been listening carefully to what he has been saying, and it seems as if he is fundamentally disagreeing with those on his Front Bench on this issue.
Nick Thomas-Symonds
I am not disagreeing with those on my Front Bench—I have made it clear that we are looking for a pragmatic way forward. For Scotland and Northern Ireland the history is very different, as I am sure the hon. Gentleman is aware. In Wales we can go back to the 1530s and the Tudors for the origins of the single legal jurisdiction, but the position is very different for Scotland and Northern Ireland.
Why do we now have the opportunity to consider a more pragmatic way forward? Amendment 7 makes it clear that there will be a review to consider the functioning of the system. The hon. Member for Dwyfor Meirionnydd made a point about having two legislatures within the single legal jurisdiction. That is unusual, but it does not mean that there cannot be a pragmatic way forward for the years ahead. Indeed, the amendment includes a proposal to always have regard to the divergence in the law. The Bill explicitly recognises the Welsh body of law, and there will be one because as the legislature goes forward, it will produce the case law to form that. There must be an annual report on the functioning of the justice system—something that I suggest all Members of the House should welcome.
Liz Saville Roberts
Does the hon. Gentleman agree that the current situation, whereby issues or disagreements about the status of legal proposals by the Welsh Assembly are resolved in the Supreme Court, is a satisfactory way for the legislature to proceed?
Nick Thomas-Symonds
Of course we would all like the Supreme Court to be used far less to resolve conflict between the Governments in Wales and in Westminster, but I am not sure that having a separate legal jurisdiction would have any real substantial short-term impact on that. The Bill is now far better and we have sought to improve it, but the clarity of the provisions—particularly removing all but two necessity tests—has made a great difference and I hope it will mean that there should be far less conflict in the Supreme Court.
Nia Griffith (Llanelli) (Lab)
I rise to support amendment 7, to reaffirm my support for the Bill, and to thank the Secretary of State for bringing it forward so quickly. We would all like it to be enacted as soon as possible. I also thank him for recognising the growing body of Welsh law, and for his initiative to set up a body to consider that. Amendment 7 would confirm that body in writing in the Bill, meaning that a report on the state of affairs is made on a regular basis. As my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) so eloquently expressed, this is not a simple issue about which we can just have a yes or no discussion; it is a growing body of law and a number of complex issues arise. If that measure was included firmly in the Bill so that a report was made on a regular basis, we would have the opportunity to consider the direction things were going in and whether any changes were needed. The amendment states clearly that the report will consider
“whether the single legal jurisdiction of England and Wales should be divided into a jurisdiction for Wales and a jurisdiction for England.”
We want that practical, sensible solution included in the Bill so we can be certain that the review will continue to take place, and so that recommendations and reports come from that, which may or may not lead to a different view on things as that body of law grows. I reaffirm my support for the Bill, and I hope that amendment 7 will be included.
Mr Mark Williams
It is a privilege to serve under your chairmanship, Mrs Laing. I reiterate my support for the amendments on the permanence of the National Assembly. I think that they originate in the office of the Presiding Officer who co-represents the Ceredigion constituency, but regardless of our constituency interests, there is huge sympathy and empathy with the principle of permanence right across the Committee—perhaps there are one or two exceptions on the Government Benches.
Amendments 3 and 4 are probing amendments like those tabled by the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). I do not intend to divide the Committee on those amendments, but I wish to elicit from the Minister a little more detail that is currently not in the Bill. To avoid clashes between the two legislatures on devolved matters, this Parliament has hitherto adopted a self-denying ordinance, and would not normally legislate on devolved matters without the consent of the National Assembly.
I believe there is a consensus on the Opposition Benches, which is reflected by my amendment and amendments 24 and 25 tabled by Plaid Cymru, that the new provision does not provide a complete statement of the circumstances in which the Assembly’s consent is required in respect of parliamentary legislation. The Bill fails to mention the circumstances in which proposed legislation would modify the legislative competence of the Assembly itself. The amendments seek to clarify that. The requirement for consent in itself is not the issue. The Bill will at some point require the assent of the National Assembly for Wales, but in the interests of clarity and transparency the amendment sets out the circumstances when the Assembly’s consent should normally be required. I think it provides a tidier definition of devolved matters.
The meat of this grouping relates to a separate, although interestingly in this debate not a distinct, jurisdiction. I understand the principle behind Plaid Cymru’s amendments. We have heard about a separate jurisdiction and less about a distinct jurisdiction. The Government have gone as far in the Bill as to acknowledge and recognise a body of Welsh law. That is an important principle, but it is where we take that principle that concerns me. I am led in the direction of the Labour party’s amendment, which follows the stance established in the increasingly dated Silk report, which is something of a bible to Liberal Democrats. Silk, in that now slightly dusty report, talked about reviewing the case for devolving legislative responsibility for the court service—sentencing, legal aid, the Crown Prosecution Service and the judiciary—to the National Assembly. I think he would endorse the speech just made by the hon. Member for Torfaen (Nick Thomas-Symonds) and the case for a broader review of the legal system in Wales. Silk also talked about the need, in recommendation 34, for a “periodic report” by the UK Government, in consultation with the Welsh Government, to the UK Parliament and to the National Assembly on how access to justice is improving in Wales, and that there should be a regular dialogue between the Lord Chief Justice of England and Wales and Welsh Ministers on the administration of justice in Wales.
The groundwork has therefore already been done for the Labour party’s amendment. It requires the Secretary of State to keep under review the justice system as it applies in relation to Wales, with a view to reform. For some of us, the inevitable divergence of English and Welsh law being open to the possibility of reform is critically important. As a Liberal, there is still the question of timing. There is a very clear Plaid Cymru amendment. We have something that has been described as more pragmatic. Simplistically, we could say that it beefs up what Silk was talking about some time ago.
The Government have acknowledged that this is an issue by providing legal clarity on a Welsh body of law. They have also acknowledged it through the creation of a judicial working group. We talked on Second Reading about the principle of setting up the Government’s working group, which is welcome, but I do not believe it is sufficient to address the issues before us today. I am led to believe that the Welsh Assembly Government have not been invited to participate in its work.
Mr Williams
I will stand corrected if that is actually the case. I am seeking clarification and it looks like I am about to get it.
Alun Cairns
I can absolutely confirm that an invitation was sent to the Welsh Government some weeks ago. We have not yet received a response.
Mr Williams
I am grateful to the Minister for that update. That should create some food for thought at the other end of the M4, because co-operation and collaboration between both Administrations on these issues is vital.
I still have concerns about timetabling. On Second Reading, the hon. Member for Dwyfor Meirionnydd spoke about timetabling and about the working group concluding its work by September. That suggests this House—or the other place, as the Bill proceeds—would not have much of an opportunity to deliberate on its work, which is a concern. Does the working group have the opportunity to engage with civil society in the way the Welsh Affairs Committee did when it received evidence on distinct and separate jurisdictions? That is important.
I support the idea of the commission, which follows a suggested precedent that we need to review these matters. As I said on Second Reading, of all the issues in the Wales Bill we have been talking about, legal jurisdiction is the one that will not go away. It needs to be addressed and I am not sure that that can be done in one amendment today. It needs to be addressed in a substantive review. If it is not addressed in a substantive review, I fear that if some of us are lucky enough to be in this House in years to come, we will be returning to another Wales Bill to deal with it.
Paul Flynn
The hon. Member for Ceredigion (Mr Williams) ended on a sombre note. Wales Bills are not just for St David’s day, they are for life—possibly for eternity. We have seen the tortuous birth pangs of devolution in Wales go on and on. The Bills we passed were grudging Bills. This place is neurotically power-retentive. We allow little bit of power, we take it back and then we allow it little bit more. Part of the problem has been the divisions that have existed over the years and a lack of conviction on the need for a Welsh Assembly and Welsh Government. Happily, I believe those days are gone. All parties have a desire to provide good legislation that will give the Assembly and the Government in Wales more stability and more durability.
May I say what a delight it is for me to be in this position as a shadow spokesman on the Opposition Front Bench? It is an extraordinary thing, but these jobs are rather like London buses: you wait 26 years for one and then two come along together. I am delighted to be accompanied by my hon. Friend the Member for Swansea East (Carolyn Harris). I am also comforted by the presence of my hon. Friends the Members for Llanelli (Nia Griffith) and for Clwyd South (Susan Elan Jones), who are on a temporary respite which I am sure will last for days. But I have this job. It is not the best job I have ever had: it is a zero-contract job, a zero-pay job and a zero-hours job that could end at any moment.
We are all conscious that we are just a matter of weeks from the terrible murder of our colleague, Jo Cox, who said memorably in her maiden speech that
“we are far more united and have far more in common than that which divides us.”—[Official Report, 3 June 2015; Vol. 596, c. 675.]
That is what I intend to concentrate on. I agree very much with the points made by the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) and I certainly do not want any futile dispute. The Government have made it clear that they will not move on some of the main points that we and the Welsh Government are very much in favour of, so we take the position that the sensible thing is to try to find a third way or middle course.
I believe we are in a better position than we have ever been in. A book entitled “Dragons led by Poodles” on the first devolution referendum was published when there were deep divisions in my own party. We are happy today that, in particular after the example of the Welsh football team, we are dragons led by dragons. We have the great joy of seeing the brilliant success of our footballers—the best we have ever seen. We take great pride in that. It has done so much for Wales that everyone is Welsh now. I heard someone on the radio say they owned two Bryn Terfel records and did that entitle him to call himself Welsh? It is suddenly fashionable and desirable to be Welsh. The whole world wants to be Welsh and that will bring us tangible benefits.
Jonathan Edwards
I honestly mean it when I say that I warmly welcome the hon. Gentleman to his post. He is a man of great principle, and I am a great admirer of his. Because he is a man of great principle and because he says he supports the meaning and wording of amendment 5, should he not act on those principles and support Plaid Cymru in the Lobby later?
Paul Flynn
We will not be supporting amendment 5, because we think it gesture politics; unless the Government change their mind, it is not going to get through. We are suggesting a practical compromise that might well be accepted by the Government.
Kevin Brennan (Cardiff West) (Lab)
I also recommend my hon. Friend’s book “Dragons led by Poodles”, and thank him for what he said about me in it. [Hon. Members: “What did he say?”] Hon. Members can read it for themselves later, rather than have me read it into the record.
Despite what my hon. Friend said about the grudging nature of legislation around devolution, has not the organic way in which Welsh devolution has progressed built support for devolution from the very narrow victory in the referendum back in 1997? Might not imposing a separate legal jurisdiction at the outset of this journey in the creation of Welsh law place unnecessary costs on Welsh citizens having to seek permission to take a case in another jurisdiction, when that matter could be dealt with organically as the Welsh body of law develops in the years to come?
Paul Flynn
I agree entirely with my hon. Friend. In my book, which begins with a dramatis personae, I awarded Welsh politicians a number of pompoms for being poodle-ish or flames for being dragon-like. I think he emerged with no pompoms and five flames, which was the top award. His point is absolutely right.
During the pre-legislative scrutiny, it became clear that the question of the jurisdiction was a fundamental one that had to be addressed in the Bill. As the hon. Member for Dwyfor Meirionnyddp said, the Plaid Cymru amendment adopts the approach in the Welsh Government’s alternative Bill. That is fine—we agree with that—but we are proposing a compromise that would address the issue in a more consensual way. That is the spirit in which we approach consideration of the Bill. In response to the intervention from the Secretary of State, I must say that I welcome the concept of working with the Welsh Assembly. I know that the Constitutional and Legislative Affairs Committee of the Welsh Assembly will be meeting throughout August to consider the Bill under our former colleague Huw Irranca-Davies. I am sure that it will have a great deal to contribute, and I hope that its suggestions will meet with an open door.
There is common ground among legal and constitutional experts that the current arrangements are not sustainable. The challenges can only grow as the Welsh statute book develops further in the fifth Assembly term—“the Welsh statute book” has a nice ring to it. We have not yet risen to the heights of cyfraith Hywel Dda and the days in the 10th century when Wales led Europe with progressive legislation. There was a law that said if a starving person had gone to three villages without being fed, he or she was entitled to steal without risk of prosecution. They had wonderful rules on the rights of women that were far in advance of anywhere else and they had practically no capital punishment. Eight hundred years later, England had 220 crimes for which people could be punished with death, including stealing from a rabbit warren and cutting down a tree. So we are building on the shoulders of the giants of the 10th century and Hywel Dda. We are a long way from it, but this is another step towards that progress.
The joint jurisdiction was based on the premise that there was a common body of law across England and Wales with a single set of administrative arrangements. That premise worked for the centuries following the Acts of Union but is now out of date. In essence, that premise is inconsistent with legislative devolution; it is simply impossible to argue for retention of the joint jurisdiction when the criminal and private law in England and Wales will increasingly diverge as a result of Assembly legislation. The starting point is that there must be robust joint arrangements between the Lord Chancellor and the Welsh Ministers to work through the issues and identify solutions, and the UK Government’s proposed official working group might add some value. In his intervention, the Secretary of State said that an invitation had been sent to the Welsh Government. I do not know about that, but we would like to see that joint working. It is certainly the desire of the Welsh Government.
Our amendments would achieve three things. First, there would be a duty on the Lord Chancellor and Welsh Ministers to keep the operation of the justice system under review, including the jurisdiction question. Secondly, they would be able to appoint an expert panel to advise them, which could be an invaluable source of legal expertise to focus on the practical issues. Thirdly, the work would have to be transparent and sustained, with an annual report laid before the National Assembly and Parliament.
The Secretary of State, like his predecessor, wants the Bill to offer a lasting settlement, and so do we, but that will not happen unless they put forward a credible and serious process for reforming the joint jurisdiction. There is a major gap in the Bill as it stands. Amendment 7 is proposed as a constructive solution that deserves cross-party support and we hope to press it to a Division.
Clause 2 provides statutory underpinning for the Sewel convention. Under our constitution, both Parliament and the Assembly can legislate for Wales on devolved matters, so it is important that there be a clear understanding between the two legislatures as to which will be the principal legislature on these matters. The convention normally resolves that issue in favour of the Assembly. Amendments 23 and 24 address that issue further. The convention also requires that if Parliament proposes to amend the legislative competence of the Assembly, that too should require the Assembly’s formal consent.
To be fair to the UK Government, they have always acknowledged that the Bill will require the Assembly’s consent if it is to proceed to Royal Assent. This is a matter not of controversy but of common sense and consensus between the parties. This aspect of the convention, however, is only set out in rather obscure terms in a devolution guidance note for civil servants. As drafted, clause 2 makes no reference to this aspect of the convention at all, so it is an incomplete statement of the real position. Clarity would be appreciated.
Amendment 4 is designed to fill that gap. It would provide a comprehensive statement of the circumstances when Assembly consent is required for parliamentary legislation. In particular, it would make it clear in the Bill that Assembly consent is required when a parliamentary Bill proposes changes to the Assembly’s legislative competence. I note that amendment 25 is broadly to the same effect. This is an important element in the Welsh devolution settlement, so clarity is required; it should not depend on what is written in devolution guidance note. I urge the Government to accept these reasonable and constructive amendments.
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
I join hon. Members in welcoming the hon. Members for Newport West (Paul Flynn) and for Swansea East (Carolyn Harris) to their places on the Front Bench. I fear that I have followed the hon. Gentleman’s political career for more than 40 years, which makes me feel very old. When he was the candidate in Denbigh during the 1974 general election, my father was the election agent for Ieuan Wyn Jones, who stood for Plaid Cymru. The hon. Gentleman clearly made a huge impression on my father, who followed his career avidly, but I am surprised that as a resident of Llansannan he did not appreciate the beauty and importance of the agricultural community in the way that he perhaps should have. When my wife had a bookshop, we recommended “Dragons led by Poodles” to many of our customers. It was one of our bestsellers in the year in question, so he undoubtedly contributed to my coffers then.
On behalf of myself and the Secretary of State, may I also thank the hon. Members for Llanelli (Nia Griffith) and for Clwyd South (Susan Elan Jones) for their constructive engagement on the Bill prior to the change of guard on the Opposition Front Bench? The Bill has been brought forward in a measured way, and we have attempted at all times to have a constructive engagement with all Opposition parties. The constructive engagement we had with the hon. Members for Llanelli and for Clwyd South was particularly appreciated.
I need to go through the amendments in some detail to provide reassurance where necessary and to explain the Government’s position on them. Let me deal first with amendment 17, which was tabled by the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). This is clearly an attempt to change the place where new part 2A is inserted into the Government of Wales Act 2006. The new part inserted by clause 1 enshrines the permanence of the National Assembly for Wales and the Welsh Government and recognises the body of Welsh law. Amendment 8, which was tabled by the Opposition, would change the title of new part 2A, making it broader in scope. Amendments 17 and 8 are consequential amendments, so I shall explain the Government’s position on them when I speak to other amendments.
Amendments 18 to 22, tabled by the hon. Member for Dwyfor Meirionnydd, are designed to insert into the Government of Wales Act 2006 separate statements on the permanence of the National Assembly for Wales and of the Welsh Government. The amendments rightly recognise the importance of new part 2A in confirming without any doubt in law what is widely understood—that the National Assembly and the Welsh Government are a permanent part of the United Kingdom’s constitutional arrangements.
I pay tribute to my hon. Friend the Member for Monmouth (David T. C. Davies) and his work as Chairman of the Welsh Select Committee. I pay tribute, too, to his speech in which he highlighted the permanence of the Welsh Assembly in the UK’s constitutional arrangements. I accept his argument that a majority is a majority in a democratic vote. My mother-in-law argued on Sunday that we should try to avoid the result of the EU referendum, highlighting the fact that it was a very small majority on a very small turnout, whereupon I said to her that she was of the view that the 50.3% of the people of Wales who voted for the establishment of the Welsh Assembly should be respected. I stood by the democratic principle that a majority is a majority, but it was good to hear my hon. Friend the Member for Monmouth being so clear in his view that the Assembly is part and parcel of the UK’s constitutional arrangements.
It is fair to say that a great deal of consideration has been given to the content of this clause and its place in the 2006 Act, not only in the context of the draft Wales Bill, published last October, but in terms of the read-across from the Scotland Act 2016. As in the context of Scotland, I am keen to see this commitment expressed in a single clause to reflect the fact that the Assembly and the Welsh Government belong together as a part of the UK’s constitutional arrangements. I would, however, like to give further consideration to the most appropriate place to insert new section 92A in the Government of Wales Act 2006.
I shall deal next with amendments 5, 7, 9 and 10, which amend new clause 92B on the recognition of Welsh law. In its second report, published in March 2014, the Silk commission recommended that there
“should be further administrative devolution in the court system”,
and it specifically provided for devolution in respect of the various divisions of the High Court, which should sit in Wales on a regular basis to hear cases—other than highly specialist cases—that arise in Wales. The commission stated that a High Court office should be established in Wales to co-ordinate High Court sittings in Wales; that the divisions of the Court of Appeal should continue to sit in Wales on a regular basis to hear cases that arise in Wales; and that High Court and Court of Appeal judges should be allocated to sit in Wales only if they satisfy the Lord Chief Justice that they understand the distinct requirements of Wales.
I am pleased to be able to state clearly from the Dispatch Box that many of the recommendations relating to administrative devolution in fact reflect the current position in Wales: the senior courts already sit in Wales; the administration of Welsh courts is overseen by Her Majesty’s Courts and Tribunals Service Wales; and court sittings are co-ordinated locally.
Jonathan Edwards
There has, of course, been a material change in conditions, following the events of the last few weeks and the EU referendum. From our perspective, we just want to get the Bill on the statute book, so that we can move on to the next big debate about the future of our country. Is the Minister seriously saying from the Dispatch Box today, after the events of the last few weeks, with Scottish independence imminent in the next few years and with Irish unification never being closer since Lloyd George decided to split that country in two, that this Bill will hold Wales together for the next generation?
Guto Bebb
The hon. Gentleman is a passionate speaker and a strong advocate for his position. In a debate in Westminster Hall this morning, however, I warned of the dangers of creating history as we want to believe it to happen. I am not as yet convinced that there is enough evidence to suggest that Scotland is imminently about to leave the United Kingdom—[Interruption.] I am not convinced. There was a referendum two years ago that provided a fairly clear result. I think it would therefore be inappropriate to legislate on the basis of the wish list of the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards)—much as I enjoy that wish list and the passion with which it is articulated.
The Government are fully committed to maintaining the single legal jurisdiction of England and Wales. It has served Wales very well. It is also our firm view that it is the most effective, efficient and consistent way to deliver justice. The issues raised by the hon. Member for Torfaen (Nick Thomas-Symonds) highlighted some of the complexities that would be created if we moved away from that single jurisdiction at this point in time. The vast majority of law is not devolved, so there is no justification for a separate jurisdiction that would create significant upheaval and huge costs. It is worth highlighting that cost issues cannot be swept under the carpet. There would be a cost implication with very little benefit. I wonder whether Plaid Cymru Members have carried out a cost-benefit assessment to weigh up the benefits and the costs that would be incurred.
Amendment 5 envisages separate legal and court jurisdictions, administered by a common judiciary and court staff. It is designed to provide clarity, but I am not sure that it would. I think it would create more confusion, having the opposite effect—a point made by the hon. Member for Cardiff West (Kevin Brennan). The same people would be charged with administering two separate legal regimes where there is currently a commonality of law and procedure. This would have downstream consequences and it would impact on how the legal system works. It is difficult to justify such an impact on the basis of the current body of Welsh law.
We have heard the argument that the situation in Scotland and Northern Ireland is simpler because they have separate legal jurisdictions. I expected to hear that argument, but it ignores the historical reality that there has been—there always has been for that matter—a separate Scottish legal jurisdiction. I have engaged previously with the hon. Member for Carmarthen East and Dinefwr on the laws of Hywel Dda, who is rightly remembered for the legal system he put in place.
David T. C. Davies
Does the Minister also accept that Hywel Dda was very well known for the importance he placed on working with the English Government at the time, particularly with Edward the Elder and Athelstan? Is there not a great lesson for all of us here in terms of co-operation with the Welsh Assembly?
Guto Bebb
I appreciate that there are quite a few experts on Hywel Dda in this place. It is certainly the case that he took a co-operative approach. As I said previously in a debate with the hon. Member for Carmarthen East and Dinefwr, Hywel Dda was perhaps very good in some respects, but he allowed the murder of his brother-in-law for his own personal gain in the kingdom. So perhaps he was not perfect.
Let me return to the serious issue of the separate legal entity. I think that, for all the talk of Hywel Dda, it would be a mistake to ignore the historical context. We are where we are. We legislate not in terms of what we would like to see, but in terms of what is practical and what is right at this point in time, and I think that the Bill has struck the right balance in that respect.
We recognise the validity of some of the points that were raised during pre-legislative scrutiny. Wales has a distinctive legal identity. It has two legislatures, and a growing body of law made by the Assembly and Welsh Ministers. The Bill recognises that, and there is clearly a need to ensure that it does so in the context of maintaining the single jurisdiction of England and Wales. Our position is clear: we are recognising reality in the context of a system that currently works very well for Wales and the United Kingdom.
Amendments 7 and 9 call for the Lord Chancellor and Welsh Ministers to keep under review the functioning of the justice system in relation to Wales, including the question of whether the single legal jurisdiction should be separated into a jurisdiction for Wales and a jurisdiction for England. The case for that was argued by the hon. Members for Torfaen and for Newport West.
This is an important issue, and it should be considered carefully. The St David’s day process considered the position for and against devolving justice, and ultimately found no consensus in favour of implementing the Silk commission’s recommendation. As I have said, the Government firmly believe that the most effective, efficient and consistent way to administer justice is under a single legal jurisdiction.
Despite the devolution of powers to Wales, under this Bill and the Government of Wales Acts before it, and despite the increasing amount of legislation made by the Assembly, the vast majority of laws apply equally across England and Wales, and will continue to do so. The Government therefore pledged to continue to reserve justice and policing in their election manifesto, as I mentioned earlier. However, I agree with the principle that the functioning of the justice system must be kept under review, especially given the continuing divergence in law to which I have referred.
It is for that very reason that my right hon. Friends the Justice Secretary and the Secretary of State for Wales have established a working group to consider the administrative changes needed to meet the administrative and operational demands of diverging legislation in a Welsh context. The group will represent the key areas affected by the changing legislative Welsh landscape, and will consider a range of circumstances affecting the operation of justice in Wales. I can tell the hon. Member for Ceredigion (Mr Williams), who raised the point in his speech, that the Welsh Government have been invited to be represented on the group, but the invitation was issued to officials in that Government, so there should be no condemnation of any political forces—any Ministers—in the Assembly. We expect a positive response to the invitation.
Mr Mark Williams
Will the Minister clarify—I am sure that he is on the verge of doing so—the time frame for the joint working group? I understood that it would conclude its work in the autumn. The amendment proposes a real review over a lengthier period as the divergence between Welsh and English legislation becomes a reality.
Guto Bebb
It is currently envisaged that the group will report in the autumn, and, as things stand, that is its aim. I hope that that satisfies the hon. Gentleman, at least in terms of clarity.
It is important to understand what the group will and will not do. It will consider the administrative and operational implications of a shared but single legal jurisdiction, but it will not discuss broader constitutional questions such as whether there should be a separate jurisdiction. The Government’s view is clear: the single legal jurisdiction of England and Wales is the most effective, efficient and consistent way to deliver justice. I hope that provides the clarity for which Members have been asking.
Amendment 10 seeks to omit subsection (2) of the proposed new section 92B of the Government of Wales Act. Subsection (2) recognises that a body of Welsh law made by the Assembly and by Welsh Ministers forms part of the single legal jurisdiction of England and Wales, while giving due regard to the boundaries of competence set out in the Bill. It is important for the Assembly to have full and effective powers to enforce its legislation on devolved matters, and in order to achieve that, a growing body of distinct law will necessarily continue to be made by the Assembly and Welsh Ministers.
The Bill provides for that throughout. In particular, paragraphs 3 and 4 of new schedule 7B, which schedule 2 inserts into the Government of Wales Act and which the Committee will debate next week, make it clear that the Assembly may modify the private law for a devolved purpose, and that only certain core elements of the criminal law are outside its competence. Those elements are listed in paragraph 4 of the new schedule. The Assembly will, for example, be able to create and modify offences when they are for the purpose of enforcing devolved provisions.
Subsection (2) of new section 92B is intended to be helpful, explaining that the purpose of the provision is to recognise the ability of the Assembly and Welsh Ministers to make laws forming part of the unified legal system of England and Wales. The new section constitutes a declaratory statement, and does not bestow any further powers on the Assembly than are provided for elsewhere in the Bill. It is, however, important in that it enables the contribution made by the Assembly and Welsh Ministers to the law of England and Wales to be recognised for the first time, while having due regard to the other provisions in the Bill. Subsection (2) is required to clarify that the statement must be considered in the context of the rest of the Bill. Without it, there might be uncertainty about the meaning of subsection (1).
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
So that the public can understand the divergence that has, to a limited degree, taken place so far, will the Minister tell us what proportion of the current law he considers to be distinctly Welsh, as opposed to England and Wales law? May we, in future, be given a regular update on that distinction, so that ordinary people understand where the law is diverging?
Guto Bebb
That is a good question, because it highlights the importance of ensuring that people in Wales understand where law is made. The percentage of Welsh law is currently tiny by comparison with the overall impact of the law on those people, but I think we should keep an eye on the position.
Clause 1 sets the scene for the new model of Welsh devolution that is presented in the Bill. It inserts a new part 2A into the Government of Wales Act, ensuring that, for the first time, the permanence of the National Assembly for Wales and the Welsh Government is confirmed. It recognises both as a permanent element of the United Kingdom’s constitutional arrangements, and as part and parcel of our nation’s constitutional fabric, and reflects the importance of the National Assembly and the Welsh Government to political life in Wales.
The Silk commission recommended that it be recognised that the National Assembly for Wales is permanent for as long as that is the will of the majority of people in Wales. In the St David’s day agreement, the Government gave an undertaking to enshrine that commitment in legislation, which we are delivering in clause 1; we did the same for the Scottish Parliament and the Scottish Government in the Scotland Act 2016. I think it fair to say that most Members welcome that certainty.
New section 92A also provides that the Assembly and the Welsh Government are not to be abolished except on the basis of a decision by the people of Wales voting in a referendum. I hope that such a referendum will not be forthcoming, but I think it important to recognise that the decision on whether we have a Welsh Assembly and a Welsh Government is a decision for the people of Wales, to be made by them.
New section 92B underpins the commitment to permanence by recognising that there is a body of Welsh law made by the Assembly and Welsh Ministers that forms part of the law of England and Wales. It is important that we recognise that in statute—which we are doing for the first time—while also recognising the elements that are common to England and Wales. Clause 1 is a declaratory statement, but its recognition of the contribution made by the Assembly and Welsh Ministers to the law of England and Wales is important none the less. Meanwhile, the Justice in Wales working group of officials that I mentioned earlier will consider what changes are necessary to reflect the distinctiveness of Wales within the administrative arrangements for justice, and, as I have said, I expect a report in the autumn.
Amendment 23, tabled by the hon. Member for Dwyfor Meirionnydd, seeks to broaden the scope of the commitment given in relation to the convention about Parliament’s legislating on devolved matters by removing the word “normally”. The commitment in clause 2 that Parliament will not normally legislate with regard to devolved matters without the consent of the Assembly reflects the current convention on legislative consent. We gave a commitment to put that convention on a statutory footing in the St David’s day agreement, and that is what clause 2 does. The clause is also in line with the provision made in relation to the Scottish Parliament in the Scotland Act 2016. Since the convention was established, a legislative consent motion has always been sought before Parliament has passed legislation for Wales in relation to devolved matters. This is part of the normal working arrangements between the UK Government and the Welsh Government and we expect it to continue, but to remove “normally” from the clause would fundamentally change the convention. The “not normally” element of both the convention and clause is essential as it acknowledges parliamentary sovereignty and, within the clause, signals to the courts that this clause is not intended to be subject to adjudication.
Liz Saville Roberts
I am very grateful for the opportunity to close this debate, Sir Alan. I will restrict my comments to amendments 5 and 7 on jurisdiction, although I appreciate the comments the Under-Secretary made about the areas that he will reconsider. I intend to withdraw amendment 17 and to divide the Committee only on amendment 5.
In my opening speech, I referred to the arguments about divergence that are made against separate legal jurisdictions, but the overriding need to maintain a single legal jurisdiction leads to many of the complications and areas that cause a lack of clarity in the Bill.
Other issues were raised during the debate. The hon. Member for Torfaen (Nick Thomas-Symonds) made much of somewhat speculative cross-border cases. It is evident that Hadrian’s wall is no more a barrier to the functioning of law in the United Kingdom now than Offa’s Dyke would be in the future. It is effectively an argument for the right of Welsh lawyers to practise in Bristol, which is a very worthy cause but not what we are here to discuss.
Nick Thomas-Symonds
It was not so much speculation as experience that I was drawing upon. My point was not about lawyers, but about the uncertainty that would be created for my constituents and others by such cross-border cases if there were different jurisdictions.
Liz Saville Roberts
That very question is dealt with across the land border between Scotland and England. There is also a tradition in respect of Scotland and Northern Ireland.
I felt that Labour was almost clutching at straws to find ways to disagree with what Plaid Cymru was proposing. Indeed, our amendment 5 uses the very words proposed by the Labour Welsh Government.
I reiterate what the hon. Member for Ceredigion (Mr Williams) said: the issue of jurisdiction will not go away and we will continue discussing it in the future. It is an argument about gradualism that we have here today. We know that a separate body of Welsh law is developing, and as the Welsh Assembly matures, that body will grow. These questions cry out for an answer in the shorter term, rather than this piecemeal approach.
In closing, the historical realities of Northern Ireland and Scotland are indeed different from that of Wales, but we are making the historical reality of Wales today in this Committee and we should be proud of what we achieve. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 5, page 2, leave out lines 1 to 6 and insert—
“Part 2B
Separation of the Legal Jurisdiction of England and Wales
Introductory
92B New legal jurisdictions of England and of Wales
The legal jurisdiction of England and Wales becomes two separate legal jurisdictions, that of England and that of Wales.
Separation of the law
92C The law extending to England and Wales
(1) All of the law that extends to England and Wales—
(a) except in so far as it applies only in relation to Wales, is to extend to England, and
(b) except in so far as it applies only in relation to England, is to extend to Wales.
(2) In subsection (1) “law” includes—
(a) rules and principles of common law and equity,
(b) provision made by, or by an instrument made under, an Act of Parliament or an Act or Measure of the National Assembly for Wales, and
(c) provision made pursuant to the prerogative.
(3) Any provision of any enactment or instrument enacted or made, but not in force, when subsection (1) comes into force is to be treated for the purposes of that subsection as part of the law that extends to England and Wales (but this subsection does not affect provision made for its coming into force).
Separation of the Senior Courts
92D Separation of Senior Courts system
(1) The Senior Courts of England and Wales cease to exist (except for the purposes of section 6) and there are established in place of them—
(a) the Senior Courts of England, and
(b) the Senior Courts of Wales.
(2) The Senior Courts of England consist of—
(a) the Court of Appeal of England,
(b) the High Court of England, and
(c) the Crown Court of England, each having the same jurisdiction in England as is exercised by the corresponding court in England and Wales immediately before subsection (1) comes into force.
(3) The Senior Courts of Wales consist of—
(a) the Court of Appeal of Wales,
(b) the High Court of Wales, and
(c) the Crown Court of Wales, each having the same jurisdiction in Wales as is exercised by the corresponding court in England and Wales immediately before subsection (1) comes into force.
(4) For the purposes of this Part—
(a) Her Majesty’s Court of Appeal in England is the court corresponding to the Court of Appeal of England and the Court of Appeal of Wales,
(b) Her Majesty’s High Court of Justice in England is the court corresponding to the High Court of England and the High Court of Wales, and
(c) the Crown Court constituted by section 4 of the Courts Act 1971 is the court corresponding to the Crown Court of England and the Crown Court of Wales.
(5) References in enactments or instruments to the Senior Courts of England and Wales have effect (as the context requires) as references to the Senior Courts of England or the Senior Courts of Wales, or both; and
(6) References in enactments or instruments to Her Majesty’s Court of Appeal in England, Her Majesty’s High Court of Justice in England or the Crown Court constituted by section 4 of the Courts Act 1971 (however expressed) have effect (as the context requires) as references to either or both of the courts to which they correspond.
92E The judiciary and court officers
(1) All of the judges and other officers of Her Majesty’s Court of Appeal in England or Her Majesty’s High Court of Justice in England become judges or officers of both of the courts to which that court corresponds.
(2) The persons by whom the jurisdiction of the Crown Court constituted by section 4 of the Courts Act 1971 is exercisable become the persons by whom the jurisdiction of both of the courts to which that court corresponds is exercisable; but (despite section 8(2) of the Senior Courts Act 1981)—
(a) a justice of the peace assigned to a local justice area in Wales may not by virtue of this subsection exercise the jurisdiction of the Crown Court of England, and
(b) a justice of the peace assigned to a local justice area in England may not by virtue of this subsection exercise the jurisdiction of the Crown Court of Wales.
92F Division of business between courts of England and courts of Wales
(1) The Senior Courts of England, the county courts for districts in England and the justices for local justice areas in England have jurisdiction over matters relating to England; and (subject to the rules of private international law relating to the application of foreign law) the law that they are to apply is the law extending to England.
(2) The Senior Courts of Wales, the county courts for districts in Wales and the justices for local justice areas in Wales have jurisdiction over matters relating to Wales; and (subject to the rules of private international law relating to the application of foreign law) the law that they are to apply is the law extending to Wales.
92G Transfer of current proceedings
(1) All proceedings, whether civil or criminal, pending in any of the Senior Courts of England and Wales (including proceedings in which a judgment or order has been given or made but not enforced) shall be transferred by that court to whichever of the courts to which that court corresponds appears appropriate.
(2) The transferred proceedings are to continue as if the case had originated in, and the previous proceedings had been taken in, that other court.”—(Liz Saville Roberts.)
This amendment replaces the Bill’s proposed recognition of Welsh law with provisions to separate the legal jurisdictions of England and of Wales, as drafted by the Welsh Government.
Question put, That the amendment be made.
The Temporary Chair (Sir Alan Meale)
With this it will be convenient to discuss the following:
Amendment 28, in clause 6, page 7, line 2, leave out paragraph (b) and insert—
“(b) for ‘The Secretary of State may by order provide for the poll at an ordinary general election to be” substitute “The Presiding Officer may propose that the poll at an ordinary general election is.’”
The Bill as drafted transfers the power to vary the date of an ordinary general election from the Secretary of State to Welsh Ministers. The amendment transfers the power to the Presiding Officer of the National Assembly for Wales.
Amendment 29, page 7, line 2, at end insert—
“(7A) Leave out subsection (2) and insert—
(2) If the Presiding Officer makes a proposal under subsection (1), Her Majesty may by proclamation under the Welsh Seal—
(a) dissolve the Assembly,
(b) require the poll at the election to be held on the day proposed, and
(c) require the Assembly to meet within the period of fourteen days beginning immediately after the day of the poll.”
The amendment inserts provision for the arrangements for varying the date of an ordinary general election. The amendment also extends from seven to fourteen days the period within which the Assembly is required to meet following the day of a poll.
Amendment 30, page 7, line 2, at end insert—
“(7B) In subsection (4) for ‘An order under this section may’ substitute ‘If the Presiding Officer makes a proposal under subsection (1), the Welsh Ministers may by order’”.
The amendment replicates existing provisions in the Government of Wales Act 2006 with a modification resulting from the transfer of the power to vary the date of an ordinary general election to the Presiding Officer.
Amendment 31, page 7, line 6, at end insert—
“(10A) Section 5 of the Government of Wales Act 2006 (Extraordinary general elections) is amended as set out in paragraphs (a) to (d)—
(a) In subsection (1) for “Secretary of State” substitute ‘Presiding Officer’.
(b) In subsection (4) for “Secretary of State” substitute ‘Presiding Officer’.
(c) In subsection (4) for ‘Order in Council’ substitute ‘proclamation under the Welsh Seal’.
(d) In subsection (4) for ‘seven’ substitute ‘fourteen’”.
The amendment inserts a new provision transferring the power to propose the day of an extraordinary general election from the Secretary of State to the Presiding Officer. The amendment also extends from seven to fourteen days the period within which the Assembly is required to meet following the day of a poll.
Clauses 6 and 7 stand part.
The Parliamentary Secretary, Cabinet Office (John Penrose)
Clauses 5 to 7 deal with elections to the Assembly and local government elections in Wales. Clause 5 concerns the power to make provision about Welsh Assembly elections. It flows from the St David’s day agreement, which states that powers relating to elections to the National Assembly for Wales should be devolved. Essentially, the clause gives Welsh Ministers an order-making power to make provision about the conduct of Welsh Assembly elections. It also gives the Secretary of State, subject to the agreement of Welsh Ministers, the power to make regulations to combine the polls at Welsh Assembly elections with UK parliamentary elections and in theory—this will not matter much in future—with European parliamentary elections, too.
Clause 5 substitutes section 13 of the Government of Wales Act with a proposed new section 13. It broadly transfers to Welsh Ministers the power exercised by the Secretary of State to make provision by order about the conduct of Welsh Assembly elections. The new section provides that the powers of Welsh Ministers are aligned with the legislative competence of the Welsh Assembly. It also sets out the scope of the order-making power and makes it clear that it enables provision to be made on a number of matters, including the registration of electors and the limits of election expenses for individual candidates. It also allows Ministers to combine polls: when more than one poll is held on the same day, they will decide how the polls will be administered.
The clause also devolves matters relating to the allocation of regional members at an election, the process for challenging an election and what should happen if there is a vacancy in the Assembly. It also inserts a new section 13A into the 2006 Act that gives the Secretary of State the equivalent power to combine polls at Welsh Assembly elections with UK parliamentary elections and European parliamentary elections. For example, an extraordinary general election for the Assembly could be held on the same day as a general election for the UK Parliament. The exercise of this power by the Secretary of State will be subject to the agreement of Welsh Ministers and subject to the affirmative resolution procedure here in the UK Parliament.
Clause 6 concerns the timing of elections in Wales and implements the St David’s day agreement, which states that while conduct of Assembly elections and local government elections in Wales should be devolved, the Assembly should not be able to decide to hold its elections on the same day as general elections to the UK Parliament, the European Parliament or local government elections in Wales. This aspect of the administration and conduct of Assembly and local elections will therefore remain reserved to the UK Parliament.
By way of background, to date, each general election that has been held to the Assembly—there have been five in total—has been held in a different year from ordinary local elections in Wales. Further, the Wales Act 2014 amended section 3 of the Government of Wales Act 2006 so that ordinary general elections to the Assembly are now held every five years rather than every four. This, and the provision in the Fixed-terms Parliaments Act 2011, which it superseded, avoided the Assembly general election and the UK parliamentary general election clashing in 2015 and will avoid such a clash in 2020, as the next ordinary general election to the Assembly is now scheduled to be in 2021.
The next scheduled local elections in Wales are due to be held in 2017. The Local Authority Elections (Wales) Order 2014, made by Welsh Ministers, provided for the local government election date to be moved by one year in order to avoid a clash with this year’s Assembly election. The clause says that in the event of a clash, Welsh Ministers can make an order specifying the alternative day on which the poll of the ordinary Welsh Assembly general election shall be held. It also transfers the existing power of the Secretary of State to move the date of an Assembly ordinary general election by up to one month to Welsh Ministers, and that where this power is exercised, that new date cannot fall on the same date as a UK parliamentary general election or European parliamentary election.
The clause also includes provisions that prevent local government elections in Wales from being held on the same day as an Assembly general election. If there is a clash, Welsh Ministers can make an order specifying the alternative day for the local government election to held.
Clause 7 ensures co-operation between Welsh Ministers and UK Ministers over the online individual electoral registration digital service for Assembly elections and local government elections in Wales. The Assembly is free to decide on a franchise and a registration process for these elections, but as a practical matter, where the Welsh Government wants changes to the GB-wide Digital Service, they will need the approval of UK Government Ministers to do so.
Stephen Doughty
To clarify, if Assembly Ministers have the ability to change the provisions about the registration of electors and potentially to move to an automatic system of registration, which ensures that we have people registered, unlike the current system, how will that work with future UK parliamentary elections or other elections? Will they then be using the system that the Welsh Ministers have decided on or will there be a different register for those elections?
John Penrose
As the hon. Gentleman will be aware, we already run two very heavily overlapping but subtly different electoral registers for local council elections and parliamentary elections. There are different qualifications. For example, an EU national who currently lives in a British city might be eligible to vote in a local council election and not in a UK parliamentary election, so we have two heavily overlapping but not identical registers. The same applies to Scottish parliamentary elections to Holyrood. That will continue, and should the Cardiff Assembly decide that it wants to change things in some way it will have the competence to do so for the electoral roll for Cardiff Assembly elections, but it will not have the competence to change the registration process or scope for UK parliamentary elections as that is a reserved matter to be decided in this place. I hope that clarifies things for the hon. Gentleman.
Stephen Doughty
It helps to clarify things in one respect, but does the Minister not accept that there could end up being a very significant discrepancy in the numbers registered for an Assembly election versus a UK parliamentary election? The public do not understand these things in the context of the complexities of all the registers and lists; if they have registered to vote, they would expect to be able to vote in all elections. Given the huge discrepancy between registration for UK parliamentary elections and registration for the EU referendum—and given the fact that the Boundary Commission is not using the figures for the EU referendum—does he not accept that there might be a huge discrepancy in this regard too?
John Penrose
There has been a difference for many years between local election registers and parliamentary election registers. That is a very long-standing principle. We are not changing that. It would be possible, should the Welsh Assembly so decide, to make further changes and enfranchise other groups of people whom we would not necessarily want to enfranchise for UK parliamentary elections. At the moment, however, there is already a difference between the two electoral registers. There has been for a very long time. Nothing about this will change any of that, but in future it will be up to the Welsh Assembly to decide whether it wants to make further changes that might narrow or widen the existing long-standing differences.
Geraint Davies (Swansea West) (Lab/Co-op)
The Minister seems to be saying that the Welsh Government should have the right to displace coincidental elections, but that they do not have to. He seems to be saying that under the rules a general election, an Assembly election and even a European election could occur on the same day. At the same time, he is saying that it would be delayed by only a month. In the last such episode, we saw political parties in Wales campaigning up to the Assembly elections and not really mentioning Europe, but then we had only six weeks to persuade Wales that it was better off in. That was not enough. Is a month long enough?
John Penrose
I fear that I was not clear enough. I am saying that there are explicit provisions in the Bill to prevent the elections the hon. Gentleman just mentioned from happening on the same day. It will not be possible to hold an Assembly general election, for example, on the same day as a UK parliamentary general election. That is explicitly prevented in the Bill and if some future accident of diary meant that the two things were to fall on the same day, we are talking about the powers for Welsh Ministers to move their date, should it be necessary, by up to a month, and about their having that power rather than the Secretary of State.
Geraint Davies
On the second point, one question would be whether a month is long enough. It would seem to me that it is not. Secondly, it seemed to me that the Minister said that there are powers to move the dates but that Welsh Ministers are not obliged or required to move them. Could not the Welsh Assembly Government choose to have the two elections on the same day under this provision?
John Penrose
I am not saying what the hon. Gentleman fears I am saying. I can reassure him on that. The power to move things by a month already exists. It just happens to be vested in the Secretary of State. All we are seeking to do here, as part of the St David’s day agreement and following the principles set out in it, is to devolve that power from the Secretary of State to Welsh Ministers. We are not seeking to change the power in one direction or another; we are just making sure that it is being exercised more locally in Cardiff rather in than Westminster. It continues to be legally the case that the Assembly elections and the UK parliamentary elections cannot happen on the same day, so it would only be a question of moving some of these elections around in that case—although there might be other reasons why one might want to—if at some point, many decades hence, an accident of the diary meant that the two happened to coincide. In order to comply with the constraint, they cannot happen on the same day and one would have to move, whereupon this power would apply.
I was talking about the online voter registration system and the way that that needs to be adjusted, if it is to be adjusted, by mutual consent. As I said, the Assembly is free to decide on the franchise and the registration process for Assembly elections, but as a practical matter, where the Welsh Government want changes to the Great Britain-wide Digital Service, they will need the approval of UK Ministers to do so. That is because the Digital Service is a series of interconnecting digital applications, including online voter registration, for people living in England, Wales and Scotland, as well as British citizens resident overseas. We all need to ensure that any changes to the franchise or registration process for Welsh Assembly and local government elections in Wales do not adversely impact on voters in other parts of the UK or abroad.
With these considerations in mind, the clause allows Welsh Ministers to make regulations concerning the Digital Service in relation to Assembly and local government elections in Wales with the agreement of a Minister of the Crown.
Hywel Williams
I apologise to the Committee for my voice today. My daughter Enlli came back from nursery the other day with a slight tickle, and that has led to world war three breaking out in my larynx, unfortunately.
My hon. Friends and I support the motion that clauses 5, 6 and 7 stand part of the Bill, preferably along with our amendments 28 to 31 to clause 6. These are probing amendments and I would be interested in hearing the Minister’s response.
As the Assembly has grown in competence, it is reasonable that the power over the timing of its own elections, as well as powers over the conduct of those elections and the registration of electors, should be devolved. Any ambitious democratic body would surely seek such powers. The amendments in this group, as Members on both sides of the Committee will be aware, were originally drafted and published by the office of the Presiding Officer of the National Assembly. In a letter dated 30 June, the Presiding Officer set out that the aim of this set of amendments is to
“deliver a constitutional settlement that is workable, clear and provides a firm foundation for the Assembly’s future.”
She noted in the same letter that these amendments were informed by evidence given during pre-legislative scrutiny of the previous draft Wales Bill to the then Assembly’s Constitutional and Legislative Affairs Committee, and were equally informed by the Assembly’s experience of working under the current settlement.
Amendments 28 to 31 would transfer the power to vary the date of an ordinary general election, as well as the power to fix the date of extraordinary Assembly elections, from the Secretary of State directly to the Presiding Officer of the National Assembly, rather than to Welsh Ministers. The amendments are underpinned by the principle that the Assembly should have powers over its own internal affairs.
It is worth pointing out, as the context, that the Fixed-term Parliaments Act 2011 set a precedent for moving decision making over the administration of elections away from the Government. Our amendments in this group, though probing, have this same underlying principle at their root—that is, that powers over determining the date of Assembly elections should be moved away from the Government. To our mind, this power should not be conferred on the Executive, so as to remove the possibility of any accusations of political interference. Were this change to be made by our amendments, it would add to the competence and responsibility of the legislature, which should surely be welcomed by all parties. It would also increase public confidence in the independent nature of election management in Wales.
As drafted, the Bill transfers the power to vary the date of an ordinary Assembly general election from the Secretary of State to Welsh Ministers. This is in contrast to the system operated in Scotland, whereby this power is bestowed on the Presiding Officer. Amendment 28 would put the Welsh Assembly’s arrangements on the same footing. Amendment 29 relates to conferring powers over varying the date of an ordinary general election. Although the Bill devolves powers over electoral arrangements, it does so in an unnecessarily impractical way.
John Penrose
Can the hon. Gentleman expand on his thinking about why those changes would be helpful? There are different approaches, as he will appreciate. Does he believe that there is anything unclear about the criteria that must be satisfied under the Fixed-term Parliaments Act as to whether a majority has been achieved in an Assembly or Parliament, or does he have other concerns about potential political game playing? Does he believe that the measure might put the Presiding Officer in a politically contentious position?
Hywel Williams
I have considered that, and it is my opinion and that of the Presiding Officer that it would not put her in that difficult position. These amendments are hers, after consideration. The point about parity and similarity with Scotland is persuasive, to our minds.
Jonathan Edwards
Is it not the case that under the Bill as drafted, the Welsh Government could act unilaterally if they so decided, whereas if the spirit of the amendments were accepted, adapted by the Government and incorporated in the Bill, the power would reside with the Presiding Officer, but only with the support of the legislature, which means that there would have to be cross-party support before she acted?
Hywel Williams
I take my hon. Friend’s point entirely. The four Assembly elections held so far have not produced a majority Government, so the consent of the Assembly collectively would be required in that situation. I am not casting any aspersions on the motives of Governments in Cardiff, London or anywhere else, but the amendment would remove any suspicion of political advantage being sought.
By adding a strict seven-day timeframe, during which period the Assembly must meet and elect a Presiding Officer, the Bill once again puts Wales on an unequal footing with Scotland. The Scottish Parliament is allowed 14 days to carry out this function. Given the history of the outcomes of elections to our Assembly, as I said a moment ago, and the obvious consequence that time has been required for the parties to discuss all manner of arrangements, seven days for this particular exercise seems unreasonable. That is why amendment 29 extends this period to 14 days for the Welsh Assembly.
Amendment 30 amends the Government of Wales Act 2006 so as to confer powers over varying the date of an ordinary general election to the Presiding Officer, as opposed to transferring this power directly to Welsh Ministers under the Bill as currently drafted. Finally, amendment 31 amends the 2006 Act so as to ensure that powers over proposing the date of an extraordinary general election are given to the Presiding Officer. The amendment once again extends the timeframe during which the Assembly is required to meet following an election to 14 days, thus establishing parity with Scotland.
These amendments are meant to probe and promote discussion. We do not intend to press them to a vote.
John Penrose
I thank the hon. Gentleman for laying out his case so clearly and so helpfully. He is right to point out that the provisions in the Bill seek to mimic the existing provisions to which his four amendments relate and to devolve the existing arrangements from the Secretary of State down to Welsh Ministers. However, he is also right to point out that this is not quite the same thing as has already happened in the parallel situation in Scotland, where the powers were devolved not to Scottish Ministers but to the Presiding Officer. We therefore already have in British constitutional arrangements two parallel but subtly different approaches.
The reason I asked my question of the hon. Gentleman is that there are competing views on this issue. I am not sure that either is necessarily automatically better or worse than the other, but there are different strengths and weaknesses, and different pros and cons, to both. Some people are concerned that devolving these powers to the Presiding Officer could put them in a politically contentious position. I do not think that that is the view of the Scottish Presiding Officer, the Welsh Presiding Officer or many politicians in the Welsh Assembly, but some people would certainly cleave to it—perhaps here, for example.
Equally, the question is whether the criteria that have to be satisfied for a fixed-term Parliament to be altered in length and for an early, extraordinary election to be called, are clear. For example, for this Parliament, the Fixed-term Parliaments Act says that we either have to have a Government who cannot command a majority and who, over two weeks, have failed to find one, or we have a two-thirds majority. Those are fairly clear criteria, so there is relatively little opportunity for political game-playing, either by Ministers or a Presiding Officer.
Jonathan Edwards
I am grateful to the Minister for the tone of his reply and for his clarification. Having read up on the potential implications of the Brexit situation, whereby the new Prime Minister may decide to call a snap election, I wonder whether it would be possible, under the terms of the Fixed-term Parliaments Act, for the new Prime Minister to call a vote of no confidence in him or herself, therefore triggering an election.
John Penrose
If the hon. Gentleman is not already in his party’s Whips Office, he probably should be, because that is a proper Whips Office wheeze. Were such a thing legally possible—I defer to others to decide whether it would be—I do not think it would pass the test of democratic credibility. Any Government who sought to precipitate their own downfall through that kind of mechanism—voting against themselves and saying they were not competent—would, as a practical matter, probably be judged quite harshly by voters in the polls. However, I appreciate that we are talking about theoretical circumstances, and we will have to leave that issue to the future to decide.
The point I was trying to make is that there are legitimate arguments on both sides, and both systems—one here, and one in Scotland—already persist quite happily side by side in British constitutional arrangements, and the question is now being raised in relation to the Welsh Assembly. I do not want to say that one system is inherently legitimate or illegitimate, or that one is necessarily better or worse than the other. It has to be a question of what is acceptable to local decision makers—in this case, Assembly Members and their officials in the Welsh Assembly.
We are therefore sympathetic to taking this issue away and thinking about it carefully. I thank the hon. Gentleman for raising it, and he makes a thought-provoking case. If he agrees, I would be happy to take his amendments away—I think he indicated they were probing amendments—to see whether we can take this issue forward or at least develop his ideas and thinking a little further.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clauses 6 and 7 ordered to stand part of the Bill.
Clause 8
Super-majority requirement for certain legislation
Hywel Williams
I beg to move amendment 32, page 10, line 3, leave out subsections (5) and (6).
The amendment removes the requirements on the face of the Bill for the National Assembly for Wales’ Standing Orders to include requirements for the publication of a statement in Welsh and English.
Mr Speaker
With this it will be convenient to discuss the following:
Clauses 8 to 11 stand part.
Amendment 33, in clause 12, page 12, line 24, at end insert—
“(a) for a sum paid out of the Welsh Consolidated Fund not to be applied for any purpose other than that for which it was charged or (as the case may be) paid out”.
The amendment sets out that Welsh legislation must provide that the Assembly has to authorise any drawing from the Consolidated Fund and that such funds can only be utilised for the purposes for which they were authorised.
Clauses 12 to 14 stand part.
Amendment 38, in clause 15, page 14, line 3, leave out “translation of references” and insert “consequential provision”.
The amendment replaces “translation of references” with “consequential provision”, to reflect the overall effect of Clause 15.
Amendment 39, page 14, line 5, at end insert—
“( ) Cynulliad Cenedlaethol Cymru,”.
The amendment clarifies that any references in legislation, instruments and documents to “Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name, in Welsh.
Amendment 40, page 14, line 6, at end insert—
“( ) Comisiwn Cynulliad Cenedlaethol Cymru,”.
The amendment clarifies that any references in legislation, instruments and documents to “Comisiwn Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name, in Welsh.
Amendment 41, page 14, line 7, at end insert—
“( ) Deddfau Cynulliad Cenedlaethol Cymru, or”.
The amendment clarifies that any references in legislation, instruments and documents to “Deddfau Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name, in Welsh.
Amendment 42, page 14, line 11, after “to”, insert “Cynulliad Cenedlaethol Cymru,”.
The amendment provides that if the Assembly changes its name then any reference in legislation, instruments and documents to the “Cynulliad Cenedlaethol Cymru” is to be read as a reference to the new name.
Amendment 43, page 14, line 12, after first “Wales,” insert “Comisiwn Cynulliad Cenedlaethol Cymru,”.
The amendment provides that if the Assembly changes its name then any reference in legislation, instruments and documents to the “Comisiwn Cynulliad Cenedlaethol Cymru” is to be read as a reference to the new name.
Amendment 44, page 14, line 12, after “Commission,” insert “, Deddfau Cynulliad Cenedlaethol Cymru”.
The amendment provides that if the Assembly changes its name then any reference in legislation, instruments and documents to “Deddfau Cynulliad Cenedlaethol Cymru” is to be read as a reference to the new name.
Amendment 45, page 14, line 17, after “name”, insert
“in Welsh or English (as the case may be).”
The amendment clarifies that the clause applies to any new names listed in the clause be they in English or Welsh.
Clauses 15 and 16 stand part.
Amendment 14, in clause 17, page 15, leave out lines 29 to 31.
This amendment and amendment 15 make provision for the definition of devolved competence in Clause 17 to be applied for the purpose of the amendments made to Clause 19 by amendment 13.
Amendment 15, page 15, line 35, at end insert—
“( ) In this section and section 58B ‘within devolved competence’ and ‘outside devolved competence’ are to be read in accordance with subsections (7) and (8); but for the purposes of section 58AB no account is to be taken of the requirement to consult the appropriate Minister in paragraph 11(2) of Schedule 7B.”
See the explanatory statement for amendment 14.
Clauses 17 and 18 stand part.
Amendment 13, in clause 19, page 17, line 27, at end insert—
“(2) After section 58A of that Act (inserted by section 17(1) of this Act) insert—
‘58B Transfer of functions within devolved competence
(1) Functions conferred on a Minister of the Crown by virtue of any pre-commencement enactment or pre-commencement prerogative instrument, so far as they are exercisable within devolved competence by a Minister of the Crown, are to be exercisable by the Welsh Ministers instead of a Minister of the Crown.
(2) Provision for a Minister of the Crown to exercise a function with the agreement of, or after consultation with, any other Minister of the Crown ceases to have effect in relation to the exercise of the function by a member of the Welsh Government by virtue of subsection (1).
(3) In this section “pre-commencement enactment” means—
(a) an Act passed before or in the same session as this Act and any other enactment made before the passing of this Act;
(b) an enactment made, before the commencement of this section, under such an Act or such other enactment; “pre-commencement prerogative instrument” means a prerogative instrument made before or during the session in which this Act was passed.’”
Clause 19 makes provision about transfer of Ministerial functions. The amendment provides for the transfer of all functions currently exercisable by Ministers of the Crown within devolved competence to the Welsh Ministers.
Clause 19 stand part.
That schedule 3 be the Third schedule to the Bill.
Amendment 16, in clause 20, page 18, line 8, at end insert—
“(ab) section 58B,”.
Clause 20 amends the power in section 58 of the Government of Wales Act 2006 to make provision by Order in Council for the transfer of functions to the Welsh Ministers to authorise provision to be made in respect of “previously transferred functions”. This amendment extends the definition of “previously transferred functions” to include functions transferred by the general transfer proposed by amendment 13.
Clauses 20 and 21 stand part.
New clause 2—Welsh thresholds for income tax—
“(1) Part 4A of the Government Wales Act 2006 is amended as follows.
(2) In section 116A(1)(a) (overview), after ‘of’ insert ‘and thresholds for’.
(3) After section 116D insert—
‘116DA Power to set Welsh thresholds for Welsh taxpayers
(1) The Assembly may by resolution (a “Welsh threshold resolution”) set one or more of the following—
(a) a Welsh threshold for the Welsh basic rate,
(b) a Welsh threshold for the Welsh higher rate,
(c) a Welsh threshold for the Welsh additional rate.
(2) A Welsh threshold resolution applies—
(a) for only one tax year, and
(b) for the whole of that year.
(3) A Welsh threshold resolution—
(a) must specify the tax year for which it applies,
(b) must be made before the start of that tax year, and
(c) must not be made more than 12 months before the start of that year.
(4) If a Welsh threshold resolution is cancelled before the start of the tax year for which it is to apply—
(a) the Income Tax Acts have effect for that year as if the resolution had never been made, and
(b) the resolution may be replaced by another Welsh threshold resolution.
(5) The standing orders must provide that only the First Minister or a Welsh Minister appointed under section 48 may move a motion for a Welsh threshold resolution.’”
This new clause would allow the National Assembly for Wales to determine the income thresholds at which income tax is payable by Welsh taxpayers.
New clause 3—Income tax receipts—
“(1) Section 120 (destination of receipts) of the Government of Wales Act 2006 is amended as follows.
(2) The Comptroller and Auditor General must certify for each tax year that Her Majesty’s Commissioners for Revenue and Customs have transferred the full amount of income tax paid by Welsh taxpayers in that tax year into the Welsh Consolidated Fund.”
This new clause would require the receipts from income tax paid by Welsh taxpayers to be paid into the Welsh Consolidated Fund.
Hywel Williams
I rise to speak to amendments 32, 33 and 38 to 45. My hon. Friends will seek to catch your eye later, Sir Alan, to speak on the aspects that concern them. I also wish to speak to clause 18 stand part.
Amendment 32 is a technical amendment. Clause 8 provides that Assembly legislation dealing with certain protected matters—the name of the Assembly, who is entitled to vote at Assembly elections, the voting system and so on—would require a super-majority of the Assembly. It requires the Presiding Officer to decide whether an Assembly Bill relates to a protected matter and to state that decision, and I do not disagree with any of that.
However, the clause then requires that that statement be in both English and Welsh and that the form of that statement be dealt with in the Assembly’s Standing Orders. While we agree that such statements should be made in both languages, amendment 32, which is in my name and those of my hon. Friends, would remove those two provisions. It does that for two reasons. First, including them is at odds with much of the rest of the Bill, which recognises the Assembly as a mature legislator and allows it to determine its own internal arrangements rather than what is required by Westminster. Secondly, both Welsh and English are official languages of the Assembly—as someone rather paradoxically put it, English is a Welsh language in that respect—and both must be treated equally. Therefore, providing that the Presiding Officer’s statement must be made in both languages is unnecessary—nugatory.
Amendment 33 seeks to amend clause 12, which inserts a new section into the Government of Wales Act 2006. This would replace the previous arrangements for financial controls and provide that Welsh legislation should make provision for the matters contained within that section, such as accounts to be prepared of their expenditure and receipts by the First Minister or other Ministers who draw sums from the Welsh consolidated fund. We believe that the new section should include basic safeguards in the form of minimum requirements that Welsh legislation should provide for, and that reflect good governance. Section 124 of the Government of Wales Act 2006 currently provides for authorisation by the Assembly. Amendment 33 proposes that funds should be issued from the Welsh Consolidated Fund only in accordance with legislation or authorisation by the Assembly, and can be utilised only for the purposes for which they were authorised. This simple addition to the Bill would improve accountability and responsibility, and it would reflect the provisions for Scotland—that is, section 65 of the Scotland Act 1998.
Amendments 38 to 45 are technical in nature. They amend clause 15, which provides that if the Assembly changes its name, then any reference in legislation, instruments and documents to the “National Assembly for Wales” is to be read as a reference to the new name. This saves having to change each reference to the “National Assembly for Wales”, of which there may be many thousands. However, the clause neglects the fact that Assembly Acts are prepared bilingually, and so references to the Assembly and the commission will be in Welsh and English. Moreover, it does not address the issue of legislation, instruments and documents that refer to “Cynulliad Cenedlaethol Cymru”. The amendment clarifies that any reference in legislation, instruments and documents to “Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name in Welsh.
The same issues arise with regard to any change in the names of the National Assembly for Wales Commission or Acts of the National Assembly for Wales, which are also addressed in the amendment. The heading of the section inserted into the Government of Wales Act 2006 by clause 15 refers to “translation of references”. The amendment would change that to “consequential provision”. That is more appropriate, given the overall effect of clause 15, and avoids confusion between legal translation—that is, consequential provisions—and linguistic translation of references. I look forward to the Minister’s response and hope that he might consider adopting some of these changes on Report.
I now turn briefly to clause 18 stand part. This clause shows the speed of political change. After nearly five years of discussions about Silk and powers for Wales, we are now providing that Wales Acts are relevant to the European Communities Act 1972, although the UK has just voted to leave the EU. Obviously, this provision should remain in the Bill. We are still in the EU, and unpicking EU legislation from our domestic legislation will take many years and will not be easy. There are questions as to how decisions will be taken about which EU legislation remains.
I hope that the UK Government, of whatever stripe, but particularly of a right-wing Conservative complexion, will not take it upon themselves to decide what is, or what is not, relevant to Wales. We have already heard the comments from one Conservative leadership contender at the weekend calling for a “strong Union”, and we suspect that we know what that actually means. We need to know where Wales stands and how these powers will be determined. So-called Henry VIII powers, lying either with the UK Government or with Whitehall bureaucrats, will not be democratically acceptable.
My party, Plaid Cymru, is the official Opposition in Wales and the second largest party after the elections two months ago. The balance of competences review did not consider Wales in particular depth, but, post-Brexit, we must consider the question of which powers should be in Wales’s hands and not those of Westminster. The vote in Wales to leave the EU was not a vote to centralise power in Westminster.
I draw the House’s attention to today’s Assembly debate on a motion standing in the name of our former colleague, Simon Thomas, which states that the Assembly
“believes that following the withdrawal of the UK from the EU, provisions should be made to ensure that all legislation giving effect to EU Directives or Regulations pertaining to areas such as environmental protection, workers' rights, food safety and agriculture are retained in UK and Welsh law unless they are actively repealed by the relevant Parliament.”
The debate will repay close reading.
Whether or not Vote Leave was in a position to make the promises it made, they must be honoured by the Westminster Government because they were the Brexit promises that people voted for. That means additional money for the NHS through the Barnett formula, as well as protecting funding for our farmers and regional and structural funds post-2020.
It is right for clause 18 to remain part of the Bill, as it will be relevant until any official departure from the European Union takes place. However, the clause, like so many others, shows how the Bill has already been overtaken by events and why Wales should have so much more power than it provides. The Bill is far from being a once-and-for-all settlement, and we give notice that we will return to this matter later in this Parliament.
Glyn Davies (Montgomeryshire) (Con)
Thank you, Sir Alan, for calling me to speak on this hugely important Bill. The work leading up to it has played a significant part in my time in politics.
I pay tribute to the shadow Secretary of State for Wales, the hon. Member for Newport West (Paul Flynn). I have a special reason for welcoming him to his position: of all the other Welsh Members of Parliament, I am probably the nearest to being an octogenarian, and his wonderful example gives me promise and ambition for the future. If he can do it, there is no reason why I cannot. I thank him for that, as well as for the great wit with which he has entertained me over many years.
The Bill is wide-ranging. Inevitably, opinions on it will differ and there will be an element of compromise. In his response to earlier amendments, the shadow Secretary of State said that we need to be pragmatic. We all have different opinions, including in my own party. We all, I think, want this Bill to go through, but we need to accept that we are going to have to compromise.
The big compromise that I have to make relates to the fact that the Bill transfers energy powers to the Welsh Government, the idea of which fills me with horror. I would find it difficult to support the Bill, except that the Welsh Government have, disgracefully, already taken unto themselves those powers through their local government responsibilities. That makes the Bill’s transfer of energy powers much less damaging to mid-Wales and much less of an attack on the people of mid-Wales than it would otherwise have been.
The intention behind the Bill is to provide a much more stable, long-lasting and permanent settlement for Wales and to provide clarity on it. I am not sure about the word “permanent”. I do not think it is wise to have a Wales Bill every five years, which is pretty much what we have been doing. This is not permanent: I think we will come back to developing devolution at a pace at which we can bring the people of Wales with us. Plaid Cymru Members spoke earlier about the judicial position. When the body of Welsh law is no longer tiny and grows to be substantial, we may have to revisit the issue in the future, and the same may be true of other issues that we have not entirely foreseen.
Susan Elan Jones
I speak in support of amendment 11 on income tax powers. I am interested in much of the Bill, but during the past week, in the aftermath of the Brexit result, a thought has come to me. I am now absolutely determined that, like highly calorific chocolate, constitutional experts are to be valued, savoured and enjoyed, but not indulged in very frequently. I spent the referendum evening sitting around a table in a television studio in the company of a constitutional expert—I would argue that he is probably one of Wales’s finest. As we looked at the results coming in, many of them fairly miserable, the constitutional expert sprang to life and said, “Do you realise the impact of that on parts of the Wales Bill? Do you realise its impact on this and on that?” I sat there thinking that I was a little more interested about potential job losses at Airbus, what would happen to farms and all the rest of it.
Let us get back to the amendment. I have always supported a referendum on devolving income tax. Our amendment 11 would do something really practical. We argue that income tax powers should not be devolved to the Welsh Assembly until a full fiscal framework for Wales has been approved by both Houses of Parliament and the Welsh Assembly. That is an agenda of total respect.
I will tell the House why that is important. We all sit around discussing what it means to be Welsh, our patriotism and our different interpretations of it, often with the view that we have the one complete, absolute truth on the issue. But there is one thing that matters more and more, especially in the aftermath of the Brexit result. I can think of a million ways in which every single one of us in this Chamber could express our Welsh patriotism, but there is one way we can never do so: by supporting a deal under which ordinary Welsh people become poorer. That must be our litmus test, and that is why we must not only vote on this issue in both Chambers of this House, but we must also place it in the hands of our Welsh National Assembly.
I agree with part of what the hon. Member for Montgomeryshire (Glyn Davies) said, but it is a pity that he has an obsession about never wanting a Labour Government in Wales again. Last week the Secretary of State said some interesting and thoughtful things on television in the wake of the EU referendum.
Glyn Davies
Let me clarify my view on that. We should not be in a position where we never have a Labour Government in Wales from time to time, but I object to the idea that we should never have anything but a Labour Government, and the assumption that Wales must always have a Labour Government or be led by Labour. We need variation—let us have somebody else, and then Labour can come back.
Susan Elan Jones
It does not much matter what I or the hon. Gentleman think—it has far more to do with what the electorate in Wales think. In all seriousness, this is about how we get the best deal for people in Wales, and for those of us who have never had an ideological objection to the Assembly having tax-raising powers, what we are proposing is sensible, workable, and goes with the grain of the majority of opinion in the Assembly, in this House and across Wales. The hon. Gentleman will probably disagree with me, but he said something interesting about how the Welsh Assembly, which was elected in 1997 with a small majority, has turned into something that very few people in Wales would want to get rid of, and quite right too. I think that this change and incremental increase in devolution, and the support for further fiscal powers, is right and proper, and it is time that the House supported it.
Liz Saville Roberts
I rise to speak against clause 10 and the imposition of an obligation on the Assembly to undertake and publish justice impact assessments for Assembly Bills. Such assessments are intended to set out the potential impact of a Bill’s provisions on the justice system in England and Wales, and specifically on the Crown Prosecution Service, the Serious Fraud Office, courts and prisons. The obligation to undertake justice impact assessments—or justice impact tests—in Westminster Departments is voluntary in the sense that the UK Ministry of Justice provides guidance as a tool to help policy makers find the best way to achieve their policy aim. If the guidance approach is appropriate for Westminster, why should it be deemed acceptable to place an obligation on the Assembly by means of its own Standing Orders?
Mr Mark Williams
I share the hon. Lady’s concerns over clause 10. In many ways the Bill includes a welcome approach for the Assembly to regulate its own affairs, so does she agree that this measure is inconsistent with the rest of the Bill?
Liz Saville Roberts
It is also being imposed on the Assembly through its own Standing Orders. In that same spirit, surely the Standing Orders of the Assembly should be a matter for Assembly Members alone, especially bearing in mind that the Bill trumpets its credentials as the harbinger of a new model of reserved powers. No other legislature in the UK is denied the freedom to decide on its own legislative process and Standing Orders. There is nothing of the kind in Northern Ireland, Scotland or England, and nothing currently in Wales. No reciprocal arrangement is in place whereby UK Government Bills are required—voluntarily or otherwise— to assess what impact they will have on Assembly responsibilities in Wales. What impact, for example, will the building of the super-prison in Wrexham have on public service provision in the area, the national health service and transport?
Stephen Doughty
I wish to speak on clause 16 and the referendum on income tax powers. I preface my remarks by saying that I have always been an instinctive pro-devolutionist. I worked in the Assembly when it first began and I supported its establishment. I would go further than some aspects of the Bill in devolving powers and giving responsibilities to the Welsh Government. I support, as the First Minister has, a federal UK. I would like a constitutional convention and a written constitution that properly settles the duties and responsibilities of the respective Administrations across these islands. This is even more crucial in the aftermath of the EU referendum. I genuinely fear for the future of the UK at the moment. I have always considered myself a proud Welshman, but also proudly British and proudly European. I will continue to do so, but we have unleashed a whole series of very difficult questions in the aftermath of the vote that make our deliberations on the Bill all the more important.
David T. C. Davies
Does the hon. Gentleman agree that the citizens of Switzerland and Norway are Europeans and may be proud to be European? They are just as European as anyone else in Europe, and he would be just as European as a Norwegian or a Swiss person is after Brexit takes place.
Stephen Doughty
I am not going to be taken down that rabbit hole. I want to concentrate on the details of the Bill. I make my point because, despite having those views and pro-devolutionary instincts in supporting the most of the Bill—as I said, I am even willing to go further—I have also always believed in applying two tests to proposals put before us.
First, whatever is proposed must deliver better outcomes for the people of Wales. It is absolutely crucial that we look at this in the context of our unique history. Our history is not the same as that of Scotland, our legal history is not the same as that of Scotland, and the nature of our polity and development is not the same as that of Scotland. There are distinct and unique things about Wales that we should consider that do not apply to Scotland. We always have to ask: is this the right solution? I apply that particularly to issues such as policing, the justice system and criminal jurisdiction. I am not saying that they should not be looked at in the future, but I believe in a practical test of whether they will deliver better outcomes. It is not just about sticking a dragon on something and saying it will be done better; this has to be approached in a very cold and hard-headed way.
Secondly, I have always believed in the consent of the Welsh people when making major constitutional change. I support very much the intent of amendment 11, which I will support if it is pressed to a Division. We have considered the fiscal framework for Wales before moving forward with any devolution of income tax powers. There is a fundamental principle at stake here. Clause 16 would remove the requirement for a referendum. We have had two referendums in this country, one in Wales and one in Scotland. In Scotland, the question related to the devolution of income tax powers. It was the second question in the Scottish referendum of 1997 and it passed by 63.48%. The Scottish people were asked that question and voted for it separately from the question on whether there should be a Scottish Parliament. In Wales, we had a referendum on 3 March 2011 on a much lesser question, which was whether the Assembly should be able to make laws on the areas for which it already has responsibility. I did not think we needed that referendum at all. It was obvious that Wales should have had primary law making powers—it should have had them from the beginning. I always thought it absurd, sitting there in the early days of the Assembly discussing odd details of secondary legislation, that we did not have that primary law making power, so I am glad we have moved in that direction in terms of the Assembly’s core competences.
Whether or not people agree with devolving income tax powers, the question is a very fundamental one that changes the nature of the settlement for the Assembly and the Welsh Government. The question should be put to the Welsh people. I think it would pass in the current context, despite what some people say. Many in Wales would want to see it pass, and it should be put to them. It is a matter of precedent: we have had the two previous referendums, but we are not getting one on this question. I cannot understand why. We are not giving the Welsh people a voice. Whatever side people were on in the referendum campaign, it was crucial that the British had their say on such a fundamental decision.
I think that clause 16 is a mistake, but I will support our amendment 11, which goes fundamentally to the question of getting a fair fiscal settlement for Wales.
Jonathan Edwards
I rise primarily to speak to new clauses 2 and 3 in my name and those of my hon. Friends the Members for Arfon (Hywel Williams) and for Dwyfor Meirionnydd (Liz Saville Roberts). I intend to push them to a vote, with the leave of the Committee, but I understand that that will take place on the second day of the Committee, as opposed to today.
Amendment 32 is a technical amendment that should not be controversial. The Welsh language has thankfully gained official status in Wales. The National Assembly is a bilingual body and official statements must be made in both languages. There is, therefore, no need for the Bill to include such a provision. I support the principle of clause 8, which essentially means that before any changes can be made to the new constitutional powers devolved in the Bill, the support of two thirds of Assembly Members would be required. This would essentially require cross-party consensus to change the name of the Assembly, people’s entitlement to vote, the electoral system, constituency numbers and the number of elected representatives in the National Assembly.
I look forward to a swift consensus developing around renaming the National Assembly “the Senedd”, which would help to create clearer boundaries between the legislature and the Executive. Despite previous changes to the Welsh constitution, far too many people and commentators cannot distinguish between the work of the Executive, the Welsh Government, and the work of the legislature, the National Assembly. I also look forward to a consensus developing around votes for 16-year-olds. If an individual is old enough to start full-time employment or serve in the armed forces, they must have a say over who gets to form the Government. Extending the franchise to 16-year-olds during the Scottish referendum was a huge success, and we should aim to replicate it in Wales, not least because it would mean only eight more years before my daughter can vote for herself, as opposed to filling in my ballot paper—following strict instruction, I hasten to add.
Stephen Doughty
The hon. Gentleman and I disagree on many issues, but on this we are in firm agreement. I have heard from many constituents, particularly when visiting schools and colleges, that young people want the franchise extended to 16 and 17-year-olds. I spent a lot of time campaigning on the Scottish referendum, and it was clear to me that, if we engage younger people in the political process, not only can they take part fully in the debate but they can add to it. We should all support that.
Jonathan Edwards
I am grateful for that intervention. I think that we can move swiftly on this in Wales and build a consensus in the Assembly. It would be a very progressive move, as the hon. Gentleman has just outlined.
Mr Mark Williams
Did the hon. Gentleman also detect from polls in the last fortnight a healthy appetite among 16 and 17-year-olds for participation in the decision that we, as adults, were able to make and which they, as young people, should have been able to make?
Jonathan Edwards
That is another valid dimension. It was clear that the younger generations were very much in favour of remaining a part of the EU. The morning after the referendum, I was the guest speaker at the graduation service of Coleg Sir Gâr, the local further education college, and in particular the Gelli Aur campus, which specialises in agriculture courses. I started my speech by apologising to those generations of young people—mostly 16 and 17-year-olds—who had been unable to participate in the referendum but for whom the decision made on their behalf will arguably leave a far greater legacy.
Albert Owen (Ynys Môn) (Lab)
A consensus seems to be growing here on 16 and 17-year-olds having the vote. Rather than Wales mirroring some other parts of the United Kingdom, we should be radical in moving forward even further by talking about compulsory voting in Wales. Seventy four per cent. voted in a referendum, but if those others who felt disfranchised voted, the result might have been different. What we are talking about is radical Welsh politics.
Jonathan Edwards
I am grateful for that intervention, and what the hon. Gentleman says will be part of the debate as we go forward. I recently took part in a radio programme with the hon. Member for Cardiff Central (Jo Stevens), and we had a vibrant debate on this issue. My one concern about compulsory voting is that it moves voting from being a civic right to a civic responsibility, which is a very big change in attitude. I am not saying that I have closed my mind to it, and I acknowledge that the hon. Member for Cardiff Central made some persuasive arguments, but I shall reserve my judgment until the time comes.
Jo Stevens (Cardiff Central) (Lab)
Does not the hon. Gentleman agree that civic responsibility is a good thing per se? Rather like jury service, it is a means by which people can give something back to society. Compulsory voting, whereby someone votes for a party or just turns up and registers the fact that they have come to the polling station, is a responsibility that we should all have.
Jonathan Edwards
I appreciate that intervention, and the National Assembly has, of course, legislated on that basis through the organ donation Bill, whereby donating has become a civic responsibility for people in Wales as opposed to a voluntary responsibility in which people had a choice. All these things will be part of the mix when these powers are devolved. I believe our politics will be far healthier for that. Luckily, these issues will be determined by people further up the chain of command in my party than myself—by those who sit in our own sovereign Parliament in Cardiff.
I look forward to a consensus developing around the need for a proportional electoral system. If we are talking about compulsory voting, it has to go hand in hand with a change to a more proportional electoral system. We cannot allow one party to gain 50% of the seats on the basis of 30% of the votes, as we saw last May. That is bad for democracy and it is a hugely corrupting influence on our politics. There is a chance here for Labour Members to show that they are genuinely interested in the national interest as opposed to the interests of the Labour party. I shall hold my breath on that one, as Labour colleagues seem to be more interested in compulsory voting than having a proportional electoral system.
Wayne David (Caerphilly) (Lab)
Does the hon. Gentleman not accept that, in the interests of democracy and effective representation, a strong case can be made for maintaining the constituency link between a representative and his or her constituents?
Jonathan Edwards
I fear that we are getting into a debate about PR, and my party is strongly of the view that we need to go down that road. We will have to address these issues as we go along. The last election was a wake-up call where one party had 50% of the seats but only 30% of the votes.
Albert Owen
Speaking as someone who was involved in the first referendum, I know that this was a big issue. It was argued that the Assembly would be different and we would have a hybrid system, which was put in place to help the smaller parties such as the hon. Gentleman’s party. It is not the fault of the Welsh electorate that they do not vote for his party or do not like it. We have moved considerably from this place, which has a full first-past-the-post system, to a hybrid system. In north Wales, Labour topped the poll but did not get one Member.
Jonathan Edwards
I am grateful for that intervention. The people of Wales will listen to what politicians have said today, and they will make their own judgment. My personal view, for what it is worth, is that the number of seats that a party has within an electoral body should reflect the percentage of votes they receive during the election. We will see how things develop in Wales.
My hon. Friend the Member for Dwyfor Meirionnydd spoke at some length about clause 10. Needless to say, I agree with every word she says, and I will join her in the Lobby to vote against it later this evening.
Amendment 33, tabled by my hon. Friends, is designed to ensure that the legislature of Wales has to authorise the drawing of money from the Consolidated Fund and that such funds can be used only for the purposes for which they were authorised. This is straightforward, and I hope that the UK Government will accept it.
Under clause 14, the Secretary of State will no longer be statutorily bound to visit the National Assembly each year. This is a positive move, which equalises the relationship between the Westminster Parliament and the National Assembly. It might also save the embarrassment of some of the less active Members in the National Assembly. I seem to recall a story from the last Assembly in which the previous Secretary of State for Wales, the right hon. Member for Clwyd West (Mr Jones)—I am disappointed that he is not in his place, because I think he would have enjoyed this—had spoken more words than the previous Assembly Member for Islwyn.
Amendments 38 to 45 are technical, and I hope the UK Government will accept them. They deal with the naming of the legislature and the establishment of a legislatures commission in the event of a name change, and ensures that the provisions in clause 15 extend to both the English language and the Welsh language names.
Susan Elan Jones
The hon. Gentleman is in full flight, but would he continue to support all those moves if the net result was to make Wales poorer?
Jonathan Edwards
In what sense would it make Wales poorer? I am more confused by the Labour position the more Labour Members intervene. The hypocrisy of Labour’s position does nothing to further the good name of politics. Most depressingly, it shows that both the Labour party and the Conservative party rejoice in treating the people of Wales as second-class citizens and Wales as a second-class nation.
Wayne David
Will the hon. Gentleman not accept the fundamental and basic point that unfortunately Wales is a far poorer country than Scotland and that the danger in what he is proposing is that he will make Wales poorer?
Jonathan Edwards
That is a damning indictment of the current situation. I have faith in my own people and my own country to be able to develop our own economy and create wealth. The big plus of devolving fiscal powers is that it would incentivise the Labour Government in Cardiff to stop spending money on their pet projects and start concentrating on increasing tax revenues to spend on public services. That is why I support the devolution of fiscal powers.
Stephen Doughty
I have great faith in the Welsh people as well, and I have a lot of faith in the Welsh Labour Government. However, does the hon. Gentleman not accept that even in the short to medium term Wales would be poorer? Wales is a net recipient of funding from the rest of the UK, and that helps benefit all the people in Wales. In the short term, we would lose out. Does he not accept that?
Jonathan Edwards
The powers as envisaged do not involve the complete block grant. The block grant—the total money available to Wales—will not change on day one. The only issue of contention is the fiscal framework; I have been making that point. The devolution of the fiscal power itself is not an issue in terms of making Wales poorer on day one.
There is also a technical reason why we should be fully devolving income tax powers. It is far more difficult to create a fair fiscal framework to accompany the partial devolution of income tax as opposed to full devolution. The result of this would be to enable future Welsh Governments to continue to avoid responsibility for their mistakes. In the interests of transparency, accountability and—critically—incentivisation, I hope even at this late stage that the UK Government will accept my new clause 3.
A key element of ensuring that the devolution of income tax is devolved successfully is the empowerment of the National Assembly to set income tax thresholds. New clause 2 aims to achieve this objective and I will press it to a vote on the second day of Committee, with the Chair’s permission. If we have time, I would also like to press new clause 3. We will discuss these new clauses on Monday.
New clause 2 is of vital importance as we embark on the journey of devolving income tax powers. The setting of thresholds is a key component of being able to use those powers based on domestic considerations. The Welsh economy in comparison to other parts of the UK is, regrettably, currently a lower-wage economy, a concern raised by Labour colleagues. New clause 2 would enable the National Assembly ultimately to determine the number of income tax thresholds and the levels at which they are set, including, critically, the basic rate. That freedom would enable the Finance Minister of the Welsh Government, whoever he or she may be, to set innovative income tax structures aimed at maximising revenues for the Welsh Exchequer to invest in Welsh public services, but also to encourage wealth creation and encourage investment.
It has been a consistent policy of the current Chancellor to increase personal allowances—in other words to increase the rate at which people begin paying income tax. Brexit may lead to a radical reversal of this policy in the coming months and years by the next Chancellor as revenues reduce. However, the key point is that as long as the ability to set personal allowances is reserved to London and Wales has a low-wage economy, decisions by Chancellors here could have a significant impact on the revenue available to invest in Welsh public services.
It really is all or nothing when it comes to the devolution of income tax and, as someone who supports making the Welsh Government fiscally responsible, I very much hope that the UK Government decide to support the former. Diolch yn fawr iawn.
Nia Griffith
I shall speak to several amendments, in particular amendment 11, which provides that income tax powers may not be devolved to the Welsh Assembly until a fiscal framework has been approved by both Houses of Parliament and the Welsh Assembly.
We have always said that a fiscal framework must ensure that Wales is not disadvantaged by taking on the devolution of some income tax powers. In the wake of the EU referendum result, it is all the more urgent that the Government develop a coherent and redistributory regional funding strategy not just for Wales, but for the whole of the UK.
The EU uses specific criteria for designating the areas that should receive structural funds by comparing the income of an area with the EU average. Areas in Wales such as the valleys and west Wales have benefited because they have a GDP that is less than 75% of the EU average, as has Cornwall, and many other areas have benefited because their GDP is between 75% and 90% of the EU average, including south Yorkshire and Merseyside. It is, broadly speaking, a needs-based system. As Members across the House will remember, Holtham recommended that funding for Wales should be based on a needs-based formula. However, a sophisticated formula would take time to develop.
It is simply unacceptable for Wales to accept the devolution of income tax without an order in both Houses and the consent of the Welsh Assembly, because those measures would give elected Members the chance to discuss the funding and the fiscal framework so that we do not see a cut to our funding and then get told to make up the rest by increasing income tax.
Stephen Doughty
I wholeheartedly agree with the point about the potential trap for Wales. Does my hon. Friend share my concern and that of many of my constituents about the uncertainty that is being created for projects such as the south Wales metro, which was due to be funded by the EU? We are not clear where that £150 million of funding will come from. If we do not have clarity on Wales’s fiscal framework and on whether we will be better off or not, projects like that will be in doubt.
Nia Griffith
I very much agree with my hon. Friend. It is even more serious than that because many jobs depend on EU funding. People might find that they no longer have the apprenticeship opportunities, training opportunities and many other things that are supported by the EU but that are not quite as obvious as the concrete structures.
It would be very difficult for the Welsh Government to make up a significant shortfall in the block grant. The block grant is some £15 billion per annum, whereas the total income tax raised in Wales amounts to some £4.9 billion. It would be very difficult to make up any percentage cut to that £15 billion, particularly if we wanted to protect the standard taxpayer. It is therefore vital that there is an opportunity for negotiation and for a vote and approval before any devolution of income tax.
People might think that I am very suspicious of the Conservative party and that I do not trust it an inch. [Hon. Members: “No!”] Well, I just think that we have to look at the facts. Look at what it has done with councils in England. It has told them that if they want to increase social care funding, they can raise it through council tax hikes. If anyone thinks that the UK Government run by the Conservative party are committed to fair funding or needs-based formulas and are free from partisan bias, I remind them that between 2012 and 2020 the average cut in spending power per household in Labour council areas in England is more than five times higher than the average cut in Tory local authority areas.
Jenny Chapman (Darlington) (Lab)
I regret to inform my hon. Friend that the situation is worse than she describes, because when special funding was identified for councils, 85% of it went to Conservative-held authorities.
Nia Griffith
My hon. Friend confirms my very worst fears. Instead of having needs-based funding, the average cut per household in a Tory area will be in the region £68 by the end of the Parliament, whereas in Labour council areas it will be more than £340. My fear is that the block grant will be cut and we will be told to make up the rest through income tax hikes in Wales. As Members are well aware, there has been no full assessment of the impact on Wales of different rates of tax on the different sides of a very porous border, so we really have no idea what will happen.
Byron Davies (Gower) (Con)
Thank you, Mr Gray, for giving me the opportunity to speak about the Bill today. I am delighted to see my neighbour, the hon. Member for Swansea East (Carolyn Harris), on the Opposition Front Bench.
By and large, I am happy with the measures and the devolution of some further powers to the Welsh Assembly. To be perfectly frank, I have never been a devolutionist, but I accept where we are and we must make it work. I know that the Secretary of State for Wales, my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns), and the Under-Secretary of State for Wales, my hon. Friend the Member for Aberconwy (Guto Bebb), will be doing everything that they can in the Wales Office to ensure that these further provisions are a success and contribute in a positive and constructive way to the Welsh economy and Welsh national life.
However, my concern about tax-raising powers is long standing, and it would be remiss of me if I did not raise on behalf of the people whom I represent in Gower the issue of a referendum on tax-raising powers. I am well aware and have no doubt that we have all seen enough of referendums to last a lifetime, but one on tax-raising powers for Wales would be slightly less contentious and would take place in a slightly better spirit.
The National Assembly for Wales, and devolution in Wales, has been on something of a journey over the past two decades. There have been mistakes, many potholes in the road and things that could have been done differently, but we have taken this course together and I am sure that everyone is committed to working to ensure that devolution works for the people of Wales. There is no doubt that Welsh national life has benefited from devolution, and it is important that people feel that our institutions are close to the decision-making process. There is still work to do on such issues, but things do not happen overnight at such a young institution. Speaking as a recent former Assembly Member, it is promising to have seen some progress and maturity in the Assembly as an institution since the last election.
I want to make it clear that when there has been a major decision that would greatly affect the devolution process, the people of Wales have been consulted every time. There have been close votes. Indeed, the one that created the National Assembly was on a knife edge, but the Assembly was created. The Welsh people then voted to give the Welsh Government law making powers. Now, the next stage of that process, and perhaps one of the most important, is to give the Welsh Government the power to levy taxes. It is argued that such powers are vital to economic growth, families’ security and the future prospects of the Welsh nation. If used well, tax-raising powers could create huge economic opportunities that drive our economy forward and increase the fortunes of our people, their children and things that they consider important to them. If they are used poorly, however, that could place a burden on family budgets, put encumbrances on small and medium-sized business, which are the lifeblood of the Welsh economy, and drive key companies and economic figures away from the burdens of a tax-laden Wales to Scotland, Ireland or England.
These powers are as crucial as any that have gone before, and if we are to be true to the Welsh people and to the devolutionary process that we have undertaken over the past two decades, it is only right and correct that we allow the Welsh people a voice on these powers. It is their democracy, their devolutionary process and their futures that are being decided, and some might quite rightly say that if they were worthy of being given the choice then, why not now?
The Under-Secretary has previously said that a referendum was not an absolute manifesto promise, but I contend that it was implied to the people of Wales and to my constituents that a referendum would be offered. I must admit that I am disappointed that it will not be on offer as I campaigned fiercely on the issue. However, after a great deal of soul searching, I will not vote against the Government on this. I hope that we can continue a dialogue on this issue and others to ensure that this Bill provides the very best outcome for our people in Wales.
Albert Owen
It is a pleasure to serve under your chairmanship once again, Mr Gray. Many points that I was going to make have already been raised by other Labour Members, especially by my hon. Friend the Member for Llanelli (Nia Griffith). None the less, I wish to discuss the idea of a referendum on income tax that was raised by my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), who is no longer in his place. The hon. Member for Gower (Byron Davies) talked about the Conservative manifesto, but I am more concerned with the fact that, under the Wales Act 2014, it is clear that if there were to be a referendum on the devolution of powers to raise income tax, it would be held before the powers could be transferred to the Assembly.
I said on Second Reading that I am a devolutionist. I have long argued that major constitutional changes should be made by referendums, and I supported that in 1997 and 2011. However, in recent weeks I have been persuaded by some of the arguments on whether we should hold referendums on this specific issue and a range of others, including on having a go at the Government of the day. I make that point seriously, because I am not convinced that this is the major constitutional change that it once was. The Assembly already has tax-raising powers, but we do need some safeguards, which is why I will support amendment 11.
I know that you will not allow me to digress too much, Mr Gray, but let me say that I used to support the single transferable vote for elections. In theory, it is great textbook stuff, but as someone who has campaigned regularly in the Republic of Ireland, I can say that the practical implication of that has put me off. I have also been put off referendums over the past few weeks. None the less, we do need to move forward on income tax, and amendment 11 is the right vehicle to help us do that. What it suggests is that both Houses of Parliament in London and the National Assembly for Wales in Cardiff Bay would make that decision. They would have a mature debate on income tax, in which we would look at the whole fiscal framework and the settlement that we have at present.
Like my hon. Friend the Member for Llanelli, I am worried that if we were to give the Assembly the power to raise income tax, this Government would say, “There you are. You now have the tools to do the job. Get on with it and start raising your own taxes”, while they cut the block grant and other fiscal measures. Our Welsh constituencies would end up poorer, which worries me considerably.
It would be fair and right to have safeguards, and it is what the people of Wales want. This Chamber of elected Members and the second Chamber should look at the matter in greater detail along with the National Assembly for Wales. It is right to have that consensus and some safeguards to ensure that the people of Wales are not worse off as a consequence of the measure.
We all know that the Barnett formula has a flaw, and we all argued that in the 2015 election—it was in all our manifestos. I have concerns because for every pound that is spent in the UK, Wales gets £1.15 in return. It gets more than England, but not as much as Northern Ireland or Scotland. In the future, if these income tax measures were given to the Welsh Assembly by a Government who were keen to get rid of them without having that proper debate in both Houses of Parliament and the Welsh Assembly, I would worry that the people whom we are here to represent would be in a worse position. I understand the theory, but it is the practice that worries me, and for that reason, I will support amendment 11.
Dr James Davies (Vale of Clwyd) (Con)
With regret, I stand to oppose clause 16, which relates to the removal of the requirement for a referendum on the devolution of income tax or a proportion of it to the Welsh Assembly. I want to give my reasons for that. In Scotland there was a referendum before such a change took place. Also, the manifesto on which I stood for election—both the UK version and the Welsh version—reiterated the requirement for a referendum. When I and other members of the Select Committee on Welsh Affairs scrutinised the draft Wales Bill, it contained no such proposals. We must ask ourselves why at this stage we want to remove the requirement to have a referendum. In other words, why do we want to repeal this requirement that is in the Wales Act 2014? It is clear that the Welsh people would not vote in favour of the devolution of income tax, so this is an attempt to circumvent the will of the people, in my eyes.
Why do we wish to devolve income tax? Financial accountability has been talked about, but I believe that unless and until the Welsh Assembly Government levy the vast majority of taxes, they will continue to blame this place for not being in a position to provide them with limitless funding. Of course, any situation whereby they would levy most taxes would equate more or less to Welsh independence, which I feel the Welsh population do not favour.
If these powers are transferred, what will happen to the level of taxes? We are told by some that the powers would not be used, and if that is true then why would we wish to transfer them to Cardiff? Some, of course, fear that tax levels would be increased and, clearly, from my point of view, that would harm the Welsh economy. Some have suggested that tax could actually be reduced. That is highly unlikely, but if it ever occurred it would undoubtedly lead to calls from some nearby English regions for similar reductions. Any competitive advantages would be eliminated.
From a north Wales perspective, there are 50,000 cross-border commutes every day and 1 million people of working age live on either side of the border. This is a political border that does not reflect how people live their lives or how businesses operate, and there is already cross-border disparity in the standard of public services, which leads to much frustration. Why would we want to make the situation worse? I believe that differential tax rates could lead to confusion, further complication of an already complex tax system, additional associated costs, and consequences, intended or otherwise, for where people choose to live and work, whether that is in England or Wales.
We have just undergone the latest Assembly elections and, as in the past, disinterest and disengagement were evident, with votes cast primarily on the basis of politics in this place and with reference to the EU referendum, and I am afraid that sums up the level of enthusiasm for more Welsh devolution, at least in my area. It is clear that there is no call or mandate for additional powers and particularly not for tax-raising powers, and I see this as simply yet another step in the gradual break-up of the UK, which my residents do not want. Indeed, now that the prospect of partial income tax devolution has been raised, we are already seeing calls for further tax devolution. I feel strongly that this is an unnecessary and undesirable proposal and, with great regret, I will have no choice but to vote against the clause.
Chris Davies
Last week, I had the great pleasure of congratulating the hon. Member for Newport West (Paul Flynn) on regaining his seat on the Front Bench after a gap of 27 or 28 years. That was in a slightly different role to the one he has taken today, but I am delighted to see him there. I am also more than delighted to see the hon. Member for Swansea East (Carolyn Harris) sitting next to him. Many Members will not know that a certain television company did a programme—it should have been a series—about two MPs trying to get to Westminster. They were me, now the Member for Brecon and Radnorshire, and the hon. Lady. She was my leading lady and I was her leading man, and I am delighted to see that the star is now shining brightly on the Labour Front Bench. That, I am afraid, is where the pleasantries stop, and pleasantries they are, I say to the hon. Lady.
I, too, have reservations and concerns about clause 16. I made my objections clear on Second Reading just a few weeks ago, and here we are, too quickly for my liking, already at Committee stage. I have great concerns about a referendum on income tax. I stood on many a doorstep, on many a street, on many a farm throughout two and a half years of the election campaign, and as we got closer to the election, it was a clear manifesto commitment that we would deliver a referendum on this very important matter. I am deeply disappointed that the Government have decided to do away with that referendum. I have made these feelings clear to various members of the Government and I have made my views clear in this place. Sadly, the Government have decided to go on with the clause and I, too, will vote against it today.
Albert Owen
I heard the hon. Gentleman speak on Second Reading and I am sure he is going to repeat a lot of what he said then about how he dislikes the Assembly, but before he does that, will he seriously consider Labour’s amendment 11, which suggests that we have a pause and that both Houses of Parliament and the Assembly debate this important issue, on which we are to represent our constituents? I respect the hon. Gentleman’s view. He has heard the reasons why I am moving away from demanding a referendum. Will he consider supporting that amendment?
Chris Davies
I may consider it, but at the moment I am thinking about going further, with deep regret, and looking to my first vote against the Government—my first rebellion, which is of great concern to me.
My position is not a criticism of the Welsh Assembly per se or of devolution. It is a criticism of the present incumbents down in Cardiff Bay. They have not delivered for us. Why on earth are we now looking to give them tax-raising powers? Sadly, I do not feel that they would be able to deliver that properly for the people of Wales. With great regret, I will not be able to support the Government’s proposal in this matter.
Mr David Jones (Clwyd West) (Con)
I apologise for the fact that I was not here at the beginning of the consideration of this group of amendments. Sadly, I was detained by another engagement.
Like my hon. Friends the Members for Vale of Clwyd (Dr Davies) and for Brecon and Radnorshire (Chris Davies), I have huge concerns about clause 16. I speak as the Secretary of State who took the Wales Bill 2014 through this House. Unlike my hon. Friend the Member for Vale of Clwyd, I was an enthusiast for tax-varying powers for the Welsh Assembly, because I thought that that would introduce a measure of accountability and potentially give the Assembly Government some incentive to introduce a more competitive tax regime in Wales. However, the Wales Act 2014 clearly states that such tax-varying powers should not be implemented until they are triggered by a positive vote in a referendum, and it is still right that such a referendum should be held; after all, tax-varying powers include the power to increase taxes.
If one expects the people of Wales potentially to pay more tax, it is only right that they should first be asked if that is what they want. That is what happened in Scotland in 1997, when the referendum had two separate questions, including one on taxation. Unlike hon. Members who have already spoken, I do not believe that it is beyond the bounds of possibility that the people of Wales would vote for tax-raising powers; after all, that is what the Scots did. However, imposing such a competence on the Welsh Assembly Government without giving the people of Wales the right to have their say in a referendum is utterly disrespectful of the people of Wales; after all, what was good enough for the Scots should be good enough for the Welsh.
I also share the concerns of my hon. Friend the Member for Vale of Clwyd. I stood in a general election only 14 months ago on a manifesto that made it entirely clear that there would be a referendum before tax-varying powers were triggered, and I do not believe that anything has changed 14 months later. If we make a manifesto pledge, we should adhere to it, so, like my hon. Friends, I will, sadly, be voting against the Government on clause 16. My right hon. Friend the Member for Chesham and Amersham (Mrs Gillan), who is also a former Secretary of State, has asked me to indicate that she will do likewise. Sadly, she is not able to be here at the moment, but she too regards this as a point of principle. I urge my right hon. Friend the Secretary of State to reconsider. By pressing ahead, he is breaking faith with the electorate of Wales.
Paul Flynn
The opening words of the splendid book I referenced earlier are:
“Only the future is certain. The past is always changing.”
We have seen splendid examples today of people fictionalising the past. I am proud of the Welsh Assembly, and I am proud that it was a creation of the Labour party in this Parliament. In deciding on its form, it would have been possible for us to adopt a first-past-the-post principle, which would have given Labour a majority in perpetuity. However, for very honourable reasons, it was decided not to do that. We also feared creating what was described at the time as Glamorgan County Council on stilts. There are other examples of socialist and social democrat countries, such as the Nordic countries, which have had parties equivalent to Labour for many decades, and which have produced some of the finest social services and human rights policies in the world.
It is absolutely wrong and mean-spirited not to recognise that the Welsh Assembly, as set up, is probably the finest example of democracy in the British Isles. Many of us were unhappy about the number of UKIP Assembly Members in May, but they gained 13% of the vote and they got 13% of the seats, which is absolutely right. However, for two Parliaments, including the ones when we set up the Assembly, when we could have done anything we liked, 20% of the voters in Wales voted Conservative and did not have a single Conservative Member of this Parliament. Why do people not object to that?
We intend to divide the House on amendment 11. Clause 16 has obviously taken up a great deal of the House’s attention, but Wales is suffering from referendum revulsion, and so are other parts of the country. We have had enough. We have been having these all through my childhood, on whether we close the cinemas on a Sunday or close the pubs on a Sunday. We have overdosed on referendums.
Let us look at examples of public votes, such as the decisions taken by the public to call a boat “Boaty McBoatface”, and in the European referendum. The choice in the European referendum was between two sets of lies by each party. Both sides are embarrassed by what they said a few weeks ago, because it has not happened, after all the dire threats. We do not have £365 million for the health service and we do not have an emergency Budget; one could go on. I am afraid that the referendum on the alternative vote was even more disreputable, with two sets of outrageous lies put before the public. On Vauxhall bridge there was a sign saying, “If you vote for AV you’re in favour of taking protection away from our soldiers in Afghanistan and taking protection away from babies in hospitals”, suggesting that only that sort of person would vote for AV. It was nothing to do with the facts of the case. The propaganda in referendums has got to a level where the results are degraded and distorted. That certainly happened in the European referendum, and I think that faith in the process has gone.
In Wales, with each vote we have—it was a tiny minority the first time—there is momentum to build up trust in the Welsh Assembly. As the hon. Member for Montgomeryshire (Glyn Davies) argued very persuasively, it is not a real parliament unless it has its own tax-raising powers. That is a normal, essential development if we are to see the parliament of which we are so proud, on the soil of our own country for the first time for centuries, grow and take on its own decisions and responsibilities. Clause 16 provides for the removal of the requirement of a referendum on this.
We are grateful for the wisdom and generosity of the Government in how they have treated this Bill. It was a fairly ugly Bill to start with, but they have amended it and accepted all the various suggestions that were made to remove some of its less wise implications. It now has widespread support in the House from all parties and Government Members. Our problem now is that the removal of these powers also takes away the involvement of the Assembly in the process of deciding when they should be brought into force. Quite rightly, several of my hon. Friends have expressed anxieties about what would result from this, because we certainly do not want to legislate for a reduction in the amounts of money that the Welsh Assembly has.
The introduction of Welsh rates of income tax will represent a step change in devolution to Wales, replacing about £2 billion of the Welsh block grant with a more volatile revenue stream. It will therefore be essential that fair and robust new funding arrangements are established before this takes place. A new fiscal framework is required, agreed by the Welsh Government and the Treasury, which addresses each of the new factors that will affect the level of spend on devolved public services in Wales. That fiscal framework should not only cover the offsets made in return for devolved tax revenue but include a long-term commitment to the funding floor announced by the Chancellor in November. The UK Government’s Silk commission, to which we owe a great debt of gratitude, recommended that devolution
“of income tax powers…should be conditional upon resolving the issue of fair funding in a way that is agreed by both the Welsh and UK Governments.”
That is absolutely essential. There are fears that this might well be a Trojan horse that could be abused in the way that my hon. Friends have suggested. This issue remains unresolved beyond the next five years. Until the fiscal framework has been agreed, there must be no move to implement the Welsh rates of income tax. The UK Government have agreed a fair fiscal framework with the Scottish Government. It is appreciated that the model of the Welsh Senedd will develop along the lines of the Scottish Government, but it would be unacceptable for the fiscal framework proposed for Wales to have any less favourable terms than those agreed for Scotland. Amendment 11 addresses that issue by ensuring that the Assembly and both Houses of Parliament have clearly defined roles in ensuring that the conditions are right for income tax powers to be devolved to Wales. It cannot be right that the UK Government could commence powers over income tax in Wales without the approval of the Assembly. I urge the Government to consider those amendments seriously.
Alun Cairns
It is a pleasure to serve under your chairmanship in this important debate, Mr Gray.
In opening, I say that it is a pleasure to welcome the hon. Member for Newport West (Paul Flynn) to his place. He is the Member of Parliament for my parents-in-law, and an active constituency Member. We all know how active he is, usually on the Back Bench, but it is a pleasure to see him on the Front Bench. I extend a welcome to the hon. Member for Swansea East (Carolyn Harris)—I have some roots in Swansea, having been brought up in that part of the world. I also pay tribute to the hon. Members for Llanelli (Nia Griffith) and for Clwyd South (Susan Elan Jones), for the work that they have put into consistent scrutiny of the Bill in its early stages. I am grateful for the co-operation and support they gave me as we sought to bring about broad agreement on where the Bill stands. There is not agreement on everything, but I am grateful to all Members who have contributed for the broad consensus that has come forward.
Clauses 8 to 21 and the amendments related to them deal with changes to Assembly processes, the devolution of income tax powers, and the functions of Welsh Ministers. Clause 8 would insert a new section into the Government of Wales Act that determines what types of protected subject matter would, if contained in an Assembly Bill, require that that Bill be passed by a super-majority, which is two thirds of all Assembly Members. The protected subject matters in clause 8 include the name of the Assembly, those entitled to a vote in the Assembly elections, the system used in Assembly elections, the specification or number of Assembly constituencies and regions, and the number of Members returned for each constituency or region. These are in line with the protected subject matters included in the Scotland Act 2016, with two exceptions. The Bill provides that any change to the name of the National Assembly for Wales be subject to a super-majority requirement. The Bill also provides for the specification of constituencies, regions or equivalent electoral areas as protected subject matter. The super-majority requirement will ensure that there is broad support across the Assembly for those fundamental changes.
In the first instance, it would be for the Presiding Officer to determine and make a statement on whether or not an Assembly Bill relates to any of those protected subject matters. It is this part of the clause that amendment 32, tabled by Plaid Cymru, seeks to change. The amendment would remove the requirement for the Presiding Officer’s statement to be made in both the English language and the Welsh language. It would also remove the requirement for the Assembly’s Standing Orders to determine the form of the statement and the manner in which it is to be made.
It goes without saying that the Government are fully committed to the Welsh language. The Wales Office has two Ministers who speak Welsh, of which I am one, and a third Minister who is learning Welsh. It is good to see that the political tension around the Welsh language seems to be a relic of history, which is, I am sure we would all agree, a positive move. But the intention behind proposed new sections 11A(5) and 111A(6) of the Government of Wales Act 2006, as inserted by clause 8, is to ensure that the Welsh language is treated equally with English when the new super-majority processes are incorporated into the workings of the Assembly.
Glyn Davies
Does the Secretary of State agree that it is outrageous for those organisations supporting the Welsh language to assume that because we are leaving the European Union the support for the Welsh language will in some way be greatly diminished? The UK Government and Welsh Government have been huge supporters of the Welsh language, and there is no earthly reason why that should not continue in future.
Alun Cairns
My hon. Friend makes an extremely important point. A broad consensus has developed on the Welsh language over the past few decades, which is very different from what we might have seen before.
Susan Elan Jones
Does that mean we will have a fully bilingual Welsh Grand Committee? I am just hoping.
Alun Cairns
The hon. Lady knows that the Welsh Grand Committee is fully bilingual when it sits in Wales, but when it sits in this place its proceedings are in English, the language of the House.
Alun Cairns
I am not going to give way, because there are many technical amendments I need to cover and I want to make some progress.
I say to the hon. Member for Arfon (Hywel Williams), who moved amendment 32, that he has made a persuasive argument that the Assembly processes would ensure that Welsh is treated equally anyway, without adding a prescriptive provision to the Government of Wales Act. I would like to give the matter more thought but undertake to return to it on Report. I therefore hope that he will consider withdrawing the amendment.
Hywel Williams
I am grateful to the Secretary of State for that response and will listen to the rest of his speech with interest. I will withdraw the amendment. There is a progression in the normalisation of a language such as Welsh, from a point where it has to be specified to one where it is assumed, which is where we are in the National Assembly. That is an important point to make.
Alun Cairns
The hon. Gentleman makes an extremely important point that demonstrates the maturity of the debate and the acceptance of the language.
Clause 8 also provides for the Counsel General or the Attorney General to be able to refer the question of whether a provision of an Assembly Bill relates to a protected matter to the Supreme Court for a decision. The Counsel General or the Attorney General may make such a reference to the Supreme Court at any time during a period of four weeks from either the Assembly rejecting the Assembly Bill or its being passed.
There is precedent for a requirement for a super-majority on matters of constitutional importance. Under the Government of Wales Act 2006, the Assembly vote that triggered the 2011 referendum on Assembly powers required two thirds of Assembly Members to vote in favour. The Government believe that the safeguards in the Bill are sensible and command broad support across Wales.
Supplementing clause 8, clause 9 amends requirements for the Assembly Standing Orders on Assembly Bill proceedings, to reflect the new processes required as a result of a reference to the Supreme Court. The clause provides for Assembly Bills to be reconsidered by the Assembly in the event that the Supreme Court rules against the Presiding Officer’s decision on whether the Bill relates to a protected subject matter. That is in line with procedures put in place for the Scottish Parliament in the Scotland Act 2016, which has been passed by both Houses.
Clause 10 relates to justice impact assessments, on which there was considerable debate. The UK Government and Welsh Government have a number of well-established processes for assessing the impact of legislation on matters ranging from regulation to equalities. Indeed, on Second Reading I discussed the fact that Assembly Bills are assessed against their likely impact on the Welsh language and on equalities. It is also important to recognise that, through the Treasury and a range of other Departments, Her Majesty’s Government issue guidance and requirements relating to expectations of how public spending will be conducted and how public interests will be guarded. That is the principle under which the justice impact assessment should be considered, rather than how it has been interpreted by many.
Within the UK Government, Departments bringing legislation forward to this House are required to assess its likely impact on the justice system. The importance of that assessment is self-evident: for legislation to be effective it must be enforceable. It is vital that that enforcement process is ready and resourced sufficiently to cope with new demands placed upon it.
Mr David Jones
Will my right hon. Friend explain what extraordinary event has happened in the past 14 months to move devolution on to such a large extent?
Alun Cairns
I am grateful to my right hon. Friend for his intervention. I was about to go on to say that two important principles have been acknowledged. First, the Assembly is more mature. That is reflected in the legislation we are passing to enable the Assembly to reach out and respond further to Welsh needs.
Secondly, when my right hon. Friend was Secretary of State for Wales, he established the principle of devolving significant tax-varying powers without a referendum. In the 2014 Act, the devolution of stamp duty land tax and the aggregates levy, in addition to powers over council tax and the subsequent full devolution of business rates to Wales, account for a broad income of £2.5 billion. The Welsh rate of income tax, which we propose to devolve is—at about £2 billion—significantly less than that. This important principle has been accepted positively by the Welsh public and by civic society. That stands firm and is a backstop to clause 16.
Mr David Jones
Does my right hon. Friend not accept that the significant difference is that very many more people pay income tax than pay stamp duty land tax or landfill tax? Is that not the point, that it affects nearly everybody in Wales?
Alun Cairns
I remind my right hon. Friend that a similar number of people who pay income tax also pay council tax, and that many will be business owners who pay business rates.
Much reference has been made to the Welsh Conservative manifesto and I remind right hon. and hon. Members what it said. Our manifesto for Wales stated that a funding floor would be introduced in the expectation that the Welsh Government would hold a referendum. We have fulfilled our end of the bargain, having introduced a funding floor of 115%, as has been mentioned. That is the floor—if I may gently correct the hon. Member for Ynys Môn (Albert Owen)—and the spending level is currently higher. If the Welsh Government are not going to introduce a referendum—I do not think that any of us want one after the events of recent weeks—we will need to take steps, so I hope that the House will agree clause 16 as it stands.
Clauses 17 and 20 deal with the functions of Welsh Ministers and devolve important new powers to them. Clause 17 will insert new subsection 58A into the Government of Wales Act 2006, conferring common law-type powers on Welsh Ministers—the kinds of powers exercised by a natural person, such as the power to enter into contracts, make payments or set up companies. It is difficult to believe that Welsh Ministers do not already hold these powers, and it demonstrates how current legislation is out of date with modern thinking and concerns.
Clause 19 deals with the transfer of ministerial functions. The Bill provides for a clear separation between devolved and reserved powers, an important component in which is being clear about which so-called pre-commencement Minister of the Crown functions in devolved powers are to be exercised in the future. We intend to transfer to Welsh Ministers as many of these functions as we can. We will do so in a transfer of functions order made under section 58 of the Government of Wales Act and will bring forward a draft order during later stages of the Bill. Several other transfer of functions orders have been made under section 58 since the Assembly was established.
I turn now to amendment 11, tabled by Labour, which would place a requirement in the Bill for a so-called fiscal framework. I should underline that the precedent in Scotland was not for the inclusion of such a provision in legislation; instead, the UK and Scottish Governments negotiated an agreement. I would hope that a mature relationship has developed between the Welsh and UK Governments, and between the First Minister and me, in respect of how we conduct our affairs. Clearly, there is no way I want to see Wales in a detrimental position—that is the starting point of our negotiations—and I am optimistic that we can come to an agreement over the appropriate adjustments to the Welsh block. Holtham has made some recommendations that are a good starting point for those discussions. Few people believed we would ever get to the position of introducing a funding floor. I hope, therefore, that that funding floor of 115% might give people confidence.
I would like us to reach a position where the Welsh Government can grant a legislative consent motion. Under the model we followed in Scotland, a legislative consent motion came only after the fiscal framework was agreed. I would hope that, once we have reached an agreement on a fiscal framework and a Barnett adjustment, a legislative consent motion could then be used as proof and evidence. For that reason, the amendment proposed is unnecessary—appropriate structures are in place to allow for that mature discussion to take place.
Amendment, by leave, withdrawn.
Clause 8 ordered to stand part of the Bill.
Hywel Williams
We have had a wide-ranging debate, including on issues not really to do with the lead amendment. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 ordered to stand part of the Bill.
Clause 9 ordered to stand part of the Bill.
Clause 10
Introduction of Bills: justice impact assessment
Question put, That the clause stand part of the Bill.
Business without Debate
Delegated Legislation
EU Referendum: Race Hate Crime
(7 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Yasmin Qureshi (Bolton South East) (Lab)
I want to make it clear that this Adjournment debate is not about people who voted to leave. Many good people voted to leave, as they believed we will be better off out of the European Union. Today’s debate is about the rhetoric and images used by some in the leave campaign.
Growing up as the child of Pakistani immigrants in the 1970s, I frequently received abuse such as “Go back to your country” or “You smell of curry.” Often, the words I heard were, “Go back home.” The words stung because they implied that I did not truly belong in this country. Growing up, this taunt haunted many of my generation and others as well. Words such as “Paki” and signs on doors saying, “No blacks, no Irish, no dogs” still haunt many of us.
If we fast-forward to 2016, it feels like nothing has changed. I still receive abuse, and it is not just racially motivated. I have frequently been subjected to rape and death threats online—often I am told I should be sent to Saudi Arabia to be raped and lynched—but I will not be frightened off, despite the fact that I am one of those MPs who regularly hold drop-in surgeries in my constituency and I have no idea who will come to see me. These people will not prevent me from carrying on connecting with my constituents and giving them the best service I can.
Karl Turner (Kingston upon Hull East) (Lab)
I have been contacted by my constituent Leroy Vickers, who describes four very serious incidents of racially aggravated offences. He says that in the past two days he has witnessed a man on a bus telling a passenger, “Get off the bus, Paki”, witnessed racially aggravated abuse in a takeaway, and heard a man of Jamaican descent say that for the first time since he was about five or six he is hearing the N word used regularly. What does my hon. Friend say to that?
Yasmin Qureshi
That is also the experience of so many of the constituents and other people who have written to me. That is why I am very grateful that I managed to get this Adjournment debate.
We have had words such as, “Go home, Polish vermin”, posted through the letterboxes of Polish residents in Cambridgeshire; heard of young Muslim school girls being cornered and intimidated, with people saying, “Get out, we voted leave” and “I can even give you a suitcase”; and seen signs in Newcastle urging the Government, “Stop immigration and start repatriation”, with words such as “This is England, we are white, get out of my country”.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My hon. Friend is making some strong, powerful and deeply disturbing points. Does she agree, though, that it is not just in the context of the referendum that we have seen hate crime increasing? I saw this horror in last year’s general election. In just one street in my constituency, somebody told me that that they would not vote Labour because all we did was support the N word, another person pointed to a black woman in the street and told her she should go home, another told me that gay people should be killed and sent to hell, there was a race hate attack in a fish and chip shop at the end of the road, and somebody said that we needed to stand up against the Jews. That was all in one street. Does she agree that this has been going on for some time? It has been a problem in the referendum, but it has been coming for a while.
Yasmin Qureshi
I absolutely agree. Later in my speech I will deal with fact that this has been going on for some time.
Since last week, I have been inundated with emails, tweets and messages detailing hundreds of horrific incidents that have taken place. I understand that since last Friday, True Vision, the Government website to combat hate crime, has recorded a fivefold increase in reports to the police from the public, with 331 incidents since the day the referendum was held. The weekly average used to be 63 reports. In my own region, Greater Manchester, there has been a 50% increase in the number of hate crimes reported in the past week. There has been a very famous incident on YouTube showing an American professor who was abused by people.
Keith Vaz (Leicester East) (Lab)
May I wish my hon. Friend a very happy birthday? She is obviously a very dedicated Member of this House to be spending this evening here with us discussing these events rather than celebrating her birthday.
May I also say how much I agree with what my hon. Friend has said? I have just received a letter from the Metropolitan Police Commissioner telling me that the number of hate crimes in London has gone up from 20 a day to 60—a huge increase. Does she agree that it is very important that there is consistency among all the police forces—in Lancashire, in the Met—in dealing with this problem?
Yasmin Qureshi
I absolutely agree. We need consistency throughout the country in how these cases are dealt with. I thank my right hon. Friend for remembering my birthday.
Many here will know or remember that on 15 February 1971 Enoch Powell stood up to speak at Carshalton and Barnstead Young Conservatives club in Surrey. It was three years since he had made his incendiary “rivers of blood” speech, and now he was returning to the subject of immigration. Mass immigration, Powell claimed, led to the native British seeing their towns
“changed, their native places turned into foreign lands, and themselves displaced as if by a systematic colonisation.”
Three members of the shadow Cabinet threatened to resign unless Mr Powell was sacked. Mr Heath dismissed him.
I, like many other Members, was horrified by the return of such language during the recent referendum. I felt revulsion—I am sure many others did too—on seeing the image of Mr Farage proudly unveiling his “breaking point” poster, featuring Syrian refugees, a week before the referendum. It was the visual equivalent of the “rivers of blood” speech. The poster shows a crowd flowing towards us—face after face, an apparently unending human tide. The nearest faces are in sharp focus, the furthest a blur of strangers. Even though they are human beings, they seem to be aliens.
Nigel Farage and the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) frequently made false claims that immigration, not austerity, is the reason that health, social care and schools are under pressure, fostering the myth that immigrants drain our resources rather than enhance them.
That is scaremongering in its most extreme and vile form. The leave campaign played on people’s genuine fears about poverty, unemployment and deprivation, especially in areas facing generational unemployment that have long been neglected for the past 20 to 30 years. Immigration is not the cause of social inequality, and such scaremongering does not and will not address the root causes of the problems faced by so many. It is successive Governments who have failed to deal with the issue of social and economic inequality. The gap between the rich and the poor is now even bigger, and five families in the United Kingdom own some 20% of the UK’s wealth. The issues that need to be addressed—such as eradicating poverty and providing equal opportunities—are not being tackled. Immigrants are accused of being the cause of all that and they are used as a natural target—that is what Vote Leave campaigners campaigned on.
Jim Shannon (Strangford) (DUP)
As one of the 17.4 million people who voted to leave, I totally and wholeheartedly condemn the attacks. Immigrants who come to my constituency of Strangford get employment and jobs, and they get married and buy houses. I acknowledge the valuable contribution they make. Whatever hate crimes have been carried out, they have not been carried out in my name or in those of the 17.4 million people who voted leave.
Yasmin Qureshi
I entirely agree with the hon. Gentleman. That is why I said when I started my speech that this is not about leaving or about people who voted to leave; as I said, many of them had very good reasons for doing so. I am talking about some of the people who led the campaign.
Mr Powell foresaw an unchecked inflow of black immigrants creating civil war. The UKIP poster told us absolutely the same thing about the people headed our way, it claimed, “across borderless Europe”. The tide of faces sums up exactly the same image as the swarms and rivers and hordes of otherness and racial difference that Powell spoke against in 1968 and that so many others—the National Front and the British National party among them—have tried to evoke over the years. I do not think that the creators of the UKIP poster would be insulted by that Enoch Powell comparison. They assume that we all share their unease with racial diversity. It was no wonder that the poster was reported to the police for inciting racial hatred.
The referendum was one of the ugliest political campaigns that I have witnessed in my life. Leave campaigners could have talked about the need for reform, the Transatlantic Trade and Investment Partnership, economic considerations and a whole host of other things. Instead, they chose to make the debate about the mythical “other”—the immigrant who is stealing our jobs and resources and taking our homes. They seemed to cry, “If only we could close the door, then Britain will be great again and all our problems will be gone.” I am afraid to say that the tone taken on immigration by some of the leave campaigners has made racism socially acceptable again.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
I congratulate my hon. Friend on securing this important debate and agree with all the points she has raised. I am sure she agrees with me that these actions against EU nationals, including the Polish people in my constituency who are having letters put through their letterboxes telling them to go home, are deeply deplorable and should be condemned.
Yasmin Qureshi
I absolutely condemn the vitriolic abuse that the Polish community has received over the years. I would add to that that a lot of European nationals in this country are now very concerned about their status and their citizenship rights. I will ask the Minister to ensure that the Government deal with this issue fairly urgently to bring reassurance to a lot of EU nationals living in the United Kingdom.
The hon. Member for Uxbridge and South Ruislip (Boris Johnson) claimed that Brexit would stop “uncontrolled immigration”, suggesting images of hordes of people rushing to our shores. During a televised EU debate, a member of the audience asked Mr Farage to explain how he would reduce racial tensions in the light of such rhetoric. Not only did he ignore her question, but later her Twitter timeline was filled with horrific abuse from his supporters. We must acknowledge that the abusers now feel more confident in making these claims because of Mr Farage’s frequent racist comments and claims that he can restore Britain’s place in the world.
Stephen Doughty
I thank my hon. Friend for giving way again; she is being incredibly generous. She made a point about Twitter. Does she agree that social media companies and internet providers have a great deal of responsibility here? It is not easy enough to report or deal with hate crime, of all sorts, and the internet is currently filled with abuse, whether it is anti-Semitic, anti-Muslim, anti-gay or anti-women. Many Members of this Chamber have experienced that abuse in recent days, from the left and from the right, and the companies that are involved need to take a much firmer hand.
Yasmin Qureshi
I absolutely agree. It is so difficult to make a complaint. I am one of those people who can relate, on a personal level, the amount of abuse that I have received. When I tried to contact the organisations concerned, I got nowhere. It is important that we think about how we can regulate that and ensure that social media companies deal with these issues responsibly and monitor the posts that are being put on their sites. It seems that most of them completely fail to do that.
There have been constant calls that we are claiming our country back. After the Brexit campaign won, the first comment from Mr Farage was, “We have got our country back”, suggesting that it had been under the control of somebody else. These are the types of irresponsible comments that feed into people not liking immigrants—the “other”. Sadly, some senior politicians who perhaps should know better did the same, including the Prime Minister, when he talked last year about the “swarm” of migrants in Europe, and they have failed, time and time again, to stop the spread of such anti-immigrant feeling.
Catherine West (Hornsey and Wood Green) (Lab)
It seems that confusion is being deliberately stoked on the definition of a refugee versus somebody exercising their right, or their former right, to freedom of movement across Europe, and other categories of non-European migration. In general, this leads to a sense that there is a lack of education about what migration actually is.
Yasmin Qureshi
I absolutely agree with that. Very disturbingly, one of the arguments used by some leave campaigners was that the refugees who are fleeing war-torn countries such as Syria will come here as terrorists, and that, if we were to leave the European Union, they would not be able to come and somehow we would become safe. That feeds into the “anti-other”, or anti-immigrant, sentiment, and that is irresponsible.
Sadly, as of now, not a single prominent leave campaigner has uttered any condemnation of the rise of racial hatred or, better still, called for unity to heal the deeply dangerous divisions that have been created. Does the Minister agree that we now need a cross-party coalition to make sure that future campaigns on such issues are conducted according to some sort of code of conduct that ensures that we never again allow our political language to become so irresponsible?
The media have not exactly played a good role in this, either. We must consider the media and journalists who portray such politicians as colourful eccentric characters, whose outrageous comments are seen for their entertainment value and as being honest. How many times have we heard, “This person is saying it how people are saying it, and is not pretending to be something else—he is giving honest views”? That serves to legitimise their point of view.
We have heard about famous journalists who have continued with that kind of behaviour. Politicians here in the United Kingdom and in the US who encourage what I call “othering” quickly become big box office hits, especially if they are able to talk, not just unchallenged but endorsed by journalists, in a way that suggests that all Muslims are rapists, or that immigrants are sucking the NHS dry or are stealing our jobs while living on benefits. Imagine the effect on someone in an economically or socially vulnerable situation who is told on a daily basis that they are in that plight because of these immigrants who have taken everything. It is not surprising that some of those people think that the immigrants are to blame. That is why I talked about the need to eradicate poverty and provide good jobs, decent housing, education, schools and hospitals. That is so important. Can we really be surprised at some of the rhetoric and the things people have been saying when that kind of thing is perpetuated by our media?
The free hand of the print and online media to distort facts and blame entire groups of people for the troubles of our country, with almost no fear of contradiction, plays an important part in the spread of hatred, and is worrying. Certain parts of the media are complicit in the rise of bigotry and the consequent discrimination. Here, I touch on what my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) referred to. It is not that suddenly one day everyone decided to become abusive. There has been a consistent level of immigrant bashing over a number of years. There was a time in this country when the Irish were bashed. Then it was the Afro-Caribbean community, then the Muslims. Now it seems like everyone is hated. That is very worrying.
This is a great country to live and work in. I am very passionate about my country, which is why I think it is so important that everyone, including all politicians across the United Kingdom get together and say, as the hon. Member for Strangford (Jim Shannon) did, “Not in our name.” This is not what we are as a country. We are a tolerant and liberal country. I have travelled and worked in other countries, and as far as I am concerned this is the best country to live in in the world. When I see this kind of thing happening, it really disheartens me. I know that others feel the same.
Let me give as an example some of the front-page scare stories from the Daily Express, the Daily Mail and The Sun. Recently, a Daily Mail cartoon compared immigrants to vermin and conflated them with gun-wielding terrorists. Who can forget the well-known shock tactic journalist who referred to desperate and scared refugees as “cockroaches”? It is amazing that the newspapers and journalists who make an enormous amount of money from those kinds of things are able to say them again and again and get away with it completely. In fact, the journalists are paid even more by the radio stations, television companies and media to carry on peddling their hate. When did journalists forget that with freedom of speech comes responsibility? Does the Minister agree that it is now more pressing than ever that we proceed with the next stage of the Leveson inquiry, so that the press act responsibly in their treatment of minorities? A free press is great—we want that, and we want the press to cover stories, responsibilities, wrongdoing and investigative journalism, and to tell us what is going on, but some sections of our media seem to have a completely different agenda of their own.
We have a proud tradition of welcoming people from around the world, and our diversity makes us stronger. We are grateful to all those who have chosen and continue to live and work in this nation. Members of the House must pledge to stand together and unite against hatred and intolerance in our communities. We will not, and should not have to tolerate hate crime again.
Colleen Fletcher (Coventry North East) (Lab)
My hon. Friend is making important points about the responsibilities of different agencies. The Minister may have heard about the incident in Coventry, where my constituent, the Coventry and Warwickshire radio presenter Trish Adudu, was racially abused in the street last week. Trish said that an individual shouted at her and another Coventry resident, and said vile things, including the N word, which I have never used and cannot bring myself to use even when describing this incident tonight. She was told: “Get out of here. Go back home. Haven’t you heard the result of the vote?” Trish was visibly distressed when she reiterated that on the radio and on TV. Does my hon. Friend—and hopefully the Minister—agree that there is no place for such sickening and deplorable behaviour? We must work together to put a stop to it, bringing in all those agencies and working cross-party. Robust action must be taken—
Madam Deputy Speaker (Natascha Engel)
Order. I have been very generous with the intervention, but that was very long. There is plenty of time and if the hon. Lady wanted to make a speech, she could have done so, but I think that was it.
Yasmin Qureshi
I entirely agree with my hon. Friend.
We have processes in place to report hate crime, and swift action can be taken, as was demonstrated by Greater Manchester Police following the incident of hate on a tram towards an American lecturer. Importantly, many who voted to leave the EU did so as a protest vote to voice concerns against the Government and austerity measures, and the vast majority do not endorse any racist rhetoric. Many who voted to leave felt that they were doing the right thing for the economy, and they fell for the lies being peddled as promises, such as £350 million a week for funding the NHS. However, Brexit has legitimised and normalised racism. We must ensure that all incidents are reported and prosecuted, and we must hold the media and leaders—including political leaders—to account when hatred is propagated. We must act against social inequality, and provide and protect jobs, wages, workers’ rights, good schools and hospitals. In essence, social and economic equality often leads people to view the “other” through the prism of dislike, hatred or suspicion. Only together can we work to tackle that problem, and ensure that future generations can hope for a safe future in this country and regard it as their home.
Keith Vaz (Leicester East) (Lab)
It is a pleasure to follow my hon. Friend the Member for Bolton South East (Yasmin Qureshi). She is a passionate advocate on behalf of the downtrodden and all those whose rights need to be exercised in this country. She had a long career outside this House as an international barrister and she has shown a passionate commitment to the cause of justice in this House, serving on the Justice Committee, the Home Affairs Committee and now the Foreign Affairs Committee. She has reminded us all of the huge contribution that has been made by the migrant community to our country.
I have to declare an interest as a first generation migrant. I arrived here from Aden in Yemen at the age of nine. My hon. Friend the Member for Walsall South (Valerie Vaz) is also my sister and we do not normally sit together in this House. We try to sit apart. Some people mistake her for my daughter—nobody thinks I am her father, which is a good thing. We are sitting together in solidarity today, because we think this is a really important issue and my hon. Friend the Member for Bolton South East is right to raise it. We came to this country and we can remember the speech made in 1968 by Enoch Powell, which cast a shadow over a whole generation.
The good thing about this place is that when we have discussed race issues, no matter what happened in the referendum campaign and the words my hon. Friend quoted, there is an all-party consensus about the contribution of the migrant community and the diversity of Britain. As I said to the Prime Minister last week, he has constructed the most diverse Government in the history of the Conservative party, with more women and more ethnic minorities sitting in the Cabinet and the Government. Labour did the same thing when we were in office.
How do we translate the huge achievements of the migrant community and get everyone, including the media, to understand that they are a force for good? It means talking them up, but it also means that when the chips are down we defend them, support them and stand up for them. I was so pleased to hear what the hon. Member for Strangford (Jim Shannon) said. I have been to his constituency and I know his commitment to different communities. Northern Ireland has different issues, but he has always supported all his constituents equally, as we all do. How do we, as parliamentarians, translate that contribution and get that message across to the public? That is the problem we face.
The problem is very stark. As I said to my hon. Friend the Member for Bolton South East, today I received a letter from the Metropolitan Police Commissioner. The figures in that letter are shocking: an increase from 20 to 60 hate crime incidents every single day. The number of hate crime incidents between the day after the referendum, 24 June, and Tuesday 28 June was 232 in the Metropolitan police area alone. We do not know the figures for the rest of the country. A lot of people do not want to report these crimes: as with any crimes, including crimes against women, people do not want to report them. The figures represent the number of reported incidents only. I would imagine that the number of hate crime incidents is even greater.
Catherine West
Does my right hon. Friend agree that there is a real issue around reporting such crimes, in particular in schools? Young children do not really understand what it means when another child says, “You’ve got to go home now,” and how that can be reported and linked in with police officers within the school context.
Keith Vaz
My hon. Friend is absolutely right and as the former leader of a council she will know the importance of starting at a very young age. That is the impressionable age and that is where we need to begin the dialogue. That is where we need to show these positive images. We all represent constituencies with ethnic minority communities. It is important that that exposure happens at a very early stage.
The referendum polarised opinions. I, of course, voted for remain. I say of course, because under the previous Labour Government I was a Minister for Europe. There were many Ministers for Europe under the Governments of Tony Blair and Gordon Brown. One of my jobs, when I was appointed by Tony Blair, was to go to the eastern European countries and prepare them for enlargement. His first words to me were, “Get closer to them than the French and the Germans.” I did and I travelled a lot: I made 54 visits in two years. I went to eastern Europe, having never visited before, and it was a revelation. We should say in the House how pleased we are with the contribution that eastern European communities have made to our country. People are surprised to hear that the figure is 3 million. I do not think that one can tell, because these are the hardest-working communities, they contribute in each and every constituency, and they make the lives of our citizens better.
I was shocked to hear not just about the incidents recounted by hon. Members or about the crimes committed but about how social attitudes have changed because of the referendum. It has changed not just the political make-up of our country—with so many party leaders resigning within days of the referendum—but attitudes. That is why last Sunday, with my hon. Friend the Member for Ealing Central and Acton (Dr Huq), I went to Ealing Broadway—not Leicester but Ealing Broadway, Ealing being the centre of the Polish community in London—and sat through a Polish mass at the Church of Our Lady Mother of the Church. It was the first Polish mass I had been to since I was Minister for Europe and I went to a mass in Piekary Slaskie in Poland.
At the end of the mass, I was asked to address the congregation, and I reminded them of the great affection we all felt for the contribution made by the Polish and other communities that have come here as a result of enlargement. When I went outside, an elderly Polish gentleman came up to me and said, “I have to tell you what happened the day after the referendum. I go to an elderly persons’ lunch club. When I went in, I was told by the person who runs it that, because of the referendum vote, I was not allowed to have lunch with the other people.” If I had not heard this myself, I would not have believed it. I represent probably the most multi-racial constituency of anyone sitting here, and I have never heard such a thing from members of the British Asian community. Yet here was I, in the middle of Ealing, hearing this from an elderly Polish gentleman who had lived all his life in this country—Polish migration began at the time of the second world war.
What starts with a social attitude or a speech, whether at school—as mentioned by my hon. Friend the Member for Hornsey and Wood Green (Catherine West)—or among the general migrant community, ends up with a hate crime and violence. That is what we need to guard against.
Amanda Solloway (Derby North) (Con)
The right hon. Gentleman mentioned school. I heard a horrific story the other day from a headteacher about two seven-year-old boys who had always been best friends. On the Monday after the referendum, one of them said to the other, whose parents were Polish but who had been born here, “You’re going home. You won’t be in this country any more”. That cannot be right, surely.
Keith Vaz
The hon. Lady is absolutely right. It cannot be right for a seven-year-old to say such things, but it is because of prevailing attitudes either in the local area or, most probably, in the home of that child. That is exactly what my hon. Friend the Member for Bolton South East was saying, and that is why her debate, held so quickly after the referendum, is so important. It is not about whether someone voted to stay in or come out—it is the settled view of the British people that we should come out—but about the attitudes that remain, the speeches made and the quotes she gave. These points have to be regretted.
I am sorry that I missed yesterday’s urgent question from my right hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart). It is really important that the Government settle the issue of whether EU migrants can stay here. It is not an issue for the Conservative party’s leadership campaign—it cannot be talked about in hustings; it has to be told to the House. I believe that the Prime Minister is an honest, honourable, fair and diligent person, and I believe that if he came to that Dispatch Box tomorrow and was asked this question, he would come out with a settled view and tell us that they can stay—that they should not be, as we heard yesterday, bargaining counters. I am sure he would say that we will allow the 1.2 million Britons to stay in the EU and that we will keep the 3 million. Of course, the numbers will not stack up in any case. The need to clarify is what causes people to be concerned, which is why it is important that we clarify these matters as soon as possible.
Stephen Doughty
My right hon. Friend is making some strong points. Before he finishes, I want to agree with his point about Polish people in this country. I have Polish relatives, many of whom live in the constituency of my hon. Friend the Member for Bolton South East (Yasmin Qureshi). I am horrified at some of the abuse that has been directed at the Polish community. Given what I said before about the impact of social media and the internet as a common theme running through everything I have seen in the last few years—whether it be this type of hate crime, hate crime directed at LGBT people, extremism, radicalisation for terrorism or the sectarianism we saw in the Scottish referendum that was also played out online—what does my right hon. Friend feel that social media and internet companies need to do?
Keith Vaz
My hon. Friend is absolutely right that the responsibility on social media and internet companies is massive. I cannot understand why companies that make millions of pounds cannot have dedicated teams to take down this hate immediately. Why should it be left for people to block those who write these racist comments? We have to be sitting and looking at our iPhones every single minute of the day to know what people are saying about us. I block a lot of people: I have some friends, but also some enemies on the internet. The fact is that those companies should be doing this, and if they do not do it, Parliament should legislate.
Let me conclude. The Select Committee decided unanimously on Wednesday to have an inquiry into hate crimes and violence. We heard the words of the Minister last week at the Dispatch Box, and I welcome what she said. I also welcome her personal commitment to this issue. I have been in the House for 29 years, and I know the difference between a Minister who comes to the Dispatch Box and just says what is in the brief and a Minister who comes to it but believes passionately that something must be done. The Minister does believe in this issue passionately. She believes in zero tolerance for racism and anti-Semitism; she wants to put in place an action plan to which we can all adhere; she wants consistency. That is what we all want.
The Minister will find this House united in support of what the Government propose, because there can never be any doubt that we stand united in support of all the communities who have come to this country since we have been in the European Union and the diaspora community that has settled here for many years, including my hon. Friend the Member for Bolton South East, my hon. Friend the Member for Walsall South—my sister—and me. This is our country. I know this phrase has been used a lot, especially by Conservative leadership candidates, but I love this country, too, and I do not want anyone to say of us collectively that we tolerate racism, anti-Semitism or hate. We stand united to defeat them.
The Parliamentary Under-Secretary of State for the Home Department (Karen Bradley)
I congratulate the hon. Member for Bolton South East (Yasmin Qureshi) on securing today’s debate and I wish her a happy birthday. I hope she will have some remaining time this evening to enjoy it.
Hate crime of any kind, directed against any community, race or religion has absolutely no place in our society. I reiterate my message from last week: this Government are utterly committed to tackling hate crime, and we will provide extra funding to do so. We will also take steps to boost reporting of hate crime and support victims, issue new Crown Prosecution Service guidance to prosecutors on racially aggravated crime, provide a new fund for protective security measures at potentially vulnerable institutions and offer additional funding to community organisations so that they can tackle hate crime.
I do not propose to repeat the many points discussed last week. Instead, I shall reflect on the comments made today and answer the questions put to me. It is worth repeating, however, that the scenes and behaviour we have seen in recent days, including offensive graffiti and abuse hurled at people because they are members of ethnic minorities or because of their nationality, are despicable and shameful. The examples cited today across the House show that this is a real problem affecting our constituents up and down the country, including in my own constituency of Staffordshire, Moorlands. I know of comments and abuse that have been directed at Polish friends in my constituency —people who have lived and worked there, who have contributed to our communities, and whom we value and want to protect. We must stand together against such hate crime, and ensure that it is stamped out.
The right hon. Member for Leicester East (Keith Vaz) gave the House some statistics. Let me now give some statistics from True Vision, the police online reporting portal, and from the letter to which he referred. Between 23 and 29 June, 331 reports of hate incidents were made to True Vision. When compared to the weekly average of 63 reports in 2016, that shows a 525% increase. However, although those figures undoubtedly seem shocking, I urge people to be cautious about drawing conclusions from them, because they represent a snapshot of reports rather than definite statistics. We should bear in mind that the extensive media coverage of hate crime will have increased awareness of True Vision, and may have encouraged increased reporting—which we welcome. We should also bear in mind that some of the reports may relate to non-criminal hate incidents, and that some may be duplicated. As I have said, I urge caution because this is an early snapshot, but we nevertheless take it very seriously.
The right hon. Gentleman referred to figures included in a letter from the Metropolitan Police Commissioner, which showed that there had been 599 incidents of race hate crime between 24 June and 2 July in the Metropolitan police area. As he said, that is an average of 67 per day. However, it is worth noting that the average daily number before 24 June was 44 per day, and that the number of reports normally varies between 25 and 50 per day. We are seeing an increase in reporting of hate crime, which I greatly welcome, but when we have definitive figures, we will need to establish whether it is an underlying increase in prevalence or an increase in reporting. We need to know how the figures break down.
Much of the reporting of hate incidents has been through social media, including reports of xenophobic abuse of eastern Europeans in the United Kingdom, as well as attacks against members of the Muslim community. However, we have also seen messages of support and friendship on social media. The hon. Member for Bolton South East referred to an incident on a tram in Manchester. I am sure that the whole House will join me in commending those we have seen stand up for what is right, upholding the shared values that bring us together as a country.
When we debated this matter last week, the hon. Member for Belfast East (Gavin Robinson) asked us to ensure that the hate crime action plan did not include the words “tolerate” and “tolerance”, and he was right to do so. We cannot “tolerate” incidents such as these, because they are not acceptable. We cannot say, “You received 40 messages of hate on Twitter today, so if you receive 50 tomorrow that is worse, but if you receive only 30, that is OK.” We cannot tolerate any such crimes. We must make it clear that they will not be tolerated, that they need to be reported, and that the police must take them seriously.
The hon. Member for Cardiff South and Penarth (Stephen Doughty) made a couple of interventions about social media and online messages, and I agree with much of what he said. What is illegal offline is illegal online. We have seen some prosecutions for online hatred, but there is no doubt that more needs to be done. We have been talking to social media companies, and I am pleased to say that the European Commission and IT companies recently announced a code of conduct on illegal online hate speech. We must now work with those companies to ensure that hateful content online is removed and perpetrators are brought to justice, but we must also recognise the scale of the challenge. Facebook receives 4 billion posts a day—4 billion pieces of content are uploaded on to it each day, globally. The task is therefore very difficult. More responsibility must be taken by the social media companies, and I am pressing them on exactly that matter. However, we must also recognise that this is something that we must change in society as a whole.
The hon. Member for Bolton South East talked about hate speech in the media, and again there is no place for hate speech anywhere in society. Freedom of speech is a vital cornerstone of our society, but everybody must remember they have responsibilities not to spread hatred or fear. Anyone using freedom of speech as an excuse to break the law should face the full force of the law.
Karen Bradley
The hon. Lady asked about Leveson, too, and I note all the points she makes. The press have a responsibility, but she will know there are still some outstanding cases, and we do need to complete them before we can move on.
The hon. Member for Cardiff South and Penarth talked about how this is not a new kind of incident, and probably all of us experienced this through the general election campaign. Some of my posters were defaced and I received the most vile abuse. I have young children. This is why I am not on Twitter any more—because, frankly, they do not need to have that coming into our kitchen on a Sunday morning over breakfast; it is just not necessary.
The point is that this is not new. I went to the launch of the latest Tell MAMA report last week. It shows a 326% increase in 2015—compared with 2014—in street-based anti-Muslim incidents reported directly to Tell MAMA, including verbal abuse in the street and women’s veils being pulled away, with 437 incidents reported to Tell MAMA. The report also finds that 45% of online hate crime perpetrators are supportive of the far right.
This brings me to the work we are doing on our counter-extremism strategy. There has been some confusion about its aims. It is important to set this in context. Extremism is the public supporting and promotion of ideology that can lead to crimes. Those crimes might be terrorist activity or violence against women and girls. The public promotion of FGM, while not in itself a crime, might lead to somebody carrying out FGM, a violent crime against women and girls that we simply do not tolerate. It can lead to division in society and hate crime. That is why the Government are working on that strategy with communities and others. We need to make sure as a society that we are clear about how we tackle those ideologies, be they far right, Islamist or promoting violence against women and girls. Those are the kinds of ideologies we cannot tolerate in this society and that is what we are working on in our counter-extremism strategy.
I want to reassure the House that there is currently no police intelligence to suggest any significant public order risks following the referendum result. There has been a variety of spontaneous demonstrations both in support of and against the referendum result. To date, those have caused only minor disruption and have remained largely peaceful. Police forces are remaining vigilant around any tensions and potential for disorder, and will plan accordingly.
The right hon. Member for Leicester East, Chair of the Home Affairs Committee, referred to the hate crime action plan. This is a follow-up to the hate crime action plan we had in the last Parliament, and we are making progress: we are seeing more reporting and investigating and prosecuting of hate crime, but there is still a lot more to do. That is why we will publish a new hate crime action plan, which will cover all forms of hate crime, including xenophobic attacks. It is a plan we developed across Government and with communities and society, including schools, to make sure that point is included and encouraged in schools from a very early age, so that it is clear that such behaviour is not acceptable.
The hon. Member for Bolton South East talked about working across Government. I am looking at the best way for us to come together to make this point. I look forward to working with her, the Select Committee and others to show a united front in this House and in the leadership of this House on this issue.
Citizens of other EU countries no doubt have concerns, but I reiterate the point that the Prime Minister made last week: we are a full member of the European Union today and we will continue to be a full member until two years after article 50 is invoked. During that period, there will be absolutely no change to the status of EU nationals.
Keith Vaz
The Minister has faithfully reported what the Prime Minister said, but three senior members of the Government who are contestants for the leadership of this country have decided to say that EU citizens can stay. Why does the Home Secretary not agree with them? This issue is not about the Conservative party leadership; it is about the rights of citizens in this country.
Karen Bradley
I understand the point the right hon. Gentleman makes, but he will be aware that the Home Secretary is the Home Secretary, whether she is a leadership contender or not.
The reality is that we have to get into a negotiation and to understand what the position is. We are all entering uncharted territory. This is the first time that any country has voted to leave the European Union. It is the first time that any country has been in this situation. We have to be clear about what the future looks like, and that involves grown-up negotiations not just for those EU nationals who are in this country, but for UK nationals who are overseas. I want to ensure that we get the very best deal for Britain, and that includes the EU nationals who are here and the UK nationals who are living in the European Union.
Keith Vaz
The point that my hon. Friend the Member for Bolton South East (Yasmin Qureshi), I and others are making is that it is this uncertainty that leads to prejudice; it is this uncertainty that leads to one seven-year-old boy saying to another, “You’ve got to leave.” That is why we need to be certain.
Karen Bradley
I disagree with the right hon. Gentleman. I do not think that is what leads to it. It is about a lack of understanding and we need to work very carefully to make it clear that such comments are not acceptable from a seven-year-old boy or anybody else.
We are in uncharted territory. We need to go into the negotiation clear-headed about how we will get the best deal for Britain. To suggest that that is using people as bargaining chips is irresponsible, because everything that we negotiate in the deal will have an impact on people—on people living in this country and on people living overseas. We need to get the very best deal for this country. We need to ensure that it is the best deal for trade and for our citizens, including EU citizens who are living in this country. I want to be clear that it will be a priority to get that status cleared up as soon as possible, so that we can all learn how to live in the new world of the United Kingdom being outside the European Union as soon as possible.
The Government are clear that hate crime of any kind must be taken very seriously indeed. Our country is thriving, liberal and modern precisely because of the rich co-existence of people of different backgrounds, faiths and ethnicities. That rich co-existence is something we must treasure and strive to protect. We must work together to protect that diversity, defeat hate crime and uphold the values that underpin the British way of life. We must ensure that all those who seek to spread hatred and division in our communities are dealt with robustly by the police and the courts.
Question put and agreed to.
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Peter Kyle (Hove) (Lab)
The University of Sussex down in Brighton gets £9 million of funding from the European Union. The leave campaign was very clear that that funding would be replaced by British Government funding after Brexit. Will the Minister get to his feet and guarantee that that funding will continue? If not, will he bring his brother down to Brighton to explain directly to students why the door of education is going to be slammed in their faces?
Joseph Johnson
This Government, more than any other, understand the importance of science funding. That is why we have protected science spending until the end of the Parliament—a decade of real-terms protection. Our universities and institutes can continue today to apply for EU competitive funding streams under Horizon 2020, and I am sure they will continue to be successful in the future.
[Official Report, 28 June 2016, Vol. 612, c. 140.]
Letter of correction from Joseph Johnson.
An error has been identified in the response I gave to the hon. Member for Hove (Peter Kyle) during Oral Questions to the Secretary of State for Education.
The correct response should have been:
Joseph Johnson
This Government, more than any other, understand the importance of science funding. That is why we have protected science spending until the end of the Parliament—a decade of protection. Our universities and institutes can continue today to apply for EU competitive funding streams under Horizon 2020, and I am sure they will continue to be successful in the future.
Finance Bill (Third sitting)
(7 years, 10 months ago)
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The Chair
Will this it will be convenient to discuss the following:
That schedule 8 be the Eighth schedule to the Bill.
Clause 51 stand part.
Rebecca Long Bailey (Salford and Eccles) (Lab)
Who knows what adventures the Finance Bill will take us on today? Hopefully the sittings will be a little more sedate than last week’s.
I will first address clause 50 and schedule 8, and then move on to clause 51 relating to television and video games tax relief. Clause 50 brings in schedule 8, which introduces a new relief for orchestral concerts, provides for consequential amendments to other parts of taxes Acts as a result, and arranges for the commencement of the relief. First announced in the autumn of 2014, the new tax relief for orchestral production will allow qualifying companies engaged in the production of concerts to claim an additional deduction in computing their taxable profits and, where that additional deduction results in a loss, to surrender the losses for a payable tax credit. The additional deduction and the payable credit are calculated on the basis of European Economic Area core expenditure, up to a maximum of 80% of the total core expenditure by the qualifying company. The additional deduction is 100% of qualifying core expenditure, and the payable tax credit is 25% of losses surrendered.
The credit is based on the company’s qualifying expenditure on the production of a qualifying orchestral concert. The expenditure must be on activities directly involved in producing a concert, such as rehearsal costs. Qualifying expenditure will not include indirect costs, such as financing, marketing and accountancy and legal fees, and at least 25% of the qualifying expenditure must be on goods or services that are provided from within the EEA. Concerts that have among their main purposes the advertising of goods and services or the making of a recording, or that include a competition, will not qualify for relief.
The stated objective of the measure is to support the creative sector and sustainably promote British culture. I certainly back that approach, not least because the BBC Philharmonic orchestra is based in my constituency and continues to attract many like-minded orchestral organisations to my city. On the machinery of the calculations, however, as the deduction of credit is calculated on the basis of EEA core expenditure, what assessment has the Minister made of amendments that might need to be made to the clause as a result of Britain’s exit from the EU?
I am pleased that the Government took the time to consult on the measure, and I note that the summary of responses published in March 2015 indicates that the industry welcomed the introduction of the relief. I am also pleased that the Government took heed of the Opposition’s concerns about the initial proposal exempting brass bands from the relief, effectively introducing a brass band tax, and that the Government subsequently included brass bands in the relevant definition in March 2015. The draft Bill and a policy paper were published in December 2015, and the Government did not make any substantive changes after the technical consultation exercise, so I am confident that the legislation will do what it says on the tin.
The measure is expected to cost the Exchequer £5 million in the financial year 2016-17 and £10 million every financial year thereafter until 2019-20. The Opposition agree with the principle of supporting the UK’s creative industries and therefore support clause 50 and schedule 8, but we are concerned that we keep creating relief after relief. Why does this targeted measure take the form of a tax relief, rather than a grant? Also, the industry is concerned that the relief does not support commercial music production, which is supported in other countries. Will the Minister clarify today, or indeed in a written response after today, what support is in place for this important industry?
Finally, what modelling have the Government done to ensure that the legislation is rigorous enough to prevent use of the relief for avoidance purposes? I understand that there were some issues about film tax relief and avoidance, and I am also concerned that the wording in proposed new section 1217RL to the Corporation Tax Act 2009 may not be very robust, especially with reference to those tax avoidance arrangements that fall within the ambiguous term, “understanding”; I am sure that the Minister will agree that by their very nature those will not be contractual. Will he confirm whether he has given thought to additional resources that Her Majesty’s Revenue and Customs might need if it is adequately to investigate such scenarios?
Clause 51 simply makes minor, consequential amendments to the Taxation of Chargeable Gains Act 1992 and the Corporation Tax Act 2010, substituting the words “section 1218B” for “section 1218”. The Opposition support television and video games tax relief, as we introduced it. We see no issue with this technical clause.
The Financial Secretary to the Treasury (Mr David Gauke)
It is a great pleasure to serve under your chairmanship again this morning, Mr Howarth. I welcome the hon. Member for Salford and Eccles to the Committee. She has taken on a substantial workload in the past few days. Having had experience of performing her role of holding the Government to account in the Finance Bill, I recognise how challenging it can be. I wish her luck in that; if I may say so, she has made an excellent start, raising important points about this group of clauses.
I will start with a few words about clauses 50 and 51 and schedule 8, and then I will respond to the hon. Lady’s questions. The Government have supported our world-leading creative and cultural sectors, which have entertained millions worldwide while attracting significant investment into the United Kingdom. Clause 50 and schedule 8 provide further support by introducing a new corporation tax relief for the production of orchestral concerts. The Government recognise the cultural value and artistic importance of Britain’s orchestras. The relief is intended to support them in continuing to perform for a range of audiences, and in contributing to British culture.
Clause 51 makes minor consequential amendments to the Taxation of Chargeable Gains Act 1992 and the Corporation Tax Act 2010 as a result of the introduction of video games tax relief in the Finance Bill 2013. The change is not expected to have an impact on businesses that claim the relief.
The UK is home to some exciting, world-famous orchestras. The relief introduced by clause 50 recognises their artistic importance and cultural value. Its objective is to support orchestras so that they can continue to perform for a wide range of audiences. To deliver that support, the Government are building on the success of existing creative sector tax reliefs available for the production of film, high-end television and children’s television, video games, animation and theatre. Those reliefs have shown how targeted support can make a real difference, not only by promoting economic activity, but by promoting British culture and the way that the UK is viewed internationally.
Clause 50 will introduce a new corporation tax relief and payable tax credit for the qualifying costs of producing an orchestral performance. It will support a wide variety of ensembles and performances, from chamber orchestras to large brass bands playing music ranging from jazz to blues. It will allow production companies to claim a payable tax credit worth up to 25% of the cost of developing an orchestral concert, with effect from 1 April this year.
In 2013, minor consequential amendments were made to the Corporation Tax Act 2010, as some sections were renumbered following the introduction of video games tax relief in the Finance Bill 2013. Clause 51 makes a further consequential amendment to the Act and the Taxation of Chargeable Gains Act 1992; it is not expected to have an impact on any business claiming that relief.
The Government are grateful for the constructive and positive engagement with the industry since the policy was announced, and during consultation in 2015. That has enabled us to understand better how the orchestra industry operates, and to design a relief that will work across the sector. The director of the Association of British Orchestras, Mark Pemberton, has commented that the relief
“will make a big difference to our members’ resilience in these challenging times, helping them to continue to offer the very best in British music-making to audiences both here in the UK and abroad.”
The hon. Lady asked whether there was a risk of the relief being abused. Effective anti-avoidance rules are critical to the long-term success and stability of orchestra tax relief. Rules similar to those applied to the creative industry reliefs aim to prevent artificial inflation of claims. In addition, there will be a general anti-avoidance rule based on the GAAR denying relief where there are any tax-avoidance arrangements relating to the production—and, of course, HMRC will monitor for abuse once the regime has been introduced. On HMRC resourcing, I point the Committee in the direction of the £800 million announced in last year’s summer Budget, which provided further investment in HMRC to deal with avoidance and evasion measures more generally.
I come back to the point the hon. Lady raised about film tax relief and how that was abused. It is true that an earlier design of film tax relief was brought in by the previous Labour Government and was abused. That relief was abandoned by that Government, and the replacement model has been much more successful. It has provided the support that the film industry needs and benefits from, and that has helped to ensure that we have a thriving film industry without anything like the risks of abuse we saw formerly. In the measures that we have taken, we have learned from the previous approach.
The hon. Lady referred to making use of an EEA definition, and understandably asked what the implications are of the vote to leave the European Union. It is too early to say exactly how that will work. We are not sure what relationship we will have with the European Union, other than that we will be leaving it. It is quite possible that EEA definitions and so on will remain relevant, but we currently remain members of the EU and are considering legislation that takes effect in April, so it is necessary to comply with the rules as they stand. If it is necessary to review definitions, that is something we will have to look at, but that will depend on the future renegotiation.
The hon. Lady expressed the concern that perhaps we have too many tax reliefs. As the Chancellor made clear in the House of Commons yesterday, there is a place for reliefs, but our general and main focus has been on lowering corporation tax rates, and that continues to be the case. There is scope for using tax reliefs to support investment in growth through the tax system, and that is why we provide a range of tax reliefs and allowances. The Government have restricted a number of tax reliefs and allowances; for example, we have introduced a cap on income tax reliefs, restricted relief for buy-to-let landlords and capped the amount of losses through which banks can reduce their tax, so we have taken action on reliefs where we feel that their use is disproportionate to the benefits for the wider economy.
On orchestras, the Government are committed to supporting the arts through both spending programmes and tax reliefs. The orchestra tax relief is intended to complement current funding. It is specifically aimed at supporting orchestras in continuing to produce high-quality music that is enjoyed by a range of audiences. In those circumstances, we think it is justifiable. I hope that the clause has the support of Members in all parts of the Committee.
Question put and agreed to.
Clause 50 accordingly ordered to stand part of the Bill.
Schedule 8 agreed to.
Clause 51 ordered to stand part of the Bill.
Clause 52
Banking companies: excluded entities
Question proposed, That the clause stand part of the Bill.
Rebecca Long Bailey
Clauses 52 and 53 relate to the taxation of banking companies. Clause 52 amends the excluded entity test that forms part of the definition of a bank for tax purposes, and clause 53 makes provisions to restrict corporation tax loss relief.
Following the financial crash in 2008, specific taxes were imposed on the banking sector, and a definition of “banking companies” was required. The excluded entity test forms part of this definition. Clause 52 revises the legislation so that undertaking a second activity is possible, provided that the entity undertakes one of the specified regulated activities in the excluded entities test, and that the other activity, when considered by itself—that is, without taking into account the regulated activity that is specified in the excluded entities test—would not require the firm to be both an IFPRU 730K investment firm and a full-scope IFPRU firm as defined by reference to the Financial Conduct Authority handbook.
As the British Bankers Association has explained in far more articulate layman’s terms,
“Effectively there is a list of permitted activities which do not cause you to be treated as a bank and brought into the various bank-specific taxes, even if you meet all the other conditions. The change to the rules allows you to carry on more than one of those activities and still be excluded.”
This measure clarifies the rules and has been welcomed by industry. We therefore have no issue with agreeing the clause today. We also welcome clause 53, which, to quote the explanatory notes to the Bill,
“further restricts the proportion of a banking company’s annual taxable profit that can be offset by brought forward losses to 25%. The further restriction will apply to accounting periods beginning on or after 1 April 2016.”
At autumn statement 2014, it was announced that the amount of taxable profit that could be offset by banks’ historical carried-forward losses would be restricted to 50% from April 2015. However, this clause further restricts the proportion of a banking company’s annual taxable profit that can be offset by brought-forward losses from 50% to 25%. The restriction will remain subject to a £25 million allowance for building societies, and an exemption for losses incurred by new entrant banks. The Government estimate that this will generate over £2 billion in extra revenue between the current financial year and 2020-21. They also state that the measure should be revenue-neutral in the long run for any one bank, but the timing of the measure may well have negative implications for cash flow.
The British Bankers Association has indicated that further restricting bank losses from the financial crisis to 25% of profits rather than 50% primarily brings about a timing difference; it effectively accelerates payment of £2 billion in tax into this Parliament and out of the next one. Combined with the previous changes, it means £5 billion is being brought forward to this Parliament.
Can the Minister say why the Chancellor needed to accelerate this windfall in tax revenues? Was it part of his desperate attempts to ensure a budget surplus by 2020? I suspect it might have been. However, that argument is now redundant, given the recent suspension of that aim, and I am really glad that the Chancellor is finally listening to the experts and my hon. Friend the shadow Chancellor. Nevertheless, we welcome this new requirement on banking companies to increase their contribution to the Exchequer in the light of their role in causing the current economic situation.
I am glad that the Government are taking steps to address the casino banking sector. However, the policy should be seen in the wider context of the Government’s new settlement with financial services, as announced by the Chancellor, which includes the shift in emphasis from the bank levy to the banks’ tax surcharge as a result of lobbying by the sector, and watering down promised regulatory provisions in the Bank of England Act 2016.
In the 2016 Budget, the introduction of a general restriction on carried-forward losses was announced. That will come into effect on 1 April 2017, and the Opposition support it. In the meantime, we are more than happy to agree to the further restriction set out in clause 53.
Mr Gauke
I am grateful to the hon. Lady for her support for clauses 52 and 53, which will ensure that the exceptional tax treatment of banks’ crisis-related losses is maintained in the light of the wider changes to the UK loss relief regime announced in the Budget. They will also amend the definition of a bank used in tax legislation to ensure that bank-specific tax measures are targeted as intended.
Clause 52 will change the definition of an investment bank to ensure that legislation is appropriately targeted. We have been clear that banks should make a fair contribution to reflect the risks they pose to the UK economy, and we have taken several steps to ensure that they do make that contribution. The Chancellor introduced the bank levy—a tax on banks’ balance sheets—in 2011 and removed tax relief for banks’ compensation in relation to misconduct and mis-selling from July 2015. We restricted the amount of profit that banks can offset with historical corporation tax losses, and we introduced a new supplementary tax of 8% on banking sector profit from 1 January 2016.
Those policies, which are forecast to raise more than £28 billion between 2015 and 2021, rely on there being an appropriate definition in tax legislation of a bank. That definition is based broadly on the extent to which a company is regulated and the nature of the activities that it undertakes. Concerns have been raised that the existing definition has the potential to go further than intended and bring into scope companies that are not undertaking retail or investment banking activities. We seek to address that through clause 52, which will make a minor technical change that is expected to have a negligible cost to the Exchequer and will ensure that legislation is fair and appropriately targeted. The clause will ensure that banking taxes are targeted appropriately at banks and that legislation remains simple, certain and effective.
Clause 53 will reduce from 50% to 25% the amount of profit that banks can offset with historical losses for corporation tax purposes from 1 April 2016. When a company makes a loss for corporation tax purposes, it is able to offset that loss against the profit of a group member in the same year. If that is not possible, companies are able to carry forward their losses and offset them against future profits. Companies’ ability to carry forward losses is an important feature of the corporation tax system. It means that companies with volatile income streams are not subject to higher effective rates of tax on their long-term profits. In the 2014 autumn statement, the Chancellor announced that the proportion of taxable profit that could be offset by banks’ pre-April 2015 losses would be limited to 50% from 1 April 2015. That exceptional treatment recognised the significant losses that banks had carried forward from the financial crisis and the subsequent misconduct scandals, and the impact that those losses were having on banks’ corporation tax payments. It was forecast to increase corporation tax receipts by £2 billion between 2015 and 2020.
In the March 2016 Budget, fundamental reforms were announced to the treatment of carried-forward losses across all industry groups, to take effect from April 2017. First, there will be greater flexibility regarding the profits against which carried-forward losses can be offset. Secondly, the amount of profit that can be offset by carried-forward losses will be restricted to 50% from April 2017, subject to a £5 million allowance. Those reforms will create a more modern loss relief regime in the UK that is competitive with those in other G7 countries and better aligned with how businesses operate.
The changes made by clause 53 will maintain the exceptional treatment of banks’ historical losses by reducing from 50% to 25% the amount of profit that banks can offset with historical carried-forward losses from 1 April 2016. That will increase banks’ corporation tax payments by around £2 billion over the next five years. The existing reliefs for losses incurred by new entrant banks and building societies will be maintained; those will continue to be treated in the same way as losses in other industry groups.
On the hon. Lady’s question about timing, these measures, taken together, will raise about £5 billion in 2016-17 alone. It is important that the banking sector’s tax contribution is made when it is most needed during this period of fiscal consolidation. I take the point about the changed circumstances in the light of the vote to leave the European Union. It is also important that we make progress in reducing the deficit, and that we demonstrate that the Government are fiscally responsible. That is what we are doing. This measure is part of a plan to make progress to reduce our deficit further. Having given the Committee those points of information, I hope that these clauses can stand part of the Bill.
Question put and agreed to.
Clause 52 accordingly ordered to stand part of the Bill.
Clause 53 ordered to stand part of the Bill.
Clause 54
Reduction in rate of supplementary charge
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clauses 55 to 59 stand part.
Clause 128 stand part.
New clause 3—Corporation tax treatment of the oil and gas industry—
‘The Chancellor of the Exchequer shall, within six months of the passing of this Act, commission a comprehensive review of the corporation tax rates and investment allowances applicable to companies producing oil and gas in the UK or on the UK continental shelf, and publish the report of the review.’
New clause 6—Oil and gas: decommissioning contracts—
‘(1) The Chancellor of the Exchequer shall commission a review of the ways in which the tax regime could be changed to increase the competitiveness of UK-registered companies in bidding for supply chain contracts associated with the decommissioning of oil and gas infrastructure.
(2) In undertaking the review, the Chancellor shall consult the Department for Business, Innovation and Skills, the Oil and Gas Authority; Scottish Ministers; and any other stakeholders that the Chancellor thinks appropriate.
(3) The Chancellor shall report to Parliament on the results of his review within six months of the passing of this Act.’
The Exchequer Secretary to the Treasury (Damian Hinds)
It is a pleasure to serve under your chairmanship once again, Mr Howarth. These measures bring into statute a £1 billion package of fiscal reforms for the UK’s oil and gas sector. These changes will deliver the next stage of the Government’s reform plan for the oil and gas fiscal regime, and they will give much-needed support to an industry facing exceptionally challenging conditions. They will provide the right conditions in which to maximise the economic recovery of the UK’s oil and gas resources by lowering sector-specific tax rates, updating the current system of allowances and expanding the types of activity that can generate financial relief. The Government are making these changes to protect jobs, encourage investment in new projects and infrastructure, and safeguard the future of one of our most vital national assets.
I will provide hon. Members with some background to the changes. Almost 200 companies are currently in production in the UK oil and gas industry. They support 30,000 jobs directly and 250,000 in the wider supply chain. As hon. Members know, since 2014 the industry has experienced highly challenging conditions. Oil prices have fallen to less than half their 2014 value, putting thousands of jobs at risk. In the 2014 autumn statement, the Government set out our plan to reform the oil and gas fiscal regime in the publication “Driving investment”. That document recognised the need to reduce the future oil and gas tax burden in order to maximise economic recovery and keep the UK basin attractive to investors as it further matures. We delivered on that plan by reducing the rate of the supplementary charge and the petroleum revenue tax in 2015. As announced in the March 2016 Budget, we will lower both those rates further.
Between 2013 and 2015 the Government introduced the investment, onshore and cluster area allowances, which replaced the old suite of field allowances with a simplified and expanded relief system to generate greater investor certainty in the sector. The Government intend to include tariff income—income from third-party access to oil and gas infrastructure—in the scope of the investment and cluster area allowances. We will introduce secondary legislation later this year to facilitate that. Clauses 55 to 59 update the investment, onshore and cluster area allowances to align them with that piece of future legislation and ensure that the allowances are not generated twice.
The changes made by clause 54 will halve the rate of the supplementary charge from 20% to 10%. That will make the sector more attractive to future investors, thereby providing much-needed support for jobs and supply chain opportunities across the industry. As I said, clauses 55, 57 and 58 update the disqualifying conditions of the investment, onshore and cluster area allowances to prevent allowances being generated twice and to limit opportunities for avoidance. Clause 55 amends the investment allowance to update the conditions that disqualify expenditure incurred before a field is determined. This will protect the Exchequer and ensure the legislation works as intended.
Similarly, clause 57 updates the onshore allowance to introduce certain disqualifying conditions. This will provide parity with the other allowances available to the sector. Clauses 55 and 58 insert leasing into the disqualifying conditions for the investment and cluster area allowances. Together these three clauses will align the investment, cluster area and onshore allowances with future legislation while ensuring the allowance is not open to avoidance opportunities.
Clauses 56 and 59 amend the investment and cluster area allowances and introduce a power to expand the meaning of “relevant income”. The Government intend to enable tariff income to activate the investment in cluster area allowances and incentivise owners to maintain investment in the sector’s infrastructure, including key pipelines. These measures will encourage further investment in exploration and appraisal projects, which are the lifeblood of the industry.
Finally, clause 128 changes the petroleum revenue tax by reducing its rate from 35% to zero. Our commitment is effectively to abolish this tax by zero-rating it on a permanent basis. This change will simplify the tax regime for investors and level the playing field between investment opportunities in older oil fields and infrastructure and new developments across the North sea. Furthermore, clause 128 will update the Oil Taxation Act 1975 to reflect the new zero-rated nature of the petroleum revenue tax and amend the cap on interest carried on its repayments. The clause will work in tandem with clauses 54 to 59 to deliver the next stage of fiscal reforms to support the oil and gas sector.
New clause 3, tabled by the hon. Member for Kirkcaldy and Cowdenbeath, calls for the Government to review the taxes and allowances that apply to oil and gas-producing companies in the UK within six months of the Bill receiving Royal Assent. However, a further review into oil and gas taxes is not required because the Government already carried out a broad review of the fiscal regime in 2014. The outcome of that review, as I mentioned, was the publication “Driving investment”, which sets out our long-term plan to ensure that the fiscal regime continues to support the objective of maximising economic recovery while ensuring a fair return on those resources for the nation.
The principles in “Driving investment” recognise the need for the oil and gas tax burden to fall as the basin matures, and the need to factor wider commercial opportunities when making judgments about future fiscal policy. The March 2015 Budget delivered on many of the reforms set out in that plan by reducing the rate of both the supplementary charge and the petroleum revenue tax. The package announced in the March 2016 Budget delivers the next stage of our plan for reform.
The Government understand now, as we did in 2014, that certainty and stability are crucial to providing the right conditions for companies to continue investing in this vital industry. Another review could create further uncertainty for the industry and delay investment, particularly in the current environment. Therefore, given the volume and range of work that has been done in this area recently, an additional review is unnecessary, so I urge the hon. Gentleman not to press his new clause or, failing that, I urge Members to reject it.
New clause 6, which was also tabled by the hon. Member for Kirkcaldy and Cowdenbeath, calls for a review into how the tax regime could increase the competitiveness of UK-registered companies in bidding for supply chain contracts associated with decommissioning. Decommissioning in the UK continental shelf brings significant opportunities for UK business and we want to maximise those. The Government fully support the vision of Sir Ian Wood to establish the north-east of Scotland as
“a global centre of knowledge and excellence in offshore mature basin technology and decommissioning”.
That is why the Government support the creation of an oil and gas technology centre in Aberdeen as part of the Aberdeen city deal. It is also why the Oil and Gas Authority will soon be publishing a decommissioning plan for the continental shelf. This will be focused on enabling the £15 billion service sector in Aberdeen to become the centre of a new global market for decommissioning and will help UK firms to capitalise on the huge opportunities that will become available. It is of course important that we have a tax regime that supports that ambition, and the package being delivered in the Bill will ensure that the UK has one of the most competitive tax regimes in the world for oil and gas. In addition, the Government have cut the rate of corporation tax to 20%—the lowest in the G20—and we are committed to going further.
With a competitive tax system in place and the OGA’s focus on realising the opportunities of decommissioning, I firmly believe that UK businesses are in a strong position to benefit. Certainty and stability are vital, and I do not believe that these would be supported by a further review. I therefore urge the hon. Gentleman not to press new clause 6.
The changes brought about by these clauses will deliver the £1 billion package of fiscal reforms announced in the March 2016 Budget by cutting tax rates, encouraging investment in infrastructure and updating the oil and gas allowances. These measures will send a strong signal to the global investment community that the UK’s oil and gas sector is open for business and ready for investment.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
It is a pleasure to serve under your chairmanship once again, Mr Howarth. As the Minister has spoken to both new clause 3 and new clause 6, I seek clarification that I may attend to both at the same time.
Philip Boswell
Thank you. In relation to new clause 3, the cut to the supplementary charge set out in clause 54 is of course welcome. It will assist in encouraging business investment, and I commend this initiative. However, the UK Government’s support for the oil and gas industry, as it pertains to the cut in the supplementary charge and in a more general sense, does not go far enough. The alterations made to the financing of the oil and gas sector fall significantly short of the fiscal and regulatory reforms necessary to ensuring a steady recovery in the ongoing North sea crisis. Despite the oil price continuing to rise—it is currently around $50 for Brent crude—instead of the extensive regulatory changes experienced over the past 15 years, stability and certainty are required to increase and retain investment as well as some incentivisation. I must admit to being further encouraged by the Minister’s statements in this respect.
However, the UK Government must consider all possibilities that could facilitate fresh investment in the oil and gas sector. These possibilities need not be restricted to fiscal support. For example, schemes such as Government guarantees ought to be explored. I would welcome such initiatives from the Minister. Has he considered further the following suggestions, made by the Scottish Government to the Chancellor in February 2016: removing fiscal barriers, specifically for exploration and enhanced oil recovery; implementing fiscal reforms to improve access to decommissioning tax relief and encourage late-life asset transfers—that would reduce costs and help prevent premature cessation of production, which is critical if marginal fields are to be garnered in future—and implementing additional non-fiscal support, such as Government loan guarantees, to sustain investment in the sector? I welcome his commitment to future legislation, especially in relation to cluster allowances, and look forward to its introduction. The industry has called for a comprehensive strategic review of tax rates and investment allowances. Based upon my own experience of working in the sector, I believe that this review would be beneficial, hence my support for new clause 3.
In relation to new clause 6, the UK continental shelf is one of the first large fields in the world to reach super-mature status. This poses both a challenge and an enormous amount of opportunity. While no reservoir on the planet has harvested more than 50% of its reserves, and most of the “sweet oil”—the high-quality, easy-to-reach oil found to date, which requires minimum processing—has gone from the sector, we need to look at improving recovery and the technology required to maximise output through enhanced oil recovery, in order to maximise profits from these fields, marginal or otherwise.
Decommissioning is a key part of the life cycle of UKCS assets. Some have now lasted for over three decades, which in many cases considerably exceeds their original design life. It is advances in technology and additional tie-backs—additional nearby fields that can be tied into the existing infrastructure—which would otherwise be unprofitable if they required a bespoke pipeline, that have made our oil and gas industry so successful.
Oil & Gas UK has estimated that between now and 2040 the total decommissioning spend in the North sea on offshore assets is set to rise by £46 billion. That represents a huge opportunity for domestic supply chains, not to mention extensive finds further west of Shetland and off the west coast of Scotland, which as yet have hardly been touched. The companies that operate on the UK continental shelf are respected all over the world, as it is there, in rough seas with heavy swells, that technology has advanced in conjunction with safety measures to ensure that the North sea, and Scotland in particular, are at the forefront of offshore construction and sub-sea technology, which is something I specialised in at BP, Shell and Premier Oil.
Given our well-deserved status in sub-sea technology and the maturity of some of our fields, there is a real opportunity to become world leaders in well plugging and decommissioning. The UK Government need to incentivise and support the oil and gas industry so that UKCS expertise can be further developed in the North sea and exported around the globe. That begins with ensuring that the oil and gas industry is working in a fiscal regime that is appropriate to the maturity of the field, which is what new clause 6 seeks to do. Although there are always new fields being discovered and technological advances rendering previously unprofitable reservoirs profitable, it is in the management of mature assets, via enhanced oil recovery and further tie-backs, that optimise power output and profitability, a strategy adopted by Statoil, our near neighbours, the Norwegian national oil and gas company, where every barrel counts. That has proved very successful and is a strategy we should copy.
The removal of fiscal and regulatory barriers is imperative to the advancement of an internationally competitive tax regime in the North sea, such as Norway’s incentive to remove taxation on exploration where the contractor or operator drills a duster. The Minister of State, Department of Energy and Climate Change, the hon. Member for South Northamptonshire (Andrea Leadsom), in response to a question from my hon. Friend the Member for Aberdeen South (Callum McCaig) in September 2015, committed to a proactive policy to encourage the development of a capable and competitive UK supply chain. That proactive approach needs to start sooner rather than later.
I welcome the Minister’s announcement on the oil and gas technology centre in Aberdeen, and on the decommissioning focus in Aberdeen and the offshore construction centre in the UK, but what steps have the Government taken to compensate oil and gas companies for exploration in the UKCS where a duster is drilled? For example, in Norway no tax is applied to such exploration. What tax incentives are in place, or are being considered, to encourage or subsidise decommissioning projects by UK companies, where new technologies, techniques or even tried and tested decommissioning methods are utilised on various types of assets?
In September 2015 Wood Mackenzie reported that low oil prices could render marginal fields economically unviable and lead to potential decommissioning of up to 140 fields within the next five years. I reiterate that Brent crude remains at around $50 a barrel. If prices continue to rise to the forecast $70 to $75 dollars a barrel after the summer, what tax incentives has the Minister put in place to identify and retain critical infrastructure across the UKCS?
With that in mind, new clause 6 calls for a review of the ways in which the tax regime could be changed to increase the competitiveness of UK-registered companies in bidding for supply chain contracts associated with the decommissioning of oil and gas infrastructure, with the aim of ensuring that we take advantage of this momentous opportunity.
Rebecca Long Bailey
With permission, I will speak to clauses 54 and 128 together before moving on to the remaining clauses and new clauses.
As we have heard, clauses 54 and 128 reduce the rates of the supplementary charge levied on the ring-fenced profits of companies involved in oil and gas production and petroleum revenue tax respectively. Companies involved in the exploration for and production of oil and gas in the UK are charged ring fence corporation tax and a supplementary charge. RFCT is calculated in the same way as corporation tax but with the addition of a ring fence so that losses on the mainland cannot be offset against profits from continental shelf fields. It is important to note that the rates of RFCT differ from those of corporation tax, and that the main rate of RFCT is 30%. The supplementary charge is an additional charge on a company’s ring-fenced profits. Clause 54 would reduce the supplementary charge from 20% to 10% from 1 January 2016.
Petroleum revenue tax, which was introduced in 1975, is a tax on the profits from oil and gas production from fields approved before 16 March 1993. The Finance Act 1993 reduced the rate from 75% to 50%, and it was then reduced to 35% from 1 January 2016. Clause 128 reduces the rate to zero, effectively abolishing the tax, as the Chancellor explained in his Budget speech. These two measures, taken together, are expected to cost the Treasury just over £1 billion between this financial year and 2021. The Government expect the reduction in rates to increase the post-tax profits of affected companies. This will make investment in oil and gas projects on the UK continental shelf more attractive, which will lead to additional production of oil and gas.
According to the tax information and impact note, and as the Minister confirmed today, there are around 200 companies extracting oil and gas in the UK. The industry directly supports 30,000 jobs, with another 250,000 in the supply chain. The decrease in the supplementary charge and the petroleum revenue tax will have a positive impact on company post-tax profits and result in lower instalment payments being made. We have already welcomed this support for the UK’s oil and gas industry. The industry trade body, Oil & Gas UK, has broadly welcomed this reduction in the headline rate of tax paid on UK oil and gas production, from a rate of 50% to 67.5% to a rate of 40% across all fields.
However, it is important to note that Oil & Gas UK has stated that the reduction in tax will help only those companies that are actually making a profit. It estimates that fewer than half a dozen companies are paying corporation tax this year. Indeed, the 2016 Budget stated that the tax receipts for these companies in 2015-16 were zero. A reduction in those tax rates is therefore welcome, but it is a long-term benefit.
Frankly, I think that more needs to be done in the short term. Stakeholders have said that they are more concerned about the lack of exploration activity. Only one well was drilled in the first quarter of 2016, so more has to be done to stimulate exploration. Can the Minister confirm whether any plans are in the pipeline—excuse the pun, but we have to get our fun somewhere in the Finance Bill—to stimulate exploration on the UK continental shelf in the short term?
I have also heard concerns from the industry about the late-life asset market. As we have heard today from Scottish Members, decommissioning is a normal part of a production cycle, but it is very expensive. I am aware that a tax relief is available, but it depends on a company’s tax history. If new companies buy older fields, they cannot access the relief, thus blocking late-life asset trade. Essentially, assets are not being sold on as they should be. The policy paper on the 2016 Budget states that the Government are open to exploring
“whether decommissioning tax relief could better encourage transfers of late-life assets”,
if “significant progress” on reducing the cost of decommissioning has been made. I worry that that is rather vague. I would therefore welcome clarification from the Minister on exactly what “significant progress” means.
Clauses 55 to 59 make minor changes to the investment allowance, cluster area allowance and onshore allowance. These three allowances provide relief by reducing the amount of ring-fenced profits on which the supplementary charge is due. Investment and cluster area allowances are given at a rate of 62.5%, and onshore allowance at 75%. Clauses 55 and 58 update the conditions that disqualify expenditure from generating investment allowance and cluster area allowance respectively. They expand the conditions following the extension of the allowance to include some leasing expenditure by secondary legislation not yet enacted. As we have heard from the Minister, this is to ensure that there are no gaps in the legislation that would permit these allowances to be generated twice. This will have effect for expenditure incurred on or after 16 March 2016.
The clauses are technical measures with which I have no issue whatever. However, stakeholders have expressed frustration that it has taken so long to lay before Parliament the regulations extending the allowances. According to Oil & Gas UK, the consultation on the draft statutory instrument concluded in January, and since then things have gone quiet. Could the Minister take this opportunity to confirm exactly when the draft SI will be laid before Parliament?
Damian Hinds
It is a pleasure to respond to the pertinent questions put by the Opposition and SNP Front Benchers. They both asked about exploration, which is the lifeblood of the industry’s future. We had a choice: introduce a complex system of reliefs and incentives relating to exploration, or have a simple, straightforward tax cut across the board. We chose the latter. Reducing the tax payable on the economic activity lowers the hurdle point for investments, improves the net present value of projects, and means that more will take place. It is cutting the headline rates of tax, rather than anything else, that provides a clear incentive to invest in the continental shelf. The Government have also twice provided £20 million for seismic surveying to help kick-start those processes.
Allowances came up a number of times. Over the past few years, the Government have been simplifying that system. Allowances mean that projects that are economic, but not commercial at the higher rates of tax, can go ahead. That is good for the Exchequer, as it brings in more income, and good for the companies concerned. The hon. Member for Salford and Eccles, who speaks for the Opposition, asked when the Government would finalise the secondary legislation expanding the definition of qualifying expenditure for the investment cluster area allowances. Draft legislation was published at the end of last year and the technical consultation ended in January. HMRC has been analysing the responses to that and liaising with the Treasury and the OGA to ensure that the legislation works as intended. We plan to lay the new regulation before the House after the summer recess. It will apply to all qualifying expenditure incurred after 8 October 2015.
The hon. Lady also asked about the power to extend the definition of relevant income and the timing. The Treasury will consult with industry shortly, and will ask it to provide information and evidence to inform the design of the inclusion of tariff income in the investment cluster area allowances. It is a complex area, with a range of commercial arrangements that we need to understand if we are to ensure that infrastructure owners and users can benefit from the allowances. The power has been drafted in such a way as to ensure that the inclusion of tariff income can have a retrospective effect. That measure will not delay the introduction of the extension to qualifying expenditure.
The hon. Member for Coatbridge, Chryston and Bellshill rightly asked about the crucial opportunity area of decommissioning. Decommissioning across the shelf is expected to become a multibillion-pound industry, and there are significant export opportunities as other basins around the world become more mature. Decommissioning costs here could be more than £40 billion. As I said earlier, the Government support Sir Ian Wood’s vision of establishing north-east Scotland as a real centre of excellence. That is why we support the creation of an oil and gas technology centre in Aberdeen as part of its city deal. As the hon. Gentleman will know, the OGA will soon publish its United Kingdom continental shelf decommissioning plan.
The hon. Gentleman and the hon. Member for Salford and Eccles asked about late-life assets and asset transfers. We are in constant discussion with the OGA and industry to understand what impediments there may be to value-creating deals going ahead, and we retain an absolutely open mind on that. The hon. Gentleman also asked about Government guarantees. Again, that is something on which the Government have an open mind, in recognition of the importance of the sector. The Government are willing to consider proposals for using the UK guarantee scheme for infrastructure where that could help to secure new investment in assets of strategic importance to maximise economic recovery. Any proposals would need to meet the scheme’s criteria, including those relating to commerciality and financial credibility.
The Government have recognised the exceptionally challenging conditions that the industry faces, and in response announced a £1 billion package of fiscal reforms in the March 2016 Budget, which built on the extensive package from the previous year. The package includes halving the rate of the supplementary charge, permanently zero-rating the petroleum revenue tax, and extending the scope of key allowances to incorporate leasing and to encourage investment across the North sea. The Government have also committed £20 million of funding to a second round of seismic surveys to encourage development in under-explored areas.
Despite the extremely challenging conditions, this remains a sector of opportunity for Scotland and the UK; it is estimated that somewhere between 11 billion and 21 billion barrels of oil and oil equivalents are still to be had. More than £11 billion was invested in the sector last year. I am constantly encouraged by the positive attitude of the industry, and all the work that it is doing to get its cost base down and continue to look for new opportunities. I assure you, Mr Howarth, and all hon. Members, of the Government’s absolute commitment to the very positive tripartite approach between the industry, the Oil and Gas Authority, which is really more than a regulator, and the Government, who include the Scotland Office, the Department of Energy and Climate Change and the Treasury.
Christian Matheson (City of Chester) (Lab)
There is no doubt that the UK offshore oil and gas sector has a world lead, provides huge revenue and technical expertise to the UK, and needs to be protected, but my hon. Friend the Member for Salford and Eccles raised the spectre of onshore fracking. Can the Minister give reassurance that our efforts to support the offshore oil and gas industry will not be used as a back-door way of giving tax breaks to onshore fracking?
Damian Hinds
Mr Howarth, you would not want me to stray on to topics that are not strictly in the scope of the Finance Bill. The Government believe that there is significant potential for unconventional oil and gas—for fracking—and I think that we owe it to future generations, to ourselves and to British industry to make sure that we discover what opportunities are there. Exactly how the regime develops, in fiscal terms, is to be determined, but we know that there will be an absolutely robust safety regime. In the initial phase, the important thing is to find out on how big a scale that opportunity may be.
I had reached the conclusion of my remarks, having reiterated the very firm commitment across Government to supporting this industry. This is a bold package of support in the Budget. We know of no other country in the world that has responded on quite such a scale to the extremely challenging conditions presented by the world oil price. I commend the clause to the Committee.
Question put and agreed to.
Clause 54 accordingly ordered to stand part of the Bill.
Clauses 55 to 59 ordered to stand part of the Bill.
The Chair
I remind the Committee that I will put the question on clause 128—and new clauses 3 and 6, if required—without further debate when we reach them.
Clause 60
Profits from the exploitation of patents etc
The Chair
With this it will be convenient to discuss the following:
Government amendments 51 to 115 and 136.
Clause stand part.
Government amendments 116 to 121.
That schedule 9 be the Ninth schedule to the Bill.
Mr Gauke
Clause 60 and schedule 9 make changes to ensure that the UK’s patent box operates in line with a newly agreed international framework resulting from the base erosion and profit shifting action plan. The Forum on Harmful Tax Practices—the international group leading work on action 5—focused on harmonising the level of substantive activity required for access to preferential intellectual property regimes such as the patent box. This was linked to the BEPS action plan’s overall aim of aligning taxation with economic substance. The framework applies to all patent and innovation box-type regimes that apply preferential tax treatment to IP income in OECD, G20 and EU countries. It ensures that preferential tax treatment cannot be offered for as little as simply registering ownership of IP in a jurisdiction offering such a regime. While the UK’s patent box includes adequate safeguards to address these concerns, this framework will ensure that robust standards apply internationally.
The new framework also takes a slightly different approach from the UK patent box, so amendments to the current regime are required. In particular, the international framework links the availability of a lower tax rate offered by a preferential IP regime to the proportion of the development expenditure on the IP that the claimant taxpayer incurred, directly or through a third-party subcontractor. This means that if, for example, a claimant taxpayer directly incurred only half of the expenditure on a patent, with the other half of the expenditure being on acquisition, IP, or outsourcing to a related party, only half the profit derived from that patent will benefit from a lower tax rate.
Rebecca Long Bailey
Clause 60 and schedule 9 make substantial changes to the patent box, which provides for a reduced rate of corporation tax on profits from patents and similar intellectual property. The changes in this clause ensure compliance with the new international framework developed by the OECD for preferential IP regimes as part of the base erosion and profit shifting project.
The changes mean that the amount of profit for an IP asset that qualifies for the reduced 10% rate of corporation tax available through the UK patent box will depend on the proportion of the asset’s development expenditure incurred by the company. According to the explanatory notes to the Bill, the amended rules will require profit for the purpose of the patent box to be calculated at the level of an IP asset—for example, the patent, product, or product family relying on an IP asset or assets. The profit will be adjusted to reflect the proportion of the development activity on the asset, product, or product category undertaken by the company.
As the Minister confirmed, the measure will have effect for new entrant companies to the patent box on or after 1 July 2016, and also for some IP assets acquired on or after 2 January 2016. The new rules are being phased in, which is welcome; the current patent box rules will apply to some companies and IP throughout a transitional period lasting until 2021. The new rules will apply to all companies and IP after 2021.
By way of background, in December 2009 the Labour Government announced that they would consult on introducing a patent box—a reduced rate of corporation tax applied to income from patents—from April 2013 at a possible annual cost of £1.3 billion. The coalition Government took up our proposals for a patent box in a wider review of corporate taxation launched in November 2010. The consultation document argued that a tax relief would be most effective if it focused on patents, and that it would be proportionate to charge corporation tax at just 10% on profits made from them.
The coalition Government confirmed their plans in the 2011 Budget, and published a further consultation document in June. Draft legislation for the Finance Bill 2012 was published in December, including provisions for the patent box. In Budget 2012, the Government confirmed the introduction of the patent box, which would be phased in over five years from 1 April 2013. They estimated that its cost would rise from £350 million in 2013-14 to £910 million by 2016-17.
The Opposition welcomed the introduction of the relief, while moving an amendment to require the Government to report on
“other opportunities to introduce targeted support for business”.
This tax reform was clearly strongly supported by business at the time, but was not uncontroversial. Concerns were raised by several European countries, as well as the European Commission, that reform might represent harmful tax competition, encouraging companies to shift the ownership of patents created in other countries to the UK.
In late 2013, the EU code of conduct group raised concerns about the UK patent box, leading to press speculation that the Government might have to substantively amend the new relief. In November 2014, the Government announced that the UK had agreed with Germany that preferential intellectual property regimes—of which the UK patent box is one—should not encourage harmful tax competition and, as a result, certain changes would be made to the UK regime from June 2016. Subsequently, in October 2015, HMRC launched a consultation on amending the patent box regime to take account of these concerns. In December 2015, draft legislation to give effect to this change was published along with an impact note on the measure.
The 2016 Budget specifically confirmed that
“The government will modify the operation of the Patent Box to comply with a new set of international rules created by the OECD, making the lower tax rate dependent on, and proportional to, the extent of research and development expenditure incurred by the company claiming the relief. This will come into effect on 1 July 2016.”
Mr Gauke
I thank the hon. Lady for her broad support for the patent box. What we sought to do with the patent box—both when it was introduced and now—is ensure that we have incentives in our tax system to encourage internationally mobile activity. This is about bringing jobs and investment to the United Kingdom. It is not about artificial profit shifting. On the Government’s wider approach to the international tax system, we believe that there should be close alignment between economic activity, the profits that relate to that, and where those profits are taxed. That is why the UK has taken a leading role in the OECD’s base erosion and profit shifting process. Of course, any process like BEPS requires compromise, but the direction in which we believe the international tax system should go—towards closer alignment—is the one that BEPS has pursued, and we are pleased with the outcomes.
The changes to the patent box reflect a degree of compromise, but in essence, thanks to the patent box, the UK continues to offer an attractive place in which intellectual property may be developed. That is something that we wish to continue. I have to pick up on three of the points made by the hon. Member for Salford and Eccles. In the context of the EU, I will make a similar point to one I made earlier: we are still in the EU and a negotiation has yet to be undertaken to know where we stand exactly. There is also a wider point: when addressing the challenges of the international tax system, much of the legislation would apply whether we were in the EU or not, because the OECD BEPS process applies to all OECD countries. I do not think that anyone is proposing a referendum on whether we should leave the OECD—it is not one that I would welcome. In these circumstances, we expect to comply with the OECD standard, and that is very much our approach.
The hon. Lady also made a couple of technical points, the first of which was about what constitutes exceptional circumstances. For example, IP might have been purchased but turned out to be worth less, so that its contribution to the fraction is out of line with the cost. Obviously I cannot be exhaustive, but I hope that example is helpful in illustrating the types of things we are talking about. She also asked about tracking and tracing at an individual product level, and why that is not the approach we have taken. Companies will be able to track and trace at IP product level, so I hope that she is reassured, but I will write to her with further information.
Amendment 50 agreed to.
Amendments made: 51, in clause 60, page 94, line 38, leave out “either”.
Amendment 52, in clause 60, page 94, line 43, leave out “multi-IP” and insert “IP”.
Amendment 53, in clause 60, page 94, line 43, at end insert
“, or
(c) a sub-stream consisting of income properly attributable to a particular kind of IP process (a “process sub-stream”)”.
Amendment 54, in clause 60, page 95, line 1, leave out from “See” to second “and” and insert
“subsection (5) for the meaning of “IP item” and “IP process””.
Amendment 55, in clause 60, page 95, line 2, before “further” insert
“see subsections (5A) and (6) for”.
Amendment 56, in clause 60, page 95, line 2, at end insert “and process sub-streams”.
Amendment 57, in clause 60, page 95, line 12, at end insert—
“But see section 357BIA (which provides that certain amounts allocated to a relevant IP income sub-stream at Step 3 are not to be deducted from the sub-stream at this Step).”
Amendment 58, in clause 60, page 95, leave out lines 13 to 17.
Amendment 59, in clause 60, page 95, line 19, leave out from beginning to “deduct” in line 20.
Amendment 60, in clause 60, page 95, leave out lines 40 to 47 and insert—
“(5) In this section—
“IP item” means—
(a) an item in respect of which a qualifying IP right held by the company has been granted, or
(b) an item which incorporates one or more items within paragraph (a);
“IP process” means—
(a) a process in respect of which a qualifying IP right held by the company has been granted, or
(b) a process which incorporates one or more processes within paragraph (a).
(5A) For the purposes of this section two or more IP items, or two or more IP processes, may be treated as being of a particular kind if they are intended to be, or are capable of being, used for the same or substantially the same purposes.”
Amendment 61, in clause 60, page 95, line 48, leave out
“which is properly attributable to a multi-IP item”.
Amendment 62, in clause 60, page 95, line 49, after “sub-stream” insert “or process sub-stream”.
Amendment 63, in clause 60, page 96, line 5, at end insert—
‘( ) Any reference in this section to a qualifying IP right held by the company includes a reference to a qualifying IP right in respect of which the company holds an exclusive licence.”
Amendment 64, in clause 60, page 98, line 2, leave out “357A” and insert “357A(1)”.
Amendment 65, in clause 60, page 98, line 21, after first “income” insert “, finance income”.
Amendment 66, in clause 60, page 100, line 41, at end insert—
“357BIA Certain amounts not to be deducted from sub-streams at Step 4 of section 357BF
(1) This section applies where a company enters into an arrangement with a person under which—
(a) the person assigns to the company a qualifying IP right or grants or transfers to the company an exclusive licence in respect of a qualifying IP right, and
(b) the company makes to the person an income-related payment.
(2) A payment is an “income-related payment” for the purposes of subsection (1) if—
(a) the obligation to make the payment arises under the arrangement by reason of the amount of income the company has accrued which is properly attributable to the right or licence, or
(b) the amount of the payment is determined under the arrangement by reference to the amount of income the company has accrued which is so attributable.
(3) If the amount of the income-related payment is allocated to a relevant IP income sub-stream at Step 3 of section 357BF(2), the amount is not to be deducted from the sub-stream at Step 4 of section 357BF(2) unless the payment will not affect the R&D fraction for the sub-stream.”
Amendment 67, in clause 60, page 104, line 6, leave out from beginning to end of line 31 on page 105.
Amendment 68, in clause 60, page 108, line 13, at end insert—
“(3A) If an election made by the company under section 18A of CTA 2009 (election for exemption for profits or losses of company’s foreign permanent establishments) applies to the relevant period, expenditure incurred by the company during the period which meets conditions A and B—
(a) is not “qualifying expenditure on relevant R&D undertaken in-house”, but
(b) is “qualifying expenditure on relevant R&D sub-contracted to connected persons”,
so far as it is expenditure brought into account in calculating a relevant profits amount, or a relevant losses amount, aggregated at section 18A(4)(a) or (b) of CTA 2009 in calculating the company’s foreign permanent establishments amount for the period.”
Amendment 69, in clause 60, page 108, line 22, leave out
“incorporated in a multi-IP item”
and insert
“—
(i) to which income in the sub-stream is attributable, or
(ii) which is incorporated in an item”.
Amendment 70, in clause 60, page 108, line 23, at end insert
“, or
(c) in a case where the sub-stream is a process sub-stream, relates to a qualifying IP right granted in respect of any process—
(i) to which income in the sub-stream is attributable, or
(ii) which is incorporated in a process to which income in the sub-stream is attributable.”
Amendment 71, in clause 60, page 109, line 8, leave out “65% of any” and insert “the”.
Amendment 72, in clause 60, page 109, leave out lines 10 to 15 and insert
“in making payments within subsection (2).
(2) A payment is within this subsection if—
(a) it is made to a person in respect of relevant research and development contracted out by the company to the person, and
(b) the company and the person are not connected (within the meaning given by section 1122).”
Amendment 73, in clause 60, page 109, line 15, at end insert—
“(3) If an election made by the company under section 18A of CTA 2009 (election for exemption for profits or losses of company’s foreign permanent establishments) applies to the relevant period, expenditure incurred by the company during the period in making payments within subsection (2)—
(a) is not “qualifying expenditure on relevant R&D sub-contracted to unconnected persons”, but
(b) is “qualifying expenditure on relevant R&D sub-contracted to connected persons”,
so far as it is expenditure brought into account in calculating a relevant profits amount, or a relevant losses amount, aggregated at section 18A(4)(a) or (b) of CTA 2009 in calculating the company’s foreign permanent establishments amount for the period.”
Amendment 74, in clause 60, page 109, line 23, after “means” insert “the total of—
(a) any expenditure which is “qualifying expenditure on relevant R&D sub-contracted to connected persons” as a result of section 357BMB(3A) or 357BMC(3) (certain expenditure attributed to company’s foreign permanent establishments), and
(b) ”.
Amendment 75, in clause 60, page 109, line 23, leave out “65% of any” and insert “the”.
Amendment 76, in clause 60, page 109, leave out lines 25 to 30 and insert
“in making payments within subsection (2).
‘(2) A payment is within this subsection if—
(a) it is made to a person in respect of relevant research and development contracted out by the company to the person, and
(b) the company and the person are connected (within the meaning given by section 1122).”
Amendment 77, in clause 60, page 109, line 39, leave out from “company” to end of line 41 and insert
“in making during the relevant period payments within any of subsections (1A), (1B) and (1C).
(1A) A payment is within this subsection if it is made to a person in respect of the assignment by that person to the company of a relevant qualifying IP right.
(1B) A payment is within this subsection if it is made to a person in respect of the grant or transfer by that person to the company of an exclusive licence in respect of a relevant qualifying IP right.
(1C) A payment is within this subsection if—
(a) it is made to a person in respect of the disclosure by that person to the company of any item or process, and
(b) the company applies for and is granted a relevant qualifying IP right in respect of that item or process (or any item or process derived from it).
(1D) Where the company has incurred expenditure in making a series of payments to a person in respect of a single assignment, grant, transfer or disclosure, each of the payments in the series is to be treated for the purposes of this section as having been made on the date on which the first payment in the series was made.”
Amendment 78, in clause 60, page 110, line 2, leave out
“incorporated in a multi-IP item” and insert “—
(i) to which income in the sub-stream is attributable, or
(ii) which is incorporated in an item”.
Amendment 79, in clause 60, page 110, line 4, at end insert
“, or
(c) in a case where the sub-stream is a process sub-stream, a qualifying IP right granted in respect of a process—
(i) to which income in the sub-stream is attributable, or
(ii) which is incorporated in a process to which income in the sub-stream is attributable.”
Amendment 80, in clause 60, page 110, line 22, leave out “357BME” and insert “357BMD”.
Amendment 81, in clause 60, page 111, leave out from beginning of line 8 to “, and” in line 11 and insert
“in each of subsections (1A), (1B) and (1C) the word “relevant” were omitted”.
Amendment 82, in clause 60, page 112, line 25, leave out “357A” and insert “357A(1)”.
Amendment 83, in clause 60, page 112, line 46, at end insert—
“Small claims treatment
357BNA Small claims treatment
(1) This section applies where—
(a) a company carries on only one trade during an accounting period,
(b) section 357BF applies for the purposes of determining the relevant IP profits of the trade for the accounting period, and
(c) the qualifying residual profit of the trade for the accounting period does not exceed whichever is the greater of—
(i) £1,000,000, and
(ii) the relevant maximum for the accounting period.
(2) The company may make any of the following elections for the accounting period—
(a) a notional royalty election (see section 357BNB),
(b) a small claims figure election (see section 357BNC), and
(c) a global streaming election (see section 357BND).
This is subject to subsections (3) and (4).
(3) The company may not make a notional royalty election, a small claims figure election or a global streaming election for the accounting period if—
(a) the qualifying residual profit of the trade for the accounting period exceeds £1,000,000,
(b) section 357BF applied for the purposes of determining the relevant IP profits of the trade for any previous accounting period beginning within the relevant 4-year period, and
(c) the company did not make a notional royalty election, a small claims figure election or (as the case may be) a global streaming election for that previous accounting period.
(4) The company may not make a small claims figure election for the accounting period if—
(a) the qualifying residual profit of the trade for the accounting period exceeds £1,000,000,
(b) section 357C or 357DA applied for the purposes of determining the relevant IP profits of the trade for any previous accounting period beginning within the relevant 4-year period, and
(c) the company did not make an election under section 357CL for small claims treatment for that previous accounting period.
(5) In subsections (3) and (4) “the relevant 4-year period” means the period of 4 years ending with the beginning of the accounting period mentioned in subsection (1)(a).
(6) For the purposes of this section, the “qualifying residual profit” of a trade of a company for an accounting period is the amount which (assuming the company did not make an election under this section) would be equal to the aggregate of the relevant IP income sub-streams established at Step 2 in section 357BF(2) in determining the relevant IP profits of the trade for the accounting period, following the deductions from those sub-streams required by Step 4 in section 357BF(2) (ignoring the amount of any sub-stream which is not greater than nil following those deductions).
(7) For the purposes of this section, the “relevant maximum” for an accounting period of a company is—
(a) in a case where no company is a related 51% group company of the company in the accounting period, £3,000,000;
(b) in a case where one or more companies are related 51% group companies of the company in the accounting period, the amount given by the formula—
where N is the number of those related 51% group companies in relation to which an election under section 357A(1) has effect for the accounting period.
(8) For an accounting period of less than 12 months, the relevant maximum is proportionally reduced.
357BNB Notional royalty election
(1) Subsection (2) applies where a company has made a notional royalty election for an accounting period under section 357BNA(2)(a).
(2) In its application for the purposes of determining the relevant IP profits of the trade of the company for the accounting period, section 357BHA (notional royalty) has effect as if—
(a) in subsection (2) for “the appropriate percentage” there were substituted “75%”, and
(b) subsections (3) to (6) were omitted.”
357BNC Small claims figure election
(1) Subsection (2) applies where a company has made a small claims figure election for an accounting period under section 357BNA(2)(b).
(2) In its application for the purposes of determining the relevant IP profits of the trade of the company for the accounting period, section 357BF(2) (steps for calculating relevant IP profits) has effect as if in Step 6—
(a) for “marketing assets return figure” there was substituted “small claims figure”, and
(b) for “(see section 357BL)” there was substituted “(see section 357BNC(3))”.
(3) Subsections (4) to (9) apply for the purpose of calculating the small claims figure for a relevant IP income sub-stream established at Step 2 in section 357BF(2) in determining the relevant IP profits of a trade of a company for an accounting period.
(4) If 75% of the qualifying residual profit of the trade for the accounting period is lower than the small claims threshold, the small claims figure for the sub-stream is 25% of the amount of the sub-stream following Step 4 in section 357BF(2).
(5) If 75% of the qualifying residual profit of the trade for the accounting period is higher than the small claims threshold, the small claims figure for the sub-stream is the amount given by—
where—
A is the amount of the sub-stream following the deductions required by Step 4 in section 357BF(2),
QRP is the qualifying residual profit of the trade of the company for the accounting period, and
SCT is the small claims threshold.
(6) If no company is a related 51% group company of the company in the accounting period, the small claims threshold is £1,000,000.
(7) If one or more companies are related 51% group companies of the company in the accounting period, the small claims threshold is—
where N is the number of those related 51% group companies in relation to which an election under section 357A(1) has effect for the accounting period.
(8) For an accounting period of less than 12 months, the small claims threshold is proportionately reduced.
(9) Subsection (6) of section 357BNA (meaning of “qualifying residual profit”) applies for the purposes of subsection (4) and (5) of this section.
357BND Global streaming election
(1) Subsection (2) applies where a company has made a global streaming election for an accounting period under section 357BNA(2)(c).
(2) In its application for the purpose of determining the relevant IP profits of the trade of the company for the accounting period, this Chapter has effect with the following modifications.
(3) In subsection (2) of section 357BF (relevant IP profits)—
(a) omit Step 2,
(b) in Step 3 for “each of the relevant IP income sub-streams” substitute “the relevant IP income stream”,
(c) in Step 4—
(i) in the words before paragraph (a), for “each” substitute “the”,
(ii) for “sub-stream”, in each place it occurs, substitute “stream”,
(d) in Step 6—
(i) at the beginning insert “If the relevant IP income stream is greater than nil following Step 4,”,
(ii) for the words from “each” to “Step 4” substitute “the stream”,
(iii) for “sub-stream”, in the second place it occurs, substitute “stream”,
(e) in Step 7—
(i) for “each relevant IP income sub-stream” substitute “the relevant IP income stream”,
(ii) for “sub-stream”, in the second place it occurs, substitute “stream”,
(f) omit Step 8, and
(g) in Step 9 for “given by Step 8” substitute “of the relevant IP income stream following Step 7”.
(4) In subsection (3) of that section for “given by” substitute “of the relevant IP income stream following the Steps in”.
(5) In subsection (4) of that section for “given by” substitute “of the relevant IP income stream following the Steps in”.
(6) Omit subsections (5), (5A) and (6) of that section.
(7) In section 357BIA(3) (certain amounts not to be deducted from sub-streams at Step 4 of section 357BF)—
(a) for “a relevant IP income sub-stream” substitute “the relevant IP income stream”;
(b) for “sub-stream”, in the second and third places it occurs, substitute “stream”.
(8) In section 357BJ (routine return figure)—
(a) for “sub-stream”, in each place it occurs, substitute “stream”, and
(b) in subsection (1) for “Step 2” substitute “Step 1”.
(9) In section 357BL (marketing asset return figure) for “sub-stream”, in each place it occurs, substitute “stream”.
(10) In section 357BLA (notional marketing royalty)—
(a) for “sub-stream”, in each place it occurs, substitute “stream”, and
(b) in subsection (1) for “Step 2” substitute “Step 1”.
(11) In section 357BLB (actual marketing royalty) for “sub-stream”, in each place it occurs, substitute “stream”.
(12) In section 357BM (R&D fraction: introduction)—
(a) for “sub-stream” (in each place it occurs) substitute “stream”, and
(b) in subsection (1) for “Step 2” substitute “Step 1”.
(13) In section 357BMA(1) (R&D fraction) for “sub-stream” substitute “stream”.
(14) In section 357BMB(4) (qualifying expenditure on relevant R&D undertaken in-house) for the words after “1138)” substitute “which relates to a qualifying IP right to which income in the stream is attributable”.
(15) In section 357BME(2) (qualifying expenditure on acquisition of relevant qualifying IP rights) for the words from “means” to the end substitute “means a qualifying IP right to which income in the stream is attributable”.
(16) In section 357BMG (cases where the company is a new entrant with insufficient information about pre-enactment expenditure) for “sub-stream”, in each place it occurs, substitute “stream”.
(17) In section 357BMH (R&D fraction: increase for exceptional circumstances) for “sub-stream”, in each place it occurs, substitute “stream”.
(18) In section 357BNC (small claims figure election)—
(a) for “sub-stream”, in each place it occurs, substitute “stream”;
(b) in subsection (3) for “Step 2” substitute “Step 1”.”
Amendment 84, in clause 60, page 113, line 17, at end insert—
“( ) Where section 357BF applies by reason of this section for the purposes of determining the relevant IP profits of a trade of a company for an accounting period, the company may not make a global streaming election for the accounting period under section 357BNA(2)(c).”
Amendment 85, in clause 60, page 113, leave out lines 34 to 44 and insert—
“(a) the company and the person who assigned the right or granted the licence were connected at the time of the assignment or grant,
(b) the main purpose, or one of the main purposes, of the assignment of the right or the grant of the licence was the avoidance of a foreign tax,
(c) the person who assigned the right or granted the licence was not within the charge to corporation tax at the time of the assignment or grant, and
(d) the person who assigned the right or granted the licence was not liable at the time of the assignment or grant to a foreign tax which is designated for the purposes of this section by regulations made by the Treasury.”
Amendment 86, in clause 60, page 114, line 1, leave out “(9)(b)” and insert “(8)(d)”.
Amendment 87, in clause 60, page 114, line 4, at end insert—
“( ) Regulations may not be made under subsection (8)(d) after 31 December 2016.”
Amendment 88, in clause 60, page 114, line 21, leave out “(b)” and insert “(c)”.
Amendment 89, in clause 60, page 114, line 24, leave out
“and each product sub-stream”
and insert
“, each product sub-stream and each process sub-stream”.
Amendment 90, in clause 60, page 114, line 32, leave out
“and product sub-streams”
and insert
“, each of the product sub-streams and each of the process sub-streams”.
Amendment 91, in clause 60, page 114, line 42, leave out “a multi-IP item” and insert
“an IP item or IP process”.
Amendment 92, in clause 60, page 114, line 44, after “sub-stream” insert “or process sub-stream”.
Amendment 93, in clause 60, page 114, line 45, leave out “multi-IP item” and insert
“IP item or IP process”.
Amendment 94, in clause 60, page 115, line 1, after “item” insert “or process”.
Amendment 95, in clause 60, page 115, line 4, after “item” insert “or process”.
Amendment 96, in clause 60, page 115, line 8, leave out “multi-IP item” and insert
“IP item or IP process”.
Amendment 97, in clause 60, page 115, line 9, leave out “item or items” and insert “items or processes”.
Amendment 98, in clause 60, page 115, line 11, leave out “multi-IP item” and insert
“IP item or IP process”.
Amendment 99, in clause 60, page 115, line 13, leave out “multi-IP item” and insert
“IP item or IP process”.
Amendment 100, in clause 60, page 115, line 17, after “sub-stream” insert “or process sub-stream”.
Amendment 101, in clause 60, page 115, line 18, leave out “multi-IP item” and insert
“IP item or IP process”.
Amendment 102, in clause 60, page 115, line 20, leave out “multi-IP item” and insert
“IP item or IP process”.
Amendment 103, in clause 60, page 115, line 24, after “sub-stream” insert “or process sub-stream”.
Amendment 104, in clause 60, page 115, line 26, leave out “multi-IP item” and insert
“IP item or IP process”.
Amendment 105, in clause 60, page 115, line 27, after “sub-stream” insert “or process sub-stream”.
Amendment 106, in clause 60, page 115, line 27, leave out “multi-IP item” and insert
“IP item or IP process”.
Amendment 107, in clause 60, page 115, line 29, after “items” insert “or processes”.
Amendment 108, in clause 60, page 115, line 31, leave out “a multi-IP” and insert
“an IP item or IP process”.
Amendment 109, in clause 60, page 115, line 35, after “items” insert “or processes”
Amendment 110, in clause 60, page 115, line 35, leave out “multi-IP item” and insert
“IP item or IP process”.
Amendment 111, in clause 60, page 115, line 38, after “items” insert “or processes”.
Amendment 112, in clause 60, page 115, line 38, leave out “multi-IP item” and insert
“IP item or IP process”.
Amendment 113, in clause 60, page 115, line 40, at end insert—
“( ) In section 357FB (tax advantage schemes)—
(a) in subsection (2)(b) (list of ways by which deductions can be inflated)—
(i) omit “or” at the end of sub-paragraph (ii), and
(ii) after sub-paragraph (iii) insert “, or
(iv) an R&D fraction (see subsection (4A)) being greater than it would be but for the scheme.”, and
(b) after subsection (4) insert—
“(4A) The reference in subsection (2)(b)(iv) to an R&D fraction is a reference to such a fraction as is mentioned at Step 7 of section 357BF(2).””
Amendment 114, in clause 60, page 115, line 40, at end insert—
“( ) After section 357GC insert—
“Transferred trades
357GCA Application of this Part in relation to transferred trades
(1) Where—
(a) a company (“the transferor”) ceases to carry on a trade which involves the exploitation of a qualifying IP right (“the relevant qualifying IP right”),
(b) the transferor assigns the relevant qualifying IP right, or grants or transfers an exclusive licence in respect of it, to another company (“the transferee”), and
(c) the transferee begins to carry on the trade,
the following provisions apply in determining under this Part the relevant IP profits of the trade carried on by the transferee.
(2) The transferee is to be treated as not being a new entrant if—
(a) an election under section 357A(1) has effect in relation to the transferor on the date of the assignment, grant or transfer mentioned in subsection (1)(b) (“the transfer date”), and
(b) the first accounting period of the transferor for which that election had effect began before 1 July 2016.
(3) The relevant qualifying IP right is to be treated as being an old qualifying IP right in relation to the transferee if by reason of section 357BP it is an old qualifying IP right in relation to the transferor.
(4) Expenditure incurred prior to the transfer date by the transferor which is attributable to relevant research and development undertaken by the transferor is to be treated for the purposes of section 357BMB as if it is expenditure incurred by the transferee which is attributable to relevant research and development undertaken by the transferee.
(5) Expenditure incurred prior to the transfer date by the transferor in making a payment to a person in respect of relevant research and development contracted out by the transferor to that person is to be treated for the purposes of sections 357BMC and 357BMD as if it is expenditure incurred by the transferee in making a payment to that person in respect of relevant research and development contracted out by the transferee to that person.
(6) Expenditure incurred prior to the transfer date by the transferor in making a payment in connection with the relevant qualifying IP right which is within subsection (1A), (1B) or (1C) of section 357BME is to be treated for the purposes of that section as if it is expenditure incurred by the transferee in making a payment in connection with that right which is within one of those subsections.
(7) Expenditure incurred by the transferee in making a payment to the transferor in respect of the assignment, grant or transfer mentioned in subsection (1)(b) is to be ignored for the purposes of section 357BME.
(8) In this section—
“trade” includes part of a trade, and
“relevant research and development” means research and development which relates to the relevant qualifying IP right.
(9) For the purposes of this section research and development “relates” to the relevant qualifying IP right if—
(a) it creates, or contributes to the creation of the invention,
(b) it is undertaken for the purpose of developing the invention,
(c) it is undertaken for the purpose of developing ways in which the invention may be used or applied, or
(d) it is undertaken for the purpose of developing any item or process incorporating the invention.””
Amendment 115, in clause 60, page 116, line 9, for “357A” substitute “357A(1)”.—(Mr Gauke.)
Clause 60, as amended, ordered to stand part of the Bill.
Schedule 9
Profits from the exploitation of patents etc: consequential
Amendments made: 116, in schedule 9, page 330, line 30, at end insert—
“1A In section 357B (meaning of “qualifying company”), in subsection (3)(b)(ii), for “section 357A” substitute “section 357A(1)”.”
Amendment 117, in schedule 9, page 331, line 20, at end insert—
“( ) In subsection (6), in paragraph (a)(ii) of the definition of “relevant accounting period”, for “section 357A” substitute “section 357A(1)”.”
Amendment 118, in schedule 9, page 331, line 24, leave out paragraph 9 and insert—
“9 (1) Section 357CL (companies eligible to elect for small claims treatment) is amended as follows.
(2) In subsection (1) for “elect” substitute “make an election under this section”.
(3) In subsection (6) for “section 357A” substitute “section 357A(1)”.”
Amendment 119, in schedule 9, page 332, line 16, at end insert—
“13A In section 357EB (allocation of set-off amount within a group) in subsection (3)(a) for “section 357A” substitute “section 357A(1)”.
13B In section 357ED (company ceasing to carry on trade etc) in subsection (2)(c) for “section 357A” substitute “section 357A(1)”.”
Amendment 120, in schedule 9, page 332, line 18, at end insert—
“14A In section 357FB (tax advantage schemes) in subsection (4)(b) for “section 357A” substitute “section 357A(1)”.
14B (1) Section 357G (making an election under section 357A) is amended as follows.
(2) In the heading, for “section 357A” substitute “section 357A(1) or (11)(b)”.
(3) In subsection (1) for “section 357A” substitute “section 357A(1) or (11)(b)”.
14C (1) Section 357GA (revocation of election made under section 357A) is amended as follows.
(2) In the heading, for “section 357A” substitute “section 357A(1)”.
(3) In subsection (1) for “section 357A” substitute “section 357A(1)”.
(4) In subsection (5) for “section 357A” substitute “section 357A(1)”.”
Amendment 121, in schedule 9, page 332, line 28, at end insert—
“16A In section 357GE (other interpretation), in subsection (1), at the appropriate place insert—
“payment” includes payment in money’s worth,”.”— (Mr Gauke.)
Schedule 9, as amended, agreed to.
Clause 61
Power to make regulations about the taxation of securitisation companies
Question proposed, That the clause stand part of the Bill.
Rebecca Long Bailey
I want to say a few words about the clause; although it might not seem exciting at first glance, it really is, so listen carefully to what I am about to say.
Three principal themes underpin the Labour party’s approach to the provisions in clauses 61 and 64, which we will come to later—in particular, those relating to the taxation of financial products. First, we need to ensure that, when the UK leaves the EU, its arrangements for regulating taxation and financial activity serve the country best and protect it from abusive practices such as tax avoidance and financial crime. Those arrangements must demonstrate the highest levels of transparency and probity.
Secondly, we need to ensure that the infrastructure supporting the UK economy accords with international standards on taxation and regulation, including the relevant OECD and International Accounting Standards Board models, which are applicable to this Bill. Finally, we need to secure Britain’s place in the world by ensuring that it maintains the highest international standards.
The Bill’s proposals on the taxation of financial instruments may appear on the surface to be merely technical, but they raise a number of significant questions about the organisation of our economy and infrastructure in the near future. Clause 61 appears to be a simple extension of the corporation tax treatment of securitisation companies to the taxes Acts generally. However, in 2008 the non-existent regulation of securitisation structures amplified a medium-sized storm in the US real estate market, and it became a fully-fledged banking crisis. I would like to ask the Minister how closely HMRC and the Treasury have considered the risks that the provision will be used for tax avoidance purposes.
Experience suggests that, if we alter the basis on which tax is levied, financial institutions will attempt to create derivative products that generate losses for tax purposes on, before and after the transition between the two tax codes, as we saw in the case of Inland Revenue Commissioners v. Scottish Provident Institution 2003 and many other cases in Hudson’s “The Law on Financial Derivatives”.
Just in the reported cases, there are several examples of financial institutions using slippery derivative products, for want of a better phrase, to avoid tax liability, such as Prudential plc v. Revenue and Customs Commissioners 2008. In that case, Chancellor Morritt held that banks should not be entitled to dictate the tax consequences of their transactions by attributing particular descriptions to them. That sort of tax avoidance, using changes in the tax treatment of products, has been criticised by Professor Alastair Hudson as
“a veritable industry in off-the-peg tax avoidance schemes”
in his book “The Law on Financial Derivatives”. Has the Minister considered the misdescriptions that might be possible under this provision?
To return to the particulars of clause 61, securitisation structures operate by transferring assets—whether subprime mortgages, credit card receivables or similar cash flows—into off balance sheet special purpose vehicles. Ordinarily, the profits, or cash flows, received from those assets pass through the special purpose vehicle to the investors who have acquired bonds in the special purpose vehicle. Usually, the residual amounts—the focus of clause 61—that are left in the special purpose vehicle are small, compared with the sums paid to the investors. However, as with all such artificial financial structures, it is possible to manipulate those amounts.
If the residual amounts held by special purpose vehicles are to be saved from withholding tax, as clause 61 proposes, and are to be treated in a different manner for tax purposes—although the provision does not make plain exactly what the different tax treatment will be—that makes it possible for the payment flows through a special purpose vehicle to be raised artificially so that larger sums could benefit from this different tax treatment.
Will the Minister confirm what is stopping an unscrupulous financial institution involved in the off-the-peg industry of tax avoidance derivatives from passing large sums—otherwise subject to withholding tax as payments of interest, for example—through special purpose vehicles? Have the Government considered in detail how such cash flows should be treated to prevent artificial or abusive tax avoidance?
Furthermore, securitisation products, in the form of collateralised debt obligations, use complex derivatives as part of their structure—namely, credit default swaps. The purpose of credit default swaps has always been to permit two things: first, speculation on the creditworthiness of companies and Governments issuing bonds; and secondly, a form of artificial insurance. A feature of credit default swaps and all other credit derivatives is that they are flexible tools—so flexible, in fact, that they are ideal for manipulating tax statutes for tax avoidance purposes.
Professor Alastair Hudson has described the inherent flexibility of financial derivatives in his book “The Law on Financial Derivatives”, which I recommend to the Minister for his summer holidays. Professor Hudson states that
“different legal structures and different pricing structures can generate different commercial and structural results out of substantially similar subject matter”.
As he shows, it is possible for options contracts to be reorganised as swaps, and vice versa, so the possibilities for tax avoidance are endless. Consequently, it would be simple for financial institutions to repackage their payment obligations to achieve whatever characteristics are most helpful for tax purposes. I fear that clause 61 is really only the tip of the iceberg. There is a serious general point behind the specificity of my concerns about the clause.
The Chair
It may help all Committee members if I point out that if you want to take part in the debate—and everyone is encouraged to take part in the debate—it is usually a good idea to signify that by some means: a nod, a smile or even, more obviously, by rising to your feet. Otherwise, I am as much in the dark as everyone else.
Mr Gauke
Clause 61 will make a simple technical change to widen the scope of the power to make regulations about the taxation of securitisation companies included in the Corporation Tax Act 2010. It will enable the Government to make changes in regulations to remove uncertainty over the tax treatment of what are referred to as residual payments in the securitisation sector. That uncertainty generates a large number of requests to HMRC for clearances, which creates an administrative burden on both businesses and HMRC. Making the tax position clear will improve the customer experience. It has been welcomed by the securitisation sector and will improve the UK’s competitiveness as a financial centre.
Securitisation companies are a particular type of financial entity in which financial assets such as loans are transferred to a special purpose vehicle as security for debt issued to investors in the capital markets. Securitisation is an important way of getting more credit or liquidity flowing into the economy and of keeping down the costs of UK businesses’ borrowing and finance. The securitisation regime has worked well since its introduction, but the current rules have been in place since 2006. They need updating, to reflect recent changes to accounting standards and market developments.
One area of uncertainty that has grown as the securitisation sector has developed over recent years involves residual payments. Residual payments arise because securitisation companies typically contain more financial assets than are likely to be required in order to repay investors, meet transactions costs and retain a small profit. That excess protects against possible poor performance of the assets and allows the securitisation company to obtain an attractive credit rating. The uncertainty that arises is that residual payments may, in limited circumstances, be treated as annual payments for tax purposes and therefore be subject to withholding tax under the Income Tax Act 2007. Whether or not residual payments are treated as annual payments will depend on the facts of each case.
Uncertainty over the withholding tax rules affects the ability of law firms to issue a legal opinion on which ratings agencies can base the credit rating of the securitisation. That has a negative impact on the competitiveness of the UK securitisation sector. Currently, the uncertainty is addressed by companies writing to HMRC to seek clearance that residual payments will not be annual payments and so can be paid without withholding tax. That is an administrative burden for businesses. We would like to clarify the position by removing the potential withholding obligation in regulations, but the existing power is not wide enough to do so.
The changes made by the clause will amend the existing power to make regulations concerning the application of the Corporation Tax Acts to securitisation companies. The clause will extend the power to cover the wider taxes Acts, including the income tax Acts. That will permit changes to be made in regulations to ensure that the requirement to deduct income tax from annual payments will, as intended, not apply to residual payments made by securitisation companies. It will have a negligible cost to the Exchequer. Updated regulations under the amended power will be developed in consultation with interested parties.
The hon. Member for Salford and Eccles raised the role of securitisation in the financial crisis, which we could have spent plenty of time debating. However, while there were significant problems and faults in the US securitisation market, the UK and EU securitisation markets remained relatively robust. The global regulatory framework for securitisation has been completely overhauled since the crisis, including through increased capital requirements, reform of the oversight of credit ratings agencies and improved transparency rules.
The clause will not mean that securitisation companies pay less tax or face less scrutiny from HMRC. There is no statutory definition determining whether a payment is an annual payment. That must be decided based on characteristics established in case law. HMRC’s view is that the overwhelming majority of residual payments will never be annual payments. The change will clarify the position by placing the tax treatment on a statutory footing, removing uncertainty for taxpayers. There is no policy change here.
In terms of what is to stop large sums from being artificially passed through these vehicles, the notes have to be issued wholly or mainly to external investors. The SPVs are conduits and do not retain the profits. On how we treat such cash flows to prevent avoidance, under the payment rules an SPV is taxed on a small retained profit that has to be paid out to investors within 18 months.
This simple change to primary legislation has been welcomed by the industry. It will allow changes to be made in regulations to make the tax rules applying to securitisation companies work as intended. It will also make it easier for UK businesses to raise finance through securitisations, making those businesses and the UK securitisation sector more competitive. It will remove uncertainty over the appropriate tax treatment and need for businesses to consult HMRC on this issue before entering into securitisation transactions and it will ensure that the tax treatment of residual payments will be treated consistently. I therefore hope that the clause will stand part of the Bill.
Question put and agreed to.
Clause 61 accordingly ordered to stand part of the Bill.
Clause 62
Hybrid and other mismatches
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss that schedule 10 be the Tenth schedule to the Bill.
Rebecca Long Bailey
The same general points that I made about clause 61 broadly apply to this clause. The United Kingdom finds itself occupying a new place in the world and the provisions in the clause relate to the difficult business of double tax treaties. Such treaties currently need to be negotiated on a bilateral basis with countries that are outside large trading blocs such as the EU. They are therefore a model for the sort of issues that will be vital for the UK outside the EU.
There are model double tax treaties created by the OECD, which will guide our work. A future Labour Government would be outward looking in forging alliances of the sort possible under the OECD umbrella to create viable tax regulation and financial regulation internationally. However, there are some contexts in which the provisions in schedule 10, which the clause introduces, appear to be a little vague. For example, proposed new section 259BD(8) prevents a company from being “under taxed”, by identifying the highest rate at which tax is charged and asking whether that is lower than the company’s full marginal rate of tax should have been.
That is to be done by taking into account, on a “just and reasonable basis”, any credit for underlying tax. The reference to just and reasonable appears somewhat vague when contrasted with, for example, provisions governing international accounting standards in earlier clauses. As a survivor of the legal world, will the Minister confirm what “just and reasonable” is intended to mean and how HMRC will use that broad measuring stick in practice? Does he think that is a sufficiently clear mechanism for identifying whether sufficient tax has been paid, or do the Government simply seek to grant HMRC as much slack as they can?
Mr Gauke
Clause 62 and schedule 10 make changes to tackle multinationals that avoid UK corporation tax through cross-border business structures known as hybrid mismatch arrangements. We are building on the new rules announced at autumn statement 2014 and extending them, not least so that they also cover overseas branches, leading the way on implementing international best practice in this area.
The changes will neutralise the tax effect of hybrid mismatch arrangements and effect the recommendations of action 2 of the G20-OECD base erosion and profit-shifting project. In addition, they will neutralise the tax effect of hybrid mismatch arrangements involving permanent establishments. That means that the measure will tackle aggressive tax planning where, within a multinational group, either one party gets a tax deduction for a payment while the other party does not have a taxable receipt or there is more than one tax deduction for the same expense. The aim is to eliminate the unfair tax advantages that arise from the use of hybrid entities, hybrid instruments, dual resident companies and permanent establishments. That will encourage businesses to adopt less complicated cross-border investment structures.
In 2013 the OECD and the G20 countries adopted a 15-point action plan to address base erosion and profit shifting. BEPS refers to tax-planning strategies that exploit gaps and mismatches in the tax rules of different countries to make profits disappear for tax purposes or to shift profits to locations where there is little or no real activity but where the tax rates are low, resulting in little or no overall corporate tax being paid. The BEPS action plan is aimed at ensuring that profits are taxed where the economic activities generating the profits are performed, and where value is created.
Rebecca Long Bailey
I will be brief. The provision raises some seemingly technical questions on the taxation of loan relationships and derivatives—concepts that are closely linked in tax law. As with the other clauses, it requires deeper thought as the UK prepares to leave the EU. What precise changes, which HMRC has presumably observed in the financial markets, have prompted the reforms proposed in clause 63?
The role of insurance companies, particularly naive participants such as AIG before 2008, in derivatives markets must give us all pause for thought when considering how to regulate and tax them in the future. Those enormous insurance companies are involved in vital financial services for our citizens as well as extraordinarily complex financial instruments, such as credit default swaps. We must therefore be concerned that the reforms to the treatment of insurance companies are considered necessary. Will the Minister confirm what work the Treasury has done on assessing the future treatment of derivatives and similar markets and their impact on the UK economy? It is important for the future health of the UK economy that careful analysis of those markets is conducted as we prepare to leave the EU.
Mr Gauke
Clause 63 makes changes to ensure that corporation tax rules applying to insurance companies carrying on long-term business produce the appropriate policy results. A new regime for the taxation of life insurance companies was introduced in the Finance Act 2012 and was widely welcomed. However, putting that into practice has uncovered some specific issues that must be resolved for the regime to operate smoothly and effectively. HMRC has worked with industry to identify those issues, which relate to three main areas: intangible fixed assets, deemed income and trading losses.
Clause 63 will make minor technical changes to that legislation to ensure that it operates as intended. The cost to the Exchequer is negligible. For intangible fixed assets, clause 63 will allow debits to be set against the income for the accounting period in which they are incurred. That will bring the rules into line with those for companies that are not life insurers. For deemed income, clause 63 will prevent unused interest expenses from being set against the minimum profits charge in any circumstances. That will mean that any such charge is always fully taxed. For trading losses, clause 63 will mean that their use is no longer restricted to a company’s net position on its derivative contracts in the same period, which will bring stability into that calculation. The changes are relatively minor in nature and will have a small impact on insurers’ profits. However, they are important as they will ensure that the legislation delivers the intended policy objectives.
As I said, the Finance Act 2012 introduced a fundamental rewrite of life insurance company taxation. Such major reforms are always likely to necessitate some minor adjustments when put into practice and HMRC has worked with the industry to identify a handful of issues where the legislation does not work as intended. The changes will simply ensure the legislation operates as initially intended, which is why we are making them. Of course, all these matters are kept under review. Again, the hon. Lady raises the point about EU membership and so on. I am not sure I have much to add to what I previously said on that matter. I hope that the clause stands part of the Bill.
Question put and agreed to.
Clause 63 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Mel Stride.)
Finance Bill (Fourth sitting)
(7 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 11 / Noes: 9 - Question accordingly agreed to.
Rebecca Long Bailey (Salford and Eccles) (Lab)
I covered most of the points relating to this clause when discussing previous clauses. I am concerned that it is another example of complex arrangements being created for the purpose of, among other things, avoiding liability to pay corporation tax. Will the Minister confirm what specific activity has prompted these proposals?
The Financial Secretary to the Treasury (Mr David Gauke)
It is a pleasure to welcome you back to the Chair, Mr Howarth. Let me say a word or two about the clause in response to the hon. Lady’s question.
Clause 64 makes changes to prevent tax avoidance by ensuring that tax is chargeable upon any consideration received in return for agreeing to take over tax-deductible lease payments. Leasing of plant and machinery plays an important role in UK business by providing a means of access to assets for use in commercial activities. There may be a number of different reasons for choosing to lease plant and machinery—for example, where the assets are required for only a relatively short period, where a lease meets the requirements of the business’s cash flows, where the business does not have the funds to buy the asset outright or where the asset is of a type typically leased rather than bought.
The person who leases plant and machinery—the lessee—for use in their business is entitled to tax deductions for the rents payable under the lease. Her Majesty’s Revenue and Customs has become aware of arrangements relating to the transfer of a lessee position in an existing lease. In those arrangements, the existing lessee transfers its right to use the leased plant or machinery, together with the obligation to make the lease payments, to another person. The new lessee will use the plant or machinery in its business and claim tax deductions for the lease rental payments.
However, the arrangements for transfer also involve the new lessee or a connected person receiving a consideration in return for the new lessee agreeing to take over from the existing lessee. That is done in such a way that there is no charge for tax on that consideration. The new lessee is able to get tax deductions for rental payments, some or all of which are funded by the non-taxable consideration received. That is an unfair outcome, and in a number of examples seen by HMRC it is clearly part of a tax avoidance scheme.
It is right that where a person meets tax-deductible payments not from their own resources but out of an otherwise non-taxable consideration received for agreeing to take over those payments, that consideration should be taxed in full. The changes made by the clause will ensure that where a person takes over a lessee under an existing lease, obtains tax deductions for payments under that lease and, in return, receives a consideration, such consideration is chargeable for tax as income.
The changes proposed will ensure a fair outcome for tax purposes for such arrangements. No longer will it be possible for tax-deductible lease payments to be funded by untaxed considerations received for the transfer of responsibility to make those payments. The expected yield to the Exchequer over the scorecard period from the changes is £120 million. I therefore hope the clause will stand part of the Bill as a way of preventing businesses from gaining an unwarranted tax advantage.
Question put and agreed to.
Clause 64 accordingly ordered to stand part of the Bill.
Clause 82
Inheritance tax: increased nil-rate band
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendments 13 to 19.
That schedule 15 be the Fifteenth schedule to the Bill.
Mr Gauke
Clause 82 and schedule 15 ensure that the residence nil-rate band for inheritance tax will continue to be available when an individual downsizes or ceases to own a home. The clause builds on the provisions in the Finance Act 2015, which introduced a new residence nil-rate band, by creating an effective inheritance tax threshold of up to £1 million for many married couples and civil partners by the end of the Parliament, making it easier for most families to pass on the family home to their children and grandchildren without the burden of inheritance tax.
The combined effect of this package will almost halve the number of estates expected to face an inheritance tax bill in future. The Office for Budget Responsibility now forecasts that 33,000 estates will be liable for inheritance tax in 2020-21. As a result of this package, 26,000 estates will be taken out of inheritance tax altogether and 18,000 will pay less.
We recognise that people’s circumstances change as they get older and that they may want to downsize or may have to sell their property. We do not want the residence nil-rate band to act as a disincentive for people thinking about making such changes. That is why we announced in the summer Budget that anyone who downsizes or ceases to own a home on or after 8 July 2015 will still be able to benefit from the new residence allowance. Clause 82 and schedule 15 allow an estate to qualify for all or part of the residence nil-rate band that would otherwise be lost as a result of the downsizing move or disposal of the residence.
The extra residence nil-rate band or downsizing edition will only be available for one former residence that the deceased lived in. Where more than one property might qualify, executors of an estate will be able to nominate which former residence should qualify. The approach reduces complexity and ensures flexibility in the system.
The Government have tabled seven amendments to schedule 15 to ensure that the legislation works as intended in certain situations that are not currently covered by the downsizing provisions. Amendment 15 caters for situations in which an individual had more than one interest in a former residence, to ensure that they are not disadvantaged compared with those who owned the entire former residence outright. Amendment 16 clarifies the meaning of disposal in situations where an individual gave away a former residence but continued to live in it. Amendment 19 ensures that where an estate is held in a trust for the benefit of a person during their lifetime, a disposal of that former residence by the trustees would also qualify for the residence nil-rate band.
Amendments 13, 14, 17 and 18 make minor consequential changes to take into account the other amendments. Clause 82 and schedule 15 will help to deliver the Government’s commitment to take the ordinary family home out of inheritance tax by ensuring that people are not disadvantaged if they move into smaller homes or into care. That commitment was made in our manifesto and I am pleased to deliver it fully with this clause.
Rebecca Long Bailey
As we have heard from the Minister, clause 82 and schedule 15 provide that the inheritance tax transferrable main residence nil-rate band will apply to an estate even when somebody downsizes. As the Tax Journal’s commentary on the Bill concisely explains, schedule 15 in particular contains provisions to ensure that
“estates will continue to benefit from the new residence nil rate band even where individuals have downsized or sold their property, subject to certain conditions. The residence nil-rate band is an additional transferable nil rate band which is available for transfers of residential property to direct descendants on death. The additional relief will be available from 6 April 2017 and the relief for downsizing or disposals will apply for deaths after that date where the disposal occurred on or after 8 July 2015.”
My hon. Friend the Member for Hayes and Harlington and I tabled amendments to leave out clause 82 and schedule 15 today—we will therefore oppose the clause—although they were not selected for debate.
The Government’s objective seems to be that
“individuals may wish to downsize to a smaller and often less valuable property later in life. Others may have to sell their home for a variety of reasons, for example, because they need to go into residential care. This may mean that they would lose some, or all, of the benefit of the available RNRB. However, the government intends that the new RNRB should not be introduced in such a way as to disincentivise an individual from downsizing or selling their property.”
If we go back a couple of steps, at summer Budget 2015 the Government announced that there would be an additional nil-rate band for transfers on death of the main resident to a direct descendant set at £100,000 and subject to a taper for an estate with a net value of more than £2 million. The band will be withdrawn by £1 for every £2 over the threshold. During the passage of the Finance Act 2015, which introduced the additional nil-rate band, the Opposition spokesperson, my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), stated:
“We have been clear that we believe that the focus of tax cuts should be on helping working people on middle and low incomes and on tackling tax avoidance…the Treasury has admitted that 90% of households will not benefit from the Government’s inheritance tax policy, so we should be clear about the part of society we are talking about.”
She went on:
“The priority for the Government, we believe, should be helping the majority of families and first-time buyers struggling to get a home of their own. That is why Labour voted against the Government’s inheritance tax proposals in the July Budget debate. The Treasury estimates that the changes to inheritance tax will cost the Exchequer £940 million by 2020-21—nearly £1 billion.”––[Official Report, Finance Public Bill Committee, 17 September 2015; c. 56.]
I echo those comments in the light of the measure today. We simply do not believe that expanding the conditions in which inheritance tax is not payable should be a priority for the Government. As my hon. Friend said at that time, this measure will cost nearly £1 billion by 2020-21. That is a vast amount of money that could be better spent supporting those on middle and low incomes who are struggling to get by.
As with so many measures in the Bill, the Government are prioritising the wrong people, with tax giveaways for the wealthy, such as this measure, and cuts to capital gains tax, at a time when they were considering taking billions away from working people through cuts to tax credits and disability payments. Not only do we disagree with the principle of this tax giveaway; we are also concerned that the legislation is badly drafted. A similar outcome could be achieved through a simpler mechanism. The Chartered Institute of Taxation has said:
“It appears to us that the legislation in Schedule 15 as currently drafted is deficient in one particular respect in that no provision has been made for downsizing when the home is held as a trust interest (for example, and especially, an Immediate Post-Death Interest (“IPDI”)). The typical scenario would be that the home (solely owned by husband) was left on a life interest basis to his widow, with remainder over to his children. The widow goes into care and the trustees wish to sell the property. An IPDI is becoming increasingly common to safeguard the interests of children from a first marriage when their parent enters into a second.”
Will the Minister clarify what will happen in that instance?
I will touch briefly on Government amendments 13 to 19, which according to the Minister’s helpful letter of 30 June make a number of technical amendments to ensure that the legislation operates as intended in a limited number of specific circumstances that are not currently covered by the downsizing provisions. I am glad that the Government are taking steps to improve the legislation, but I cannot see how the amendments address the concerns outlined by the Chartered Institute of Taxation.
The Opposition do not feel that these measures, which expand the number of situations in which inheritance tax is not due, are a priority, given the apparent funding constraints we often hear about from the Government. We will therefore oppose clause 82 and schedule 15.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
It is a pleasure to serve under your chairmanship yet again, Mr Howarth. I congratulate the hon. Lady on the clear case she has made. We shall also oppose this measure.
I have one question for the Minister. He mentioned that 26,000 would be taken out of the tax altogether and 18,000 would pay less because of this change. Will he clarify how many of those are in Scotland and the north of England, compared with some of the richer parts of the country? I think that would be informative. Secondly, this is the wrong initiative at the wrong time, and it is targeted at the wrong people. That is why we will oppose it.
Mr Gauke
I am disappointed that this clause and the approach that the Government are taking do not have cross-party support, but I am sure that my hon. Friends on the Government side will support the measures.
The first point I have to make in response to the criticism of the clause is that, of course, the Government were elected and one of our manifesto pledges was to take forward measures to take the family home out of inheritance tax. We also have to bear it in mind that not doing anything on inheritance tax is not a neutral option, because the consequence of leaving inheritance tax alone is that, in a period in which property prices increase, more and more households and estates fall within inheritance tax and inheritance tax receipts will go up. It is worth pointing out that inheritance tax receipts in cash terms will continue to be higher under this Government than at any time since the introduction of inheritance tax in 1986, including the period of the last Labour Government between 1997 and 2010, when receipts peaked at £3.8 billion in 2007-08. Let us remember that.
Regarding the impact of not doing anything, do remember that relatively modest properties have increased in value. In 2015, the average house price in London was £552,000 and in the south-east it was £375,000. That means that relatively modest households were potentially finding themselves with an inheritance tax bill, which had not previously been the case under Governments of different colours.
Some technical points were made by Opposition Members. I was asked whether the downsizing rules will apply when the former house was held in a trust. Amendment 19 caters for such situations. The measure will apply only where the former home was held in a type of trust that was set up for the benefit of a person during their lifetime and that person had a right to the trust assets. It does not apply to former homes held in discretionary trusts because they would not qualify for the residence nil-rate band in those circumstances.
I was asked whether the estate would qualify for the allowance if the home is left in trust for a spouse and on their death passes to the children. The answer to that is no. If the home is transferred on death to a life interest trust to the benefit of the surviving spouse, the deceased’s estate will not qualify for the residence nil-rate band because the home is not inherited by a direct descendant at that time. However, the unused portion of the residence nil-rate band can be transferred to the surviving spouse’s estate to be used on their death. If the home subsequently passes to a direct descendant on the death of the surviving spouse or life tenant, their estate will be eligible for the residence nil-rate band.
In terms of exact numbers for the United Kingdom, I do not have those numbers; I will have to write to the hon. Member for Kirkcaldy and Cowdenbeath. However, it is the case that there are beneficiaries of this policy throughout the United Kingdom.
Kirsty Blackman (Aberdeen North) (SNP)
We are not denying that there will be people who will benefit from not paying tax or from paying less tax, but in places in Scotland you can get a castle for £1 million—albeit a small castle—and that is in no way, shape or form a family home, and it should not be classed as such.
Mr Gauke
I come back to what I was saying earlier, namely, that doing nothing will mean that many properties, often relatively modest properties, will fall within the inheritance tax bands. Doing nothing will mean that a tax that I think most people in this country would support, on the basis that it is designed for the very wealthy, would apply to people who would not necessarily have had high incomes in their lifetimes. That creates a sense of unfairness. There are certainly parts of Edinburgh where relatively modest properties are of such a value as to create concerns about inheritance tax.
Christian Matheson (City of Chester) (Lab)
If the Minister is concerned about rising property prices and an overheating housing market driving more people into inheritance tax bands, perhaps he should do something about the housing market—rather than fiddling around with the tax bands—for example, by building more houses for rent and cooling the housing market in that way.
Mr Gauke
I very much support the idea that we need to build more homes. As a Government, we have done so. We are a Government who have changed many of the planning rules. We are a Government who announced a substantial housing package in the autumn statement. This Government are doing much to improve house building in this country. Indeed, the number of building starts last year was high, which is encouraging.
To conclude, the measures before us are a sensible further step to meeting our objective of taking the family home out of inheritance tax. They will also ensure that there is no impediment to people downsizing, creating difficulties in the housing market. I hope, notwithstanding the objections from the Opposition, that clause 82 and schedule 15 will stand part of the Bill.
Question put, That the clause stand part of the Bill.
Rebecca Long Bailey
The Minister will be pleased to hear that I do not have many comments on this clause, which provides that inheritance tax will not be charged if a person leaves unused funds in a pension drawdown fund when they die. In April 2015, the Government introduced changes to pension tax rules allowing people to access their pension funds flexibly from the age of 55. That flexibility, and an increase in drawdown arrangements, means that the inheritance tax charge will potentially apply to more people. The changes, which the Opposition supported at the time, meant that pensioners could access as much of their pension pots as they wanted, without having to buy an annuity. That meant, however, that if people became entitled to the funds but did not actually draw on them before death, the money would be subject to inheritance tax at the usual rate. According to the explanatory notes, that was not the original policy intention, so the clause has been introduced to correct things. The Opposition supported the changes to pension tax rules so will not be opposing the clause.
Mr Gauke
As we have heard, clause 83 makes changes to ensure that when an individual dies, unused funds in a drawdown pension are not treated as part of their estate for inheritance tax purposes. Without the clause, a small number of pensions would be liable for inheritance tax in some circumstances, which was not our intention.
As the Committee will be aware, funds that remain in a pension scheme do not traditionally form part of a deceased’s estate and are generally exempt from inheritance tax. Nevertheless, under the current tax rules, in a small number of circumstances undrawn pension funds are unintentionally caught. For example, if an individual has designated funds for pension drawdown and then passes away without having drawn down all those funds, an inheritance tax charge may arise.
The Government introduced changes to the pensions tax rules from April 2015 that allowed more people to flexibly access their pension funds from age 55. That flexibility means that the inheritance tax charge might apply to more people who pass away leaving undrawn funds in their pension scheme. It was not intended that an IHT charge should arise in such circumstances; the clause ensures that it will not do so. It changes the existing rules so that an inheritance tax charge will not arise when a person has unused funds remaining in their drawdown pension when they die.
The changes will be backdated and will apply for deaths on or after 6 April 2011, so that they include any charges that could arise from the time when the general rule ceased to apply. The minor changes made by the clause will help to maintain the integrity and consistency of the pensions system while supporting those who have worked hard and saved responsibly throughout their lives. I commend the clause to the Committee.
Question put and agreed to.
Clause 83 accordingly ordered to stand part of the Bill.
Clause 84
Inheritance tax: victims of persecution during Second World War era
Question proposed, That the clause stand part of the Bill.
Kirsty Blackman
I am pleased that this clause has been included in the Bill. It seems to be a sensible measure, and I am pleased to note that there will be the ability to tidy up afterwards if anything else needs mopping up. The Scottish National party welcomes the clause.
Mr Gauke
I thank the hon. Lady for her support. I would expect such a measure to have the support of the whole Committee. As the Prime Minister said on National Holocaust Day,
“whatever our faith, whatever our creed, whatever our politics”
it is right that the whole country should stand together to remember the
“darkest hour of human history.”
To that end, the Government have committed to building a national memorial in London to show the importance that Britain places on preserving the memory of the holocaust.
The clause provides further reassurance and certainty to holocaust victims by placing on a statutory footing their right not to pay inheritance tax on the compensation they receive as a result of their persecution. I am proud that the Government have extended the inheritance tax exemption even further to include a one-off compensation payment for the victims who endured such an unimaginable trauma in their childhood. I am delighted that the clause has cross-party support.
Question put and agreed to.
Clause 84 accordingly ordered to stand part of the Bill.
Clause 85
Inheritance tax: gifts for national purposes etc
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendments 122 to 126.
Clause 86 stand part.
Mr Gauke
Clauses 85 and 86 make a number of changes to ensure that certain tax reliefs available for objects of national heritage continue to be appropriately targeted and that those objects remain accessible for the nation to enjoy. The first change, clause 85, ensures that legislation keeps pace with the way museums are structured. Clause 86 will regulate the interaction of estate duty and inheritance tax for many objects of national, historic and cultural value and will enable HMRC to take appropriate action in the event of such an object being lost.
Rebecca Long Bailey
The Minister has given us an articulate and detailed summary of how the clauses work in practice, so I will not go over too much of that again. I briefly note that the provisions make technical changes to the tax treatment of gifts or sales of property to public museums and galleries and objects of national scientific, historic or artistic interest respectively.
Clause 85 makes technical changes to support the exemption from inheritance tax of gifts or sales of property to public museums and galleries. It is necessary, as the Minister said, because recent changes in local authorities have led museum collections to be placed in charitable trusts. Those trusts do not presently fall within schedule 3 to the Inheritance Tax Act 1984, which describes the bodies that attract inheritance tax and capital gains tax relief. The clause simply rectifies that and moves the power to designate schedule 3 bodies from HMRC to HM Treasury. We have no issue with this technical clause, but I am interested to know what the justification was for moving the power to add bodies to schedule 3 from HMRC to HM Treasury. As a general question, what assessment was made in the long term of the efficacy of local authorities in managing museums and galleries? The Minister might want to refer that question to another Department and get back to me in writing.
Clause 86 puts a stop to using existing law to pay inheritance tax at a lower rate than estate duty. Estate duty was replaced in 1975 by capital transfer tax, which was replaced by inheritance tax in 1984. However, legacy estate duty legislative provisions still remain in force in relation to exemptions given pre-March 1975. Estate duty can be levied at up to 80%, whereas inheritance tax is currently at 40%. The clause stops individuals using a gap in legislation to claim conditional exemption solely to facilitate a later sale of 40% instead of up to 80%.
There is also provision for HMRC to be able to raise a charge when the owner loses an estate duty exempt object. That leads me nicely on to Government amendments 122 to 126, which make technical changes to ensure that the legislation operates as intended. Amendment 122 clarifies the rules around HMRC’s ability to raise a charge for duty on the loss of an item, so that it will raise only a single charge rather than a dual one. Amendments 123 and 124 ensure that the legislation works in specific circumstances, as intended, and amendments 125 and 126 simply make minor consequential changes. We are more than happy to support these clauses and Government amendments.
Question put and agreed to.
Clause 85 accordingly ordered to stand part of the Bill.
Clause 86
Estate duty: objects of national, scientific, historic or artistic interest
Amendments made: 122, in clause 86, page 143, line 6, after “as if”, insert
“—
(a) after subsection (3) there were inserted—
“(3A) But where the value of any objects is chargeable with estate duty under subsection (2A) of the said section forty (loss of objects), no estate duty shall be chargeable under this section on that value.”; and
(b) ” .
Amendment 123, in clause 86, page 144, line 2, at end insert—
‘(5A) In section 35 of IHTA 1984 (conditional exemption on death before 7th April 1976), in subsection (2), for paragraphs (a) and (b) substitute—
“(a) tax shall be chargeable under section 32 or 32A (as the case may be), or
(b) tax shall be chargeable under Schedule 5,
as the Board may elect.””
Amendment 124, in clause 86, page 144, line 9, at end insert
“, and
(b) in sub-paragraph (4), after “40(2)” insert “or (2A)”.”
Amendment 125, in clause 86, page 144, line 10, leave out “Subsection (6) has” and insert “Subsections (5A) and (6) have”.
Amendment 126, in clause 86, page 144, line 11, after “referred to in”, insert “section 35(2) of or”— (Mr Gauke.)
Clause 86, as amended, ordered to stand part of the Bill.
Clause 87
Apprenticeship levy
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendments 22 to 24.
Clauses 88 and 89 stand part.
Government amendments 25 and 26.
Clause 90 stand part.
Government amendment 27.
Clauses 91 to 108 stand part.
Government amendment 28.
Clauses 109 and 110 stand part.
New clause 2—Review of the Apprenticeship Levy—
‘The provisions of this Act relating to the Apprenticeship Levy shall not come into force until the Chancellor of the Exchequer has laid before Parliament a report on how the levy will be implemented, including but not limited to information on how equitable treatment of the different parts of the UK will be assured in its implementation.’
Mr Gauke
I hope hon. Members will forgive me if I go through the various clauses and amendments. I hope they will take some consolation from the fact that this group will advance us some way down the amendment paper—I get the feeling that is the most popular thing I have said for some time.
Mr Gauke
I was just warning the Committee that I had quite a bit to say on this group, and I am afraid we can no longer put back the moment when I have to say it.
The Government believe in apprenticeships because they are one of the most powerful motors of social mobility and productivity growth. There has been a rapid decline in the amount and quality of training undertaken by employers over the past 20 years. We must reverse that trend of under-investment in training, and that is what the apprenticeship levy seeks to achieve. The apprenticeship levy will be paid by larger employers across all sectors to fund the step change needed to improve the quality of apprenticeships and achieve 3 million starts by 2020. My remarks will cover clauses 87 to 110. I appreciate that they may be quite lengthy, but I hope that hon. Members will bear with me.
Clauses 87 to 89 cover the basic provisions. Clause 87 provides that the commissioners of Her Majesty’s Revenue and Customs will be
“responsible for the collection and management of apprenticeship levy.”
Clause 88 sets out the conditions under which the apprenticeship levy will be charged. Where an employer has a pay bill for a tax year, the levy will be charged at a rate of 0.5% of the total pay bill. Employers will have a £15,000 annual levy allowance, which means that in practice only employers with an annual pay bill that exceeds £3 million will pay the levy. However, as hon. Members will be aware, the Government’s amendments to allow companies and charities to share the levy allowance within a group, which I will turn to later, make consequential amendments to clause 88 that allow the annual levy allowance to be less than £15,000 where a group of companies or charities decides to split the allowance across the group.
Clause 89 sets out which earnings will make up an employer’s pay bill for the purposes of the apprenticeship levy. Pay bill comprises earnings that are subject to secondary class 1 national insurance contributions—NICs—including earnings below the NICs secondary threshold. That effectively means that pay bill is comprised of the gross cash earnings of all employees and will exclude any employer-provided benefits. Clauses 88 and 89 provide that the person liable to pay the apprenticeship levy is the secondary contributor; that is, the person who incurs the secondary class 1 NICs liability on an individual’s earnings.
Clauses 90 and 91 provide rules for connected companies and connected charities respectively. The rules will determine whether two or more companies or charities are considered to be connected for the purposes of the apprenticeship levy at the start of each tax year. The rules will prevent connected companies from claiming multiple levy allowances. The Finance Bill, as introduced, provides that, where companies or charities are deemed to be connected with one another, only one company or charity in the group will be entitled to the annual levy allowance. However, the Government have tabled amendments to allow connected companies and connected charities to share the allowance within their group as they choose. I will outline the effects of the amendments after addressing the remaining clauses.
The rules for determining whether companies are connected for the purposes of the apprenticeship levy will be the same as the rules set out in part 1 of schedule 1 to the National Insurance Contributions Act 2014 for determining whether companies are connected for the purposes of the employment allowance—the employment allowance allows employers to reduce their total national insurance liability by up to £3,000 a year. The connection rules for the apprenticeship levy have been adapted from provisions in existing tax legislation. The employment allowance connected companies rules are similar to the associated companies rules in sections 25 and 27 to 30 of the Corporation Tax Act 2010.
The meaning of “connected charities” for the purposes of the apprenticeship levy allowance is set out in clauses 107 and 108. The rules for determining whether charities are connected will be the same as the rules set out in part 2 of schedule 1 to the NICs Act. The employment allowance connected charities rules are similar to the connected charities provisions in section 5 of the Small Charitable Donations Act 2012. The advantage of following the employment allowance rules is that where companies and charities know that they are connected for the purposes of the employment allowance, they will also know that they are connected for the purposes of the apprenticeship levy.
The anti-avoidance provisions for the levy are addressed by clauses 92 and 93. Clause 92 sets out that where an employer stands to gain a tax advantage as a result of avoidance arrangements relating to the levy allowance, it will not be entitled to the allowance for the tax year in question. That includes any attempt to bring forward or delay an employee’s earnings to alter the tax year in which those earnings are paid. The term “avoidance arrangements” is given a wide meaning and includes any arrangements where the main purpose, or one of the main purposes, is to secure a benefit in relation to liability for the levy.
Clause 93 extends the existing anti-avoidance legislation applying to PAYE and NICs so that it can be applied to the apprenticeship levy. That includes HMRC’s rules on the disclosure of tax-avoidance schemes, the general anti-abuse rule, HMRC’s system of accelerated payments in relation to avoidance schemes and HMRC’s rules on the formation of tax avoidance schemes.
Clauses 94 to 99 relate to the administration of the apprenticeship levy. Clause 94 gives HMRC powers to provide, through regulations, for the assessment, payment, collection and recovery of the levy. Employers will be required to pay the levy with their PAYE and class 1 NICs, which will allow us to apply the £15,000 levy allowance on a monthly and cumulative basis. Applying the allowance on such a basis will ensure an even flow of payments into employers’ digital apprenticeship accounts, which levy-paying employers will be able to use to pay for training and assessment of apprenticeships, thereby enabling them to start employing apprentices. The clause also provides the power to make regulations to provide for reporting the levy and making returns as part of HMRC’s real-time information system.
There are also regulation-making powers to prescribe how HMRC may make assessments where employers have failed to make an apprenticeship levy return or where there is an underpayment. Regulations may also provide for the repayment of the apprenticeship levy in circumstances where the levy is paid in error or where there needs to be repayment or remission of interest. The clause also provides that regulations may set out the appeal process for any matters arising under the assessment, payment and collection regulations.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
Although the Scottish National party supports clause 98, we feel that its definition is a little loose. We have concerns that it might not prohibit employers from recouping the cost of the apprenticeship levy as intended. The lowering of salaries for any new positions advertised is an example. Does the Minister agree?
Mr Gauke
Clause 98 goes as far as is practical. It seeks to address the matter. No doubt the hon. Gentleman will raise that point during the debate, and I will be happy to respond with further details, but we believe that clause 98 strikes the right balance.
Clause 99 makes provision for HMRC to recover underpayment of the apprenticeship levy. HMRC will be able to recover unpaid apprenticeship levy from employers and may undertake court proceedings to facilitate that. That will work in the same way that it does for income tax under the relevant section of the Taxes Management Act 1970.
Moving on to the information and penalties clauses, clause 100 gives HMRC the power to prescribe in regulations which records need to be retained by employers in connection with the apprenticeship levy. Clause 101 extends HMRC’s information and inspection powers under schedule 36 of the Finance Act 2008 to the apprenticeship levy. Clause 102 gives HMRC permission to charge penalties for errors on returns, late payments and failures to return payments in relation to the apprenticeship levy. The intention is to ensure, as far as possible, that the apprenticeship levy position is aligned with that of PAYE and NICs. Clause 103 sets out that an employer may appeal against an HMRC assessment of the apprenticeship levy or other amounts. It specifies the notice period and process for dealing with such appeals, which follows part 5 of the Taxes Management Act 1970.
The final group of clauses deals with more general matters. Clause 104 applies HMRC’s information and inspection powers for tax agents who engage in dishonest conduct to the apprenticeship levy, as set out under schedule 38 to the Finance Act 2012. Clause 105 amend the Provisional Collection of Taxes Act 1968 to facilitate future changes to the apprenticeship levy. Clause 106 sets out that:
“This Part binds the Crown.”
Clauses 107 and 108, which relate to clause 91, respectively set out the rules for determining whether two or more charities are connected. Those rules are the same as those set out for the employment allowance, so they will be familiar to employers. Clause 109 defines expressions used in relation to the apprenticeship levy.
Finally, clause 110 sets out the process for making regulations relating to the apprenticeship levy. Regulations will be by statutory instrument and subject to the negative procedure in the House of Commons, with the exception of the Treasury commencement order to bring into force penalties for errors in relation to the levy.
I now turn to the apprenticeship levy amendments. Amendments 22 to 25 and amendment 27 all concern the rules relating to connected companies and charities and the levy allowance of £15,000. As I mentioned earlier when outlining clauses 88, 90 and 91, the Government have tabled amendments to enable groups of connected companies or charities to share the £15,000 levy allowance. The original proposal was that, if a group of companies or charities were connected, any one of them could apply the allowance. That followed the approach of the employment allowance, which has worked well. However, in response to representations, we have considered the matter further and have concluded that that would lead to a significant increase in the employer population subject to the levy, which was never the intention.
The amendments to clauses 90 and 91 and the consequential amendment to clause 88 will, therefore, allow a group of connected employers to decide what proportion of the levy allowance each of them will apply. The group must decide the allowance split at the beginning of the tax year and it will be fixed for that year unless a correction is necessary because the total amount of the levy allowance exceeds £15,000. Connected employers must notify HMRC of the amount of allowance to be applied for their PAYE schemes, and where that does not occur, or where the total notified does not equal £15,000, the amendments allow for the levy allowance to be determined by HMRC if the employer fails to take corrective action. Employers and their representatives have welcomed our decision to bring forward the amendments and I hope that Committee members will join in supporting the change.
Amendments 26 and 28 are technical amendments that seek to clarify the definition of “company” in clauses 90 and 109 to avoid any uncertainty and to ensure that the provisions are clear. I will also address new clause 2, tabled by SNP Members. The new clause seeks to delay the implementation of the apprenticeship levy until a report has been laid before Parliament on how different parts of the UK are equitably treated when the levy is eventually implemented.
I acknowledge that it is in everyone’s interest to ensure that the levy works for employers wherever they may operate. However, SNP Members will be pleased to know that we have already published employer guidance, which explains how the levy will work for employers right across the UK. Publishing another report will not, therefore, reveal new information to help employers, and delaying implementation of the levy would be unfair on employers who have been working hard to prepare for it as well as on potential apprentices who will benefit. I am sure that Members on both sides of the Committee will agree that the vocational skills system urgently needs investment and it is only fair that employers play their part if they want better-quality apprenticeships, which I believe they do. I also believe that they will engage with the levy to make it work for them.
The clauses on the apprenticeship levy will enable the Government to deliver their objective of increasing the quality and quantity of apprenticeships and to meet their target to deliver 3 million apprenticeship starts by 2020.
Ruth Cadbury (Brentford and Isleworth) (Lab)
The Minister mentioned the quality of the apprenticeship scheme and I want to put down a marker that some employers, such as Brompton Bikes, which employs many people in my constituency—it was, until a few weeks ago, based there—have to pay into the levy, by the looks of it, because of the size of their operation, but are not able to benefit from the national apprenticeship scheme for the key subsection of their young staff who will be skilled braziers. That is because brazing is a specialist skill and there are too few people doing it for there to be national accreditation. However, brazing is an essential part of building Brompton bikes and giving them the quality they have. Such employers have to pay the levy without getting the benefit for at least half of their eligible workforce. They have to fund that training themselves, on top of the levy. Will the Minister take that point back to his Department?
Mr Gauke
I am grateful to the hon. Lady for raising that issue. Our discussions this afternoon are focused on the raising of expenditure, and the Department for Business, Innovation and Skills is leading on how that money can be spent. However, it is perfectly reasonable for her to make that point. I encourage businesses to engage with BIS on how the apprenticeship levy can be spent to ensure that it goes to the right places and creates a more highly skilled workforce. The Minister for Skills, my hon. Friend the Member for Grantham and Stamford (Nick Boles), is engaging with businesses in many sectors up and down the country to ensure that we have the right set of rules in place. I hope that hon. Members will recognise that the Government amendments are sensible revisions, and that they will accept that the SNP amendment is not needed, as we have already published detailed guidance on how the levy will operate for employers across the UK.
I want to reiterate the importance of investing in apprenticeships, which are a powerful tool for enabling social mobility and driving productivity growth. They equip people with the skills they need to compete in the labour market, and enable employers to grow their businesses. The apprenticeship levy will put employers in control and give them an even greater say in the quality, value for money and relevance of the training that their apprentices receive.
Roger Mullin
I rise to speak to new clause 2. I commend the Minister for mentioning the importance of productivity and of generating much more investment. I am sure everyone in the Committee agrees wholeheartedly. However, the problem of productivity relates to particular strata of apprenticeships—for example, higher-skilled apprentices are needed. Fundamental questions are being asked in the different jurisdictions of the UK about how best to address that. Although one levy system is being imposed in the UK, different forms of apprenticeships are being created. There is some anxiety among employers and different Government agencies about whether the Government should be moving at this pace before these matters are clarified.
This is a probing new clause. I simply ask the Minister to address a few short questions to assist our further thinking. First, in the designing of the levy system, was account taken of the fact that different apprenticeship systems operate with different funding levels in different parts of the United Kingdom?
Secondly, we know that some of the systems and administrative arrangements that are being put in place vary considerably from one part of the UK to another. To what extent does the Minister accept that the levy may be top-sliced to fund some of those systems? For example, as he is aware, the digital voucher system that is planned for England will not operate in Scotland. Is it to be funded separately, or will the funding come out of the levy costs?
Thirdly, who has to pay this levy? It makes a lot of sense, and the Minister talked eloquently about businesses, but it is not merely traditional businesses that are expected to pay the levy. In Scotland, further education colleges are the biggest provider of the education that supports the apprenticeship system. On the latest calculation, they will collectively have to pay approximately £1.9 million for the apprenticeship levy, when we expect them to be the main providers of education training. I would like to hear the Government explain why colleges and some large training providers are expected to pay the levy. Will that not dilute their resources for investment in quality apprenticeships?
With those questions, I would like to hear some of the Government’s further reasoning. I think that there is a case, which has been made to us by many employers and agencies, for the Government to take their time and be careful about implementing the levy.
Philip Boswell
I fully support the comments of my hon. Friend the Member for Kirkcaldy and Cowdenbeath. I rise to speak to a different issue relating to the clause. I have concerns about the apprenticeship levy and its application and implementation in the devolved Administrations. Skills policy is devolved, so the design and implementation of the apprenticeship programme in Scotland are devolved to Holyrood. Such programmes are also devolved to the Welsh and Northern Irish Assemblies.
Kirsty Blackman
I understand that guidance on the apprenticeship levy has been released. The information I was able to find online said that further guidance on things such as provisional bands would be released in June 2016, but I cannot find any. Perhaps it is just that I have been unable to find it, but it would be useful if that guidance was provided.
I draw attention to the issue with employee-owned companies. I was approached by such a company that pays its employees their share of the profits through PAYE, so that share of the profits will be subject to the apprenticeship levy. Had the company been set up to pay dividends to shareholders, it would not have to pay the levy. The staff there have come to me with a specific issue that is unique to them, because they would not have to pay the levy if their company was structured differently. Will the Minister comment on such employee-owned companies?
Rebecca Long Bailey
As we have heard, this substantial group of clauses introduces the apprenticeship levy that was announced in the summer Budget and autumn statement in 2015. I shall address my remarks to clauses 87 to 110 as a group, touching on new clause 2, tabled by the hon. Member for Kirkcaldy and Cowdenbeath, and Government amendments 22 to 28.
The apprenticeship levy was announced in 2015 and will come into force in April 2017 as part of the Government’s commitment to reaching 3 million apprenticeships by 2020. The levy will be charged on large employers with annual pay bills in excess of £3 million. According to the HMRC policy paper, that means that less than 2% of employers will pay the levy. It will be charged at 0.5% of an employer’s pay bill through PAYE. Each employer will receive one annual allowance of £15,000 to offset against its levy payment. Employers operating multiple payrolls will be able to claim only one allowance. As we have heard, levy funds will be retained as electronic vouchers in a digital apprenticeship service account. The employer can spend these vouchers on training and end-point assessment from accredited apprenticeship providers, but not on associated costs such as administration of apprenticeships, pay or allowances.
According to the Government’s costings, the levy is expected to raise £2.7 billion in its first financial year, rising to just over £3 billion by 2020-21. HMRC’s policy paper states specifically:
“It is expected that the levy will support productivity growth through the increase in training. It may have a near-term impact in reducing earnings growth, although by supporting increased productivity, it is expected that the levy will lead to increased profitability for businesses, and increased wages over the long-term.”
The paper also assesses the impact on business, stating:
“For employers paying the levy, the measure is expected to have some impact on administration costs and the impact will vary by employer, depending on the size of their pay bill. The policy intention is that they will calculate and pay the levy on a monthly basis. HM Revenue and Customs (HMRC) will engage with employers to discuss and assess the impacts on them.”
Opposition Members are certainly happy to support the introduction of the apprenticeship levy, but we have some concerns that we would like the Minister to provide some reassurances on.
Business representatives have broadly welcomed the levy as a commitment to delivering increased apprenticeship places. However, they have widely expressed concern at the short timeframe for implementation, the lack of guidance to date ahead of the introduction and the limitations that the proposals place on expenditure. Indeed, the Confederation of British Industry has called for a “realistic lead-in time” and for
“taking the time to get this right”,
while EEF, the Manufacturers Organisation, has specifically called for a delay to the levy’s introduction full stop.
In addition, the high target of 3 million apprenticeship starters by 2020 has caused concern that there could be a race to the bottom in terms of the quality of apprenticeships. Mark Beatson, chief economist at the Chartered Institute of Personnel and Development, has said:
“We’d argue that the three million target should not be sacrosanct, and that quantity should not trump quality.”
Can the Minister therefore outline what regulatory framework or safeguards are in place to ensure that the quality of apprenticeships is up to scratch?
The Charity Finance Group is particularly concerned that the charitable sector does not have highly developed human resources departments or accredited apprenticeship training schemes. The sector remains reliant on volunteers whose expenses cannot be remunerated via the apprenticeship levy. The CFG is also concerned that significant charity resources are tied up in public sector contracts or that charitable donors will seek confirmation that their donations will fund a charity’s specific cause.
Indeed, public sector employers themselves have expressed concern that, first, the levy is being introduced at a time of severe funding cuts and, secondly, that it is accompanied by a new requirement in the sector to ensure that 2.3% of workers are apprentices. The Local Government Association has urged that local authorities be exempted from payment but given authority to oversee administration of levy funds locally. Can the Minister confirm that the Government have considered that approach?
There may be scope for local authorities to co-ordinate. For instance, councils could take up a commissioning role in the Digital Apprenticeship Service, or unallocated levy funding could be reallocated to contributing areas and commissioned locally rather than being retained centrally.
Another issue that I would like the Minister to shine some light on today is agency workers and large recruitment agencies. In particular, the largest recruitment agencies have expressed concern to me that they will be liable to make large levy payments for placing employees in other companies, including for periods that would not qualify for a quality apprenticeship—over 12 months.
The Recruitment and Employment Confederation has raised concerns that large recruitment agencies will have to pay the levy on their pay bill when they place employees in temporary employment in different workplaces, so that those employees are paid by the agency but not working for it. Indeed, the TUC has expressed concern that agency contracts may be used by employers to lower their PAYE bill and reduce their levy requirement. Opposition Members are really concerned about that, so can the Minister say what steps are in place to ensure that it does not happen?
Finally, I have some concerns about how the levy will work under a devolved Administration, and I think that the hon. Member for Kirkcaldy and Cowdenbeath shares those concerns, as do his colleagues. That is reflected in new clause 2, where they have requested a review addressing how equitable treatment of the different parts of the UK will be assured in its implementation. Throughout their submissions they have asked some very pertinent questions, and I look forward to hearing the Minister’s responses to them.
The levy will be UK-wide, so employers operating across the devolved nations will pay their contribution based on all their UK employees, irrespective of where they live or work. However, the vouchers that levy-paying employers will be allocated—they can spend them on apprenticeship training—will be based only on the portion of the levy that they pay on the pay bill for their English employees. Funds available for training in devolved Administrations are provided through the block grant, and allocation will be decided upon by the Administration.
There appears to be very little guidance on how the apprenticeship levy will work in the devolved Administrations, so I would be grateful if the Minister could provide more detail today. For example, will the funds levied from a company’s UK operations based in devolved nations be identifiable in the grants made to devolved Administrations? We will support new clause 2 if it is pushed to a vote today.
I turn now to Government amendments 22 to 28, which relate to clauses 88, 90, 91 and 109. Clause 90, as drafted, states that where there is an aggregate pay bill of a group of connected companies that will qualify to pay the apprenticeship levy and each would be entitled to a levy allowance, only one will in fact be entitled to the allowance. The connected companies must nominate which company will qualify. Similarly, clause 91 sets out that at the beginning of the tax year, where two or more qualified charities are connected with one another, only one will be entitled to the levy allowance to be offset against the apprenticeship levy.
Government amendments to those two clauses allow companies and charities that are connected for the purposes of the apprenticeship levy to share their annual levy allowance of £15,000 between them, instead of only one company or charity being entitled to the allowance. There is also a consequential amendment to clause 88, which, according to the Minister’s letter,
“allows for the levy allowance not being the full £15,000, if a group of connected employers choose to split it under sections 90 or 91.”
The Government have stated that these changes are in response to representations they have received, and the Opposition are also aware of concerns from stakeholders about the legislation as currently drafted. We therefore fully support these amendments.
Amendments 26 and 28 are technical amendments that clarify that the definition of a company in clause 90 applies to the whole of part 6 of the Bill relating to the apprenticeship levy. Again, we are happy to support these Government amendments.
In conclusion, the Opposition have long called for Government action to drive growth in productivity. That is the underlying problem that the Chancellor has failed to deal with time and again. Supporting apprenticeships is certainly an important factor in doing so, and we are therefore supportive of these measures in the Bill. However, we have some serious concerns about the machinery of the specific clauses, as I have outlined, and I hope that the Minister can address them in his response.
Mr Gauke
Let me see if I can address the points that have been raised in the debate. It has been argued that business organisations are calling for a delay in implementation. We recognise that employers have concerns about the development and planned implementation of the levy, but we urgently need to address the skills shortage in our economy and improve the quality of vocational training, which employers are calling for. We are holding regular working groups with various employers and employer groups in order to keep them updated on progress and the timing of announcements, and we will shortly be publishing draft funding rates and rules to provide further information to help them plan for the introduction of the levy. The hon. Member for Aberdeen North is not wrong: there is still further information that needs to be published. That information will be published shortly.
Our focus is on ensuring that the levy works for businesses of all sizes as they adapt and seize opportunities in the coming months. In April we set out how the operational model for the apprenticeship levy and the new digital apprenticeship service will work, and how the funding of apprenticeship training will change. We continue to work with employers to design the apprenticeship levy around their needs, and we will publish further details of the draft rates and rules shortly.
Picking up on the point raised by the hon. Member for Brentford and Isleworth about Brompton Bikes and the particular concern about niche areas such as braziers, a key part of reform to apprenticeships is the trailblazer programme, which invites employers to create their own standards. It needs 10 employers, but in exceptional cases the Department for Business, Innovation and Skills is happy to accept smaller, more niche specialisms, such as braziers. I encourage all employers in such circumstances to enter into dialogue with BIS.
Kirsty Blackman
A number of people have got in touch on this point. I would appreciate it if the Government could keep it in mind going forward, and consider making changes. Employee ownership is really important, and going forward we will have more and more employee-owned companies. I do not want people to be discouraged from taking that route because they will have to structure their pay bills differently as a result of the apprenticeship levy.
Mr Gauke
I note the point the hon. Lady makes. The difficulty is that carving out bonuses that are distributed to employees of owner-managed businesses from the definition of earnings would increase the incentive to remunerate employees via bonuses rather than regular salary. That could create adverse incentives, and would also have a damaging impact on public finances. I understand why the hon. Lady raises this point, but I hope that she appreciates why we have not gone down that particular route.
On the point made by the hon. Member for Salford and Eccles about employment agencies, the apprenticeship levy will be payable by employers who pay earnings subject to class 1 secondary NICs. Where an employment agency supplies labour to a client and is the NICs secondary contributor for those workers, the agency will, like any other employer, be liable to pay the apprenticeship levy, provided that its annual pay bill is in excess of £3 million.
Apprenticeships are now the cornerstone of the skills system and provide opportunities for all sectors and all levels. Everyone stands to benefit from the better-skilled workforce that the apprenticeship levy will help to deliver. It is right that everyone plays their part and contributes to that. There is no reason why an agency could not take advantage of the drawdown from its levy account, if it satisfied the relevant criteria. We are introducing a number of flexibilities in funding for apprenticeships, such as the ability to use funding for equivalent and lower-level apprenticeships where the training is materially different from the learner’s existing qualification or leads to training in a new profession.
On the point raised by the hon. Member for Kirkcaldy and Cowdenbeath about top-slicing for England-only programmes, let me reassure him that we will not top-slice levy accounts to fund administration costs. To answer his question about what regulatory framework will ensure appropriate quality, the levy is just part of the Government’s reforms designed to improve the quality of apprenticeships. We are creating a new institute for apprenticeships to monitor quality standards, and employer-led trailblazer groups, which I touched upon a moment ago, and which allow employers to design new training standards. There are also funding rules; they require 20% off-the-job training and that apprenticeships must last one year. The Ofsted inspection regime applies to English training providers in order to guarantee quality, and there is the levy itself, which fosters employee ownership.
On the devolved authority funding mechanism, we are committed to doing all we can to make the system work for employers, wherever they are in the UK. I am pleased to see that the Scottish Government will shortly consult on how the apprenticeship levy could enhance productivity and growth in Scotland, and I would encourage other devolved nations to do the same. It will not be possible to identify individual employer contributions in the block grant; I wanted to provide that point of clarity. On the wider issue of productivity, the Government remain committed to improving productivity by increasing the quantity and quality of apprenticeships. The apprenticeship levy will enable us to do that. That is why I am pleased that we have these clauses in front of us, and I hope that they will have the support of the Committee.
Question put and agreed to.
Clause 87 accordingly ordered to stand part of the Bill.
Clause 88
charge to apprenticeship levy
Amendments made: 22, in clause 88, page 144, line 32, leave out
“any of sections 90 to”
and insert “section”.
Amendment 23, in clause 88, page 144, line 33, leave out “of £15,000”.
Amendment 24, in clause 88, page 144, line 33, at end insert—
‘( ) The amount of the levy allowance is £15,000 (except where section 90 or 91 provides otherwise).”—(Mr Gauke.)
Clause 88, as amended, ordered to stand part of the Bill.
Clause 89 ordered to stand part of the Bill.
Clause 90
connected companies
Amendments made: 25, in clause 90, page 145, line 33, leave out subsections (1) to (3) and insert—
‘(1) Two or more companies which are not charities form a “company unit” for a tax year (and are the “members” of that unit) if—
(a) they are connected with one another at the beginning of the tax year, and
(b) each of them is entitled to a levy allowance for the tax year.
(2) The members of a company unit must determine what amount of levy allowance each of them is to be entitled to for the tax year (and the determination must comply with subsections (3) and (3A)).
But see subsections (3C) and (3H).
(3) A member’s levy allowance for a tax year may be zero (but not a negative amount).
(3A) The total amount of the levy allowances to which the members of a company unit are entitled for a tax year must equal £15,000.
(3B) A determination made under subsection (2) (with respect to a tax year) cannot afterwards be altered by the members concerned (but this does not prevent the correction of a failure to comply with subsection (3A)).
(3C) If subsection (3E) applies—
(a) HMRC must determine in accordance with subsection (3D) what amount of levy allowance each of the relevant members (see subsection (3E)(a)) of the unit concerned is to be entitled to for the tax year, and
(b) accordingly subsection (2) is treated as never having applied in relation to that company unit and that tax year.
(3D) The determination is to be made by multiplying the amount of levy allowance set out in each relevant return (see subsection (3E)(a)) by—
where T is the total of the amounts of levy allowance set out in the relevant returns.
The result is, in each case, the amount of the levy allowance to which the relevant member in question is entitled for the tax year (but amounts may be rounded up or down where appropriate provided that subsection (3A) is complied with).
(3E) This subsection applies if—
(a) HMRC is aware—
(i) that two or more members of a company unit (“the relevant members”) have made apprenticeship levy returns (“the relevant returns”) on the basis mentioned in subsection (3F), and
(ii) that those returns, together, imply that the total mentioned in subsection (3A) is greater than £15,000,
(b) HMRC has notified the relevant members in writing that HMRC is considering taking action under subsection (3C), and
(c) the remedial action specified in the notice has not been taken within the period specified in the notice.
(3F) The basis in question is that the member making the return is entitled to a levy allowance (whether or not of zero) for the tax year concerned.
(3G) If any member of the company unit mentioned in subsection (3E)(a) is not a relevant member, that member is entitled to a levy allowance of zero for the tax year.
(3H) If subsection (3J) applies—
(a) HMRC must determine in accordance with subsection (3I) what amount of levy allowance each of the members of the unit concerned is to be entitled to for the tax year, and
(b) accordingly subsection (2) is treated as never having applied in relation to that company unit and that tax year.
(3I) Each member of the unit is to be entitled to a levy allowance for the tax year equal to—
where N is the number of the members of the company unit for the tax year.
Amounts determined in accordance with the formula in this subsection may be rounded up or down where appropriate provided that subsection (3A) is complied with.
(3J) This subsection applies if—
(a) the total amount paid by the members of a company unit in respect of apprenticeship levy for a tax year or any period in a tax year is less than the total of the amounts due and payable by them for the tax year or other period concerned,
(b) either the members of the unit have made no apprenticeship levy returns for any period in the tax year concerned or the returns that have been made do not contain sufficient information to enable HMRC to determine how the whole of the £15,000 mentioned in subsection (3A) is to be used by the members of the unit for the tax year,
(c) HMRC has notified all the members of the unit in writing that HMRC is considering taking action under subsection (3H), and
(d) the remedial action specified in the notice has not been taken within the period specified in the notice.
(3K) Subsection (3A) is to be taken into account in calculating the total of the amounts due and payable as mentioned in subsection (3J)(a).
(3L) The Commissioners may by regulations provide that in circumstances specified in the regulations the members of a company unit may alter a determination made under subsection (2) (despite subsection (3B)).
(3M) In this section “apprenticeship levy return” means a return under regulations under section 94(4).”
Amendment 26, in clause 90, page 146, line 1, leave out “section” and insert “Part”—(Mr Gauke.)
Clause 90, as amended, ordered to stand part of the Bill.
Clause 91
connected charities
Amendment made: 27, in clause 91, page 146, line 5, leave out subsections (1) to (3) and insert—
‘(1) Two or more charities form a “charities unit” for a tax year (and are the “members” of that unit) if—
(a) they are connected with one another at the beginning of the tax year, and
(b) each of them is entitled to a levy allowance for the tax year.
(2) The members of a charities unit must determine what amount of levy allowance each of them is to be entitled to for the tax year (and the determination must comply with subsections (3) and (3A)).
But see subsections (3C) and (3H).
(3) A member’s levy allowance for a tax year may be zero (but not a negative amount).
(3A) The total amount of the levy allowances to which the members of a charities unit are entitled for a tax year must equal £15,000.
(3B) A determination made under subsection (2) (with respect to a tax year) cannot afterwards be altered by the members concerned (but this does not prevent the correction of a failure to comply with subsection (3A)).
(3C) If subsection (3E) applies—
(a) HMRC must determine in accordance with subsection (3D) what amount of levy allowance each of the relevant members (see subsection (3E)(a)) of the unit concerned is to be entitled to for the tax year, and
(b) accordingly subsection (2) is treated as never having applied in relation to that charities unit and that tax year.
(3D) The determination is to be made by multiplying the amount of levy allowance set out in each relevant return (see subsection (3E)(a)) by—
where T is the total of the amounts of levy allowance set out in the relevant returns.
The result is, in each case, the amount of the levy allowance to which the relevant member in question is entitled for the tax year (but amounts may be rounded up or down where appropriate provided that subsection (3A) is complied with).
(3E) This subsection applies if—
(a) HMRC is aware—
(i) that two or more members of a charities unit (“the relevant members”) have made apprenticeship levy returns (“the relevant returns”) on the basis mentioned in subsection (3F), and
(ii) that those returns, together, imply that the total mentioned in subsection (3A) is greater than £15,000,
(b) HMRC has notified the relevant members in writing that HMRC is considering taking action under subsection (3C), and
(c) the remedial action specified in the notice has not been taken within the period specified in the notice.
(3F) The basis in question is that the member making the return is entitled to a levy allowance (whether or not of zero) for the tax year concerned.
(3G) If any member of the charities unit mentioned in subsection (3E)(a) is not a relevant member, that member is entitled to a levy allowance of zero for the tax year.
(3H) If subsection (3J) applies—
(a) HMRC must determine in accordance with subsection (3I) what amount of levy allowance each of the members of the unit concerned is to be entitled to for the tax year, and
(b) accordingly subsection (2) is treated as never having applied in relation to that charities unit and that tax year.
(3I) Each member of the unit is to be entitled to a levy allowance for the tax year equal to—
where N is the number of the members of the charities unit for the tax year.
Amounts determined in accordance with the formula in this subsection may be rounded up or down where appropriate provided that subsection (3A) is complied with.
(3J) This subsection applies if—
(a) the total amount paid by the members of a charities unit in respect of apprenticeship levy for a tax year or any period in a tax year is less than the total of the amounts due and payable by them for the tax year or other period concerned,
(b) either the members of the unit have made no apprenticeship levy returns for any period in the tax year concerned or the returns that have been made do not contain sufficient information to enable HMRC to determine how the whole of the £15,000 mentioned in subsection (3A) is to be used by the members of the unit for the tax year,
(c) HMRC has notified all the members of the unit in writing that HMRC is considering taking action under subsection (3H), and
(d) the remedial action specified in the notice has not been taken within the period specified in the notice.
(3K) Subsection (3A) is to be taken into account in calculating the total of the amounts due and payable as mentioned in subsection (3J)(a).
(3L) The Commissioners may by regulations provide that in circumstances specified in the regulations the members of a charities unit may alter a determination made under subsection (2) (despite subsection (3B)).
(3M) In this section “apprenticeship levy return” means a return under regulations under section 94(4).”—(Mr Gauke.)
Clause 91, as amended, ordered to stand part of the Bill.
Clauses 92 to 108 ordered to stand part of the Bill.
Clause 109
general interpretation
Amendment made: 28, in clause 109, page 155, line 35, at end insert—
““company” has the meaning given by section90(5);” —(Mr Gauke.)
Clause 109, as amended, ordered to stand part of the Bill.
Clause 110 ordered to stand part of the Bill.
The Chair
I remind the Committee that we will decide the question on new clause 2, if that is required, without further debate, when we reach it later on.
Ordered, That further consideration be now adjourned. —(Mel Stride.)
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Employment for People with Disabilities
(7 years, 10 months ago)
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Derek Thomas (St Ives) (Con)
I beg to move,
That this House has considered employment for people with disabilities.
It is a pleasure to serve under your chairmanship, Mr Stringer. I am delighted to lead this debate, not least because at the moment every Conservative MP seems to want to know me because they want my vote this afternoon, so I have 90 minutes clear of any of that kind of distraction. Much more important, I am delighted to lead this debate because supporting people who have disabilities to live full lives and to enjoy meaningful employment is something I have been concerned with for over two decades.
I know that this Government recognise the need to remove barriers that prevent people with disabilities from enjoying good access to jobs. They also recognise that little attention has been paid by Governments of all parties to this issue over decades, and as a result there is a significant gap between the employment rate of disabled people and that of the rest of the population. We all accept that if the same proportion of disabled people had been in work as non-disabled people at the time of the last general election, in 2015, an extra 2.268 million disabled people would have been in employment.
I welcome the Government’s Disability Confident campaign, which aims to challenge attitudes towards disability; increase understanding; remove barriers to employment for disabled people and those with long-term health conditions; and ensure that disabled people have the opportunity to fulfil their potential and realise their aspirations. I do not wish to steal the Minister’s thunder by stating what the Government are doing and how they intend to halve the disability employment gap by 2020, but it is good news that an extra 120,000 people who have disabilities are now in work compared with a year ago. We are certainly going in the right direction, but I believe that much more needs to be done to ensure that people who have disabilities are enabled to secure meaningful employment.
This morning I will argue that the Government’s Work and Health programme, which focuses on those with disabilities and health conditions, is the tool needed to crack the problem, and I will demonstrate that the Government’s work is made easier by the many organisations that are well placed today to remove the barriers in the way of those whom those groups support. I am keen to ensure that every extra penny spent to reduce inequalities in employment opportunities is well spent and delivers for those who need it. I will concentrate on the need, particularly today, to focus our resources on those who have learning disabilities and to ensure that money is used wisely and effectively to enable them to live full lives and be active in the communities they love so much.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The hon. Gentleman may not be aware that I chair the commission on autism. We launched a report yesterday on the barriers to health for people with autism, and we are going to move on to barriers to employment. Does he agree that autism is a disability that is rarely recognised, and that if we got more people with autism into work we would save billions of pounds for the Treasury?
Derek Thomas
I completely agree. In a moment, I will talk about my background in working with people with all sorts of learning disability, including autism, and the amazing contribution they can make to our local communities and to the workplace. I thank the hon. Gentleman for his intervention.
Supporting people towards independence and meaningful employment is something I have taken an interest in for years. Many of us will have stories about our mothers-in-law. I met my mother-in-law to be long before I met my wife. I met her in the mid-1990s, when I worked as a youth and community worker in Penzance, which is the main town in my constituency. She set up a charity called Choughs Training Project and spent her days supporting people with learning disabilities to learn skills, work in the charity and become active in the community. I was so impressed with the charity’s work that I became its chairman.
One of our most rewarding achievements was to relocate the charity and set up a training café in the heart of the newly built Wharfside shopping centre in Penzance. Over the years, Choughs Training Project—which still exists and is now called Manna’s Diner—has helped large numbers of local people to gain confidence, learn everyday life skills and work within the catering and hospitality sector. I was hooked to that work and went on to manage the Mustard Seed charity in Helston for eight years. During that period, we set up microbusinesses within the charity, and my staff and volunteers supported people with learning disabilities including autism, helping them to grow in confidence and experience and to develop skills that enabled them become more independent. We also helped to chip away at some of the perceptions that can exist in our society of people who have learning disabilities.
Each day, the people we supported made and delivered an amazing range of sandwiches and cakes for local businesses and retail outlets, not only providing a valuable service in the town but engaging in local society, breaking down many of the barriers and bridging the gaps between people with learning disabilities and those who live and work in the town. Every week, we went down to a local National Trust walled garden where we grew fruit and veg in our allotment. Using our own produce and buying direct from local farmers, we boxed up and delivered fresh produce to local homes. What made that work so interesting was that people with learning disabilities were helping local producers to sell more of their produce and were also going into people’s homes. I met many people—particularly older people—who did not meet people from one week to the next. Having someone come into their home who was able to communicate freely, had good social skills and was willing to talk about everyday life was a bright part of their week.
For a time, we ran three community cafés, two of which were in local children’s centres. Again, that brought together different groups in society, helping them to understand the richness and wealth of the local community. In both Penzance and Helston, which is also in my constituency, those projects continue their good work, and many such small but significant initiatives still operate. My experience is that people who have learning disabilities are keen to work and welcome opportunities to learn new skills and play their part in modern society.
Mr Sheerman
I have to say, the hon. Gentleman’s speech is so refreshing that I wish he had stood as leader of his party. I could not have voted for him, but I could have campaigned for him. Is it not a fact that many people on the autism scale find it very difficult to be diagnosed and their condition recognised, and to get access to care? Even children in care with a learning disability can have a 20-month wait for therapeutic care.
Derek Thomas
I agree. Right next door to where I ran Mustard Seed was a small office for Spectrum, which does amazing work supporting families of people with autism. The hon. Gentleman is absolutely right. There are so many elements of this—not just whether a person can work or would like to work, but their whole wellbeing and how we give them full lives, so that they are in a position to contribute in the way they want to. You are absolutely right, and I appreciate that intervention.
Since being elected as an MP, I have taken a particular interest in this field. There is no point in being an MP unless you can do something about the challenges you identify growing up and taking part in local society, so there would be no point in my coming here if I did not attempt to address some of the challenges I found in my professional work previously. I have been doing some very good work, and I recently discovered the positive work of Cornwall People First, which supports people to speak up for themselves and to live full lives. I have watched that charity at work: rather than doing things for our most vulnerable citizens, it stands alongside them and enables them to rise to the challenge, whatever it may be. The great tragedy is that the charity’s funding from Cornwall Council is being reduced from £120,000, which is really nothing at all out of the council’s budget, to £70,000, which means it is able to do about half of what it was doing this time last year at a time when we want people with learning disabilities and other disabilities to be supported and helped much more.
I have got to know the work of Rebuild South West, which is a unique community interest company run by ex-military personnel who work to restore lives while rebuilding properties. It has been working with people who have all sorts of challenges, including disabilities and mental health conditions. It is particularly refreshing that in my constituency, which has 1,030 empty homes—not second homes or holiday homes, but abandoned homes—and people who desperately need family homes, Rebuild South West is working with owners to bring the homes back into use and using vulnerable people who need support to gain skills and to work with others they can identify with. That amazing work is largely without the help of the council and the state.
Helen Whately (Faversham and Mid Kent) (Con)
It is fabulous to hear about my hon. Friend’s experience. Does he agree that many people with mental health problems are looking for work and want to be in work, and that we must give them more support because it is good for them to be in work and good for everyone around them?
Derek Thomas
My hon. Friend is absolutely right and I welcome her intervention. The mistake in the rhetoric of how we challenge welfare is that it is about saving money, but it is not. It is often about trying to provide people with full lives so that they feel confident and able to contribute and have satisfying work. My hon. Friend is right to mention that. I want to concentrate on learning difficulties because they present particular challenges and I believe I have identified how to resolve them. Anything we can do to help people to grow in confidence and to manage their health issues by supporting them to feel that they have something to offer is good for everyone. Thank you very much for that.
I have recently had the great and amazing privilege of meeting the people behind Helston and the Lizard Works. I used to work in Helston. The Lizard is a lovely part of Cornwall and a tourist area, but it had the highest number of people not in education, employment or training of any rural part of the country. I take a particular interest in the challenges facing people, particularly the young, on the Lizard and how they access work. Helston and the Lizard Works is unique. Many people believe the challenge is too great and that we should accept that some people will never be able to work, but Helston and the Lizard Works does not believe this and through a unique back-to-work business and community-based project in my constituency it has shown that with the correct support people can overcome enormous obstacles and take control of their own future.
It is important to make the point that being jobless is not just an individual’s problem. It is a business and community issue that can have a business and community solution. Helston and Lizard Works has engaged with local businesses and encouraged them to give their time to inspire and support jobseekers. It has run community projects to allow jobseekers the chance to get involved in their local community. It set out to help 40 people into work—I have explained how challenging Helston and the Lizard are geographically—and ended up achieving this for 104 people, which in a rural area such as west Cornwall is remarkable. It has helped many other people besides.
I selfishly mention these projects and examples in my constituency because each one and many more like them throughout the country have three things in common. They are brilliant in what they do, they are well placed to develop this work further and to help the Government to achieve their target for getting for helping people into employment, and they are all strapped for cash. I am arguing that as the Government develop their Green Paper, they should recognise that such groups are well placed to support people as they prepare for work and find work and when they are in work. If we get this right, we can transform the lives of many people, and I am excited about the opportunities ahead.
As I prepared for this debate, I thought back to some of the barriers I encountered when supporting people with learning disabilities. I will touch on them briefly simply to emphasise the contribution that many community groups already on the ground can make and that they are ready to act. The transition from school to work for people with learning disabilities has particular challenges. The hon. Member for Huddersfield (Mr Sheerman) referred to this, and it is also true for people with autism. Community-based organisations could be funded to work with schools and colleges to identify suitable work placements and apprenticeship opportunities, and to support youngsters in this transition period.
Richard Graham (Gloucester) (Con)
Hearing about my hon. Friend’s experience of bringing people with disabilities into the workplace is incredibly valuable to us all. In the Works and Pensions Committee yesterday, one of the ideas I floated over some of the people from whom we were taking evidence was that to encourage more young people into apprenticeships we should incentivise small and medium-sized businesses as we did some years ago for people without disabilities. Does he agree that allowing SMEs to have up to two apprentices with disabilities without having to pay national insurance would help to incentivise them to take on apprentices with disabilities?
Derek Thomas
I certainly think that such initiatives are important in breaking the deadlock when employers are not absolutely sure that they can provide those opportunities. I am looking at how to make that possible in my office. I understand that support and grants for apprenticeships continue to the age of 25 for people with disabilities. It is important to recognise that advantage, but we should do more.
Mr Sheerman
The hon. Gentleman is being generous in giving way. The reputation of further education in Cornwall is brilliant—everyone says it is the exemplar. Do you work in partnership with Cornwall College of further education? Is the hon. Gentleman picking up one of the problems we are picking up that some schools that become academies are filtering out people with special educational needs and autism because they think they will pull down their performance in league tables?
Graham Stringer (in the Chair)
I remind hon. Members that “you” refers to me and that they should use normal parliamentary protocols.
Derek Thomas
Thank you Mr Stringer. I also made that mistake.
I work with FE colleges in Cornwall and other groups such as Mencap, Leonard Cheshire Disability and others. I am talking to all of them and have been since being elected to Parliament to see how we can bridge some of the gaps. I share the concern about academies. League tables, albeit not necessarily the intentions behind them and incentives they put in place, present a problem to schools across the board in terms of how they maintain a high position in league tables and continue to attract children. We must look at the incentives that may marginalise and exclude people. I accept that is important.
It is obvious that different people have different hopes and aspirations. That is equally true of people with learning disabilities and, or autism. Community-based organisations can help to develop a creative and flexible approach to employment and occupation to achieve optimum positive outcomes. That is particularly true of how we work with employers to find opportunities to provide spaces and places for people.
Mr Robin Walker (Worcester) (Con)
My hon. Friend is making an important speech, and I apologise for missing the first few minutes of it. One option for community organisations working with employers is to set up their own enterprises. ASPIE in my constituency set up Wits End Wizardry, a web design company that was designed to employ people with autism. Does he agree that when community organisations have expertise in dealing with a particular condition, they can bring real value to designing the workspace and supporting employment for people with conditions such as autism?
Derek Thomas
I agree. Such organisations can also encourage progression and create bespoke opportunities for people with a learning disability. I completely accept that. As the Government put new money into this—the £60 million and the £100 million a year—I hope it will go down to organisations that really understand the opportunities and challenges and their local communities. That is hugely important.
I have found that families of vulnerable people are understandably anxious about how their loved ones would cope in the world of work. We have already heard about the challenges and lack of support as they go through school. It is understandable, then, that as their children go towards that transition, parents will be equally anxious. The organisations with which I am familiar are not seen as part of the system and they have the trust of the families they support. That helps to overcome a real barrier to meaningful employment for those who can otherwise find themselves on seemingly endless day placements and college courses. I have met people with learning disabilities who have done every course available to them and continue to go round and round. That is not giving them full lives.
Neil Gray (Airdrie and Shotts) (SNP)
The hon. Gentleman is making a very good speech. The case he is outlining is making an even stronger case for the Government to make early publication of the Green Paper a priority, so that some of these issues can be ironed out and a proper, concrete process can be put in place. Does he agree?
Derek Thomas
Actually, until today I had been wanting to hurry on the process of the Green Paper, but having achieved this Westminster Hall debate, which I had been seeking for some time, I am glad that we have not had the Green Paper yet, because I am hoping that everything I am suggesting and the other suggestions made today will be included in it. I will be looking to see exactly how my local community organisations will benefit from this morning’s debate in the Green Paper.
Richard Graham
One issue that the Green Paper will have to tackle is how the Work and Health programme will use what resources it has most effectively. The Work Choice programme has been incredibly successful, but we suspect that there will not be enough money for that programme to be available to everyone, with any disability, so there are some quite difficult choices to be made. Do we focus on the people closest to the workplace or on those with the most severe disabilities, or do we try to do a mixture of both? Does my hon. Friend agree that the way we use things such as Work Choice, which has been so successful, will be key to success after the paper has been written and the policy is implemented?
Derek Thomas
I do agree. We need to understand that every penny we spend effectively and successfully now is a penny saved that can be used to support the next individual. My hon. Friend is absolutely right. How do we prioritise? Who should we work with most? Do we just go for quick wins or do we go for the greatest challenge? We must recognise the contribution that people will make to the economy and society if we get this right, as well as the savings to the state. At the moment, so much of what we are spending, almost to maintain the status quo, is not money well spent.
I found that, although willing, employers would be nervous about whether a candidate had the skills and support network needed to work in often busy workplaces. Community-based organisations can build trust with business owners and have the connections to help to equip prospective employees with the skills and confidence they need.
I want to mention a couple of things that need to be taken seriously as we look at the Green Paper. We hear often in the Chamber now about constituents who have written to us to raise a particular issue. The chairman of Cornwall People First, who has a learning disability, asked me to raise the following issue in this debate. At the moment, he has a free bus pass for use after 9.30 am. If he wants to get employment or to access training, that bus pass needs to serve him at a time when people are actually going to work. It would be brilliant if we could talk to local authorities and change that, so that bus passes are free to use when they are actually useful to the people who need them and have a right to them.
Also, we talk a lot about the role of jobcentres, but one of the jobcentres in my constituency, in Penzance, is in a huge granite building that is completely uninviting, and often when I walk past there is a security guard standing at the door. In Helston, there is a large, glass-plated shopfront, and again, by the door stands a security guard. For someone who is vulnerable and feels they are being pressured to take part in a system, that is a barrier in itself. We need to look at how we can improve that.
In recent decades, people with disabilities have made huge progress in the workplace and more are now in work than ever before. However, despite wanting to work and often having the right skills and experience, many people still face significant barriers to accessing employment. I have focused on people with learning disabilities, but that is true for all people who have a disability. As the Green Paper on disability employment is progressed, I would ask that significant consideration and support be given to these small but effective community organisations. They are ready and primed to address the barriers to employment that exist for people with disabilities.
I am a huge fan of Cheshire homes and have enjoyed my visits to the home in Marazion in my constituency. I want to conclude by reading Leonard Cheshire Disability’s statement of belief, which serves as a reminder of why we are taking part in this debate today:
“We believe that disabled people should have the freedom to live their lives the way they choose—with the opportunity and support to live independently, to contribute economically and to participate fully in society.”
Graham Stringer (in the Chair)
I intend to call the Scottish National party spokesperson at 10.30 am and obviously the debate finishes at 11, so there is approximately 35 minutes left and there are five Back-Bench speakers. The arithmetic is straightforward.
Ms Margaret Ritchie (South Down) (SDLP)
It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for St Ives (Derek Thomas) on securing this debate on such an important issue. It is about the barriers to employment for many people in our society who are disabled, and I hope that I can bring to it a perspective from Northern Ireland.
We are dealing with people who were born with disabilities and those who were diagnosed later—reference has already been made to people with autism and with special needs. There should be no barriers in society, whether in work or in other spheres of life, for people who are disabled and are seeking to improve their lives, the lives of their families and the contribution that they can make.
Equality and protection of equal rights is vital throughout the UK. Discrimination against those with disabilities in the workplace is rightly forbidden by law. Those who were born with or who develop a disability are entitled to the same amount of respect and the same opportunities as all of us in this Chamber have. Anti-discrimination legislation is a key component in the promotion of employment for those with disabilities and their protection in the workplace, yet it is not sufficient on its own and efforts must be made to influence the work culture. In any discussion about the current Human Rights Act 1998, it is important that the provisions on people who have disabilities in the workplace are not diminished or diluted in any way. It is important that those well-held protections are copper-fastened, secured and sustained.
People with disabilities are not a homogenous group, and employers and colleagues must realise their obligation to accommodate different people’s specific needs. Negative attitudes to disability, both physical and mental, and stigma must be challenged. Employment can not only make an important contribution to the lives of disabled people but demonstrate that they, too, make a significant contribution to our economy and society. They have much to offer and they bring a different perspective, often derived from their disability and their experience due to their disability.
Many people with a disability develop it in adulthood. I support programmes that enable people to develop new skills when they are diagnosed with a disability and forced to retrain. It is important that they are allowed and enabled to do that if it is what they want. However, the Government—I say this advisedly—must learn that a disabled person cannot be sanctioned into work. The current system, and particularly the welfare system, sometimes punishes people with disabilities who struggle to find suitable work. We have seen examples of that throughout our constituencies and particularly in Northern Ireland. It can punish people who may never be able to do the type of paid work—or give the time that is needed—that employers currently value.
This Government, and the previous coalition Government, have hijacked disability rights group language about independence in order to cut the rights of disabled people. Cutting the work-related activity component of employment and support allowance—ESA—would not have supported people with disabilities into work. There is some evidence base for that. Like other Members, yesterday I received a briefing from Parkinson’s UK that clearly states:
“The cut to financial support for those in the ESA work related activity…from April 2017 will push people with Parkinson’s even further from the workplace,”—
when we want to encourage them to stay in or enter the workplace, and can—
“cause unnecessary stress which will make their condition worse and harm their financial situation which may already be precarious.”
The key, here, is recognising the need to challenge attitudes to disabled people in the workplace and to support them if they are able to work. To pile financial pressure on them is counterproductive and cruel. The focus and concentration for Government, and agencies as well, must be to challenge discrimination, as the hon. Member for St Ives highlighted in his very thoughtful contribution. We must make the workplace more equal and we must promote awareness of the support mechanisms that are available. There must be fair treatment in back-to-work schemes for people who may have already been in the workplace and find themselves disabled as a result of an accident but want to contribute to society and make their own lives better. There must be recognition and support for people who cannot work because of their disabilities, but who wish to do so and wish to make that contribution. I look forward to the response from the Minister on this very important issue.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak on this matter, Mr Stringer. May I commend the hon. Member for St Ives (Derek Thomas) for, as he always does, setting the scene on these issues? It is a pleasure to make a contribution and, like the hon. Member for South Down (Ms Ritchie), I will give some comments, direction and focus on Northern Ireland. The issue, clearly, is work itself and how we address that.
Despite the great services that exist and the Access to Work scheme, the proportion of people with a learning disability in paid employment has remained stubbornly low. That is a fact we cannot ignore and is what this debate is all about. The Government have previously referred to £330 million, which would be spent over the next five years on a tailored peer support offer for disabled people out of work and targeted at work in the ESA or the work-related activity group. That is, of course, welcome, but it should be remembered that the recent Welfare Reform and Work Act 2016 cut ESA for this group by £30 a week—other Members have referred to that—saving the Government £640 million and ultimately greatly offsetting the supposed £330 million investment. I am sure that the Minister will give the Government’s side of that, but those are the figures as I see them. The proportion of learning-disabled people known to social services in paid employment fell from 7% in 2012-13 to 6.8% in 2013-14. According to Mencap UK, which represents people with learning difficulties, that proportion appears immune to economic factors. These are clearly issues to be dealt with.
I would like to make some comment, as others have —other hon. Members will probably mention this as well—on those who have served King and country in uniform, and their families. In Northern Ireland we have had some 30 years of troubles; we have a large number of veterans who have mental and emotional issues. I feel that there needs to be more focus on them and their families.
Mencap also says that the fall in numbers of learning-disabled people in employment happened despite the fact that the majority of people with a learning disability can and want to work. There is an eagerness to work, and we should encourage it. The figures are stark if we compare them with the national employment rate of 76% and an overall disability employment rate of just below 50%. The Government pledged to halve the disability employment gap. Indeed, the pledge was in the Conservative party’s manifesto, and we recognise and welcome it. It is good to see a commitment to it, but that commitment must be met with results. That is how we measure any legislative change or commitment—by the results.
Mencap supports the 1.4 million people with a learning disability in the UK and their families. They directly support over 10,000 people with learning disabilities to live their lives the way they want and, importantly, to live independently. Many good initiatives are happening across the whole of the United Kingdom. I commend one in my constituency—Daisies Café at the Ards hospital—for the truly excellent and extraordinary work and commitment it gives to those who have emotional and physical disabilities. I know that the café works in the constituency of South Down as well, and across the whole of Northern Ireland.
Fewer than two in 10 people with a learning disability are in employment. Mencap estimates that almost eight in 10 people with a learning disability could work if given the right support; however, that support is often not available or those giving it often do not understand learning disabilities. The estimate of fewer than two in 10 in work is Mencap’s estimate, and the Government’s figures are even lower: the figure for those in work known to social services is 6.8%. Of course, this is just one of many stakeholders and one of many conditions affected in this area, but it is a pertinent example and an indication of a very worrying trend.
Although welcome moves have been made to realise that commitment, the facts show that we need to lift our game and do more. The Government need to monitor the disability employment gap, identify the factors that are still preventing it from closing and preventing disabled people from getting into work, and take action on those factors. These are things that the Government can and should do. Every day, every MP will have interactions with those with disabilities. I believe that we are elected to this House to act on behalf of those who need support more, and to help those who cannot help themselves.
Department for Work and Pensions data show that between 2011 and 2015 the number of jobcentres employing a full-time adviser to help disabled people fell by more than 60% from 226 to 90, with reductions in every recorded year. We cannot ignore that issue. We need to know what steps the Government have taken to address the fall in the number of jobcentre advisers, and how we can best help those who are disabled when they come looking for help. I know that the Minister is very responsive—I mean that honestly and sincerely—to the questions that we put to him, and I am sure that he will come back with the steps that the Government intend to take. That reduction surely contradicts the Government’s commitment to reduce the disability employment gap, and that cut in services needs to be closely monitored to ensure that it is not having an adverse effect on efforts to reduce disability unemployment.
I will give an example from Northern Ireland, because it is always good to give examples of what the devolved regions are doing so that we can ensure that we have the best practice here in the mother of all Parliaments. We have an additional scheme to help reduce the disability employment gap. As well as the Access to Work scheme, which is a devolved responsibility, there is Workable (NI), which is delivered by a range of providers contracted by the Department for Employment and Learning. My party colleague Simon Hamilton is the Minister for that, along with the Department of Enterprise, Trade and Investment. These organisations have extensive experience of meeting the vocational needs of people with disabilities, and using them is a great way of advancing social enterprise and supporting that sector.
Workable (NI) is a two-year programme that helps people out of tough economic situations, gives them support and hope and properly prepares them for employment. It tailors support to individuals to meet their specific needs. The provision can include support such as a job coach to assist the disabled worker and their colleagues to adapt to the needs of a particular job, developmental costs for the employer and extra training, including disability awareness training. Those are all vital factors for any and all disabled people who want to work. With the fresh start agreement and the streamlining of Stormont Departments in Northern Ireland, I will be sure to keep an eye on progress and bring any positive developments back to this House, so that the best policies being implemented across the United Kingdom are known and taken into consideration here at Westminster.
In conclusion, let us exchange the good points and good practice that we have in every region of the United Kingdom. Lessons can clearly be learned from the approach in Northern Ireland, and we can develop additional strategies here in the mainland to help the Government make good on their commitment to halve the disability employment gap.
Natalie McGarry (Glasgow East) (Ind)
It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for St Ives (Derek Thomas) on securing this very important debate and on the manner in which he started the debate, which has continued with other Members. This issue is of supreme importance to Members right across political parties, right across the divide, and we have to work constructively together to address it. It is particularly important to me in Glasgow East, which has a higher than average rate of disability—disabilities that have transpired throughout life, not just birth impairments.
As I have said before in the House, ours is a disabling society. Some are born with impairments whereas some acquire them, and those can be visible and invisible. From time to time, we all get a glimpse of the invisible agency of a society that is organised for the convenience of non-disabled persons. Ours is a society that adds to disabilities; we must endeavour to change it, and employment is at the heart of that challenge.
Today in the UK, the disability employment gap stands at 33%. Of course, the Government have pledged to cut the disability employment gap in half—to put 1.2 million people living with disabilities into work. I thoroughly applaud that target but feel, as many hon. Members across the House may feel, that the Government sadly do not appear to be doing enough to make that aim a reality.
For example, in a speech in August 2015, the former Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), criticised employers for the persistence of the disability employment gap. There is criticism due in that respect but, less than two months later, it was reported that the Department for Work and Pensions had cut the number of specialist disability employment advisers in jobcentres by over 60% between 2011 and 2015. Instead, the UK Government wish to replace those specialists with general, non-specialist “work coaches”.
In jobcentres in my constituency, where there are higher levels of disability, that one-size-fits-all approach has stripped services and advice to the bone. In a constituency such as mine, where unemployment is almost double the national average and competition in a flat jobs market is fierce, people with disabilities are not on an even playing field. Competition for jobs without education for employers in how to support people with disabilities in finding work further economically disadvantages people and deprives the job market of their unique talents and skills.
Charities have said that cutting specialist advisers from jobcentres will undermine the UK Government’s goal of halving the disability employment gap. Will the Minister address those concerns and tell us what assessment the Government have undertaken to ascertain the impact that the changes will have on recipients of the benefit?
The UK’s rhetoric of supporting disabled people does not necessarily reconcile with the reality of the closure of Remploy factories. In 2013, the Government closed nine Remploy factories, with hundreds of disabled people losing their jobs across the UK and Scotland, including in Leven, Cowdenbeath, Clydebank, Stirling, Dundee and Springburn, which is in the neighbouring constituency to mine.
A constituent of mine who worked for 25-plus years as a seamstress has since been put into work experience jobs and inappropriate and short-term employment. She has now been shoehorned bluntly into the care sector, which is completely inappropriate work for her. When the Government made the decision to close the Remploy factories, they pledged an £8 million package to help those who had lost their jobs to transition to mainstream employment. However, figures reported in 2015 show that, of the 1,507 Remploy workers who lost their jobs, 733 had still not secured employment. Will the Minister update the House on the Government’s progress on helping Remploy workers to secure mainstream employment? Is he satisfied with that progress?
Stereotypes and stigma still persist in contemporary society. ACAS found that for 42% of disabled people seeking work, the biggest barrier to getting hired was misconceptions about what they could do. Indeed, Geoffrey Wright, a former Remploy worker, described his experience of this. He said:
“I was looking for a job and now I’m not. They take one look at you, you hand them your CV and they never call.”
Last week I visited a wonderful school in my constituency, Cardinal Winning Secondary School, which educates children with a range of additional support needs or spectrum disorders. They learn valuable life skills and skills that will enable some of the pupils to achieve employment when they leave school. The nurturing environment of the school can be contrasted with the fears of some parents that their children will not be given the support when leaving education to continue to fulfil their potential—in employment, the voluntary sector or other areas.
An ageing population, coupled with an increasing pension age, will mean that more people are available and willing to work. People with disabilities have many valuable assets that we are missing out on by failing to break down barriers. The economy loses, society loses and people with disabilities lose. We must rise to the challenge together. It is an opportunity not only for our economy to be more diverse and our society to be more enabling but to break down barriers and to smash stigma and stereotypes—together, across the House, we must rise to that challenge.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Member for St Ives (Derek Thomas) on securing this debate. Many of us are reminded every day in our constituencies of the lack of services for disabled people, especially when young people leave full-time education. Today, as we focus on employment for disabled people, we must look at the shortage of careers advice available, which in itself leads to low numbers of registered disabled people engaged in paid employment.
Like other hon. Members, I appreciate all the excellent efforts of various Government Departments, outside organisations and, most of all, carers and volunteers, but there is still a vast gap when meeting the needs of disabled people and getting them into employment. The Equality Act 2010 has gone a long way in protecting the rights of disabled people. Included in the Act is the provision that employers must make “reasonable adjustments” to avoid a disabled person being put at a disadvantage compared with a non-disabled person in the workforce, but we cannot ignore the fact that that there are over 6.9 million disabled people of working age, which represents 19% of the working population. Of that, 1.3 million disabled people in the UK are available and want to work. Only half of disabled people of working age are in work compared with 80% of non-disabled people.
What we are seeing is a very clear difference in the employment statistics for disabled persons and non-disabled persons. I do not want to appear to be having a go at businesses but those figures suggest that non-disabled people are being favoured for jobs. Why is that happening? Is it because of the level of training required, the lack of qualifications, poor social skills or apprehensive employers? I believe it to be a cocktail that includes all those factors. That is why Government need to increase the accessibility of jobs for disabled people.
Mr Robin Walker
The hon. Gentleman is making some excellent points. One thing that has changed and improved in many ways is assistive technology, particularly for people with conditions such as blindness or deafness. Does he agree that disseminating information about the assistive technologies that are available and making sure that businesses are aware of them and how easy they are to use is an important part of this?
David Simpson
Yes, the hon. Gentleman makes a very good point. The need to promote awareness of the technologies and what is available to help companies to take on people with additional needs is a valid point.
There are two special schools in my constituency. We fundraise every year for them and try to help them to get young people into employment. Principals, staff, parents and pupils are trying to provide an excellent level of care. The detailed attention that each child receives to ensure that they are developing to their full potential is exceptional. Schools are doing their best to get the best out of young people who have additional needs, but once the child reaches the age of 19—I am referring on this point to Northern Ireland—and is due to leave full-time education, support diminishes. The Department of Health in Northern Ireland recently have set IQ tests for young people. If they reach a score of 70 or above they are deemed ineligible for specific services provided through the Department. This is simply devastating for young people and for their families as they struggle to fulfil the needs of their sons and daughters. The principals of the special needs schools have expressed to me their utter frustration at how quickly all the great work carried out in their schools is being lost as the correct level of support is not available for young people. The reality is that so many of those young people could be out working and adding to the economy, but they cannot get over the initial application phase because the support services are just not there.
I recently visited a social enterprise in my constituency that is providing excellent support, skills and qualifications. Sadly, it is under constant threat of closure due to lack of funding. Its staff train young people in essential social skills that not only equip them for the world of work, but boost their inner confidence. The social enterprise focuses on preparing young people for adult life, encouraging them to reach their goals and giving them invaluable skills. I am currently working closely with a local supported employment organisation, Ulster Supported Employment Ltd, on how we can do more after people turn 19. USEL goes some way in addressing the setbacks faced by disabled people, but we should go further in supporting such organisations and social enterprise initiatives.
Parents have said that there is no flexibility of benefits for their sons and daughters who are heading into work. That has created a significant reluctance for young people to come off benefits and start working. The challenges in their new job may not be something that they can sustain, and if they have given up their entitlements they may have to wait a number of weeks, or even months, before they can claim benefits again; indeed, they may not even receive them at all.
All Members of this House are trying to be proactive in their constituencies. In Upper Bann, I am planning a jobs fair for disabled people in the autumn. I have spoken to the local council, further education colleges, the special needs schools and a number of other organisations in my area, and all are keen to come on board. During the summer recess, we will try to get businesses interested, and see whether we can help people with additional needs and disabilities to fulfil their ambitions in life.
Neil Gray (Airdrie and Shotts) (SNP)
It is a pleasure to speak with you in the Chair, Mr Stringer. I thank the hon. Member for St Ives (Derek Thomas) for securing the debate.
I recently spoke in the Chamber during the debate on the disability employment gap. In that speech, I welcomed the announcement by the Secretary of State for Work and Pensions of the Green Paper on health and work. I welcomed it on the basis that it would involve a genuine consultation process, that the Government would genuinely listen to stakeholders and that there would be genuine investment in the resulting service. The Green Paper cannot be a conduit for further cuts. It must be boldly resourced if the Government are to get close to their employment gap target. I made clear that this should have been done before the cut to employment and support allowance for those in the work-related activity group and before the cut to universal credit work allowance.
The mistakes of the past cannot, sadly, be undone, but we must do all we can to amend them. Above all else, that requires the publication of a properly-resourced Green Paper to a cast iron, copper-bottomed, concrete timetable. The delays and changes are well known: the White Paper became the Green Paper; the Secretary of State changed from the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) to the right hon. Member for Preseli Pembrokeshire (Stephen Crabb); and the proposed publication date of
“well before the summer break”—[Official Report, 14 March 2016; Vol. 607, c. 633.]
became “later this year.” The Secretary of State is currently seeking employment elsewhere, and depending on who the eventual winner of the Conservative leadership contest wishes to surround themselves with, his position may be filled by another candidate anyway. Given that, it is imperative that a clear deadline and concrete timetable are announced as soon as possible. The Government should then abide by that schedule regardless of any future changes in ministerial personnel.
Given some of the ideas that have been floated today, in spite of some of the comments made by the hon. Member for St Ives I hope that he will be an ally in the Scottish National party’s call for an early and immovable timetable for the publication of the Green Paper. The fallout of Brexit and the Conservative party’s internal squabbles may be grabbing the headlines, but hon. Members and Ministers must never forget that such issues, which affect the day-to-day lives of thousands of our constituents, should always be our main priority. Nothing can justify the matter being pushed even further into the long grass. Government must go on.
Richard Graham
This debate has been a good example of a non-partisan, non-party political discussion of issues of crucial importance to many of our constituents. The hon. Gentleman disappoints me by going down the track of what might or might not happen in the leadership of the Conservative party. That has no relevance to the debate. It is not about having a precise timetable, to the day and hour, for the publication of a Green Paper. It is about good, long-term solutions for people with disabilities, and I would be grateful if the hon. Gentleman endorsed that.
Neil Gray
I am merely pointing out the fact that, at a time when there are delays to the publication of the Green Paper, the Conservative leadership battle cannot be allowed to get in the way. That is not being partisan or party political. It is merely pointing out the facts. It has been delayed. Why has it been delayed? Why are further delays happening?
The Secretary of State has spoken many times about his wish for a social security system that is focused on people rather than statistics. I therefore used my speech in the Chamber to highlight examples from constituents and my own nephew about problems that the current system has caused for them. Those examples highlighted issues including people in employment not receiving adequate support to claim the benefits to which they are entitled, such as the personal independence payment, which can help to support the additional costs of daily living and access to employment. Disabled people who are not yet ready for employment are being forced to attend the jobcentre due to the flawed ESA assessment system, and this has a knock-on effect on jobcentre staff, who are therefore unable to focus their attention fully on individuals who are capable of looking for work and who need support.
I hope that the Secretary of State took on board the issues that those stories raised and that the Green Paper will outline steps to address those matters. It is important, however, not to forget about statistics completely. For example, 14,000 people have lost access to mobility vehicles as a result of the replacement of disability living allowance with PIP. That causes obvious problems for those trying to seek or maintain employment.
Parkinson’s UK’s statistical research shows that more than 17,000 people between the ages of 20 and 64 are living with Parkinson’s across the UK. Those individuals have an average working life of 3.4 to 4.9 years after diagnosis, and a mean retirement age of 55.8 years compared with the then UK average of 62 years. As the hon. Member for South Down (Ms Ritchie) said, financial support is critical to those people and the cuts are harming opportunities. Those statistics and many others like them that relate to individuals living with other diseases and disabilities highlight the challenges and opportunities that a disability presents to a person’s employment.
Parkinson’s UK notes that people with the condition have experiences that mirror the general trend of people with disabilities in that they are less likely to be in employment and more likely to experience unfair treatment at work than someone without a disability. That highlights the double focus that any employment and disability legislation must address: how to increase opportunities for disabled people who are out of work while ensuring that those in employment have all the support available to remain and progress in their roles.
In the 2015 spending review, it was announced that the Work programme and Work Choice would be replaced in 2017 by a new Work and Health programme. Although the scheme will be targeted at a reduced number of participants, Leonard Cheshire Disability highlighted that payments will be spread more thinly as annual expenditure for the scheme will be £130 million by 2020 —an 80% reduction on the current combined expenditure on the Work programme and Work Choice. Time does not allow further discussion of all recommendations made by Leonard Cheshire Disability, but I recommend its briefing paper to all hon. Members.
Back when we were waiting on the White Paper, the spending review and the autumn statement 2015 promised it would contain
“reforms to improve support for people with health conditions and disabilities, including exploring the roles of employers, to further reduce the disability employment gap and promote integration across health and employment.”
I hope that the Green Paper—when it appears—will contain those aims alongside proposals of how best to achieve them. The Government have already lost valuable time on making progress in disability employment by withdrawing their commitment to publish a White Paper and by delaying the publication of the Green Paper, with no date yet agreed.
It is our responsibility to work towards the day when every person is equally valued. In doing so we will ensure that disabled people have the freedom to live their lives as they choose and to participate fully in society, and our society as a whole will be immensely better off for it. I therefore hope that the Minister will heed these words and ensure that that becomes a reality as soon as possible.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I commend the hon. Member for St Ives (Derek Thomas) and the other hon. Members who have spoken in today’s debate. Between Cornwall, Northern Ireland and Scotland, the Celtic fringes have been well represented this morning. I just wonder where everyone else is.
We debated this subject in the main Chamber a few weeks ago, and many of the issues raised in that debate have been rehearsed today. I note the hon. Gentleman’s special interest in the lives of learning disabled adults, which I am sure we all share, but it is important that we have had a broader debate today. The hon. Members for South Down (Ms Ritchie) and for Glasgow East (Natalie McGarry) made helpful distinctions between the different challenges faced by those with lifelong disabilities and those with acquired disabilities. My hon. Friend the Member for Airdrie and Shotts (Neil Gray) and others set out the wider context of disabled people’s lives.
I still have deep-seated concerns about the difficulties that disabled people face in accessing the labour market and staying in work, especially those with more severe and fluctuating conditions. I have pointed out many times the flaws in the current system and how they combine to make circumstances extremely challenging for those who have to overcome barriers to employment because of disability or health conditions. Those flaws include the shortcomings of the work capability assessment; the failures of the Work programme; the devastating impact of the new sanctions regime on people who are found potentially fit for work or work-related activity but who cannot comply with the conditions attached to their ESA or jobseeker’s allowance; support being cut in people’s transition from DLA to PIP; and people’s income being reduced by cuts to ESA and work allowances.
Life has got a whole lot harder for many disabled people over the past few years. The support for many of those who are in work has been reduced, and those who are looking for work or taking part in work-related activity have been put under enormous pressure to comply with unrealistic conditions. Those who are not fit for work have too often felt themselves to be scapegoated or demonised as shirkers and malingerers and subjected to repeated and counterproductive assessments of their fitness to work. Too many disabled people, both in work and out of work, have experienced a lack of respect and understanding in their encounters with the state and have felt their dignity undermined.
Austerity has taken a very heavy toll on disabled people, yet there has not been much gain for all that pain. The rate of disabled people’s employment has been stuck for quite some time. I have previously been very critical of the assumption at the heart of Government that the support offered to sick and disabled people through social security creates, to quote the Chancellor, “perverse incentives” to keep them out of the workforce. There is no evidence that slashing the incomes of sick and disabled people helps them to find work. Quite the reverse: austerity has compromised the health and wellbeing not only of sick and disabled people but of the family members who support and look after them. Taking away the entitlement to a Motability car from thousands of people makes it significantly harder for them to sustain employment or to get into work. It reduces their options and increases their dependency on family members. Raising the bar on entitlement to support means that carers of those who lose benefits also lose their support but still have to provide the care for free.
I have met too many constituents with long-term health conditions who have fallen through the safety net of social security. Despite having worked and contributed for decades prior to the breakdown of their health, they have dropped out of the system altogether. Frankly, I am sick of referring people for church food parcels who should be getting better support from statutory agencies. There is recognition on both sides of the House that the UK needs to take a very different approach. The Government promised us a White Paper in the spring; then it was summer; then it was a Green Paper, and now the prospect has since been batted even further into the long grass. Yes, let us take time to reflect and to get this right, but we still need a timescale. I sincerely hope that the Minister will set that out today—this is a great opportunity to do so.
The consultation period ahead of the Green Paper gives the Government an opportunity to get disabled people around the table, along with organisations that represent their interests. There is a lot of expertise out there, and valuable perspectives on what does and does not work. For instance, Disability Agenda Scotland points out that the Work Choice programme has been far more effective in delivering results—sustained employment—than the Work programme and provides more intensive and extensive support for participants. A third of those taking part in the Work Choice programme delivered by the employability service of the Scottish Association for Mental Health find sustained employment, which is significantly more than for any other approach of which I am aware. Advisers have limited case loads and spend much more time with each person and with employers, and they also help people to apply for Access to Work funding.
In contrast, most of the emphasis in current programmes is on helping to prepare and equip unemployed disabled people for the workplace. If we want to secure a step change, the real trick is to prepare and equip employers not just to take on more disabled staff but to retain staff who become disabled or develop long-term health problems. Access to Work can play a crucial role in aligning the needs of businesses with employment programme outcomes, but it can also help businesses to adapt when a valued employee develops a condition that makes it harder for them to do their job. I wholly accept that certain jobs and certain conditions may be incompatible, but there are many, many occupations that can be sustained with the right adaptations.
This cannot just be about changing employers’ attitudes. Let us acknowledge that the take-up of schemes such as Disability Confident has been fairly low. We have seen some degree of cultural change in recent years in terms of flexible working, which has probably been driven more by labour market requirements than by concerns about disabled people’s employment rights. We should also remember that flexibilities have cut both ways, with a sharp rise in zero-hours contracts and more insecure and unpredictable working patterns. The hon. Member for South Down, echoed by the hon. Member for Upper Bann (David Simpson), made a good point about legal and human rights protections for disabled people, and those issues need to be part of our debate—they are perhaps more contextually important now than they have been for some time in the wake of the events of the past couple of weeks.
In general, large public sector and voluntary organisations have been much more successful than smaller employers in employing disabled people, perhaps because they are more likely to have professional human resources or occupational health staff in situ. It might also be easier for larger organisations to cover unplanned absences. The challenges of taking on someone with, for example, a fluctuating condition are likely to be far more acute for a small business or in certain manufacturing processes. Encouraging cultural change will not cut it if there are no resources to back that up. We need to make it much easier and more affordable for employers to do more to support their disabled staff and to keep them in work.
Small and medium-sized businesses in particular need cost-effective ways of managing and mitigating what they see as the risks of taking on staff with a chequered work history. Most jobs in the UK are with small and medium-sized enterprises, which will therefore provide most of the opportunities for disabled staff. The potential win-win for employees and businesses will be huge if those hurdles can be overcome, but there is a need to build confidence by improving concrete support for employers in the event that, say, someone with a fluctuating condition has a relapse or goes through a spell where they cannot work at full capacity. If employers do not have some means of insulating themselves from such unpredictable situations, we are unlikely to make much headway in reducing the employment gap for disabled people.
The last time we debated these issues, I referred to the Resolution Foundation’s recent report on the retention deficit in employment. The report makes lots of practical suggestions for policy change, such as keeping a person’s job open for up to a year after the start of their sickness absence. The model is similar to maternity leave. It would help people to stay in work and it could also be of huge benefit to people who are recovering from illness and who are expected to make a full recovery, but it will only work if, say, we reimburse the statutory sick pay costs of firms that support their employees to make a successful return to work. I hope the Government are seriously considering those recommendations.
The Resolution Foundation also recommends making early referrals to support for people who find that they are unlikely to be able to return to their previous job, which will be a growing demographic challenge. We should not wait until someone becomes long-term unemployed before making targeted and individualised interventions. For those forced to leave work, the loss of personal confidence and social contact often pushes them further away from the labour market. I therefore hope that the Government take all that work on board.
In the absence of a Green Paper, disabled stakeholders, disability groups, community organisations, carers, employers and, indeed, MPs are all scrabbling about in the dark. The process needs to be transparent and inclusive, and I hope the Minister will get it properly under way and set out a timetable as soon as is feasible.
Margaret Greenwood (Wirral West) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for St Ives (Derek Thomas) on securing this important debate. I find it interesting to hear about the practical projects in rural west Cornwall with which he has been involved. I also note his comments about how those projects have always found themselves strapped for cash. It is an enduring issue.
This has been a worthwhile debate. The hon. Member for South Down (Ms Ritchie) pointed out that anti-discrimination legislation, while a vital component, is insufficient on its own, and that we must always challenge negative attitudes to people with disabilities. The hon. Member for Strangford (Jim Shannon) reminded the Minister to consider the impact of the cut of £30 a week to the employment and support allowance work-related activity group. The hon. Member for Glasgow East (Natalie McGarry) rightly mentioned the closure of nine Remploy factories in 2013. She asked the Minister to update us on progress in providing support for former Remploy employees and pointed out that 733 of the 1,700 people who lost their jobs have still not secured employment. The hon. Member for Airdrie and Shotts (Neil Gray) rightly called for a clear timetable for the publication of the Minister’s Green Paper.
There are approximately 12 million people living with a disability, impairment or limiting long-term illness in the UK, of whom 5.7 million are of working age. Although 4 million people with disabilities are already working, another 1.3 million are fit for work and want to work, but are currently unemployed. However, as we have heard, the gap in the employment rate between disabled and non-disabled people has grown under this Government to 34%, a 4% increase since they came into office. The vast majority of disabled people—90%—used to work. This is a waste of their skills, talents and experience.
As study upon study has shown, the Government’s pledge to halve the disability employment gap rings hollow. It is estimated that, at the current rate, it will take until 2030 to do so. The shelved White Paper, with the promise of a strategy defining support for disabled people, is yet another broken promise, so I join others in their request to Minister today: will he tell us definitively when he will produce his Green Paper?
This debate comes down to whether the Government believe in the principles underpinning the UN convention on the rights of persons with disabilities, to which we are signatories. Fundamentally, they are that disabled people should be able to participate fully in all aspects of society, including work, and to access the same opportunities as everyone else, including opportunities to use their talents and skills to the best of their ability. No one should feel they are unable to reach their best potential or that their hopes and dreams do not matter. Do the Government support the principles and articles of the UN convention? If so, when will they publish their response to the UN committee’s report investigating the UK’s breaches of the convention?
What is the Government’s planned negotiating position in relation to disabled people with regards to the exit of the EU? What EU legislation tackling disability discrimination and enhancing accessibility for disabled people will we retain? For example, will we retain the 2000 employment equality framework directive prohibiting disability discrimination, which dramatically strengthens UK disability employment law?
The Government set the tone for culture and society, and this Government have made their views abundantly clear through their swingeing cuts to social security support for disabled people, including the recent ESA WRAG cut of £1,500 a year, and an overhaul of the work capability assessment process, which has managed to be both dehumanising and ineffective and has been associated with profound mental health effects, including suicides. The Government’s sanctions policy, targeting the most vulnerable, has brought people to the brink—sadly, people have died under it—and the personal independence payment debacle is making it harder for disabled people to stay in work. There is also the closure of the independent living fund. I could go on, but I will not, due to the shortage of time.
This is happening across all Departments. In the Department for Business, Innovation and Skills, the Department for Transport, the Department for Education, the Ministry of Justice and the Department for Culture, Media and Sport, disabled people are being marginalised. Given that 12 out of 14 economic analyses forecast an economic downturn over at least the next year, will the Minister ensure that public spending for disabled people will not be hit yet again? I would like a clear response on that point.
The UN Committee on Economic, Social and Cultural Rights published its report last week on this Government’s austerity agenda, and the recommendations were damning. On unemployment for disabled people, the committee recommended that the Government
“review its employment policies to address the root causes for unemployment and include in its action plan time-bound goals with a specific focus on groups disproportionately affected by unemployment, such as…persons with disabilities”.
The committee also recommended that the Government review their austerity policies and programmes introduced since 2010 and
“conduct a comprehensive assessment of the cumulative impact of these measures on the enjoyment of economic, social and cultural rights by disadvantaged and marginalised individuals and groups, in particular women, children and persons with disabilities”.
On social security, the committee recommended that the Government
“reverse the cuts in social security benefits introduced by the Welfare Reform Act 2012 and the Welfare Reform and Work Act 2016”.
Will the Minister commit to implementing the UN’s recommendations on issues highlighted by Labour Members for many years now, address the disability employment gap effectively, produce a cumulative impact assessment and reverse the measures in the 2012 and 2016 Acts that have had a devastating effect on many disabled people?
What needs to happen? Addressing those issues, including the disability employment gap, needs political will. If 90% of disability is acquired, why are we doing so little to help employers to retain skilled and experienced employees who may become poorly or disabled? We need practical measures to support disabled people at work, enabling them to thrive and protecting them from leaving the labour market prematurely. Some disability charities have recommended more flexible leave arrangements, as well as extending Access to Work. Even if the Government do finally increase Access to Work from the 37,000 or so who were helped last year, it will still be available only to a tiny proportion of the 1.3 million disabled people who are fit for work. In the current economic climate, what assurances has the Minister had from his colleagues that Access to Work funds will be increased?
The Disability Confident scheme needs to be rebooted. The latest revelations that only 40 mainstream private sector employers across the UK have been involved since its inception three years ago show that the scheme is, to put it mildly, clearly inadequate. What measures are in place to monitor its efficacy? For those employers who work hard to recruit and retain disabled employees, how does the scheme apply to their procurement policies and supply chains?
Of course, more needs to be done to help disabled people back into work. As we have argued for over a year, the WCA must be replaced with a more holistic, whole-person assessment. The current system to assess eligibility for social security support is not fit for purpose and should be completely overhauled. However, such changes would also need to be reflected in new departmental and Jobcentre Plus key performance indicators that do not focus just on getting people “off flow” as a successful outcome. Given that so many of those people also have PIP assessments, we should also consider how to bring the two together.
Instead of the increasingly punitive sanctions system, more appropriate support is needed. It is also essential to maintain and increase specialist disability employment advisers in jobcentres, as several hon. Members have said. The current figure of fewer than one such adviser to 600 disabled people will not contribute to halving the disability employment gap. I would also like to see advisers’ role extended to working with businesses.
Current commissioning and payments for the Work programme and other welfare to work programmes need rethinking as well. We must improve specialist support, looking at what works. Although Work Choice has better outcomes than other programmes, it may not be the only solution. The individual placement and support scheme for people with mental health conditions is another example.
As we have said before, greater integration is also needed between Departments: not just between the Department for Work and Pensions and the national health service, but between the Department for Business, Innovation and Skills and those bodies responsible for economic development. For example, if someone with a musculoskeletal issue or a mental health condition needs to take time off work, they need appropriate early intervention to help them back to work. We need to understand the bottlenecks in the local system that might affect that. We also need to reflect on the drive for flexible labour markets and what it means for supporting people with long-term or fluctuating conditions back into work—or, most probably, out of work, then back into work and so on.
There are clear geographical variations in the disability employment gap, but also in the strength of local economies and the availability and type of jobs, as the hon. Member for Glasgow East made clear in her intervention. It is well established that the prevalence and geographical pattern of sick and disabled people reflects the industrial heritage of our country. Contrary to the Government’s “shirkers and scroungers” narrative, incapacity benefit and ESA are recognised as good population health indicators.
It is also clear that local economic conditions—whether the economy is thriving or not—will determine how readily sick and disabled people will be able to return to work. Again, geographical analysis shows that people with equivalent conditions in the economically buoyant London and the south-east are more likely to be in work than those in Northern Ireland, Scotland, the north-east, the north-west or Wales.
It is more than 70 years since legislation was first introduced to prohibit employment-related discrimination against disabled people. Sadly, we are still fighting to address such discrimination and the inequality in employment still faced by disabled people. Changing attitudes and behaviour needs cultural change. We in the Labour party will always promote that change and work to improve the lives of people with disabilities.
The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson)
It is a pleasure to serve under your chairmanship, Mr Stringer. I pay tribute to my hon. Friend the Member for St Ives (Derek Thomas), not only for his 20 years of experience, but for his powerful and well respected speech today. I met with him previously to learn at first hand of his experiences and knowledge in this area, and I was incredibly impressed in that meeting. I want to make it clear that as we work towards the Green Paper, and then the White Paper, he has to be very much at the heart of that, drawing on his vast experience, and also the experience of his very popular mother-in-law.
I pay tribute to Manna’s Diner, to the Mustard Seed charity, to Cornwall People First—just to reassure the gentleman who was concerned about using the bus before 9.30 am, that is an example of where Access to Work could help, so it is worth looking at that—to Rebuild South West, to Helston and the Lizard Works and to Cheshire Homes. I trust I have remembered all the organisations my hon. Friend mentioned, and I put on record my thanks for all the great work they have done. He summed up his own speech perfectly with the three phrases about brilliant organisations. We need to empower those organisations to ensure they are at the heart of helping disabled people to find work, and they are well placed to help because they have the local knowledge, connections and goodwill, which are absolutely integral, and are familiar with the challenge of accessing cash.
I will whistle through some of the questions asked by other Members and then set out what the Government aim to do. I thank all the speakers in this proactive and positive debate; if I miss anything raised today, I will be happy to meet any individual MP face to face, as I have already done with a number of colleagues. The hon. Members for South Down (Ms Ritchie) and for Strangford (Jim Shannon) highlighted the importance of employers recognising changing circumstances and opportunities. They also touched on funding, which was picked up by many other speakers. The Government are increasing funding to support people with disabilities and long-term health conditions every single year of this Parliament, right through to 2020. We are currently spending £3 billion a year more than when we came into office. The hon. Member for Strangford highlighted the importance of Mencap, which is at the heart of the work we do; its policy team is very proactive.
The hon. Member for Glasgow East (Natalie McGarry) and others mentioned disability advisers. The situation is now being changed: we are rapidly re-recruiting and are looking to get to 500 disability advisers.
I thank the hon. Member for Upper Bann (David Simpson) for committing to hold a reverse jobs fair. More than 50 MPs across the parties have signed up for that—I had one in my own constituency. I will return to that shortly.
Mr Robin Walker
The Minister and I have discussed reverse jobs fairs before, and I want to give him some feedback from my reverse jobs fair in Worcester. When I opened the new Waitrose in Worcester the other day, I was introduced to one of its partners, who was completely deaf and who was hired as a result of that Disability Confident initiative.
Justin Tomlinson
I thank my hon. Friend, who is one of the most proactive MPs in supporting our initiatives. He is a real credit to his constituency.
I understand the point made by the hon. Member for Airdrie and Shotts (Neil Gray) about the Green Paper; I will come back to that later. He and others raised the issue of Motability cars; we have increased the number of people accessing the Motability scheme by 22,000. I reassure him that Parkinson’s UK, who I met again yesterday, and Leonard Cheshire are two major stakeholders who are very much involved in the work we are doing.
The hon. Member for Banff and Buchan (Dr Whiteford) mentioned the Resolution Foundation report. I attended and spoke at the launch, and the foundation has asked some important questions and has made its own suggestions and recommendations, which can be considered in the Green Paper.
I congratulate the hon. Member for Wirral West (Margaret Greenwood) on stepping up to be my shadow today. As I said, we are increasing funding. The work capability assessment is not perfect. It was introduced by the Labour Government, who made tweaks to it themselves. The coalition Government made tweaks and we have tried to make tweaks. We all accept that it has to change; that is a given, and we will look at that in the Green Paper. It is important to remember that the personal independence payment is not work-related—it is separate. It is ESA that is work-related. On the change from the disability living allowance to PIP, only 16.5% of claimants accessed the highest rate of benefit under the DLA; under PIP the figure is 22.5%. As a benefit, the PIP is far better at accessing the most vulnerable in society and providing them with adequate support.
Access to Work helped 37,000 people last year. I understand that, as an absolute number, that is a relatively small percentage, but we must remember that not everybody on Access to Work has a lifetime award—sometimes it is a one-off adjustment or an occasional adjustment—so the scheme actually helps far more than that. We have had confirmation of an increase in funding for an additional 25,000 places, and we are actively doing all we can to let small and medium-sized businesses in particular, which are responsible for 45% of jobs, know about the scheme. I will come to Disability Confident, and I have already covered the disability advisers.
The Government are committed to halving the disability employment gap. That was announced personally by the Prime Minister, which gives me some extra bargaining tools when I talk to other Departments, to the public sector and to the private sector. Disability Confident is an important part of that. Some 690 organisations have now signed up; we are making changes to the scheme, with greater asks of larger employers in particular, and are recruiting more than 100 organisations a month now, so it is beginning to accelerate quickly.
My hon. Friend the Member for St Ives made the very powerful point that employers are nervous and we need to build trust. That is absolutely right. Disability Confident is part of that process, with signposting and sharing best practice, along with reverse jobs fairs, which I am encouraging all MPs to get involved in, particularly those who are most critical of the Government. They can do their bit to be proactive and host their own reverse jobs fairs. The way it works is that I got 22 local organisations in my constituency—the sorts that my hon. Friend the Member for St Ives highlighted in his examples—into a room. Working with local media, I got more than 70 small and medium-sized businesses that were looking to recruit people to come into that room and say, “These are the skill gaps that we’ve got.” We introduced them to those organisations and lots of job outcomes came from that.
Building on that, we decided to carry out a pilot of small employer officers, who literally doorstepped local employers and, over a cup of tea, discussed the huge hidden talent that could be matched to those employers’ skills gaps. Those pilots have been really successful, and I am pushing hard for them to be rolled out nationally, as part of the summer Budget funding. Working with the disability advisers in the jobcentre and all the support organisations, whether national providers or local charities, we can get the busy small and medium-sized businesses that are lacking confidence and knowledge of the talent that is out there, and hook them together.
That is crucial, because I have seen so many disabled people who are playing by the rules, engaging with the Work programme, the Work Choice programme or the different charities, and doing their bit to find work. Without opportunities at the end of that, they will continue to loop round the system, getting ever less confident and ever further away from the jobs market. Everything we do has to be underlined by matching that up to employers. I am really excited by what a difference that can make, and I have seen from working with employers how tangible that difference can be.
Learning disabilities were at the heart of the speech made by my hon. Friend the Member for St Ives. Those with a learning disability have a 6% chance of having a meaningful and sustainable career. As a group, they are the furthest away from the jobs market. All Governments of all political persuasions have tried and have tweaked, but have not budged that figure.
I recently visited Foxes Academy near Bridgwater, which had set up an old hotel. In their town, the opportunities are in hotels, restaurants and care homes, so those are the skills they provide for their young adults—the equivalent of sixth form—as well as teaching skills for independent living. In their third year, students go and have a supported year in industry, after which 80% of them remain in work, of which 45.6% are in paid work. Even the conservative figure of 45.6% is so much better than 6%.
I challenge officials in the Department for Business, Innovation and Skills to say “The Government are committed to 3 million more apprenticeships. Why are we not doing more to open them up, particularly to those with learning disabilities?” We set up a taskforce, which has now concluded, and we will shortly be announcing its recommendations. If we can open up access to those 3 million places, that will make a huge difference.
The Green Paper is a priority for the Government. It is well supported by stakeholders, who understand that, as my hon. Friend the Member for St Ives set out so clearly, when we use their experience and knowledge, we can make real and good decisions. But it cannot be rushed; we have to do it as and when we get all the right questions answered and the right information. It will come this year and will be done in the right and proper manner with the full support of the stakeholders who I regularly engage with.
We will continue to work with the jobcentre network to upskill. Universal credit will give individuals the opportunity, for the first time, to have a named coach who will support them both in getting into work and once they are in work. I am proud of our record: 360,000 more disabled people in work in the last two years. It is right that local best practice should be integral to that.
Justin Tomlinson
I need to conclude, to allow my hon. Friend the Member for St Ives time for his final remarks.
Derek Thomas
I am grateful to the hon. Members who have contributed to this valuable debate, and to the many organisations, including Scope, Leonard Cheshire and Cornwall People First, that have helped to inform it. Breaking down the barriers to employment for people who live with disabilities is a very real and important challenge. I would not have requested this debate if I thought I was wasting my time, other Members’ time or, indeed, your time, Mr Stringer. I am here because I am confident that the Minister understands the urgency and the importance of the issue and the opportunities presented if we get this right.
I want to live in a society that refuses to accept the barriers that currently exist for so many. I believe in equal opportunities for all. We are promised a richer economy and a richer society if we deliver for our most vulnerable people. Finally, I would like to say that I will be holding my own reverse jobs fair in October.
Motion lapsed (Standing Order No. 10(6)).
Gwynfor Evans and Welsh Politics
(7 years, 10 months ago)
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Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I beg to move,
That this House has considered the commemoration of the contribution of Gwynfor Evans to Welsh politics.
Diolch yn fawr iawn, Mr Stringer. It is an absolute pleasure to serve under your chairmanship and to introduce this debate in honour of the late, great Gwynfor Evans. Before I start in earnest, I thank Lord Dafydd Wigley for sharing his 2012 lecture on the life and work of Gwynfor. I am also indebted to Gwynfor’s former chief of staff, Peter Hughes Griffiths, for his invaluable input. As one of his parliamentary successors, it is an enormous honour for me to pay tribute to him in this House for his achievements and contribution.
Gwynfor was the greatest Welshman of the 20th century. I never had the privilege of meeting him, which is one of the greatest regrets of my life. I travelled to his funeral in Aberystwyth with my predecessor, Adam Price, a matter of days before the 2005 Westminster election. We do not do state funerals in Wales yet, but that day was most certainly an unofficial one. The town ground to a standstill as people travelled from all parts of our country and beyond to pay their respects.
In his lecture, Dafydd Wigley answered his own question on why Gwynfor was so important to Wales and our nation. At the funeral, he said in his tribute:
“If Gwynfor had not believed with such passion, exhibited such an unwavering commitment, such an incredible perseverance, then Wales would not be what it is today. It was he who created the aspiration within us”.
That is why Gwynfor is seen as the father of modern Wales. Without him, we would not have our own Senedd, our own Government, or a clear demand among our fellow citizens for greater autonomy. It is a fitting tribute that the latest YouGov poll last night put Welsh support for independence within the EU at 35%.
Without Gwynfor, we would not have our own dedicated Welsh language channel. Perhaps more importantly, we would not have our clear sense of Welsh nationhood—that common bond displayed so wonderfully over recent weeks at the Euro 2016 championship in France. Without him, we would not be discussing yet another Wales Bill later today. Of course, his influence goes far beyond our country. Arguably, without him Scotland would not be on the verge of independence—an inevitability hastened by the events of 23 June.
The brilliant Wales football manager Chris Coleman said after the famous 3-1 victory over Belgium in the quarter final of the Euro 2016 championship last Friday:
“Don’t be afraid to have dreams. Don’t be afraid to fail”.
He was not referring to Gwynfor when he said those words, but they sum up the impact that the great man had on the thinking of the generations of Welsh nationalists who followed him.
The stimulus for this debate was, of course, Gwynfor’s incredible victory in the Carmarthen parliamentary by-election in 1966, exactly 50 years ago. Perhaps one of the most iconic photographs in Welsh political history is the one of Gwynfor, perched on the balcony of the guildhall in Carmarthen, addressing the thousands upon thousands of people who had converged on the town that summer evening on 14 July 1966.
At the time of the by-election, Plaid Cymru was in a very bad position. We had contested 23 Welsh constituencies in the 1966 general election and lost deposits in every seat but two. There were real divisions within the national movement about the way forward following the election, and about the despair felt at the powerlessness of the people of Wales to stop the drowning of our valleys for English exploitation once Tryweryn had been opened.
The party, in a Brexit state of financial despair, was only able to fight the by-election following the generosity of that other great political leader of Carmarthenshire, D. J. Williams, who sold his family home, Penrhiw in Rhydcymerau. In a result that changed history, Gwynfor won 39% of the vote and secured a majority of 2,000. It was an earthquake that shook Welsh and UK politics to its core. It blew apart the myth that Plaid Cymru could never win a parliamentary election. It inspired generations to fight for the cause of Wales and, thankfully, secured the principle that the national movement could achieve its political objectives via constitutional means.
Mike Weir (Angus) (SNP)
I join in the tribute to Gwynfor, who I met once when he was campaigning for S4C. The Carmarthen by-election laid the ground for the fantastic by-election in Hamilton the following year, when Winnie Ewing won for the Scottish National party and started the rise of our party. We pay great tribute to Gwynfor and to the history of both our parties.
Jonathan Edwards
I am grateful for that intervention, which shows the very close links between Plaid Cymru and the SNP. I shall be referring to the Hamilton by-election shortly.
Gwynfor’s victory was no fluke. In March 1967, Vic Davies won 39.9% of the vote in the Rhondda and cut the Labour majority to just 2,000. In 1968, the polymath Professor Phil Williams won more than 40% of the vote in Caerphilly, losing by only 1,800 votes, with a swing of 29%. The Prime Minister, Harold Wilson, was in a state of panic about the national upsurge in Wales and Scotland, where the SNP’s Winnie Ewing had won the Hamilton by-election in November 1967, so he set up a royal commission. The resulting report by the Kilbrandon commission was published in 1973 and recommended legislative Parliaments for Scotland and Wales.
For Plaid Cymru, Gwynfor’s victory led to representation in this House over the past 50 years by politicians of incredible calibre. Gwynfor was followed by Dafydd Wigley and Dafydd Elis-Thomas in 1974; Ieuan Wyn Jones in 1987; Cynog Dafis and Elfyn Llwyd in 1992; Simon Thomas in a by-election in 2000; and my direct predecessor, Adam Price, and Plaid Cymru’s current parliamentary leader, my hon. Friend the Member for Arfon (Hywel Williams), in 2001. I was elected in 2010, and my talented hon. Friend the Member for Dwyfor Meirionnydd (Liz Saville Roberts) was elected in 2015. I genuinely stand on the shoulders of giants—politicians whose names will be celebrated in Welsh history for eternity. Without Gwynfor, though, it is highly unlikely that any of the aforementioned individuals would have graced this place and made their own vital contributions in developing our nation.
In this House, Gwynfor made his mark on a plethora of political subjects. His deep commitment on issues such as nuclear disarmament, industrial democracy, social co-operation and international concord allowed him to make a significant impact on Westminster politics. Men of conviction often face ridicule from their detractors. As they say, “First they ignore you, then they fight you, then they agree with you”. That was certainly the case for Gwynfor, who faced personal hostility unworthy of this House. However, much like other great political leaders across the world, from Ghandi to Mandela, at the time of his death there was a general recognition across the political spectrum that his contribution transcended partisan lines.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Does my hon. Friend agree that it is a credit to Gwynfor Evans’ vision of nation building that the poll to which he referred earlier shows that Plaid Cymru’s support is at its highest ever level?
Jonathan Edwards
I am grateful for my hon. Friend’s intervention. I definitely believe that we would not be where we are without Gwynfor’s contribution. Even if they did not agree with him, everybody accepted that he based his politics on principle, and that everything he did was aimed at creating a better Wales.
Gwynfor was born in 1912 in the Barry. He was brought up in a deeply Christian family, and his religious non-conformism was very important to him. Despite the huge political pressures on him, Gwynfor continued to teach Sunday school at his local chapel in Llangadog after moving to Carmarthenshire. While I was doing research for this speech, I learned of Gwynfor’s great love of cricket. He represented the Welsh schools team during the 1930 season. Since being elected, I have campaigned for a Welsh national side. Considering the fact that in the past decade our great nation has reached a rugby world cup semi-final and won three grand slams, and that tomorrow our football team will play for a place in the Euro 2016 final—I am wearing a Welsh national football tie in their honour—it is about time we had a national cricket team.
Gwynfor awakened to the cause of Wales while at Aberystwyth University. It must be contagious, as both myself and my hon. Friend the Member for Dwyfor Meirionnydd were fortunate enough to study there, as was the Under-Secretary of State for Wales—I am delighted to see him in his place and that he will be responding to the debate. I am informed that the piece of literature that sealed the proverbial deal was the masterpiece “The Economics of Welsh Self-Government”, by my political hero D. J. Davies. D. J. had written his booklet in 1931, and by 1934 Gwynfor was a fully paid up member of Plaid Cymru. As Gwynfor’s biographer, the BBC journalist Rhys Evans, said, that changed Welsh history:
“It was Gwynfor who created the national movement…Gwynfor was also the founder of the Parliament for Wales campaign…There is now a lasting memorial to that organisation in Cardiff Bay—it is the Assembly, the unmistakable symbol, for better or worse, of the desire of the people of Wales to live as a democratic nation.”
In 1937, Gwynfor became a member of the party’s national executive committee and by 1943 he was vice-president. Then, at the Llangollen conference of 1945, just five days before the atomic bomb exploded over Hiroshima, he was elected as president of Plaid Cymru, aged just 32. He would remain the party’s leading political figure for the next 36 years.
Despite his burning nationalism, it is important to remember that Gwynfor was a great internationalist. He was also a committed pacifist, so I am sure that he would have been proud that I am probably the only living person on Earth who has entered the Pentagon and proclaimed, in a meeting with the top military brass, that I am a member of an anti-war party. I am sure Gwynfor would have enjoyed my mischievous intentions.
For Gwynfor, his pacifism was arguably even more important than his nationalism, and he campaigned vigorously against the Vietnam war. His economics strongly supported economic units that are larger than nations, which I suppose is a lesson for Brexiters. He believed that a free market is a device that safeguards the individuality of nations. He strongly supported a British single market and I suspect that if he were alive today he would be doing everything he could to secure tariff-free access to the European single market.
It is not called “the national struggle” for nothing, and Gwynfor’s career is living proof of that. He had to overcome several bitter electoral losses. In his darkest moments, he would walk from his home in Talar Wen, near Llangadog, and climb the slopes of the Garn Goch. Like many of my fellow citizens, I find that our beautiful landscape is a source of endless inspiration and therapy. The love for our land and our people is the basis of our politics. It is fitting, therefore, that Gwynfor’s memorial is suitably located on that barren mountain, which overlooks the beautiful Tywi valley.
However, there is no doubt that for Gwynfor the biggest political blow was the devastating loss of the 1979 referendum. With a Government majority of only three, Plaid Cymru and Scottish National party MPs skilfully forced the concession of national referendums in their respective countries. While Scotland voted yes, only to be denied their own parliament by a clause that required a threshold of 40% of the electorate voting for change, Wales voted overwhelmingly against even a meagre form of self-government.
Dafydd Wigley wrote that Gwynfor wanted to accept that the Labour Government were sincere in their promise that they supported devolution, despite the proposed model being far weaker than the model recommended by the Kilbrandon Commission, as it had no legislative or taxation functions. However, Labour allowed its MPs based in Wales to campaign for a no vote. In the end, 79.74% of people voted against self-government, and there is no doubt that Gwynfor took the loss personally. He felt completely betrayed by Labour, which had allowed its MPs to work with the Tories against their own party. Soon after, the Labour Government lost a vote of no confidence and a general election was held, which the Tories, under Margaret Thatcher, won by a landslide. Gwynfor, after the morale-sapping defeat of the referendum, lost Carmarthen. He would never hold elected office again and there were genuine concerns about his health.
Gwynfor was offered a peerage, but he turned it down flatly, telling the party’s new Westminster Leader, Dafydd Wigley, that there was only one Lord and that he did not abide in a palace on the banks of the Thames. A lesser man would have been crushed mentally and physically by the twin political blows of 1979. However, Gwynfor was about to embark on arguably his most famous battle.
The new Conservative Government had pledged during the election in 1979 to create a new Welsh language television channel. Gwynfor viewed such a channel as a vital step to help secure Welsh as a living language in the modern world. In his epic autobiography, “For the Sake of Wales – The Memoirs of Gwynfor Evans”, he recounts the battle for S4C in great detail. On 12 September 1979 in Cambridge, the new Home Secretary, William Whitelaw, announced in a surprise statement that the new Government would not honour their pledge to set up a new Welsh language channel.
Gwynfor suspected that the decision of the Home Secretary was a case of the Westminster establishment taking advantage of the desperation in the national movement. The response in Wales to the decision was uproar. Getting both main Westminster parties to agree to a Welsh TV channel had been one of the great successes of the Welsh national movement in the 1970s, which was won only after heavy terms of imprisonment had been imposed on many patriots. For the language campaigners of Cymdeithas Yr aith, the TV channel was a priority if Welsh had any hope of surviving as a living language.
Gwynfor saw the decision as a direct attempt to break the spirit of the Welsh people once and for all. In his memoirs, he quotes the bard T Gwynn Jones:
“Ysbryd Gwlad! Os badog lu
Cas Iwyth fu’n ceisio’i lethu
Iddo trwy hyn ni ddaw tranc
Heb ddiwedd y bydd ieuanc.”
That roughly translates as:
“A country’s spirit! If treacherous and vicious throng ‘have tried to quench it, it will never be overcome by this, but will remain endlessly young.”
Gwynfor therefore viewed the decision as a direct challenge to the existence of the Welsh nation. Considering the crushing personal blows that he had just received, it says everything about the stature of the man that he had the clarity of thought to motivate himself once more. With patriots across the country—including some of the greats of the nation, such as Cynog Dafis, Meredyth Evans, Ned Thomas and Pennar Davies—up in arms and even taking direct action against TV transmitters, Gwynfor committed himself to one last action for his country.
Dafydd Wigley has recounted how he and Gwynfor were returning in a car from a St David’s day dinner in Llanberis in 1980 when Gwynfor said, out of the blue, that he would not be with Dafydd the following year as it was his intention to fast until death over the betrayal of the new Government. Gwynfor did not expect the Thatcher Government to back down; he expected to die. However, it was a sacrifice he was willing to make, because his primary aim was to motivate the Welsh nation to believe once again in their country and face down the challenge of the British establishment.
Gwynfor decided that he would make his statement in May and, following the advice of his son-in-law, the great language campaigner Ffred Ffransis, he decided to give the Government five months’ warning before beginning the hunger strike in his study in Talar Wen. He would begin his fast to death on 5 October 1980, but before then he embarked on a national tour. The response of the Welsh establishment was hostile to say the least, but Gwynfor galvanised the national movement.
Media coverage extended far beyond the borders of Wales; The Sunday Times even carried a sympathetic article in the language of heaven itself. TV crews from Canada and Germany turned up at Talar Wen. Articles appeared in the main newspaper of Catalonia, in Scandinavia and in The New York Times. The campaign gained momentum, leading many people to plead with Gwynfor that he could achieve far more if he called off his threat to fast. However, his mind was set; he felt that he could achieve far more for Wales by dying than by living, and that that was the appropriate action to take.
Peter Hughes Griffiths and the party’s chief executive, Dafydd Williams, helped Gwynfor to arrange 22 meetings between 6 September and the beginning of the fast. About 2,000 people turned up to the launch of the series of talks at Sophia Gardens in Cardiff, the home of Welsh cricket. The following night, Gwynfor was in Glasgow, where over a thousand people attended the meeting at the McLellan Galleries. At the same time, the great and the good of Wales, including the Archbishop of Wales, Gwilym O Williams, Sir Goronwy Daniel, Michael Foot and Cledwyn Hughes, held meetings with Government Ministers and implored them to reconsider. However, Gwynfor received feedback that the Government had no intention of making a U-turn.
The speaking tour continued and, as Gwynfor wrote in his memoirs, there were signs that Welsh nationalism was on the verge of becoming an overwhelming force. He wrote that it is a simple truism that that is the only thing that Westminster fears in Wales, and it fears it greatly. I personally live for the day when the people of Wales grasp this simple reality, as the people of Scotland have.
On Wednesday 17 September, the Government yielded and Margaret Thatcher would perform her first and possibly her only U-turn as Prime Minister. However, Gwynfor’s first reaction was disappointment, not elation. He thought that a few more weeks of campaigning would have shifted the tectonic plates in Wales for ever.
The meeting that night was scheduled for Crymych, and when Gwynfor announced his intention to withdraw his threat of going on hunger strike, the 800-strong crowd erupted in emotion. It was his greatest political victory and to make the point somebody mischievously painted on the banks of the Embankment, opposite this House, “Gwynfor 1 - Thatcher 0”. We will settle for that score tomorrow night, Mr Stringer.
A half-hour debate of this nature could never do justice to the contribution of Gwynfor Evans. If I had a full day of debate, I could talk about Gwynfor the Christian, Gwynfor the internationalist, Gwynfor the pacifist, Gwynfor and Europe, and Gwynfor the historian. He was also a prolific writer, publishing well over a million words. If the opportunity to speak about Gwynfor arises again in future, I am confident that I would comfortably beat the record four-hour speech that William Gladstone made in this House when he delivered his 1853 Budget.
Following the events of the last few weeks, I have given some thought in preparing this speech to how Gwynfor would have reacted if he was alive today. It would not be right of me to presume to know the thinking of a far superior intellect than mine, but based on his writings I think we can safely assume that he would now be advancing the need for our country to position ourselves economically within a tariff-free single market as an imperative; that politically Wales must have the freedom to choose its own future; and that when the UK ceases to exist following Scottish independence, as I foresee, that will be a material change in condition, and our nation will again need to have a debate and a vote about where our future lies.
Gwynfor’s place in history is secure. He was chosen by readers of Wales on Sunday and the weekly Welsh-language publication Y Cymro as a millennium icon, ahead of Lloyd George and Aneurin Bevan, and even ahead of Owain Glyndwr. Glyndwr was ranked the seventh most prominent global figure of the past millennia by The Sunday Times, which gives an indication of the esteem in which Gwynfor is held within Wales, and across the world.
Gwynfor Evans died at his home in Pencarreg on the morning of Thursday 21 April 2005, at the age of 92. His biographer, Rhys Evans, says:
“Gwynfor wanted to return to Garn Goch, to the soil, the land of Wales where his politics had taken root. Nevertheless, as his ashes blow in the wind, his legacy survives.”
As I said earlier, my great friend Dafydd Wigley offered incredible help in composing this speech. When I asked him to summarise Gwynfor’s political contribution to our country—and I will finish with this as I could not put it better myself—he replied:
“Gwynfor Evans was Wales’ greatest 20th century patriot. Without his dedication and unswerving determination, Wales wouldn’t today have the degree of national autonomy we enjoy and neither would the Welsh language have secured its official status. Future generations will look back to the 1966 by-election as a turning point in our history and salute the good people of Carmarthenshire for making it happen.”
Diolch yn fawr iawn.
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) on his speech, which was very passionate, as I would have expected. It was slightly OTT at times, not in relation to Gwynfor Evans but in his comments about the way in which politics is moving in Wales. It is early days to measure the impact of the EU referendum on Wales, but I certainly join in with the mood of the Chamber in highlighting Gwynfor Evans’s contribution of to the life of Wales over the past century and his continuing influence on the way in which Welsh life and politics are developing. It is a sad reflection on that contribution that Carmarthen voted to leave the European Union, which must have been a great disappointment to the hon. Member for Carmarthen East and Dinefwr—it certainly was to me.
Jonathan Edwards
In our sampling, Carmarthen East and Dinefwr voted conclusively for remain. It was Llanelli that let us down, so it is the Labour party’s fault.
Guto Bebb
I am more than happy to accept that straw poll evidence, but it is important to say that Gwynfor was associated with Carmarthenshire and with Wales, and there is no denying that in both contexts the result was a disappointment.
This is a great opportunity to join in the tributes to the life of Gwynfor Evans, 50 years after the political earthquake of the 1966 by-election. As the hon. Gentleman clearly stated, the party of which Gwynfor Evans became the first MP was not performing particularly well in the 1960s; there was a question mark over its future, so the 1966 result was transformational. Indeed, it contributed to the development of the Scottish National party, with the 1967 Hamilton by-election. Subsequently, even though the 1970 general election saw Gwynfor Evans lose his seat, before regaining it in 1974, there was an SNP victory in Western Isles. As a result, there has been SNP or Plaid Cymru representation in this place since 1966, which, I would argue, has contributed to the gaiety of the Chamber.
As has been mentioned, it is fair to say that Gwynfor Evans was a great writer, although whether he was a great historian remains to be seen. My grandfather was considered to be a historian and he knew Gwynfor Evans very well. I am glad that, unlike the hon. Gentleman, I met Gwynfor Evans on more than one occasion. I was at a victorious rally in Porthmadog back in 1980 when Gwynfor Evans was carrying on with his tour in relation to the S4C issue, obviously after the U-turn. I think Gwynfor took a leaf out of my grandfather’s book regarding history. My grandfather used to say that history was about saying good things about good people and I think that Gwynfor Evans’s view of history was to say good things about Wales, regardless of the evidence, but that is no bad thing. The purpose of his writing was to inform but also to persuade, and that is something we can forgive in an activist historian. I would argue that there is a place for such a historian.
If ever there was a political career that tried to replicate that of Robert the Bruce, Gwynfor’s was it. Time and again he failed, and time and again he carried on regardless. He stood unsuccessfully in Meirionnydd on at least two occasions, if not three, but there was never a situation in which he acknowledged defeat. The way in which Gwynfor took on adversity and carried on campaigning for what he believed in is a lesson for anyone involved in politics, and it clearly shows that political success is not necessarily measured in election success. I think I am right in saying that Gwynfor won only two elections in his entire career, but his contribution is much greater than that of many other Welsh MPs who won many more.
It is important to highlight Gwynfor’s political career, but the influence of that career relates not to the fact that he was elected to this place but to the way in which he fought for the Welsh language and culture, and the way in which he put those issues on the agenda. Early in his career, Gwynfor argued for the need for official recognition of the Welsh language. That came to pass. We had the Welsh Language Act 1967, which was rather weak but a step in the right direction, and I am proud to be a member of the party that delivered the Welsh Language Act 1993. I would go as far as to say that perhaps that Act was more carefully considered than the Welsh Language (Wales) Measure 2011, which was passed by the Welsh Assembly, but that would be a controversial statement at this point in time, and would go against the nature of the debate.
It is fairly clear that without the victory that Gwynfor Evans secured in 1966, the 1967 Act and the 1993 Act would not have been passed. The contribution of the two Acts was to normalise the concept of the Welsh language as part and parcel of everyone’s daily life. It is important to realise that before the Acts were passed, it was perfectly conceivable for children to be raised speaking Welsh at home and knowing that they lived in Aberteifi, yet to see a sign saying “Cardigan” when they were driven in and out of the town. The difference that 50 years has made is that everyone in Wales is now aware, when they drive into Wales, that Wales is a bilingual country. Back in 1966, when Gwynfor won that by-election that was certainly not the case, and we should acknowledge his contribution to the Welsh language. Clearly, there is still work to be done, but there is no doubt that the work that was started with such passion by Gwynfor Evans should be continued.
It should also be highlighted that Gwynfor Evans’s commitment was not just to the Welsh language as a stand-alone issue but to Welsh culture as well. I think I am right in saying that he chaired more national Eisteddfod days than any other politician and probably more than any other figure in the 20th century. His commitment was total: he was a Welshman through and through and he lived and breathed the language. We should also acknowledge the contribution that his family have subsequently made. Gwynfor was not someone who spoke in public about the need for the Welsh language and Welsh culture and then did nothing at home; he also delivered, ensuring that his family followed in his footsteps.
A few other issues are worth touching upon. S4C was undoubtedly the pinnacle of Gwynfor Evans’ career. S4C has been a political hot potato since I came into this place in 2010, and I hope I have contributed to protecting the funding of the fourth channel. It is genuinely superb to have been able to follow the Welsh football team all the way to the semi-finals of the European championship, and to do that with Welsh commentators. I pay tribute to players such as Aaron Ramsey who have been happy to tweet in Welsh during the tournament. The fact that we have Welsh coverage and Welsh pundits, such as Malcolm Allen—a credit to Wales, who could challenge the Icelandic commentator—is entirely due to the contribution made by Gwynfor Evans. It is crucial, therefore, that we maintain the support for and the funding of S4C because of its contribution not just to the culture of Wales but to its economy.
I am pleased to have been able to respond to the debate in the manner that I think would have been expected. The debate is a tribute to an important parliamentarian, but also to a politician who made much more of an impact outside the Chambers of this place than within them. I was not aware of the comment Gwynfor Evans made when he was offered a peerage—that there was only one Lord and that he did not reside on the bank of the Thames—and I leave hon. Members with this controversial comment: it is interesting that two of Gwynfor’s successors as party leader did not share that view.
Question put and agreed to.
Energy Network Charges
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Ian Blackford (Ross, Skye and Lochaber) (SNP)
I beg to move,
That this House has considered regional differences in energy network charges.
It is a pleasure to serve under your chairmanship, Mrs Main, in this debate about the sharp regional differences in energy network charges that penalise consumers and businesses in certain parts of the United Kingdom. This Government like to talk about being a one nation Government. If the Minister believes that to be the case, I ask her to reflect on why consumers in the highlands and islands have to pay a premium for their electricity. I acknowledge that the previous Labour Government introduced a hydro benefit replacement scheme in 2005 to partially take account of higher distribution costs and that that support is being continued. The Minister, who I look forward to hearing from later, said late last year:
“It is not right that people face higher electricity costs just because of where they live”.
I agree with the hon. Lady, and it was a pretty fundamental statement that she made.
This debate is not just about the highlands and islands; there are 14 regional markets throughout the United Kingdom, with different levels of network charges. Nor is it about price competition. It is about a regulated charge varying from region to region through a price control framework. The reality is that a person living in the highlands and islands will pay for the privilege of doing so, courtesy of the UK Government. Electricity distribution charges for the north of Scotland are an eye-watering 84% higher than the distribution charges for London. One nation? Whose nation? It is not mine, or that of my hon. Friends here today. Westminster calls the tune; highlanders and islanders pay the price.
We pay a high price for transmission charges, and we also have a high rate of energy consumption. The highlands and islands are noted for windy and wet conditions. It is not unusual for folk in the highlands to have their heating on all year round.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
My hon. Friend is making a good point about the travails of people living in the highlands and islands and the fact that they face additional charges and costs. Does he agree that many of those consumers are off the grid and rely on Calor gas or oil for their heating? Ofgem should regulate such things, as well as the normal transmissions.
Ian Blackford
I am grateful to my hon. Friend for making that very valid point, which was raised in a recent Ofgem report. Perhaps the Minister will reflect on what we can do to give support to those on off-grid connections.
A recent study by Ofgem noted that households in the north of Scotland that use electricity for heating would benefit from a cost reduction of about £60 a year if there was a universal network charge. That would have a significant impact on the budget of someone on a low income or a pensioner.
Not only are we faced with high transmission charges, but many consumers in the highlands and islands suffer from a lack of choice in energy provision. As my hon. Friend just mentioned, many households cannot access grid connections for gas, among other things, and have to rely on other sources of fuel. It is often a choice between electricity and domestic heating oil. With such limitations, the last thing we need is price discrimination—that is what it is—being foisted on us by a Westminster Government. Where people live should not result in them being penalised through paying higher network charges. Where is the one nation that the Government speak of? It should be about equity and fairness, but that does not exist today.
We have heard a lot since the European referendum about those who are left behind. We often hear that it is a priority for this Government to tackle fuel poverty, but fuel poverty is exacerbated by having higher network charges in the highlands and islands. I will focus on fuel poverty because there is a clear link between higher prices resulting from network charges and fuel poverty.
I am grateful to Changeworks, which has estimated the percentage of households in fuel poverty in the highlands region. It bands each locality in the highlands into groups. On its calculations, no district in my constituency has less than 47.9% of households in fuel poverty; indeed, in a number of districts fuel poverty is evident in at least 73.5% of households. I look across from my constituency to Na h-Eileanan an Iar, where fuel poverty affects 71% of households. That should shame every single Member of this House and every Government Member. Why should we accept that such a percentage of households in a wealthy country such as this should be in fuel poverty? It should be a priority for the Government to tackle the issue and eradicate such high levels of fuel poverty.
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
I am listening carefully to the hon. Gentleman, but he surely must accept that while the UK Government are doing all they can to support Scotland, this is a devolved issue, so the Scottish Government are responsible for tackling fuel poverty in Scotland? He will be aware that only last week, the Scottish Government stated that their 2016 eradication target would not be met. I am very happy to talk about what the UK Government are doing, but I am not comfortable with him blaming it all on the United Kingdom. It is a devolved matter.
Ian Blackford
I hope that people in Scotland have listened to what the Minister just said. It was quite astonishing: blaming the Scottish Government for fuel poverty that is visited on households in Scotland as a direct response to things that are the responsibility of this Government and to the failure so far to deal with the matters we are discussing today, such as network charges. I have outlined to the Minister that people in the highlands and islands are paying 84% more for connection charges than people in London. That clearly demonstrates that it is the responsibility of the UK Government. How dare the Government turn around and blame the Scottish Government! The situation has arisen because of austerity and failure to take opportunities, and the responsibility for that lies fairly and squarely in the hands of Westminster.
Barry Gardiner (Brent North) (Lab)
The hon. Gentleman is making a very passionate case. I agree that Ofgem in its October 2015 report found that electricity distribution charges are higher than average in the north of Scotland, but in contrast it found that electricity and gas transmission charges are higher in the south of England and lower in Scotland, and that gas distribution charges are higher in London and the south of England and lower in Scotland. Does he accept that there is a real issue with regional variation, but it is not unitary that Scotland is always disadvantaged by that variation?
Ian Blackford
I thank the hon. Gentleman for his comments, and I accept what he says to a degree: there are differences in gas transmission charges in other parts of the UK that are not fair. What is at the heart of the matter is that there should be fairness and a universal market. Why should people in Scotland pay more for their electricity than people in London, and why should people in London pay higher prices for gas? It is not right. We live in a unitary state; the transmission charges should be the same throughout the country. Focusing specifically on gas, my constituents in the main do not have access to a gas network. We are discriminated against because we are not on the mains.
Let me return to the issue of fuel poverty and heating costs. A recent report by Highlands and Islands Enterprise said that because of heating costs and other factors:
“The budgets that households need to achieve a minimum acceptable living standard in remote rural Scotland are typically 10-40 per cent higher than elsewhere in the UK.”
The highlands and islands of Scotland experience the harshest climatic conditions in the UK and record levels of fuel poverty. There is far greater area-wide dependence on the use of electricity for heating as well as lighting, but the standard unit price charged is 2p per kWh more than many other parts of the UK and 6p more than various economy tariffs that are on offer. Two pence might not sound like much, but it is a price premium of 15%. That is what the UK Government have done to consumers in Scotland. Let us hear no more about the Scottish Government and their responsibilities, because the responsibility for this lies fairly, squarely and solely in the hands of the Minister. She could do something about it this afternoon, if she had the guts.
That is the price set by the UK Government to live in the highlands and islands. On top of that, there is far greater reliance in off-gas areas on domestic heating oil and solid fuel, which pushes up household heating costs further still. As a result, average domestic energy bills in off-gas areas are around £1,000 more per annum than the £1,369 UK average—that is £1,000 more in the highlands and islands.
Figures from Lochalsh and Skye energy advice service in my constituency suggest that average annual heating bills in Skye and Lochalsh are £2,218. It is little wonder that there are so many people in my constituency in fuel poverty. For those whose primary fuel for heating is heating oil, the annual bill is as high as £2,519. To cap it all, customers on prepayment electricity meters—often the least well-off—not only have to pay additional standing charges, but discover that their notional right to change to a cheaper electricity supplier has become impractical.
The Government must accept that having 14 regional markets in the UK, with consumers in the highlands paying that 2p premium, is detrimental to the interests of the people in the highlands and islands. We must have a universal UK market.
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
Does my hon. Friend agree that the United Kingdom Government’s policy is strangely based on a horizontal line drawn through London? The Indian Queens power station in Cornwall has been subsidised to the tune of £5.80 per unit of electricity generating capacity, while until its closure this March Scotland’s Longannet power station charged £17.50 per unit of electricity generating capacity. That is a £23.95 difference per unit of electricity capacity—
Mrs Anne Main (in the Chair)
Order. May I ask that interventions are brief? There is plenty of opportunity for Members to speak if they wish. The intervention is becoming a speech.
Martin Docherty-Hughes
I was just about to bring my intervention to a very firm conclusion, Mrs Main. Does my hon. Friend agree that the price discrimination is about not just consumers, but Scotland’s utilities as well?
Ian Blackford
My hon. Friend makes a valuable point. We know that producers in Scotland have been discriminated against and the comparison between Longannet and Cornwall provides a clear explanation of that.
Ian Blackford
To recap on what I said at the beginning, we are talking about fairness and ensuring that people are treated in the same way throughout the United Kingdom. I quoted a statement made by the Minister at Christmas time last year:
“It is not right that people face higher electricity costs just because of where they live”.
I commend her for that statement, and I urge her, when she gets up to speak this afternoon, to tell us that she will take the necessary action to make sure that is brought into reality. We do not have a universal service today; we must do so. Why are highlanders and islanders being penalised? Fuel poverty: delivered to Scotland from Westminster. The Government have a responsibility, and the power, to do something about that.
I have submitted a number of questions to the Minister about the continued existence of 14 regional electricity markets in the United Kingdom. Here is one response:
“Electricity distribution network charges vary by region and reflect the costs of running the network in that area and the number of consumers that those costs are spread over. Moving away from this ‘cost-reflective’ approach would weaken the local accountability of the network operator in ensuring expenditure is fully justified, in turn weakening downward pressures on network costs overall.
In addition, a national price for electricity distribution would mean lower network charges in some areas, but increases in others.”
Where is the evidence for a detrimental impact on overall network costs? That is simply a red herring. As for the comment about lower costs for some and higher costs for others, the whole argument is about fairness. Somebody living in Skye should face the same network costs as somebody living in Southend. Anything else flies in the face of the statement by the Minister that people should not pay higher costs because of where they live. Let us make her statement a reality today, because those warm words from the Minister are meaningless unless we take action on a universal market. She talks about increases in some areas as a result of a universal market, but that is fairness—we all pay the same network costs. I prod the Minister to live up to her words: to take action today and to be seen as delivering fairness throughout the United Kingdom.
In Scotland, in our independence referendum, we were told that we were “Better Together”—
Ian Blackford
I have immense admiration for the hon. Gentleman, as he knows, but where is the “Better Together” in this? As I have already said, consumers in the highlands are paying 84% more for their transmission charges than someone living in London. Better together for whom? Not for us.
While I am on the topic, we were also told that our European future was secure if we remained in the UK—Scotland in Europe, and part of a wider European energy market. Well, we know where we stand now. The Minister wants to take us out of Europe with the rest of the UK. If she secures her ambition to become Prime Minister, I hope that she recognises the sovereignty of the Scottish people, who voted to remain in Europe.
Mrs Anne Main (in the Chair)
Order. Will the hon. Gentleman stick to his debate about the regional differences in the energy network, rather than European differences?
Ian Blackford
I respect the Chair, but I am trying to do this in the context of the European energy market—
Ian Blackford
France has a universal market for transmission charges. I would prefer a national transmission market, as there is in France, to the unequal system that we have in the UK. Why do we not do as France does and treat consumers equitably? We can learn from Europe, and at the same time we should remain part of it and not be dragged out. If the UK Government will not do that, perhaps we need—to paraphrase others—to take back control ourselves.
Research by the national charity Turn2us graphically shows the kind of challenges that those in fuel poverty are facing. One in two low-income households is struggling to afford energy costs, despite being in work. Among the hardest hit are people with disabilities, with more than two in three reporting their struggles, and families, with almost two in three working parents unable to meet these costs. Worryingly, of those households that are struggling with energy costs, nearly half have done so for more than a year. The knock-on effect is severe, with a third forced to skip meals and more than a fifth experiencing stress and other mental health problems. Here are some of the comments made to Turn2us:
“The bills are killing me, sometimes I have to contemplate paying all the rent or heating my home.”
“There are many pensioners like myself who don’t qualify for any help but still have to decide whether to eat or heat.”
“We have stress, debt, arguments and a low mood at home.”
“Starve or freeze? Either way you get ill and can’t work, eat or pay any bills.”
“No lights, only candles, only hoover once a week, only use washing machine once a week, no heating, meals that cook”
slowly.
In Scotland I am proud that our Scottish Government have used their powers to intervene to mitigate some of the effects of rising energy costs. It has been the failure of Westminster and the regulator to properly protect consumers that has led to a marked deterioration in the level of fuel poverty. Transmission charges are an important factor in the high levels of fuel poverty. The Scottish Government are committed to tackling fuel poverty head-on and ensuring that everyone in Scotland lives in a warm home that is affordable to heat, but the measures we are taking in Scotland are undermined by the austerity measures of the Westminster Government. That is why the responsibility for fuel poverty lies wholly, solely and squarely at the feet of Westminster and not at the Scottish Government’s, as the Minister implied earlier.
Drew Hendry
It is important that the root causes of fuel poverty are taken into account. Some 4.5 million people across the UK suffer from fuel poverty, and the cost of transmission grid charges in Scotland add to the cost for highlands and islands consumers. Does my hon. Friend agree that it is about time the issue of ducking responsibility for fuel poverty was taken squarely on the chin by the Minister?
Ian Blackford
Again, I am grateful to my hon. Friend for intervening to make a very important point. Today, in this debate, the Minister could bring this matter to a conclusion. She could follow through on the warm words that she used at Christmastime, when she said that no one should be penalised. If she believes that, I implore her to do the right thing. Let us have a universal market—a transmission market that treats everybody fairly in Northern Ireland, in Scotland and in England. Why do we still charge people based on the location they live in? It is wrong and needs to be dealt with.
When we talk about fuel poverty, there is not just a moral and ethical impact but a cost to society in increased health costs as a consequence of the mental health issues that arise; or in children being sent to school in less than ideal circumstances as a consequence of family pressures, adding to the difficulties of our young people flourishing to the extent that they should and making closing the attainment gap increasingly burdensome. That is the social cost of fuel poverty and it is an issue for which the Government in Westminster have to accept responsibility. Ending the discrimination of higher distribution charges would be a good start. I hope the Minister will respond in an appropriate manner this afternoon.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in this debate, Mrs Main. I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing it. It is always a pleasure to follow him. I look upon him as a friend in this House, as I do all my SNP colleagues, who are sitting on my right-hand side. We might have some differences about what is best for the United Kingdom of Great Britain and Northern Ireland, but I believe we are better together. They perhaps have a slightly different opinion; none the less, it does not mean that we cannot be friends in this House, and that is the important thing.
According to a study by the Northern Ireland Chamber of Commerce and business advisers BDO, almost a third of businesses in Northern Ireland believe that high energy prices are to blame for deterring investment. What the hon. Gentleman outlined in his presentation is something that I would like to mirror when it comes to Northern Ireland’s energy prices and so on.
May I also say that it is a pleasure to see the shadow Minister in his place? It is especially pleasing to see the Minister in her place. I look forward to hearing her response, which I am quite confident will be very positive and encouraging. It is always a pleasure to see her here in the House.
The regional disparity creates real challenges for the business community in Northern Ireland, at a time when those in the business community are seeking to expand and succeed and when their success is essential to rebalancing the Province’s economy and ultimately ensuring our economic success as a region. We are fortunate to have lots of jobs being created and we want that to continue. We believe we can continue that outside the European Union. I know there might be a difference of opinion among some of the Members present, but I believe Brexit will give us a great opportunity to expand and create more opportunities and move forward. A key issue for that to happen is the energy price.
The success of the United Kingdom of Great Britain and Northern Ireland depends on the success of all our regions. Although Northern Ireland is a starkly different place today from what it was a couple of decades ago, it is clear that there is much more work to do, especially in encouraging and facilitating economic development, particularly in the private sector. We have made giant leaps forward and done great things in Northern Ireland, with the Department of Enterprise, Trade and Investment creating numerous jobs—supported, let us be fair, by the Westminster Government. The Conservative party has had a strong economic policy to create jobs, and by and large we have seen the benefit of that in all our constituencies across the United Kingdom of Great Britain and Northern Ireland.
The Northern Ireland Chamber of Commerce study to which I have referred also found that just under two thirds of Ulster firms cited power and heating as among their most costly overheads. The hon. Member for Ross, Skye and Lochaber touched upon fuel poverty at the end of his speech. It is a massive issue for my constituents; in fact, it is a massive issue for constituents throughout Northern Ireland. Some 35% of people in Northern Ireland are subject to fuel poverty. We have the highest number of people in fuel poverty in the whole of the United Kingdom, so it is a massive issue for those who own or rent their houses and for those just trying to get by.
The Northern Ireland Executive continue to play a key role in addressing the issue by maintaining and improving local infrastructure. No doubt the devolution of corporation tax will allow for local business needs and circumstances in the Province to be taken into account. There has been talk in the past few days about the Chancellor reducing corporation tax in the United Kingdom. If he reduces it to a level that we would like to see in Northern Ireland, the opportunities will be greater for us. If it was reduced more, we could automatically take all the jobs that are coming in and all the potential growth could come our way. However, more often than not it is the regulatory framework that seems to create the issues. Literally all the major job losses in the Province that are down to big firms exiting or scaling back operations have been attributed directly or indirectly to high energy costs. I will give some examples.
Bombardier is one of the Province’s biggest employers. It is a business operating in the Province that has become a source of pride for us, owing to its world-renowned reputation. Bombardier has centres for manufacturing in my constituency, and many of my constituents in Strangford travel to east Belfast to get employment as well. Bombardier cited the costs when explaining why jobs had to be moved out of the Province in order to maintain competitiveness.
Michelin and JTI Gallaher are two more examples of large firms that have been good to the Province, especially in the constituency of my hon. Friend the Member for North Antrim (Ian Paisley). Michelin attributed redundancies directly to the high energy costs that business operators in the Province face. Similarly, they proved an issue for JTI Gallaher as well. We have lost them both and the impact has been great, especially in one constituency. It is not just the jobs that are lost; it is the impact that the money and wages going out of those constituencies has on the economy, which affects everything. The Northern Ireland Department for the Economy has taken steps to try to fill the gap. One way of doing that is to help with energy costs.
Northern Ireland stands out from the rest of the United Kingdom when it comes to the recruitment of part-time staff. That is another indicator of the challenges that manufacturing faces. Views about cash flow are too often the most negative in the United Kingdom. Those are some of the things that we face back home. The issue cannot be remedied just through the intervention of the responsible Minister in the Northern Ireland Executive. They can play their part, but only with co-operation, support and help from Westminster. There is no single policy that can remedy the difficulties faced by large energy users in Northern Ireland, of which there are about 20. There is a need for a long-term strategic objective of delivering competitive energy policies; but in the meantime the regulator can make the difference. The key issue preventing the change that is needed at the moment is that if large energy users were to benefit from being asked to pay less, the cost could, under the current framework, be passed on to households and small and medium-sized enterprises. Therefore, the statutory remit of the regulator would have to be expanded significantly to include that area. I would ask the Minister to respond to that point.
In the Republic of Ireland, it is not the wholesale prices that make the difference; it is the allocation of network costs, which disproportionately favour large users in a comparison between the Republic of Ireland and Northern Ireland. In Northern Ireland, the LEUs would like similar treatment. Should the Minister in Ireland want to follow that methodology, the decision would need to be politically acceptable. Given the trade-off that could ensue between SMEs, households and LEUs, such a move could prove contentious. A way forward palatable to everyone would need to be worked out to keep as many stakeholders as possible happy. There are some balancing tricks to be done, as well as some advance strategic work.
The Chancellor often talks about a northern powerhouse, and refers to economic engines and the like. He is right to recognise regional disparities in business activity and inward investment, but I hope that the worrying news coming out of Northern Ireland about the harm that energy costs are doing to our ability to attract investment will put us on the map for Ministers in Westminster, who can be part of spreading the wealth more evenly in the nation.
As everyone present for the debate knows, I am a true believer in the United Kingdom of Great Britain and Northern Ireland. I believe in it with a passion. I believe that we are better together. Those are my heartfelt thoughts, but we also need to spread the wealth across the whole of the United Kingdom, and see that we get some of it on the fringes of Northern Ireland and on the fringes of Scotland, about which the hon. Member for Ross, Skye and Lochaber made his comments very clearly. The extra power and influence here at Westminster would be of great benefit if Ministers and those with an interest would lend a hand to the Minister in Northern Ireland, as he inevitably comes to deal with an issue that is, unfortunately, very complex.
It is a pleasure to take part in the debate. I am grateful for the opportunity to speak, and I look forward to the speeches of the shadow Minister and, in particular, the Minister.
Callum McCaig (Aberdeen South) (SNP)
It is a pleasure to serve under your chairmanship, Mrs Main.
My hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) has said most of what is required and he said it in his usual passionate way. It is right that he should feel passionate about this, because there is a clear sense of injustice—one that, as he rightly pointed out, the Minister has acknowledged in the past. To quote her again for the record:
“It is not right that people face higher electricity costs just because of where they live”.
We have heard that that applies not just to the north of Scotland but to Northern Ireland and other regions of the UK. Nobody is asking for special treatment. We are asking for a level playing field, and I do not understand how that cannot be justified. Perhaps it is possible to hide behind what Ofgem has said, but this is a Government who purport to be a one nation Government. How can you be a one nation Government when, just because you live in a different part of the country, you have to pay more for your electricity? That cannot follow from the Government’s rhetoric.
The Ofgem report states:
“There does not appear to be any clear justification for a national charge in terms of the regional concentration of vulnerability. Distribution regions represent large areas and the socio-demographics of the population in each region tend towards the Great Britain average.”
The justification is fairness. Just because you may have average distributions of poverty and wealth in the north of Scotland and the south of Scotland—which, to be fair, is highly debatable—does not mean that if you are rich or poor in the north of Scotland, you should pay more than anyone in the south of Scotland. If you are disadvantaged in the north of Scotland, it is no consolation to you that you are part of a national average and you fit neatly into a demographic box, so that Ofgem can dismiss your legitimate concerns about additional costs plunging you further into fuel poverty.
Drew Hendry
On the point about additional costs, there are many off-grid users in the highlands and islands, for whom costs are 100% more than they are for on-grid consumers. That adds to the problem.
Mrs Anne Main (in the Chair)
Order. Mr McCaig, may I ask you to speak through the Chair? You are using the word “you” rather a lot, and of course I have nothing to do with it.
Callum McCaig
My apologies, Mrs Main.
The issue, as I say, is one of fairness. My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) has highlighted the additional impacts that come from the rural nature of large parts of the highlands and islands and the north of Scotland in general. The Government must take those into account. It is easy to hide behind Ofgem, but the Government must act, and there is a clear and pressing need to do so. As has been mentioned, the charge in the highlands and islands, based on per unit usage, is 84% higher than in London. It is colder in the highlands and islands, so people have to use more electricity. Also, for large periods of the year it is darker, because of the more northerly latitude. The costs of heating and lighting a home are greater the further north people live. That is not taken into account. Also, a far higher proportion of people in the north of Scotland use electricity to heat their homes. That comes at an extra, punitive cost to them. That cannot be acceptable and the Minister needs to explain it.
The Minister, perhaps inadvisedly, intervened on my hon. Friend the Member for Ross, Skye and Lochaber to talk about the fuel poverty record of the Scottish Government. There is more work that they need to do, and they have acknowledged that. Contrary to what is happening here, fuel poverty and, indeed, energy efficiency are national infrastructure priorities for the Scottish Government. There will be record levels of investment. If a comparison is made between the investment record in Scotland and that of the other nations of the United Kingdom, it is highly favourable.
Let us break down fuel poverty and look at where responsibility really lies. Electricity distribution and network charges rest with the Government. The regulation of the market, in terms of the energy companies, rests with the Government. Looking at the fuel side of the issue, it is clear that the responsibility lies with the Government. As to the poverty side of things, it is even clearer that the responsibility is the Government’s. They control the economy, set taxation and, perhaps most importantly, set the parameters of the welfare state, which they have undermined time and again, plunging more people into fuel poverty. On the face of things, the term “fuel poverty” may be devolved to the Scottish Government, but the actual responsibility—the actual levers to effect real change—rest with this Government and largely with the Minister and her Department.
It may be fine and well to engage in back and forth as we regularly do in this place, but we need to see where responsibility really lies. If the Minister really wants the Scottish Government to have that responsibility, I can tell her that we will happily take the powers out of her hands, and I promise her that we will use them more effectively than her Department has in ensuring that the people of our country do not live in cold, dark houses or have to choose, as my hon. Friend the Member for Ross, Skye and Lochaber said, between heating and eating. That is not acceptable in the 21st century. If we are one nation and there are simple things that can be done to address fuel poverty, it behoves this Government to do them.
Another theme that has run through the debate—one that was mentioned by my hon. Friend and the hon. Member for Strangford (Jim Shannon)—is the economic and social impacts that fuel poverty has on our society. Fuel costs are adding cost for and holding back our businesses and social services. There is an opportunity cost. I disagree with the hon. Gentleman about redistributing wealth. This is not actually about redistributing wealth; it is about keeping wealth where it is generated and ensuring that people do not have to pay too much of their own wealth and that it is not sucked out of their economies. It is about keeping the wealth where it is generated and allowing it to be put back into communities in Northern Ireland or in the north of Scotland. That is not redistribution; that is just fairness, which is utterly absent from this regime.
We are not necessarily asking the Minister to agree with the Scottish National party or even the Democratic Unionist party on this issue. We are asking her to agree with herself and with her own Government’s one nation rhetoric. If she cannot do that, perhaps she can explain to us why.
Barry Gardiner (Brent North) (Lab)
Diolch yn fawr, Mrs Main. Yn yr wythnos lle mae Cymru wedi gwneud Prydain mor falch, ni ddylir y ddadl atal dathlu athrylith y bobol Gymraeg, yn enwedig os fyddent yn mynd ymlaen i guro’r Ffrancwyr neu’r Almaenwyr yn y ffeinal.
Barry Gardiner
Mrs Main, I took the precaution of speaking to the Clerk beforehand, and found out that it was in order to speak in Welsh, Norman French or English. Given that this is a regional debate, I thought it was only right to speak in Welsh at the beginning, but she did advise me that a translation was always required, which I will of course be very happy to provide to both you and Hansard. I said: “Thank you very much, Mrs Main. In a week when Wales has done the whole UK proud, no debate should fail to celebrate the genius of the Welsh people, especially if they go on to beat the French or the Germans in the final.”
Ofgem concluded last year that from a regulatory perspective, there
“does not appear to be any clear justification”
for national network charges
“in terms of the regional concentration of vulnerability.”
However, as we shift towards cleaner energy to deliver our legal climate targets—an issue on which the Minister has nailed her own colours to the mast—we must also overhaul the management of our energy networks to become smarter and more flexible.
The Energy and Climate Change Committee remarked last month:
“Networks are transforming. We recognise that this presents challenges for the Government, but it has been slow to present a clear, holistic plan for the evolution networks need”.
That Committee’s June report, “Low carbon network infrastructure”, concluded that networks
“are at the heart of the UK’s low carbon ambition”,
yet network charges
“form an increasing proportion of consumer bills.”
The Committee called out
“outdated and inflexible regulation and governance”
as potential obstacles to making our energy network fit for the 21st century. Remarking that network connection costs “remain geographically skewed,” the Committee called for Ofgem to
“assess the costs and benefits of levelling connection costs across Great Britain”
and Northern Ireland in order for the Government to consider whether geographical disparities can continue to be justified.
Ofgem also found last year that it is
“legally possible to introduce national network charges but the change from the current approach would need to be justified against various criteria in European law, particularly on cost reflectivity.”
Although I am mindful, Mrs Main, of your admonishment of the hon. Member for Ross, Skye and Lochaber (Ian Blackford) for straying into the whole debate around Brexit, it seems appropriate, given that that is the legal situation, to ask whether the Government have sought new advice on this issue in light of the vote to leave the European Union.
The “Low carbon network infrastructure” report also recommended:
“DECC should investigate the disadvantage UK generators may consequently face against other European generators as Great Britain becomes more interconnected, and the impact this may have on development of domestic renewable generation.”
Given the vote to leave the EU, I also ask the Minister to provide greater clarity on the future of the UK’s electricity interconnection with the continent.
It is also worth noting that transmission tariffs for generators are higher in Great Britain than in the rest of the EU. The UK is one of only three EU member states with locational transmission tariffs. The Minister recently wrote to the Energy and Climate Change Committee, stating that
“one of the main drivers for transmission costs is the need for new network investment to accommodate renewable generation in areas such as Scotland.”
I therefore ask a further question: how much is being invested in upgrading our networks to be able to carry clean energy? Is that spending based on projections that include meeting our 2020 clean energy target?
The debate is also important in highlighting the systemic problem of the lack of transparency in an energy market that is failing the overwhelming majority of customers. The Government’s response to the Ofgem inquiry, in answer to a written question by the hon. Member for Christchurch (Mr Chope), was to reassert their objective to keep
“overall costs down for bill payers across Great Britain.”
I note that they did not say Northern Ireland. The hon. Member for Strangford (Jim Shannon) is no longer in his place, so I will add “and Northern Ireland,” because I trust that that is what the Department meant.
Network charges on a typical dual fuel consumer bill have risen by approximately 30% in the past four years, according to British Gas—we need some sort of explanation for that from the Minister—and seven out of 10 customers are currently being overcharged for their energy. As a result, millions of households cannot afford their energy bills, as the hon. Members for Ross, Skye and Lochaber, for Strangford and for Aberdeen South (Callum McCaig) said, yet Ministers are still letting the energy companies off the hook and failing to ensure that the drop in wholesale energy prices is passed through to bill payers.
The Energy and Climate Change Committee reported on energy network charges in February 2015 and recommended that the Government and Ofgem should
“publish an evidence-based analysis of the advantages and disadvantages of introducing national tariffs for transmission and distribution network charges.”
Following that recommendation, Ofgem published its report, but it found principally that electricity distribution charges are indeed higher than average in the north of Scotland, exactly as the hon. Member for Ross, Skye and Lochaber said, but also in Merseyside, north Wales and the south-west of England. The charges are of course lower in London and eastern England. In contrast, electricity and gas transmission charges are higher in the south of England and lower in Scotland, and gas distribution charges are higher in London and the south of England and lower in Scotland and north-east England. Although this debate has largely been presented—I speak as a Scot here—in terms of the injustice that an English Parliament is doing to Scotland, the reality is very different.
Barry Gardiner
I will, but I will make a little progress first. Ofgem concluded that there
“does not appear to be any clear justification”
for national network charges
“in terms of the regional concentration of vulnerability.”
That is exactly what the hon. Gentleman and I would wish to see: that evening out across the piece. So for a household with typical electricity and gas consumption there would be an increase or decrease to the network charge element of a bill, but it would be of less than £20 a year in most distribution network areas. There would be more significant changes in three electricity distribution regions, and they are: south-west England, would be down by £38; Merseyside and north Wales would be down by £26; and east Midlands would be up by £27.
Ofgem found mixed results on bills from a switch to national network charges, which would result in approximately 16 million households facing higher bills, while about 11 million would see reduced bills under such an approach. In most cases, the increase or decrease would be small—of that £20 a year margin. In Scotland, 1.8 million households would face higher bills and only 700,000 households would see reductions. It is harder to estimate the numbers for England and Wales separately because the distribution networks that serve Welsh households also operate across the border in England.
The hon. Member for Ross, Skye and Lochaber tended to speak in percentages. Of course, when one speaks in percentages, things can sound really disproportionate. Why should someone pay 80% or 100% more in distribution costs in one part of the UK than in another? That is absolutely right, and the argument for fairness he made is correct. However, when speaking in percentages, one sometimes blurs the fact that the actual amounts are relatively small. Even households in the north of Scotland who use electricity for heating would benefit from maximum reductions of about £60 a year. That is just over £1 a week. Of course that should happen, but he should acknowledge the scale of the problem we are dealing with.
Ian Blackford
I think in my speech I referred to the price difference between the highlands and other parts of the UK as being 2p per kWh, so I gave both the percentages and the actual cash amounts. To someone in the highlands, £60 is actually quite a significant amount. Does the hon. Gentleman agree that this is about equity, fairness and creating in effect a universal service obligation? Will the Labour party join with us in calling for fairness, or will it let highlanders down and walk away?
Barry Gardiner
I absolutely agree with the hon. Gentleman that it is a question of fairness. I agree that there should be a unitary basis on which this is calculated, and indeed I think the Minister is on record as having made statements that indicate that she agrees. As I have mentioned, there are issues relating to the way in which we are permitted to do that under European law that may now be freed up. They need to be investigated and, if we can do that, we should.
I simply wanted to put in perspective what I felt was the over-ebullience of the hon. Gentleman when he spoke. In the grand scheme of things, these are small injustices, not great ones, and they apply more widely throughout the regions of the United Kingdom than just in Scotland.
Barry Gardiner
I am happy to give way to the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry).
Drew Hendry
I am grateful to the hon. Gentleman for giving way and for getting my constituency correct. You talk about—
Drew Hendry
I will not use the word “you”. He talks about this being a small amount, but when you are faced with the costs of paying for off-grid fuel—oil and gas—the additional costs because you live in a sparse area and low wages in a low-wage economy, this is a devastating cocktail. Do you not agree that it is not as unimportant as you are making out?
Mrs Anne Main (in the Chair)
Order. I am not making out anything, but I shall call Barry Gardiner, who may answer on his own behalf.
Barry Gardiner
I agree that many factors come together to push people into fuel poverty and into poverty. They have been ably outlined by the hon. Gentleman and his colleagues. The point I am making is that here we have something that affects not just one part of the United Kingdom but many parts of England and Wales, as the Ofgem report clearly shows.
Barry Gardiner
I felt that the debate had been unbalanced in how the facts were presented, which implied that this was an injustice being done by the Westminster Government to poor Scotland.
Mrs Anne Main (in the Chair)
Order. May I point out that I shall be calling the Minister at 4 o’clock? Mr Gardiner, I accept that you may wish to take interventions, but I say that just in case the new timings have eluded people.
Barry Gardiner
Mrs Main, I am mindful of your ruling. I simply wanted to say I accept that there is an issue of justice and fairness, but wider effects are being felt all around the UK. If we keep this issue in that context rather than trying to make it about “us” and “them” and simple victimisation, we will have a much better opportunity to resolve the problems that do exist.
Barry Gardiner
I will finally take the intervention of the hon. Member for Aberdeen South.
Callum McCaig
I accept the point that they may be relatively small figures for individuals—they may be generally quite important to them for the reasons outlined—but, to use the hon. Gentleman’s own figures and multiply the £60 benefit by 700,000 people, this is not quite back-of-a-fag-packet but that is £42 million being needlessly taken out of the economy of the north of Scotland. That would make a transformational impact if it were reversed, and that is the point being made.
Barry Gardiner
If it were true, but the hon. Gentleman should know that it is not. If he does the arithmetic correctly, he will see that those 700,000 were of the £20 maximum variation, not £60. He will also recognise that more than double that figure—1.8 million—in Scotland would face higher bills. He really needs to try to see this issue not through the lens of victimisation but through the lens of reality. With that, I conclude.
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
This is an incredibly important debate, and I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing it. Over the last year we have had numerous debates in Bill Committees and elsewhere about the vital importance of addressing fuel poverty. On that, we are absolutely as one.
I also agree with the hon. Member for Brent North (Barry Gardiner) that it is not that those outside of Scotland are doing fine and those in Scotland are being somehow penalised by the Westminster Government. While I do not think that any of the hon. Gentlemen from the Scottish National party would say that is the case, that is the impression they are giving. As the hon. Member for Brent North made clear, fuel poverty affects the whole of the United Kingdom, including Northern Ireland, which has a different distribution and transmission network. This is an issue for all of us and we need to address it as a United Kingdom, taking account of the interests of all our citizens.
Ian Blackford
In presenting this debate, I have tried to argue for fairness across the UK. I reflected on the fact that we have 14 regional markets, which I believe to be unfair, because that penalises people based on where they live. I argued about the specific circumstances of the highlands, but specifically I am asking the Minister to deal with that by creating a universal market throughout the United Kingdom so that everyone is treated in the same way. That is the correct manner for this House. It is not about dividing people; it is about recognising fairness and equity.
Andrea Leadsom
I will certainly address those issues; I wanted to make it very clear up front how important they are.
The costs of distributing and transmitting energy vary by location. Those differences are reflected in the charges paid by generators and consumers in a particular geographic area. The idea behind that cost-reflective approach is that it helps to drive down costs for all consumers, and it is proving successful. For example, Ofgem estimates that network costs are 17% lower in 2014 than before privatisation, while system reliability remains above 99%. However, it is right that the Government should consider action if one region has markedly different network charging levels from any other. It is also true that network charging mechanisms could never provide an efficient or effective way of providing targeted support to specific groups of vulnerable consumers within a region. I will explain some of the actions we are taking on both counts to ensure consumers right across Great Britain are receiving a fair deal.
The particular challenges of electricity supply in the north of Scotland relate primarily to the relatively large and sparsely populated terrain, meaning that it inevitably costs more to distribute electricity there than elsewhere. I reassure all hon. Members that the UK Government remain committed to ensuring that consumers in the north of Scotland do not bear an unreasonable burden of those electricity distribution costs. The response we published yesterday to our consultation on electricity distribution costs in the north of Scotland confirmed we will continue the hydro benefit replacement scheme at its current level. That scheme helps to protect electricity consumers in the north of Scotland by providing £58 million of assistance to the area, which is worth an average of £41 to each household in the region and is funded by charges on all licensed suppliers across Great Britain.
In addition, our response confirms that the Government remain committed to GB-wide funding for a Shetland cross-subsidy. That will protect consumers in the north of Scotland from the costs of replacing the ageing Lerwick power station in around 2020 and will be delivered through the hydro benefit replacement scheme. The full details will be confirmed once the replacement of Lerwick power station is known. That will have the effect of reducing costs for all consumers in the north of Scotland from the end of the decade.
The Government certainly note the calls, not least from SNP Members, for a move to a single national network charge, but we continue to believe that the priority must be minimising overall network costs for consumers across GB. As I mentioned, network charges vary regionally to reflect the costs of running the network in a specific area and the number of consumers those costs are spread across. Such a significant move away from the important principle of cost-reflective charging would be unhelpful as it risks weakening the pressure on each network company to keep overall costs down for its local stakeholders, which could lead to an overall increase in costs.
Andrea Leadsom
I will in a minute. It is also important to note, as the shadow Minister pointed out, that a move towards a single national network charge would produce winners and losers. All hon. Members will be aware that in October 2015, Ofgem published a detailed analysis of regional differences in transmission and distribution network charges. It found that, for Scotland specifically, 1.8 million households would face higher bills through a national network charge while 700,000 would see reductions. For Great Britain as a whole, 16 million households would face higher bills while around 11 million would see reduced bills. Ofgem concluded that there is no compelling case, from a regulatory perspective, to move to a national network charge. However, we will of course continue to consider any new evidence that is presented on the matter.
Ian Blackford
I am grateful to the hon. Lady for giving way; she has been very generous with her time. Does she appreciate that we have a universal market for the delivery of telephone and broadband and we all pay the same price, regardless of where we live? We pay the same price for a postage stamp. We are still not addressing the fundamental point: people are paying higher prices for transmission of electricity simply because of where they live. We are generating higher levels of fuel poverty as a direct result of that.
On the whole argument about winners and losers, this is about fairness. The Minister talks about being “one nation”; we should be talking about delivering fairness to everybody and not discriminating against people, which is exactly what this Government are doing.
Mrs Anne Main (in the Chair)
Order. Before I call the Minister, I say to the hon. Gentleman: please, respect the Chair. Interventions are meant to be short and they are becoming incredibly long. Standing and talking through the Chair is incredibly disrespectful.
Ian Blackford
It is disrespectful how my country has been treated by this Government.
Andrea Leadsom
Thank you, Mrs Main.
As with other aspects of our network charging regime, Great Britain’s transmission charging regime is governed by the principle that the user pays. In other words, the costs of operating and maintaining the system are met by those who benefit from it: generators and demand customers. That ensures the economically efficient use of the transmission network and limits the overall cost to consumers across the country. I say to the hon. Member for Ross, Skye and Lochaber that it is not a postal system; it is a transmission system. He makes the case that there is one cost for a postage stamp. In a transmission system, the clear case has been made that locational pricing is needed to keep costs down for all, as that makes it more efficient for everybody. Otherwise, if I can simply add costs to the system in the knowledge that those will be socialised right across Great Britain, I will not face those competitive pressures to keep costs down.
Andrea Leadsom
I see the hon. Gentleman rolling his eyes but he must look at the evidence. He must also bear in mind that, in Scotland alone, there would be 1.8 million people whose bills would go up as a result of the measure he proposes.
The higher transmission charges for generators in certain areas of the country reflect the costs they impose on the transmission network in transporting electricity to demand centres. Conversely, demand customers in generation exporting areas pay lower transmission charges. The hon. Gentleman will be interested to note that that means Scottish generators pay higher transmission charges than their counterparts further south and nearer the centres of demand, but Scottish consumers face significantly lower transmission charges.
The hon. Gentleman rightly points out that fuel poverty is a big subject for both the UK Government and the Scottish Parliament, and is a devolved matter. This Government are fully committed to tackling fuel poverty, and it is clear that we must look beyond network charging mechanisms to do so. We absolutely want to be there right alongside the Scottish Government in dealing with fuel poverty, and I will run through some of the actions we are taking to tackle that issue.
Last week we published our proposals to reform the energy company obligation. We proposed to increase the support for low income and vulnerable households from £310 million to £450 million per annum. Scotland certainly receives more than her fair share of ECO measures with 40 measures per 1,000 households, compared with 28 measures per 1,000 households in England. There is clear evidence that through our fuel poverty measures we are seeking to support Scottish households in fuel poverty.
We also support low income households through the warm home discount. We have worked with both the Scottish and Welsh Governments on how those policies could be amended to tackle the root causes of fuel poverty in all UK nations. The devolved nature of fuel poverty action allows different nations to take measures appropriate to them, and each nation has policies tailored to address fuel poverty at the local level. We will work with the Scottish Government to set up a process and methodology for evaluating the impact of schemes implemented in Scotland—on their own and in conjunction with schemes implemented in England and Wales—on the GB energy market and any relevant UK commitments and obligations.
We are determined to help households facing the highest energy costs, including those that are off the mains gas grid, which are much more likely to face higher energy costs and more than twice as likely to be in fuel poverty as households connected to mains gas. Last year, we announced £25 million in funding through the central heating fund, which is designed specifically to help support non-gas fuel-poor homes by funding the installation of complete central heating systems.
Strong competition among suppliers is a key way to keep prices down, drive innovation and improve customer service. We have seen an unprecedented number of new companies enter the market over the last couple of years. There are now more than 40 companies competing to supply households in Great Britain. In 2010, there were just seven small suppliers and the big six.
[Mr Philip Hollobone in the Chair]
We have worked with industry to cut the time it takes to switch supplier from five weeks to a maximum of 21 days, and we are working with Ofgem to move to reliable next-day switching. The number of customers switching supplier continues to rise with 2 million energy accounts switched just between January and March this year—25% more than in the same period last year. As we know, on average consumers can save hundreds of pounds on a dual-fuel bill by switching, which is incredibly important for keeping their costs down.
We are taking a range of different actions and have seen some improvements through lower energy network costs and lower energy bills, but it is clear that this area requires continued attention. I thank all hon. Members who have participated in this valuable debate.
Ian Blackford
It is a pleasure to see you in the Chair, Mr Hollobone. I have to say that I am disappointed by the Minister’s response to our appeal for fairness, which at the end of the day is what we are talking about. The Government talk about being a one nation Government. Surely to God, in such a situation people should be treated in the same way, irrespective of what part of the United Kingdom they live in. The reality is that those living in the highlands and islands are having to pay a surcharge to live in that area. What a disgrace that the Government are treating them in such a way.
Perhaps I should not be surprised. I was in my constituency yesterday, attending a meeting of the Scottish Affairs Committee, of which there are four Tory members. Not one of them came to Skye yesterday to listen to what local people were saying about the demographics and population of the highlands. That is the contempt this Government have shown for the people in the highlands, and it has been well and truly demonstrated this afternoon in this Chamber.
Question put and agreed to.
Resolved,
That this House has considered regional differences in energy network charges.
Mr Philip Hollobone (in the Chair)
Would those who are not staying for the next debate please be kind enough to leave quickly and quietly? We now move on to the important subject of the provision of services for asylum seekers in Glasgow.
Asylum Seekers: Glasgow
(7 years, 10 months ago)
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Chris Stephens (Glasgow South West) (SNP)
I beg to move,
That this House has considered the provision of services for asylum seekers in Glasgow.
It is a pleasure, as always, to serve under your chairmanship, Mr Hollobone. May I thank the Minister for being here to listen to this debate and for taking time to consider this matter? We met to talk about these issues when extraordinary revelations were published in The Times and by BBC Scotland on the treatment of asylum seekers in Glasgow. Since that meeting, more extraordinary revelations have been published by the Sunday Herald newspaper, showing that persistent problems are leading to perverse outcomes.
This debate is very timely. Persistent issues remain in the delivery of housing, which is the lifeline public service for a group of people—women, men and children— who are seeking protection and who, by definition, need more than most the stability that a home should bring. The asylum process is difficult enough without problems of poor housing and treatment to contend with too.
The revelations published recently in the Sunday Herald include the story of an Iraqi woman with health problems and her young child being placed in a dirty second-floor flat for months, despite a doctor’s letter and instructions not to carry her child upstairs. She also claimed that drug addicts were frequenting the shared close. Another asylum seeker said that, despite reporting to the police four times racial harassment against herself and her baby outside her flat, she and her toddler had not been moved. Serco said that a housing officer had visited and was taking the complaint very seriously and monitoring the situation. I do not believe that to be acceptable.
One asylum seeker raised alleged aggressive and intimidating behaviour by the Orchard and Shipman staff who evicted him late last month—an allegation that was reported to Police Scotland. Agencies have also reported pregnant women and families facing eviction. In the past few weeks, up to 20 single men have been bussed from Glasgow to London and Manchester at short notice, with a total of 44 expected to be relocated within a month. Twenty families will then be moved to Glasgow. Another asylum seeker case brought to my attention is that of a constituent who is a single mother of three young children living on the third floor of a tenement building where she is unable to lock her windows.
Organisations representing asylum seekers continue to have concerns. Mike Dailly, principal solicitor and director of the Govan Law Centre, has said:
“There are also repeated cases of overcrowding and severe disrepair. This organisation is largely unaccountable despite receiving significant public funds to protect some of the most vulnerable in our society.”
Shafiq Mohammed, a former Orchard and Shipman employee turned volunteer for the Asylum Seeker Housing Project—ASH—said:
“I would describe some of the properties that we’ve come across as slums. In essence, asylum seekers are living in the poorest-quality accommodation in the city.”
Others have reported insect-infested couches; dirty carpets, walls, bathrooms and kitchens; and common stairwells where people regularly urinated. Two women said that their children had developed skin infections.
Too often we have found that the housing provided through the Home Office’s outsourced commercial contract to Serco, which is then subcontracted to Orchard and Shipman, provides not stability but, sadly, aggravation and harm to those who should be treated with dignity and given housing that is safe and secure. Indeed, the Scottish Refugee Council report of September 2014 shows that what was exposed this year has roots in 2012. There has been a transition from the more locally-rooted and therefore accountable, flexible and efficient model of providing housing for those seeking protection to what we must remember is an experiment in terms of asylum accommodation—a thoroughly market-based approach to the provision of such a vital public service. There is something rather valuable in having devolved, local oversight and delivery of housing for asylum seekers in terms of weaving them into joined-up services, democratic oversight and accountability, the flexibility to, for instance, flip accommodation at the point of positive decision to enable continuity of housing for the refugee and in terms of community cohesion.
Outsourcing may well suit the UK Government, as it allows them to outsource not only service delivery but a fair degree of accountability. Many of us have lost count of how many carefully drafted freedom of information requests and parliamentary questions have not been answered, on the sometimes dubious grounds of disproportionate costs or commercial confidentiality. I trust that the Home Affairs Select Committee will look at that issue; I am pleased to see its Chair, the right hon. Member for Leicester East (Keith Vaz), in his place. It may well also suit the UK Government to have their contractors on the front page of media exposés rather than Ministers. The reality is that taking such hits for future contracts could, in the long term, be worth it.
Let me return to the present issues in Glasgow. The Sunday Herald article spoke to a system that is increasingly chaotic. Symptoms of that chaos include the one and a half years that Glasgow, alone in the UK, did not have an initial accommodation facility where everyone could access the new services upon being newly dispersed to the city. In practice, that has meant that not all get their orientation briefings or health screenings done, with delays in accessing financial assistance.
Keith Vaz (Leicester East) (Lab)
I congratulate the hon. Gentleman on securing this important debate. I have visited some houses in Glasgow at the invitation of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald). As the hon. Member for Glasgow South West (Chris Stephens) knows, the Home Affairs Committee is conducting an inquiry into this matter.
Does the hon. Gentleman agree that one issue that should be explored is the dispersal arrangements? The dispersal map of asylum seekers shows that they are concentrated in certain urban areas, but the whole country should take a fair share of asylum seekers.
Chris Stephens
I thank the right hon. Gentleman for his intervention. He is right that we must look at dispersal. It is to Glasgow’s credit that the city council decided 16 years ago to tell the UK Government that it was happy to take asylum seekers. We in Glasgow are proud of that approach, but the dispersal issue needs to be looked at.
As the Sunday Herald article detailed, there is persistently high use of hotels and hostel-like accommodation for asylum seekers across the board. We know that the numbers in such accommodation quadrupled between November 2015, when the figure was over 100, and May 2016, when it was over 400. This trend shows no sign of weakening. People are being lost in the system and not getting the safe and secure housing that this approach is ostensibly there to ensure.
We appreciate that priority is being given to taking newly dispersed families out of hotels and hostels as soon as possible, but we have been aware of cases over the past few months of families being stuck in such accommodation for six or seven weeks, with the consequence that they feel isolated and unable to put down roots and their children are not entitled to enter school. These specific issues are underscored by persistent reports of people being placed in unsuitable and often overcrowded accommodation and being shunted around Glasgow at short notice and between Manchester and London with insufficient regard to their wellbeing and needs, as the Sunday Herald piece suggested. With an increase in numbers, the system is struggling to cope.
The Scottish Refugee Council and other agencies, such as the British Red Cross, Govan Law Centre and many others, are finding that too often a crude housing-led approach prevails and the needs of individuals and families are a second or third consideration. What action has the Minister taken since the Sunday Herald article was published? What steps has he taken to ensure that these problems do not persist? Will he tell us what actions or penalties are in place for breaches of contract and poor performance by contractors? Can he remind us what penalties or mechanisms are in place that would result in a contractor being removed from provision of these services?
I want to touch on gender and asylum support. One persistent casualty of the housing-led approach is the visibility of women seeking protection. As the Scottish Refugee Council has articulated many times, the asylum support regime effectively silences women. In a recent written answer, the Minister stated that he had no plans to generate or publish asylum support statistics by gender. We think that is an unacceptable omission, which amounts to the UK Government stating that gender is an irrelevant or insufficiently important part of identity to merit analysis or publication in asylum support policy. In my experience of representing constituents, I believe that is a crucial factor.
Just on the asylum accommodation issue, many agencies and groups have documented that women have, inter alia, felt very unsafe in shared flats with no locks, including on bedroom doors, and that housing officers have entered the accommodation unbidden. There is a lack of women-only initial accommodation, and it is unclear what competence and training operational and management staff have in gender and preventing violence against women. Will the Minister reconsider implementing a gendered review of asylum support? Will he publish different statistics for women asylum seekers? Will he look into how women have been treated, particularly in respect of privacy issues?
There is no list of registered social landlords, but there is an issue relating to whether accommodation meets the regulations under the Housing (Scotland) Act 2010. We assume that Orchard and Shipman is not registered under the housing regulations and is therefore not a registered social landlord. That leaves the question of who, under the 2010 Act, has general consent to provide housing services. The regulation of asylum seeker housing seems to be non-existent. I wrote to the Scottish Housing Regulator, who could not tell me who was a registered social landlord under the current Act.
Does the Minister have a list of registered social landlords in Glasgow who provide asylum accommodation? Does the Home Office ensure that social landlords provide housing quality that meets the regulations of the 2010 Act, or does it have a different standard? What expectations does the Minister have to ensure that any accommodation provided by Orchard and Shipman meets the standards of the Act?
COMPASS—commercial and operational managers procuring asylum support services—contracts are priced by UK Ministers at such a low level that only large private-sector companies with no footprint or interest in areas of asylum dispersal can afford to bid for them. It is now clear that the Home Office has three current contractors over a barrel and are keen to extend them into 2017-19. I am aware that one contractor has already asked to extend a contract to 2018. Orchard and Shipman has reported that its Glasgow subsidiary is deriving profit from its asylum seeker contracts and many of us have an issue with that. Serco Group announced to the London stock exchange in February 2016 that central Government justice and immigration contracts were marked out as priorities, both globally and in the UK.
We believe that a different approach would benefit local statutory bodies and communities, and those in the accommodation. The Home Office should seriously consider at least a substantial revision of the outsourcing approach to the provision of housing. The Home Affairs Committee’s asylum accommodation inquiry is one place where I hope that that argument will be taken on. However, it will not be effective if the Home Office decides, inappropriately, to extend the COMPASS contracts to 2019 before the Committee reports and its recommendations are considered. I hope that the Minister will confirm that there will be no extension of contracts until then.
There is clear evidence in our great city of Glasgow of asylum seekers and EU nationals being in fear of their future following the Brexit vote 10 days ago. We are dealing with our fellow human beings, who are fleeing oppression and persecution. Many of them are women fleeing sexual violence. Many, like us, had professions and careers, but are now seeking sanctuary and safety. We have a duty of care to our fellow human beings, and we must treat them a lot better than we do. I hope we can treat asylum seekers as we ourselves would like to be treated if we were in their situation. I look forward to the Minister’s response.
Mr Philip Hollobone (in the Chair)
Because of the Divisions, and because the previous debate finished, technically, 22 minutes early, the Minister has until 4.53 pm, although he does not have to use all that time.
The Minister for Immigration (James Brokenshire)
It is a pleasure to serve under your chairmanship, Mr Hollobone.
I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing the debate. I have met him to discuss specific concerns, and the invitation to do so again remains open to him. If he has received specific complaints or concerns from his constituents, or from charities or non-governmental organisations operating in Glasgow about standards of accommodation or related services, I certainly extend my offer for him to contact me and to raise any matters directly, as I have indicated.
I again underline my willingness to continue discussion and dialogue outside the debate this afternoon. If issues are being brought to his attention directly, I want to know whether individual cases are being raised in relation to property standards or otherwise, so that we can ensure that they are dealt with effectively and promptly, not just in terms of the contracting arrangements we have with Serco, but equally to enable asylum seekers using accommodation in Glasgow to be reassured about the seriousness that we attach to complaints when they are made.
May I make a general point about intimidation or hatred towards anyone as a consequence of their background, faith, colour or creed? I take a very uncompromising approach to that: it is utterly unacceptable. We are working with the police here and with Police Scotland to ensure that we have a clear understanding of incidents that may occur. Equally, we want to give a strong reassurance about the approach that this Government take, working with the devolved Administrations and in particular the Scottish Government, who have the devolved responsibility in relation to crime. All right hon. and hon. Members present in the debate would want to give the very strong response that, whatever our feelings about the result of the referendum, that does not provide any excuse, any succour or any opportunity at all to sow division or hatred in the United Kingdom or the countries that make up the UK. We all stand united in confronting and combating any of that, wherever it may occur.
Chris Stephens
I thank the Minister for those comments; I agree with him wholeheartedly. Is it the Government’s intention to meet organisations such as the Ethnic Minorities Law Centre in Glasgow, which represents EU nationals and asylum seekers? They are reporting to me, as a Glasgow MP, the fear that asylum seekers and EU nationals have. Given the message the Minister is sending, it would be very useful if the Government wrote to such organisations or met them. I hope he will consider that.
James Brokenshire
If the hon. Gentleman has details of groups or organisations that are making those representations to him, I will certainly be pleased to follow up on that. There are regular visits to Scotland by representatives of UK Visas and Immigration, which has the lead responsibility on these issues. I had officials there last week in relation to a number of these issues. However, if the hon. Gentleman is picking up specific concerns and if there are groups that he thinks there would be a shared value and benefit in meeting in order to understand those concerns and to telegraph the clear message that I hope I have given in this debate, I will of course be very willing and happy to follow up on that. I am grateful to him for his intervention in that regard.
I underline the fact that the UK has a proud history of operating an asylum system that looks after individuals seeking refuge from persecution and we are committed to providing safe and secure accommodation while asylum cases are considered. I am very grateful to the city of Glasgow for its participation in the asylum seeker dispersal scheme and for the support it has provided over many years to asylum seekers.
I welcome this debate. There have been a number of debates on issues relating to support for asylum seekers. As I have already said, I certainly want to continue the dialogue and ensure that we are getting feedback from colleagues as well as from non-governmental organisations and others that take an interest and are engaged in these matters.
For those asylum seekers who do not have independent means of support, the Government provide access to support services in accordance with the obligations of the 1951 United Nations convention relating to the status of refugees—the Geneva convention. The COMPASS contracts provide asylum seekers who claim to be destitute with full-board accommodation, in so-called initial accommodation, while their means are assessed, and then with accommodation throughout the United Kingdom—dispersed accommodation—and a small weekly allowance of £36.95 per person per week for food and other essential expenses while their asylum application is considered.
Our existing policy is aimed at ensuring an equitable distribution of asylum seekers and refugees across the country, so that no individual local authority bears a disproportionate share of the burden.
James Brokenshire
I will of course give way, but let me just finish this point. Historically, Glasgow has been the only local authority area in Scotland to take part in asylum seeker dispersal. However, we are working with COSLA—the Convention of Scottish local authorities—and local authorities in Scotland to encourage other areas to participate. Similarly, my officials are meeting and working with local authorities across the United Kingdom to broaden the number of areas in which supported asylum seekers will be accommodated. I now give way to the Chair of the Home Affairs Committee.
Keith Vaz
As the hon. Member for Glasgow South West (Chris Stephens) said, Glasgow is taking a very large proportion of the asylum seekers—I think it was top of the list for the entire United Kingdom that the Select Committee published in our last report. The Minister’s own local authority and other local authorities in the south of England are just not doing enough. I know that he is encouraging them, but why can they not do more to relieve the pressure on local authorities such as Glasgow?
James Brokenshire
As the right hon. Gentleman knows—he has questioned me on this issue in the Home Affairs Committee previously—we have a voluntary arrangement for dispersal in respect of asylum seekers. Yes, we are taking steps to encourage more local authorities to contribute and provide that support. It is important to see this in the context of both the really positive support that many local councils across the United Kingdom are providing for the Syrian vulnerable person resettlement scheme and the pressures on some local authorities in respect of asylum-seeking children. The right hon. Gentleman will also be aware of the separate dispersal arrangements that we announced last week in relation to that. Therefore, different councils are contributing in a number of different ways. It is important to recognise the different ways in which many local councils are providing support for refugees and asylum seekers, whether they be adults or children, with the different challenges that each group presents. It is important that we provide appropriate support for them.
In Scotland currently, the only dispersal area is Glasgow. The hon. Member for Glasgow South West recognises that, and we have had discussions about it previously. A meeting took place in February with other local authorities in Scotland to seek their consent to widen the dispersal of asylum seekers beyond Glasgow. Follow-up meetings have explored these issues further, but I certainly encourage the hon. Gentleman to continue to work with the Home Office and the Scottish Government to ensure that we are working together to encourage more local authorities in Scotland to recognise the need to extend that beyond Glasgow.
I pay tribute to the work that many local authorities are already doing in providing support for Syrians arriving under the vulnerable person resettlement scheme. In some ways, that is unlocking many more local authorities, which recognise the contribution they can make and the role they can play. That is a conversation that I am very keen to continue, to ensure that we are indeed looking at the particular concentrations in Glasgow and seeing how we can work together to extend dispersal into other parts of Scotland.
Accommodation standards were the core part of the hon. Gentleman’s contribution. The Home Office is working with its contractors to ensure that all the accommodation provided to asylum seekers is safe, habitable and fit for purpose and that asylum seekers are treated with dignity and respect, taking account of their vulnerability. We are also ensuring that the system is effective and efficient and provides value for money for the taxpayer. I am of course concerned about any allegations of substandard accommodation or misconduct or mistreatment of asylum seekers by our staff or the staff of any contractors. Such allegations are taken extremely seriously and investigated thoroughly.
The suppliers’ housing inspectors are required to visit each property at least once a month and when asylum seekers first arrive at, or depart from, a property. The Home Office also inspects properties and will inspect one third of the properties in the Scotland and Northern Ireland contract area over the course of this financial year. Where Home Office inspections find that accommodation does not conform to the required standards, contractors are provided strict time limits to remedy the defects.
I can assure the hon. Gentleman that the Home Office can, and does, impose penalties on any provider who fails to meet the terms of their contractual agreement. Between April 2015 and April 2016, four service credits were applied for accommodation standard issues in Glasgow. In those cases, the required improvements were made but not within the prescribed timescales; therefore service credits were applied.
The Home Office has improved its inspection regime over recent months not only to ensure that the accommodation standards are being complied with, but to ensure that asylum seekers have opportunities to raise any concerns they have or report any complaints that our providers have not resolved to their satisfaction. This was a core part of the review that we undertook to ensure that we were getting full feedback from service users and therefore not simply relying on providers to provide that feedback, and also to engage with NGOs and charities. That is something that I remain committed to doing to ensure that we get that further, full feedback.
Chris Stephens
I thank the Minister for giving way; he has been most generous and we may well get to 4.53 pm. In relation to inspections, one of the big concerns is that asylum seekers are unable to lock their own accommodation and have privacy issues. That is a key concern, so will the Minister look at that and also ensure that inspections are done in such a way that asylum seekers are not left frightened of seeing someone with a uniform, which will mean something different to them from what it would to us?
James Brokenshire
I am very happy to look into the issue that the hon. Gentleman has highlighted. If there are concerns about security, assurance or safety, those are of course the sorts of issues that I would want to know are being investigated, so that those in receipt of accommodation have confidence in their surroundings. Equally, I will certainly reflect upon his point about the manner in which investigations and inspections are conducted.
One of the points I was concerned to ensure we reflected upon properly was the manner in which inspections are conducted, so that service users can be confident that they can report problems to those who are inspecting without fearing some comeback to themselves and so that there is no barrier to that taking place. That is why I made the point about talking to NGOs and charities. Sometimes service users do not have that confidence, for whatever reason—whether that be from past experiences of contact with authority figures in their own countries that they have fled from—but if there are issues and they feel confident to be able to report them, we can get the appropriate feedback to understand whether issues are emerging. On that point, it is important to stress that the Home Office has established an advisory board with key NGO stakeholders to better capture the views and concerns of the asylum seekers we accommodate.
The hon. Gentleman raised the point about hotels as well. Under the COMPASS contracts, providers are able to use contingency accommodation to cope with high levels of demand. Again, I have made it clear to providers that this is only ever acceptable in exceptional circumstances and asylum seekers must be moved to appropriate longer-term accommodation as soon as possible. If there has been that accommodation in hotels in Scotland, it is possible that the movements he described may be to move asylum seekers to longer-term, more dispersed accommodation, which is obviously something I would want to see, in terms of overall stability for them. We have been working with the providers on that and have seen recent improvements.
Chris Stephens
Will the Minister look specifically at the issue in relation to women asylum seekers? I am thinking about asylum seekers who are unable to get what is known as an HC2 form for healthcare and getting access to a GP. This is a real issue for women asylum seekers, particularly those coming into the country fleeing sexual violence, for example. I would be obliged if the Minister looked specifically at that issue.
James Brokenshire
If there are some further specifics, I would be grateful if the hon. Gentleman wrote to me or provided the details. I was aware that towards the end of 2015 there were some temporary issues with attendance at NHS appointments, following the closure of the initial accommodation block and an increase in the number of service users. My understanding was that these issues had been addressed and all asylum seekers are triaged by the NHS for health screening when they arrive, but if there are emerging issues or if there is a specific point about the form that he highlighted, I would be very pleased to look into that for him.
Keith Vaz
I am grateful to the Minister for giving way a second time; he is always generous in these debates in taking interventions. Taking him back to his point about hotels, of course they sometimes have to be used in emergency situations. Does he agree that it is preferable in those circumstances that the entire establishment, or a wing of the establishment, is used, rather than parts of an establishment? There is evidence that it causes an enormous amount of resentment on the part of the normal paying customers in a hotel when asylum seekers are present. Indeed, the asylum seekers themselves feel disadvantaged, because they are getting different meals to those who are normal hotel-goers. This should be exceptional, but there is a crisis in asylum accommodation and it does have to be dealt with.
James Brokenshire
I am grateful for the right hon. Gentleman’s intervention. There are examples where we have sole-use hotels, as well as examples where rooms have been taken as part of the continuing use of the hotel. My focus is on seeing those numbers come down and moving to a position where there is not a need for reliance on hotel accommodation, and is therefore on looking at that overall capacity issue. That also comes back to his point about widening and looking for new areas to establish dispersed accommodation and working with providers to find ways to get further access. A significant amount of work has been taking place on that over the course of this year, and there is continued work engaged on that.
Where there is a need, at times, for hotel accommodation to be used, whether that be shared-use or not, it is important that providers do that in a respectful way, ensuring that no issues of stigma are attached. I am obviously familiar with the discussions that the right hon. Gentleman and I have had on other things relating to issues of stigma. Again, I take a firm view on ensuring that we do all we can to prevent any of those matters from arising. That is a clear point that we have underlined to our service providers on the approach they take. I suppose what I would say to him is that I recognise the points he makes about sensitivity and the appropriate use of accommodation. We take that into careful consideration and we make those points to the providers.
The hon. Member for Glasgow South West also highlighted the potential extension of the COMPASS contracts. Officials are continuing to carefully consider the extension of existing contracts in accordance with their terms. The timing of any decision to extend the COMPASS contracts is subject to ongoing commercially sensitive discussions with providers. In deciding whether to extend the contracts, the Home Office will take a number of things into account, including the performance of the contracts and the value for money they offer to the taxpayer.
The Government are committed to doing everything necessary to protect the rights of asylum seekers and provide them with the safe and secure accommodation they deserve. Any complaints relating to the standard of accommodation will be investigated promptly and necessary remedial action will be taken. In closing, I reiterate my thanks to Glasgow for the proud role it has played in welcoming and supporting asylum seekers over many years.
Question put and agreed to.
Resolved,
That this House has considered the provision of services for asylum seekers in Glasgow.
Dormant Betting Accounts
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Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Mr Philip Hollobone (in the Chair)
In the third part of our Scottish National party afternoon, we now move on to the important subject of dormant betting accounts. I call Ronnie Cowan to move the motion.
Ronnie Cowan (Inverclyde) (SNP)
I beg to move,
That this House has considered dormant betting accounts.
It is a pleasure to serve under your chairmanship, Mr Hollobone, and I am grateful for the opportunity to lead this Westminster Hall debate. Members here today will know that problem gambling continues to blight too many communities across the United Kingdom. Like alcohol or drug addiction, gambling has the terrible power of being able to destroy a person’s life and inflict financial and emotional misery on victims and their families.
In recent years, there has been greater recognition of gambling-related harm and the damage that it can cause. Despite the greater awareness and increased funding for support services, it has been suggested that there are still around 450,000 problem gamblers in the UK. The sheer scale of the problem makes it clear that the UK Government have a responsibility to do more. I have devoted much of my time as a parliamentarian to pursuing this issue. I believe that the money contained in dormant betting accounts could, and should, be used as an additional source of revenue for organisations to assist people with gambling-related harm.
Julian Knight (Solihull) (Con)
I congratulate the hon. Gentleman on securing this important debate and I share his concern about the devastating impact of gambling addiction, but does he recognise that the gambling industry has started to take some measures in that respect, such as the “When the Fun Stops, Stop” campaign, which is very high profile? Betting is a private transaction between an individual and a bookmaker and we must be very careful about setting a precedent for the state confiscating private property, even in such a worthy cause.
Ronnie Cowan
I have no issue with what the hon. Gentleman is saying. I agree that “When the Fun Stops, Stop” is a very strong campaign led by the gambling organisations, and they should take credit for that. I am not here to lambast gambling as a concept; what we are looking at is problem gambling and facilitating a trigger that I believe we can use to help people who find themselves in that unfortunate situation.
Dr Paul Monaghan (Caithness, Sutherland and Easter Ross) (SNP)
Does my hon. Friend agree that gambling and debt are often symptomatic of economic and social decline and that the creative use of dormant bank accounts could benefit and bring some relief to such communities ?
Ronnie Cowan
I absolutely agree with my hon. Friend and colleague, and hopefully I shall shine some light on that later in my speech.
Why do dormant betting accounts exist? When I was a boy in the ’60s, I used to enjoy watching the racing on the television with my Uncle Charlie. We would spread out the pages of the newspapers in front of us and gamble. We would watch the racing, pick our horses and calculate how much to bet. Spread betting taught me more about checks and balances than my economics teacher ever did. Because Charlie was a regular gambler, he had an account with the local bookies. From the comfort of his living room he phoned the bookie and placed his bets. Charlie would drop into the bookies during the week and pay his debts or pick up his winnings. The bookie knew Charlie, and the books were balanced weekly.
As technology has advanced, so has our ability to access gambling, which we can do from our phones or tablets at any time of the day. We also now live in a more disposable world. People once worked their entire lives at the same company, lived in the same street all their married lives, banked with the same bank and went to the same place on holiday every year. Now it is easier to change, and we are encouraged to change and move and to take up new offers.
Betting companies tirelessly promote free bets and other generous offers to encourage new customers to sign up. It is not unusual for people to have half a dozen or more accounts with different companies to take advantage of those offers. People can only remember so many user names, passwords and accounts, and eventually, they lose interest or forget about an account that may only have a few pounds in it. Over the passage of time, the accounts become dormant, but do we know how many accounts there are and do we know how much money they contain? The answer to both of those questions is no.
In preparation for the 2010 Department for Culture, Media and Sport report, companies were approached to give a financial breakdown of the amount of money involved in dormant or similar accounts. A majority refused, either on the grounds of commercial confidence or because they claimed to be unable to produce the figures. Betfair provided data about the size and scale of dormant betting accounts, but on a confidential basis. Under the current arrangements, dormant betting accounts are simply reverted to the company profit line after a specified amount of time.
Julian Knight
Will the hon. Gentleman clarify what he defines as dormant betting accounts? For exactly how long does he think there has to be no activity on the account for it to qualify as dormant?
Ronnie Cowan
I shall certainly go on to do that because it is an area of some concern. There is no definition of that as yet and I think there should be.
Companies have different definitions of “dormant”. For instance, Gala Coral define it as 400 days of no activity whereas Ladbrokes define it as 12 months. The report commissioned in 2010 for the Department for Culture, Media and Sport proposed that when a betting account became dormant, 25% should be added to the company profit and 75% should be transferred to good causes. The report also concluded that if a voluntary scheme could not be established with betting companies, legislation should be enacted requiring them to contribute 75% of the unclaimed amount. Dormancy in this instance was defined as 18 months of no activity and the money was only taken once all efforts had been made to contact a customer regarding their account.
In April this year, I wrote to Ladbrokes, Gala Coral, Paddy Power, William Hill and Betfred regarding their policy towards dormant betting accounts and problem gambling. Unfortunately, Betfred and Paddy Power did not respond to my letter. William Hill, Gala Coral and Ladbrokes gave me the courtesy of a response, but all strongly rebuked my statement that the issue of gambling is one that blights a number of communities and households.
The response from Ladbrokes was perhaps the most insightful for people wishing to learn how gambling companies view their own services. It said that
“rather than a blight on local communities and individuals as you suggested in your letter, I strongly believe that our shops are a real part of their local areas. Many of our colleagues know their customers by name and face and our shops often provide a social outlet for customers to meet other people, over a cup of tea or coffee, whilst having a flutter on their sport of choice.”
Betting companies may paint a rosy picture of gambling as a harmless pastime, but that is a misconception. The reality is that the proliferation of betting shops on our high streets is seen by my constituents as an unwanted symptom of economic and social decline.
Online betting accounts are also part of the problem, making it easier than ever for problem gamblers to become bankrupt, fall behind on their mortgage payments or experience divorce or family troubles because of addiction. Is that the experience of most gamblers? No, it is not. Do the majority of punters bet responsibly? Of course they do. The experience of the problem gambler—that is who we are seeking to help—and the wide-reaching ramifications of their actions far outweigh the experiences of the majority of punters who visit the bookies for a cup of tea and a £2 bet. For example, I am aware of one problem gambler who stole almost £850,000 to fund his addiction. The Gambling Commission concluded that Gala Coral had failed in its duty to prevent money laundering and problem gambling and added that the company’s safeguards against both were inadequate. Gala Coral agreed to pay back £850,000 to the victims of the crime and to pay £30,000 to the commission for the cost of the investigation.
Some will say that enough has already been done to tackle problem gambling and that adding money from dormant betting accounts is not necessary. They will highlight the financial contribution that betting companies already make to organisations that assist with gambling addictions. Figures released by the Gambling Commission show us why we should be sceptical of those who say that enough is already being done. Last year, British gamblers lost £12.6 billion and losses have risen every year since April 2011. Online betting accounted for a third of the total losses. In 2014-15, the charity GamCare reported an 18% increase in calls from problem gamblers and a 39% rise in clients receiving treatment.
We can conclude without hesitation that betting companies have no interest in voluntarily signing up to a dormant betting account scheme such as that envisaged in the 2010 Government report. Their view has been unambiguously stated through their unwillingness to outline how much money is in dormant accounts and their hesitation in engaging with me on the subject.
In conclusion, I hope that the Minister takes away three points from my contribution. First, the UK still has significant and worrying levels of problem gambling. Secondly, betting companies have no interest in voluntarily signing up to a scheme as proposed in Don Foster’s 2010 report. Thirdly, only the UK Government have the power to ensure that good causes benefit from the potential funding locked in dormant betting accounts. The UK Government have a duty of care and the time for paying lip service is over. It is time for the UK Government to act on the recommendations laid out in the 2010 report, and in turn help the many individuals and families who have been affected by gambling-related harm.
Mr Philip Hollobone (in the Chair)
Because of the injury time carried over from the previous debate, this debate can, in theory, go on until 5.53 pm. The recommended limits for the Front-Bench spokespeople are five minutes for the Scottish National party, five minutes for Her Majesty’s Opposition and 10 minutes for the Minister, but obviously we have a lot of time to play with.
Patricia Gibson (North Ayrshire and Arran) (SNP)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Inverclyde (Ronnie Cowan) on securing this important debate, and I declare an interest as somebody who spent seven years of her life working in high street betting shops.
The potential negative effects that gambling behaviour can have on those who develop an addiction is an issue that does, and should, cause great concern.
Julian Knight
I understand the concerns about problem gambling, and I think we all share those concerns. However, for a moment, we ought to consider the fact that the gaming industry creates thousands of jobs, and 70% of the population take part in some form of gambling during the year without any poor side effects. Gambling is not always a negative story.
Patricia Gibson
I take on board the point that the hon. Gentleman makes so well. He encourages me to jump forward to something that I was going to say later, which is that, although most people gamble responsibly, we have to recognise that in some cases gambling causes huge problems and distress not just to families but to communities. The proposal to use dormant betting accounts to help deal with the damage that gambling often causes for too many people has something of a beautiful synchronicity to it. I take nothing away from the fact that gambling, for most people, is an enjoyable pastime. One thing does not necessarily preclude the other. We can recognise the benefits and the negative consequences of gambling.
The problems caused by gambling should make us pause for thought from a public health and policy perspective. Indeed, the prevalence and ease of access to gambling should give us all cause for concern, even those of us who do not have a particular problem with gambling. Gambling behaviour is increasingly a subject of public health and policy interest, and there is widespread recognition that some people who engage in gambling activity can experience harm. I think we can all agree that the deregulation of gambling in 2005, allowing online gaming companies to advertise on UK media, gave rise to potentially worse problem gambling while, at the same time, offering greater leisure opportunities for those who enjoy gambling in a healthy spirit.
The online gambling industry is worth nearly £2 billion a year in the UK, which shows that it makes a significant contribution to our economy, but we must not let that blind us to the difficulties that it throws up and that we have to deal with. There is plainly a need for more education and support, and the matter of dormant betting accounts has already been visited in this place.
There are a number of reasons why dormant betting accounts arise. It might be that the account holder has died or has decided no longer to engage in gambling at all. Given the current competitiveness in the market, customers may regularly transfer their credit between betting accounts held with different companies, meaning that old accounts can easily be forgotten.
In the event that a betting account falls into a dormant state, betting companies will try to contact the customer to make them aware of it. However, companies will often use the dormant account as a way to coax customers back with promises of free bets. In the event that the customer does not reactivate their account, the money left in the dormant account reverts to the company’s profit line after a period of time through an accountancy procedure. For the information of the hon. Member for Chester on the definition of a dormant account—
Julian Knight
I think the hon. Lady meant me when she said the hon. Member for Chester.
Julian Knight
No, that is very perceptive as I was actually born in Chester.
Patricia Gibson
That must have been what I was thinking of. I apologise to the hon. Gentleman for changing his constituency without consulting him.
For the information of the hon. Member for Solihull (Julian Knight), the definition of a dormant account may vary depending on who is asked. If we were to move the matter forward, that is an argument we could have. Would an account be dormant after, for example, 12 months or 18 months? There is a debate to be had about that. Today, that is beside the point because we are talking about the principle of dormant accounts, not ones that have simply been unattended for a few months.
Craig Mackinlay (South Thanet) (Con)
Has the hon. Lady gathered any evidence as to exactly what steps the betting companies take to locate the person who holds the dormant account? It is often the case that people deposit from their credit or debit card, and can withdraw money at will. Betting companies hold people’s debit and credit card numbers. In the hon. Lady’s estimation, would it help if funds were just returned automatically after a certain amount of time, if that card is still live? Might that obviate some problems we are discussing?
Patricia Gibson
It might obviate some of the problems but, as the hon. Gentleman will be aware, debit and credit cards also fall into disuse. I own credit cards that I have not used for months or years and that I probably could not use now. Cards get changed and personal identification numbers get updated, so I am not sure that that would be a permanent way forward. The problem is that, when betting companies make contact with people who have dormant accounts, it is very often a lever to encourage them to gamble more. I am not sure that that is helpful.
The way forward is to use the funds from accounts that have fallen dormant to do some good for those who have difficulties with gambling. To be quite honest, I cannot see what is controversial about that. Hon. Members might throw up all sorts of issues such as privacy and the intrusion of the state but, in the long term, we are talking about doing something for the greater good.
Julian Knight
The key point is whether the amount of money required to administer such a measure would swallow up virtually all the money that is brought back from the dormancy arrangement. There are no definable figures, so a good starting point would be to pressurise betting companies to find out exactly how much money is in dormant accounts. We would then know exactly what good that money could do.
Patricia Gibson
The hon. Gentleman makes an interesting point; he talked earlier about the voluntary participation of the betting industry. To establish the exact sums involved—which I believe are significant, although I could be wrong—we really need the betting industry on board. Companies are quite reluctant to go down this road, for reasons that I am sure they could explain well enough themselves. The proposal has some merit, but how much money are we talking about? Let us have that conversation. Why would anybody be afraid or reluctant to have that conversation? I leave that thought hanging in the air for the hon. Gentleman to mull over at his leisure.
I have no doubt that the sums held in dormant accounts may be surprisingly large. Why do I say that? For the National Lottery, which allows 180 days for people to claim their prize money, unclaimed winnings, although not the same as dormant accounts, amounted to 1.5% of sales in 2008-09. That is not a high proportion, but it amounted to £78.2 million, a sum that any charity or group of charities would be delighted to have. We are talking about significant sums of money that could do much to mitigate the harm, damage and distress that gambling addictions all too often cause. We are not talking about a hill of beans; we are talking about quite a windfall—pardon the pun—for gambling charities. In 2009-10, unclaimed pool betting dividends on UK horse races totalled £944,000. Again, such dividends are not the same as dormant accounts, but the figure indicates the kinds of forgotten sums that could be put to better use rather than sitting in some account or being used on somebody’s profit line.
Of course, as with any proposed change, we will have naysayers, not least in the gambling industry, telling us that it cannot be done. They will say, “This is the intrusion of the state. Where is people’s privacy? Where are people’s rights? We cannot ensure that the money will minimise gambling-related harm.” Why not? What is the obstacle here? I know the gambling industry is an obstacle, but surely policy cannot be made due to pressure from companies with a vested interest in the status quo. Whenever someone makes a proposal on any aspect of public life, there are always a hundred reasons to say no, but in this place surely we can look to the greater good and find enough reasons to say yes.
We are not starting from scratch. A way forward can be found by implementing the findings of previous reports, as mentioned by my hon. Friend the Member for Inverclyde, in the form of a voluntary scheme for high street betting shops, while requiring online and remote gambling operators to have their accounts annually audited to identify accounts that have been unused for, say, 18 months—the amount of time is up for debate. As a starting point, the operators could then provide 75% of the money in those accounts for good causes. What could possibly be wrong with that? Using money left in dormant accounts to help fund organisations working to minimise gambling-related harm would have a beautiful synchronicity that I find quite compelling, and I can honestly see no downside. All that is required is political will.
Mr Philip Hollobone (in the Chair)
Ronnie Cowan gets two minutes at the end to try to sum up the debate, which I am sure he is looking forward to. I am looking forward to the next speech from the hon. Member for Luton North. What a great day it is to see such a stalwart of the Back Benches propelled on to the Front Bench of Her Majesty’s Opposition.
Kelvin Hopkins (Luton North) (Lab)
It is a great pleasure to serve under your chairmanship, Mr Hollobone. I will try to live up to your flattery—it may have been a compliment, but I feel flattered.
I congratulate the hon. Member for Inverclyde (Ronnie Cowan) on securing this debate. I want to call him my hon. Friend, because he is a friend. Although he is not a party political friend, we are both members of the Select Committee on Public Administration and Constitutional Affairs and we have spent many happy hours discussing matters on that Committee. The hon. Member for North Ayrshire and Arran (Patricia Gibson) made another excellent speech. I agree with both speeches in their entirety, but I will share a few thoughts of my own.
The hon. Member for Inverclyde is seeking effective Government action to address dormant betting accounts, which is a matter of great seriousness. He has, not for the first time, raised the issue of problem gambling—compulsive or addictive gambling—about which I, too, have been concerned for many years. I sympathise with his view. I am, of course, old enough to remember the first betting shops opening in the 1960s; later in that decade the first UK inland casino, Caesars Palace, opened in my Luton North constituency. There has since been progressive relaxation of regulations governing gambling establishments, the use of fruit machines in places of entertainment, and so on.
The last Labour Government were pressed by the gambling industry to allow the opening of many mega casinos across the country, which I and many others in my party opposed, and the proposal was largely seen off by the House of Lords. But that Government made the installation of fixed odds betting terminals possible. I think I was the first person to use the term “crack cocaine of gambling” in the Chamber to describe FOBTs, although I did not coin the phrase.
I occasionally gambled moderately in my youth. I bet a shilling each way on a horse or two, which shows how old I am. One of my dearest friends, sadly now deceased, wisely observed that gambling is a pleasure for which he usually had to pay. We would do rather better if we all had that attitude. However, that sensible attitude is not given to all gamblers. The opportunities and temptations to gamble dangerously have increased over the decades, and gambling addiction is now an enormous social problem. We need Government action and legislation to reduce harmful gambling, and I do not accept the spurious notion that freedom means that the state should not involve itself in such matters. The state has a duty to help protect us from danger, as with alcohol and other things.
Julian Knight
Will the hon. Gentleman enlighten us as to what other prohibitions he would like to see introduced?
Kelvin Hopkins
I will address some of them later, but I will not be specific. I have only been in my job for a few days, and I have yet to be fully briefed on where my party stands on this matter, so I have to be careful—I suspect that I would go further than my party might like—but I hope to persuade my party to pursue proper action. I will not specify that action today but, so long as I am in this job, I will seek to persuade my party.
The notion of freedom is overplayed. We were the last country to make wearing a seatbelt compulsory in cars and, of course, a lot of people died because they did not wear their seatbelt. We all started wearing seatbelts after it became compulsory, and hundreds of lives have since been saved every year. That is just one of many examples where the state intervenes to protect us from ourselves and to make us more sensible than we would otherwise be. Most of us are sensible, but some people are not and require a little encouragement from the law.
Fixed odds betting terminals are, of course, responsible for much of the most problematic gambling in our communities. As gambling has been progressively relaxed, we have seen the problems increase. FOBTs continue to cause immense damage to people’s lives, destroying families and driving some of our poorest people into penury and massive debt.
Today, we are discussing what should be done with the considerable sums left in dormant betting accounts and suggesting practical ways of using those sums for beneficial social purposes. One suggestion is to find appropriate ways of using the moneys to help support problem gamblers, and detoxing is one way in which they could be helped. There should be a suitable public agency—here we go, perhaps my left-wing views are coming out now—or public fund to which these moneys could be transferred with appropriate safeguards. If all dormant betting accounts were required by law to be declared and specified in the accounts of gambling companies each year, we would know how much those accounts were worth. We could then decide what to do with them. The sums might be very small, and it might not be worth doing anything with them because the administration would be too expensive, but like the hon. Members for Inverclyde and for North Ayrshire and Arran, I suspect that the sums will be considerable—they will be in the many millions and possibly even billions.
The 2010 Department for Culture, Media and Sport report by the former right hon. Member for Bath, Don Foster, who has now been elevated to the other place, suggested that new bodies should not be created. Although I applaud his good work, I beg to differ. A publicly accountable body that operates transparently could provide a useful and secure home for such dormant account funds. Former ownership could be registered with all necessary and available details so that if the moneys were ever claimed, they could be returned to the rightful owners, but many owners will have forgotten or lost the money, or died or whatever. Considerable sums could be collected and used for beneficial public purposes. Support for sporting activities, especially for the young, would be another obvious use. No one would lose, and claims by rightful former account owners would be honoured.
Julian Knight
The hon. Gentleman says that no one would lose, but surely if money is taken away from companies, the employees and the shareholders lose?
Kelvin Hopkins
Well, yes, profits might be dented a bit, but I doubt that employees would lose, especially if they were properly represented by trade unions, as many of them are. I am frequently lobbied by members of my own union about their jobs in local casinos. It is possible that profits might be affected by the interest earned on such accounts, but the money could be used for good social ends rather than being wasted through lost opportunity costs.
Legislation would be required, of course, to facilitate such a system and require bookmakers and others to release the funds, but I see no downside for the public in what I suggest. I hope that these thoughts take hold at least within my own party, and hopefully with the Minister too, who I know is socially concerned. I hope that she, like me and the Scottish National party Members, is concerned about the damage caused to many ordinary people by dangerous gambling. I do not wish to say any more. Perhaps in another debate I might branch out rather further into my interventionist approach to policies to make people’s lives better and safer.
Mr Philip Hollobone (in the Chair)
We look forward to that. Meanwhile, in this debate, we can in theory go on until 5.53 pm, but we do not have to.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Tracey Crouch)
On day two after returning from maternity leave, I already have the honour and pleasure of serving under your chairmanship, Mr Hollobone. I place on record my thanks to my colleague and right hon. Friend the Member for Bexleyheath and Crayford (Mr Evennett) for covering my portfolio for the past five months. I also take this opportunity to congratulate the hon. Member for Luton North (Kelvin Hopkins) on his appointment. We have worked together on many issues, not least due to our shared interest in alcohol addiction. This is an opportunity for him to use his freedom to make policy while nobody is looking. Go for it!
I congratulate the hon. Member for Inverclyde (Ronnie Cowan) on securing this debate. I am grateful for the opportunity to discuss dormant betting accounts and the incredibly important issue of research, education and treatment for gambling-related harm. I thank the other hon. Members who have participated in this debate for their informed and helpful contributions.
Gambling is a legitimate leisure activity enjoyed by many people, but I am absolutely clear that we must do all that we can to protect vulnerable people from gambling-related harm. Hon. Members may well be aware that I am extremely passionate about this issue and have championed it for many years. I will touch on that in more detail in a bit, but first I will concentrate on dormant accounts and unclaimed winnings, which is worthy of consideration in some detail.
“Dormant accounts” tends to refer to online or telephone accounts in which a customer has deposited funds and which have then seen no activity for a set period. That time period, as others have said, varies between operators and can be anything from a few months to more than two years. If the account remains dormant beyond that period, many operators will absorb the funds into their profit line.
The previous Government commissioned an independent report to investigate whether unclaimed winnings or money in dormant accounts could be put to good use. The report was undertaken by Lord Foster of Bath, and acknowledged a number of practical, technical and legal issues that would need to be considered in order to take forward any proposals in the area. One of the report’s key findings was the lack of information about how much cash was lying dormant in such accounts. Further work would need to be explored, either in voluntary discussions with the operators or by introducing a new licence condition via the Gambling Commission, although I heard what the hon. Member for Inverclyde said about his own approach to getting some of that information from the operators.
In my view, any additional money for the treatment of gambling harm must be a good thing. Therefore, I see the potential benefits of directing funds that have been left dormant for a set period of time towards education on gambling-related harm, research into it, treatment and prevention. Members may be aware of the Dormant Bank and Building Society Accounts Act 2008, which allows the Government to direct money left untouched in bank and building society accounts for more than 15 years to good causes.
In March this year, a new independent commission on dormant assets was established to support Government, to identify additional pools of unclaimed assets and to work with industry to encourage the voluntary contribution of those assets to good causes. The commission will report and make recommendations to Government on the feasibility of expanding the dormant assets scheme before the end of the year, and it is considering unclaimed gambling winnings as part of its asset scoping work. Relevant sector organisations, including the Gambling Commission, have provided submissions to the call for evidence. Officials from my Department are in contact with colleagues at the Cabinet Office, and I will stress to them the need to work closely together, to see what progress can be made as part of the forthcoming recommendations on the feasibility of expanding the dormant assets scheme.
I have taken a close interest in gambling addiction for some time. By all accounts, it is the silent addiction—the one that gets the least interest and funding, especially compared with drugs and alcohol. Sadly, there is often a link between gambling addiction and other addictions that might not always be identified. Therefore, as the secondary harm, gambling addiction might well go unnoticed until it is too late. Research indicates that the vast majority of those who gamble do so without problems and overall rates of problem gambling remain low, at less than 1% of the total adult population, yet I am sure that we are all acutely aware of the devastation that gambling addiction can cause. The NHS website estimates that there are nearly 600,000 problem gamblers in Great Britain. I was struck by GamCare’s estimate that for each problem gambler, there may be 10 to 15 other people whose lives are adversely affected by their activities.
The health implications of problem gambling are such that there is a clear overlap with public health policy and practice, especially on mental health issues and substance misuse. I have spoken with my ministerial colleagues in the Department of Health, and officials from that Department and mine have met to discuss the issue. My officials continue to take this work forward.
Returning to funding for gambling-related harm, it would be remiss of me not to highlight that the gambling industry contributed more than £7 million to the Responsible Gambling Trust to fund research, education and treatment for gambling-related harm last year. Under their current licence requirements, all gambling operators must make an annual financial contribution to one or more organisations that perform research, education and treatment. The vast majority choose to contribute to the RGT, the leading charity in the UK committed to minimising gambling-related harm, which aims to prevent people from getting into problems with gambling and ensure that those who do develop problems receive fast and effective treatment and support.
The RGT’s funding priorities are guided by the national strategy advised by the Responsible Gambling Strategy Board and endorsed by the Gambling Commission. I was heartened to see in the national responsible gambling strategy that the gambling industry is now committing significant resources to harm minimisation, over and above its voluntary contributions to the RGT.
Kelvin Hopkins
The Minister mentioned the staggering figure of 600,000 problem gamblers. That requires more than rehab and treatment; it requires measures to prevent people from getting into that situation in the first place.
Tracey Crouch
I agree completely. I know people who have lost everything in their lives to gambling. We must ensure that we work across Government not just to tackle harm but to prevent people from getting into such situations in the first place. The one thing that I know about gambling is that it is pretty indiscriminate in terms of who becomes addicted, much like addictions to alcohol or drugs. When we talk about vulnerable people, and especially when we talk about gambling in general, we often think about deprived communities—I see it in my own community in Chatham—but the truth is that people from any walk of life can become addicted to gambling and lose absolutely everything as a consequence. That is why we have to do much more on prevention and treatment of gambling.
To return to what we are doing in research, education and treatment, it is clear from the strategy that gambling-related harm is a complex area—I know that at first hand from speaking to people in my constituency, from knowing individuals and from reading the letters I have received as Minister responsible for gambling policy. I therefore welcome the work undertaken by the RGSB in the national responsible gambling strategy published in April. For the first time, the strategy was put out for public consultation and subsequently agreed by all those who have implementation responsibilities. It will help the industry, the Gambling Commission and the Government to focus our responses, and indeed our resources. The areas that the strategy will support include setting research priorities and determining best practice in preventive measures, effective treatment and targeted interventions aimed at reducing gambling-related harm. The RGSB is now working with the RGT to estimate the costs of the activities identified in the strategy, and the Government will work very closely with the Gambling Commission and the RGSB on its implications.
The hon. Member for North Ayrshire and Arran (Patricia Gibson) made the point that this is a debate about principle, and she is right. Let me be clear: I am sympathetic to the principle. There are practical issues that need to be discussed, but my view is that every extra pound put into preventing or treating gambling harm is a good thing. I thank the hon. Member for Inverclyde again for securing this debate and other Members for their valuable and informed contributions. I take problem gambling seriously and am deeply committed to ensuring that the gambling industry makes appropriate contributions to these important areas, including funding programmes of research, prevention and treatment of gambling-related harm. It is clear that Members who have spoken so passionately on this issue today and in other debates share that aim.
Ronnie Cowan
I believe we are heading to a vote, so I shall be extremely brief. I welcome the Minister back from maternity leave; I hope the transition is not too difficult for her. I thank the hon. Member for Luton North (Kelvin Hopkins) for his kind words—keep the faith, comrade, despite your new lofty position! I also thank my comrades the hon. Members for North Ayrshire and Arran (Patricia Gibson) and for Caithness, Sutherland and Easter Ross (Dr Monaghan) and those Opposition and Government Members who were here earlier.
I am not lambasting all gambling. The issue is problem gambling, and we have to address it in some way, shape or form. The funds are potentially there to be partitioned off and used responsibly. BetVictor is based in Gibraltar and many other betting companies are based abroad. They have the technology, and their first option must always be to trace the owners of the money. If they cannot do that, let us see what we can do with it in a positive fashion.
I believe I heard words of progress from the Minister. My one reservation is that the Department for Culture, Media and Sport’s report, which was written by the then Liberal Democrat MP Don Foster, was published in 2010 and we do not seem to have moved any further since then. I hope we are now starting to move in the right direction.
Question put and agreed to.
Resolved,
That this House has considered dormant betting accounts.
Written Statement
(7 years, 10 months ago)
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Intelligence and Security Committee: Annual Report
(7 years, 10 months ago)
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The Prime Minister (Mr David Cameron)
The Intelligence and Security Committee of Parliament (ISC) has today laid before Parliament its annual report for 2015-16. I am grateful to the ISC for its report and for the work that has gone into it.
[HCWS58]
Grand Committee
Contracts for Difference (Miscellaneous Amendments) Regulations 2016
(7 years, 10 months ago)
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Lord Bourne of Aberystwyth
That the Grand Committee do consider the Contracts for Difference (Miscellaneous Amendments) Regulations 2016.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, before turning to the detail of these regulations I would like to make clear that this Government’s commitment to delivering the secure, affordable and low-carbon energy supply that this country needs, and which the Secretary of State set out in her reset speech in November of last year, remains constant. The vote to leave the European Union does not change this Government’s approach to these challenges, and we remain fully committed to delivering on our priorities, including encouraging the development of offshore wind where we see great potential—and where good progress is already being made—to get costs down and to deploy at scale. In fact, I met with representatives of the offshore wind industry this morning to discuss the opportunities that exist. The ability to provide good-quality jobs and apprenticeships and to support industrialisation of the whole supply chain, including United Kingdom companies, is just one of the elements that makes the industry attractive. We are proceeding with plans to hold a competitive allocation round for “less established” technologies later this year and hope to announce the details of this as soon as practicable.
The regulations that are the subject of this debate will amend regulations concerning the contracts for difference scheme. The contracts for difference scheme is designed to incentivise the significant investment required in our electricity infrastructure, to keep our energy supply secure, to keep costs affordable for consumers and to help meet our decarbonisation targets. Contracts for difference, or CFDs, give eligible generators increased price certainty through a long-term contract of 15 years. This allows investment to come forward at a lower cost of capital and therefore at a lower cost to consumers. Participants in the scheme bid for support via a competitive allocation, which ensures costs to consumers are minimised. We plan to run the next allocation round in late 2016—details, although not yet published, will be brought forward shortly.
As noble Lords will be aware, the first CFD allocation round was held in October 2014, leading to contracts being signed with 25 large-scale renewable generation projects, at significantly lower cost than those projects would have cost under the renewables obligation scheme. While this scheme is operating successfully, the Government are looking to make a number of minor amendments: first, to ensure that an application for a CFD cannot be made where there is a pending application for a capacity agreement in respect of the same unit, which would potentially distort the allocation for both processes; and, secondly, to improve the efficacy of the allocation process, including by making available non-price bid information to enable evaluation of the allocation rounds—information that would be held by National Grid and would be made available to the Secretary of State.
In order to implement our proposed amendments, four sets of regulations will need to be amended by this instrument: the Contracts for Difference (Definition of Eligible Generator) Regulations 2014; the Contracts for Difference (Allocation) Regulations 2014; the Contracts for Difference (Standard Terms) Regulations 2014; and the Electricity Market Reform (General) Regulations 2014. The instrument under consideration—that is, the Contracts for Difference (Miscellaneous Amendments) Regulations 2016—makes a number of minor and technical amendments to the current regulations. I will aim to run through these technical amendments briefly.
The amendments are designed to improve the effectiveness of the CFD scheme. The most significant of these amendments are: first, to ensure that an application for a CFD cannot be made where there is a pending application for a capacity agreement in respect of the same unit. This will ensure that an applicant cannot apply to participate in the CFD and capacity market auction at the same time and then make a choice of scheme, potentially distorting the allocation for both processes.
Secondly, the regulations set out the connection requirements applicable to generators who connect to the national transmission or distribution system, or to a private network, to align with the allocation framework. These are key qualification requirements for applicants who connect to the grid in this way, and having the detail in regulations will provide greater certainty to generators in advance of a future allocation round.
Thirdly, the regulations refine the procedures that apply when there is a need to delay or rerun the auction or allocation round, leading to greater clarity for investors.
Fourthly, they make a distinction between confidential price information and non-price information in a sealed-bid submission, which will ensure that the Secretary of State is able to obtain information relating to non-price sealed-bid data to evaluate the efficacy of the allocation round—non-price information could, for example, include the ratio of successful to unsuccessful projects or the number of bids in each delivery year.
Fifthly, they enable unincorporated joint ventures to participate in the CFD regime.
Sixthly, they ensure that only those bank holidays observed in England and Wales are considered within the definition of a “working day”. The proposal to focus on a single jurisdiction to define a “working day” allows for consistency of time periods and deadlines throughout the CFD regime.
Finally—seventhly—they allow for the Secretary of State to issue a direction to the CFD counterparty to amend signed CFD contracts where the sustainability criteria have been altered in subsequently published versions of the CFD.
All of the proposals being implemented by this instrument were publicly consulted on and received a largely favourable response. Some concern was expressed about the proposal to split non-price data from confidential price information in a sealed-bid submission. We are confident that the non-price data can be effectively disaggregated from confidential price information and anonymised in such a way that individual projects cannot be identified. This will enable us to evaluate the efficacy of the allocation round.
As a final point, I would like to take the opportunity to assure noble Lords that the Government will continue to evaluate and monitor the reforms following implementation, making sure that the measures put in place remain effective and continue to represent value for money to the consumer. I beg to move.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to the Minister for his explanation this afternoon. We accept that most of these changes appear to tidy up minor issues which have cropped up after the initial allocation rounds. Arguably, some of those problems might have been anticipated, but I will not make an issue of that this afternoon.
The most important amendment is to Regulation 14, seeking to extend the exclusion from possible conflict between CFDs and capacity agreements to cases where an application has been made for a capacity agreement but has not been determined. Therefore, as the noble Lord said, the new rules would stop duplicate applications to both allocations at the same time. I understand that this type of gaming is not desirable, although I also understand that the Minister in the other place admitted this had not ever happened in practice. In the meantime, can I clarify whether, under the new regulations, this prohibition works equally for both schemes, so that you cannot apply for either one while the other application is being processed?
Also, while we understand that the Government would not want to reward one company applying under both schemes, is there not some scope for companies to make some sort of initial application, on the basis that the applications take time to go through the several stages and be considered, before that company works out for itself which is the most right and appropriate application to pursue? I just wonder whether we are being rather too stringent on this and whether there ought to be some more flexibility for an initial application to be made before the final application is followed through. I think companies may find that that process makes it easier for them to decide what is in their best interests in the longer term.
Perhaps the noble Lord could give some clarification on these points, but I would make it clear that, in principle, we support the amended regulations.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Baroness, Lady Jones, for her contribution and her general support for this instrument. As she rightly said, and as was stated in another place, there have not been any overlapping applications for CFDs and capacity market agreements so far. This is therefore a pre-emptory move to ensure that such overlaps do not happen. She is right to suggest that the prohibition would work equally for both schemes and in both directions.
On the noble Baroness’s point about flexibility being desirable, so that a company might choose, it is our view that the details of the schemes are available and, obviously if they do not overlap, it is possible to apply for one and subsequently for another if the first application was unsuccessful. However, it appears to us—although we will keep it under review—that it is absolutely right that people make that choice. After all, the CFD and the capacity market are for different purposes. We believe that this is the right approach, but I assure the noble Baroness that we will keep her point under review and thank her for raising it.
With that, I commend the regulations to the Committee.
Electricity Capacity (Amendment) Regulations 2016
(7 years, 10 months ago)
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The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth)
My Lords, this draft instrument seeks to amend the main secondary legislation package for the capacity market scheme, which was part of the electricity market reform programme in 2013. The powers to make this implementing secondary legislation are found in the Energy Act 2013 which, following scrutiny in this House and the other place, received Royal Assent in December 2013 with cross-party support.
I remind noble Lords that the capacity market will address our electricity needs and ensure that there is a sufficient electricity supply towards the end of the decade and beyond. In brief, the capacity market will achieve this by making a regular “capacity payment” to providers who are successful in capacity auctions. In return for this payment, providers must meet their obligations to provide supply, or reduce demand, when the system is tight, ensuring that enough capacity is in place to maintain security of supply.
Ensuring that hard-working families and businesses across the country have secure, affordable energy supplies they can rely on is our top priority as a Government. That is why we already have firm mechanisms in place, working closely with National Grid and Ofgem, to maintain comfortable margins on the system in the coming winter.
Beyond that, it is essential that generators have confidence that they will receive the revenues they need to maintain, upgrade and refurbish their existing plant, and can finance and build new plant to come on stream as and when existing assets retire. Equally, we want to make sure that those who are able to shift demand for electricity away from periods of greatest scarcity—without detriment to themselves and the wider economy—are incentivised to do so.
That is why we have the capacity market. The first two capacity market auctions took place in 2014 and 2015 and the first of two separate auctions, focusing on demand-side response, took place at the beginning of 2016. These resulted in a good outcome for consumers, as fierce competition between providers meant that we obtained the capacity we will need at prices below the levels many had expected. That translates to lower costs on consumer bills.
To ensure that the capacity market remains fit for purpose, my department has reviewed the capacity market mechanism in light of experience gained in these auctions. The clear message from industry and investors is that the mechanism retains their confidence and is the best available approach for ensuring our long-term security of supply. They also stressed that regulatory stability is crucial.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to the Minister for setting out the intentions behind the amended regulations today. I have to say at the outset that the strategy for maintaining energy supply consistency does not seem to be working out quite as well as the Minister would have had us believe in his comments earlier and just now. We seem to be moving to a place where what was once a vibrant independent energy market is increasingly making investment decisions based on the government subsidy that is available. The more that the Government intervene, the more their interventions skew the overall energy capacity available.
Of course these latest proposals have to be seen against the backdrop of government policy shifts that have created huge uncertainty and risks for investors, deterred investment and put up costs. The Minister will have debated with my colleagues on numerous occasions the negative investment impact that has arisen from pulling the plug on schemes such as feed-in tariffs and the renewables obligation. I do not expect him to agree with me but we would contend that some of the problems with which he is now trying to grapple are essentially of the Government’s own making.
The original intention of the capacity market scheme was to attract new investment, encouraging gas-fired power stations in particular, but it seems to have completely failed in that objective. Instead, the subsidies seem increasingly to be used to reward existing profitable suppliers, including nuclear power stations. For example, nuclear power plants have so far received payments amounting to £153 million for 2018 and £136 million for 2019, despite the fact that they were almost certain to remain open during those years without receiving those subsidies.
Incidentally, I could use this opportunity to raise again with the Minister the question marks over Hinkley Point, given the outcome of the referendum, which has fuelled further concerns about the commitment of the French Government to that investment, but I realise that he will feel obliged to repeat the mantra that all is well in that investment until eventually there is overwhelming evidence that that is not the case and the deal finally falls through. So I understand that he is limited in what he can say on that.
There is also a question mark over whether the capacity market interventions will run counter to the Government’s other binding commitments to reduce pollution, given that some of the beneficiaries are coal and diesel generators. Indeed, my colleague in the other place, Lisa Nandy, made a telling point that there is a danger that consumers will be paying twice for policies pulling in opposite directions: they will pay once to drive coal out of the system via the carbon price floor, and once to keep it in the system via the capacity market. We are now reaping the effects of ill- thought-through market interventions, with consumers bearing the ultimate cost.
The Minister may be aware of the recent report from the IPPR think tank into the workings of the capacity market. It underlines the argument that these measures work against decarbonisation. They have provided a lifeline for several old coal-fired power stations, which received a total of £373 million from the first auctions. They have also heavily incentivised the proliferation of new diesel generators, which are even more polluting than coal. The report also makes the point that the capacity market is designed around the requirements of large power stations rather than smart energy technologies, such as demand response and electricity storage.
Has any consideration been given to introducing an emissions performance standard, which could be applied to all those in receipt of the capacity payments? Is the department giving any thought to how the capacity payments could be used to incentivise gas power plants using carbon capture and storage if they are to stay open in the longer term? Is the department prepared to consider variable subsidies so that the new technologies, which could provide a longer-term solution, do not have to compete with traditional power station generators for support?
Having said all that, the specific proposals in the amended regulations to increase the penalty for non-performance clearly make sense. It cannot be right for suppliers to accept subsidies and then walk away from the contract anyway. It is also right that there should be a robust system of checks on new-build and existing plant to ensure that agreements are honoured.
Finally, does the Minister feel that the financial assessment of the cost benefits of the new auctions, in what is clearly a volatile market, can be relied on, and is there a mechanism for revising such calculations in the light of changing market responses? Does he feel that enough stress-testing has been done to interrogate the market effects of introducing one-year auctions when we are trying to encourage longer-term planning and investment? I look forward to his response.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Baroness, Lady Jones of Whitchurch, for her qualified support—I think she gave some support to the basic thrust of what we are seeking to do—and I will endeavour to respond to the points she has raised.
It is ironic that the Official Opposition have put forward a more market-based approach than the Government on this occasion. I feel that intervention is necessary, and the regulations have been brought forward on that basis. As I have said, the No. 1 priority for this Government, as I would think for any Government—I have yet to hear otherwise—is to ensure that we have security of supply and that the lights are kept on. In the broader sense, we need to ensure that our hospitals can carry out operations in a timely way; at the most basic level, we can see why that is so important.
Such interventions are necessary. As I have said, the changes that have occurred in the market since 2014, with the massive drop in commodity prices, have made many of the regulations necessary. Some power stations have closed. The noble Baroness will know that the Government are totally committed to the closure of coal-fired stations. That is something that only this Government have brought forward. We have said that unabated coal-fired power stations will end by 2025—that will be put out for consultation—subject to ensuring we have security of supply. We are the first developed country in the world to indicate that we will do so, ahead of all our European colleagues, the US and so on. As a country, we can be proud of that, and I hope that the Official Opposition support it.
The noble Baroness talked about the importance of underpinning renewables. That is certainly true, but we cannot rely totally on renewables. We need baseload to support renewables, which is what the regulations are about. She said she would refrain from mentioning Hinkley Point C, and then she did so. Having heard her dismal litany, I am obliged to say that the mantra she expected in response is indeed what we believe to be the case. Last week, I discussed this with a Chinese Minister, who is fully committed to the project, and we understand that the French Government are as well. It remains central to our energy policy, and I hope we can avoid talking down this area of activity, because the supply of nuclear is essential for us.
The noble Baroness mentioned diesel generators. I share some of her concerns, so I can understand where she is coming from on this point. As she will appreciate, this area cuts across government departments. Some of it rests with Defra, which we expect will announce consultation proposals in the autumn, ahead of both the next round of auctions and, indeed, the supplementary capacity auction that we are dealing with. We therefore expect bidders to be aware of likely future restrictions on their generation, and their bidding behaviour will adjust accordingly. We cannot anticipate precisely how that will go, but the consultation is being held with a view to ensuring that we can restrict diesel. I share the concerns she has expressed on that point, so I hope that that offers her some comfort.
In general, the noble Baroness will know that the auctions operate in relation not just to providing additional capacity but to the demand-side response of reducing capacity. That is central: we are looking not just to build in more generation but to restrict existing generation and to shift it. I hope that that will again provide some comfort to her. I should also say with regard to diesel that Ofgem will consult on proposals to tackle embedded benefits in due course, so action is going on elsewhere in government to deal with the diesel generation issue, which I recognise; I previously indicated in the House that we would look at it, as indeed we are.
Once again, I thank the noble Baroness for the qualified enthusiasm for the regulations she was clearly demonstrating, although she managed largely to restrain herself, and I commend the statutory instrument to the Committee.
Baroness Jones of Whitchurch
Lest the Official Opposition, as he describes me, are totally misrepresented, I would say on intervention and regulation that our position is that when you do it, it should be smart intervention. There is always a danger in any regulation that you encourage perverse outcomes if you do not think through its consequences. I was just warning against some of those perverse outcomes which can occur, particularly when you deal with large sums of money, as we are here. However, I do not want to go back over the Minister’s clarification of other points but simply wished to say that on that basis we are happy to support the regulations.
Lord Bourne of Aberystwyth
My Lords, that is a perfectly fair point, and I thank the noble Baroness.
Water and Sewerage Undertakers (Exit from Non-household Retail Market) Regulations 2016
Lord Gardiner of Kimble
That the Grand Committee do consider the Water and Sewerage Undertakers (Exit from Non-household Retail Market) Regulations 2016.
Lord Gardiner of Kimble (Con)
My Lords, these regulations will enable the implementation of important reforms from the Water Act 2014 to extend competition in the market for water services. The development of these regulations has been a very thorough exercise. We have consulted widely, as there are intricate elements. We are confident that we have taken the time to secure regulations that are fit for purpose to meet the objectives of the Water Act 2014.
From April 2017, all 1.2 million non-household customers such as businesses, charities and public sector organisations will be able to switch to a new provider of retail services for their water and wastewater. It is estimated that this will deliver a net benefit of around £200 million to the UK. These new “retailers” will be responsible for all customer-facing services such as billing, meter reading, call and complaint handling and the provision of all water efficiency advice. These customers will get the same water from the same pipes and have their wastewater taken away as they do now, but they will be able to choose their retailer in the same way as they can choose their energy or telecom providers. Non-household customers are keen to have this choice, and the Government’s decision to expand retail competition was made in response to clear demand from business customers. Our reforms will mean that they are free to negotiate for the package that best suits the needs of their business.
Currently, the law requires water and sewerage companies to provide both wholesale and retail services to all the premises in their area of appointment. During the passage of the Water Bill through Parliament, the Government brought forward amendments designed to enable such companies to decide they want to stop offering retail services to their non-household customers once the new market opens. The amendments to enable retail exit reflected a strong cross-party consensus that competition would deliver better results for customers if, as well as new retail businesses being able to enter the retail market, existing water companies were able to withdraw. Providing choice is a key driver for our retail competition reforms. Just as customers will be able to benefit from increased choice over their retailer, so, too, will water companies benefit from being able to choose whether they wish to compete in the new market. Enabling exit will allow water companies to make informed choices about their retail strategies. The Government are not seeking to require companies to exit, nor are they seeking to shape the market in any particular way. The purpose is to put in place a framework that will allow the competitive market to evolve as effectively as possible.
The Water Act 2014 includes a power for the Secretary of State to make regulations allowing water companies to apply for permission to exit voluntarily the non-household retail market. Today we are considering the regulations that make retail exit possible. The Water Act 2014 enables the extension of retail competition to non-household customers only. The Government have more recently committed to review the costs and benefits of extending competition to household customers. The regulations before your Lordships today, however, have no implications for householders.
I should also point out that the powers in the Water Act 2014 allow only those water companies that operate wholly or mainly in England to exit. That includes Severn Trent Water, which operates mainly in England but also partly in Wales, and its customers subsequently will be able to switch their water and wastewater provider. These regulations do not allow companies that operate wholly or mainly in Wales to exit, although the current market arrangements already allow their non-household customers who use 50 megalitres of water a year to switch to a new water supplier, and this will not change.
As I said, the draft regulations have been through a very thorough process of consultation. We are confident that there is clear support for these regulations from across the water industry, consumer groups and Ofwat, and that they are fit for purpose. A first consultation informed the development of the policy on exits and built consensus around our approach; a second focused on the detail of the draft regulations themselves. A draft of the regulations was provided to the House of Commons Select Committee on the Environment, Food and Rural Affairs to ensure that its members had an opportunity to comment on our intentions. Indeed, earlier this year I also wrote to eight noble Lords who I knew had taken an interest in retail exits policy at the time the Water Bill was being debated, again to ensure that all those who wanted to comment on the draft regulations had every opportunity to do so.
These regulations have two main objectives. First, they set out the process those companies wishing to exit the market for non-household retail services must follow. This process, which we are committed to making as light-touch as possible, provides for companies to apply to the Secretary of State for permission to exit the non-household retail market in their area of appointment. On approval, the company would transfer its non-household retail business to one or more alternative retailers. The Government have produced a simple application form, along with guidance, to help companies with their applications to the Secretary of State. This has been consulted on and a draft is available to help water companies plan ahead of the application process that is set to open on 3 October 2016.
Secondly, the regulations provide a lasting regulatory framework for customers and companies following an exit. Safeguarding customers is a key concern. We expect competition to deliver higher levels of service, keener prices and greater innovation in the provision of retail services. The Government also want to ensure that customers retain access to the same standards of protection, whatever their water company chooses to do. These regulations will ensure that no customers should be worse off because their company decides to exit. This principle of equivalence, therefore, underpins a number of safeguards within these draft regulations. They ensure that all customers will have access to good contractual terms, be protected by Ofwat and be assured of access to a retail service even if something were to happen to their new retailer.
Customers who are transferred as part of an exit and do not have formal contracts in place will be subject to a deemed contract with the new retailer. The terms and conditions of those contracts must comply with a code produced by Ofwat. All retail businesses accepting a transfer of customers will be water supply and sewerage licensees. Ofwat is responsible for the licensing process, which opened in April this year. It closely examines the business plans, management resources and financial viability of all applicants before any licences are issued.
Before applying to the Secretary of State for permission to exit the market, a water company will need to reach agreement with a licensee willing to take on its non-household customers and fulfil the requirements of the exit regulations. Of course, in the new competitive market customers will have the ultimate protection of choice. Should any retailer fail to meet their expectations of customer service, they will be able to take their business elsewhere. Customers will be informed of their company’s intention to exit well in advance, and will be free to switch to the supplier of their choosing.
It is important that we deal with these regulations now to enable them to come into force in time to allow any water companies that wish to exit this market to do so when it opens in April 2017. The regulations will need to come into force by 3 October this year to allow us to open the exit application process six months before the market is due to open. This will provide certainty to those water companies wishing to exit and enable them to make the necessary preparations and communicate with their customers, as required by the regulations.
I express my department’s thanks to all those who have contributed to the development of the draft regulations, including noble Lords here today. I and the department are most grateful. The regulations are the result of detailed work with the water industry, prospective entrants and customer groups. They give choice to the industry, protect customers and put in place a framework that will allow the competitive market to evolve effectively. For those reasons, I commend the regulations to your Lordships and beg to move.
Lord Moynihan (Con)
My Lords, I commend the Minister for his opening speech. The draft statutory instrument before us reflects many hours of debate in your Lordships’ House. His words were not exactly in sync with the Minister at the Dispatch Box when we began this journey, and I note with interest that he mentioned that the pressure for these changes came from business customers. It would be fair to say that on the question of timing there was pressure from noble Lords from all sides of the House, who together recognised the importance of these measures for customers. Without that concerted effort, I do not believe that we would have met the timetable that the Minister has set out today. I echo his thanks to other noble Lords from all sides of the House who worked so diligently to ensure that retail exit was in the then Water Bill.
One key point that my noble friend has raised is the issue of timing. I am grateful to him for keeping us informed—he referred to a letter that he had written to a number of noble Lords—and for ensuring that we had every opportunity to contribute to the debate and the deliberations on this issue. In his letter of 23 March he mentioned that there was only one final step to take: the finalisation by lawyers of the then regulations. We have moved a significant time forward since 23 March, and I am very concerned and interested to hear from him that we will meet the April 2017 deadline. This is a complex issue, as my noble friend has mentioned; it is a thorough exercise. Meeting the April 2017 deadline is vital.
In that context, exemplary work has been done by Ofwat, by Cathryn Ross and her team, to achieve the objectives that the Government have set out and that deadline. There is no doubt that we have a first-rate regulator who is keen to ensure that everyone involved—those companies that choose to implement the changes, while others are putting in place deemed contracts and the changes necessary to ensure that the market works—has the full attention of Ofwat to ensure that that process takes place.
Baroness Parminter (LD)
My Lords, I too thank the Minister for the thoroughness with which he introduced these regulations and for the way that he has opened up consultation to Members of this House and elsewhere on this matter. That was in stark contrast to the way that this initiative was introduced during the passage of the Water Bill, which has been somewhat glossed over this afternoon—at the time, my noble friend Lord Marks of Henley-on-Thames referred to it as being introduced not at the 11th hour but at one minute to midnight. It was poorly done, but it is encouraging that since that time both the department and outside stakeholders have worked hard to ensure that the consultation and parliamentary scrutiny that I and others insisted on have happened. I thank the Minister and the department for that.
While I accept the comments of the noble Lord opposite that there was cross-party support for the proposal, it was not unalloyed support. Although my party was not against the proposal in principle, we were concerned about the complexities, the way in which the proposal was introduced and the need to protect the rights of customers—and I want to touch a bit on that. The Minister said that these regulations will have no implications for householders, but we must be concerned not only with those in the non-household market who will be affected but those households who will remain with incumbent providers that cannot divest themselves of their household customers. Such people could be stranded, and therefore these regulations will have implications for household customers.
Secondly, although at the time we in the Liberal Democrats welcomed the potential to innovate in retail services, which these regulations should provide, we were very concerned about ensuring that we should not lose the water-saving initiatives, which up until then had been delivered by water providers working together with their retail arm. The potential for such water-saving initiatives must not be lost, given the very severe water shortages that we face in certain parts of the country. For those two reasons—the need to protect all customers, both household and non-household, and to ensure that water-saving initiatives would not be lost—we asked for the fullest parliamentary scrutiny. I am pleased that the department has delivered on that.
I have just two questions for the Minister. Under “Monitoring & Review”, which I think is a fairly standard exercise for all such regulations, the Explanatory Memorandum talks about monitoring whether the regulations have “met their intended objectives”. However, the intended objectives make no reference either to the need to protect those household customers who will in effect be stranded or to the need to ensure that there is no diminishment in the opportunities for water-saving initiatives. That concerns me, so I ask the Minister to give us a reassurance that a full review of these regulations will be undertaken before any decisions are taken to extend their effect to the household market.
My second question is, given that the Government have now asked Ofwat to look at the cost-benefit analysis of extending the provisions to the household market—which suggests they are increasing the priority they are giving to this area—can the Government confirm that, in terms of new legislation and issues for the future, water abstraction regime reform is the top priority for this department, given that it will have significant constraints on its time over the forthcoming months and years because of the impacts of the Brexit decision? Given the fact that CAP accounts for 40% of the budget, there will have to be an awful lot of changes in the department. Can the Minister reassure us that water abstraction remains the priority, not extending to the household market provisions that are still unclear and untested and over which a number of us have serious concerns? Will that happen before the initiative to split the retail arm from the wholesale arm is extended to the retail market?
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the Minister for introducing the regulations today. I very much endorse the thanks that he and others who have been involved in this—the noble Lord, Lord Moynihan, and the noble Baroness, Lady Parminter—have extended this afternoon.
As has been said, we support in principle the extension of competition into the retail market for non-household water and sewage service so that charities, businesses and public sector organisations can switch their supplier. We accept the corollary of this new flexibility, which is that providers should also be able to exit the market, provided that the public interest test is met. For the scheme to work well, though, a number of practical guarantees have to be in place. I therefore have a few questions that I hope the Minister can answer.
First, in the submissions to the consultation there was a bit of a running theme about the incomplete asset location records making it difficult to accurately specify which undertaker is currently providing which service. Is the Minister confident that the proposed measures address that issue effectively? In other words, will there be, if you like, a land and business register that we can all have confidence in regarding who is supplying to which address and what that supply is? Is it intended that those records will be kept on a national IT system? Does the Minister have confidence that that system will be comprehensive and robust enough to store all those data properly?
Secondly, although actually I think the Minister has answered this, is he proposing that domestic business users will have a guarantee that an alternative provider will always be available, and is he saying that that will be underpinned by the public interest test that will always guarantee that? Thirdly, what requirements will be placed on companies to ensure that their customers are always made aware of their plans to exit, and that those customers are given sufficient time to find an alternative provider?
Lastly, I want to tease out what the Minister said about no company being worse off. I am thinking of isolated communities, particularly isolated businesses, that might have been on a longer-term promise that they would have expensive upgrades of water and sewerage provision in future, such as the laying of new pipes or whatever. You could imagine that an existing supplier might think in retrospect that they would rather not have that rather expensive outlay on their books. Is a guarantee built into the scheme that those expensive businesses, which a lot of suppliers might not consider economically viable, will nevertheless maintain a supplier? In other words, is there a guarantee that they will not just find that they are dumped on another supplier who is not prepared to make that longer-term investment and provide the upgrades that they might have been expecting from their original supplier? If the Minister could confirm that that longer-term investment would be guaranteed, as well as the initial supply of water and sewerage services, that would be reassuring.
Apart from that, both the noble Lord, Lord Moynihan, and the noble Baroness, Lady Parminter, raised important questions and I look forward to the Minister’s response on those matters.
Lord Gardiner of Kimble
My Lords, I thank your Lordships for what I think is a broad range of support for the regulations that the Government have brought forward.
I am conscious of the many hours of debate to which my noble friend Lord Moynihan referred. If I was not sufficiently fulsome, may I be even more fulsome in recognising the assistance of your Lordships—particularly some of those here, but also some who are not present—in making a significant contribution to where we are now? As a supporter of your Lordships’ House, it would be fair to say that this is precisely the reason why I try to persuade people, when I am out and about, that this place can get down into all the detailed, hand-to-hand fighting. I hope that we will come to a result that is undoubtedly in the public interest. If I may, I will put on the record even more fulsome praise of Members of your Lordships’ House. It is also entirely appropriate, and we do not do this often enough, to thank the officials who have to implement what we have all wrestled with and decided on. I am delighted to add those points, which pick up what my noble friend said.
I want to deal with some of the points that your Lordships raised, particularly my noble friend Lord Moynihan’s point about teasing out the household customer situation. Let me set out our stall: we want to have good evidence on the potential for household competition and the benefits that it could bring for customers. We have asked Ofwat, as the independent economic regulator, for an analysis of the potential costs and benefits for household customers, and we believe it will be due in September. Obviously the introduction of household competition would require amendments to be made to primary legislation and, indeed, changes to Ofwat’s price review process. There would also need to be an agreed practical timetable for delivery. We are moving in the direction of understanding more about this but, as we have done for non-household customers, the whole purpose is to ensure that the customer has the best choice and the best outcome. All I can say is that we will look at that very carefully, and I am confident that noble Lords will assist us in that when we come to do so. That work is in hand.
My noble friend mentioned the timetable and asked whether we would meet the April 2017 deadline. There is a clear plan for working towards market opening. Exit applications open on 3 October—companies will have exit decisions to make—and we are on track to open the market in April 2017. My understanding of all that is going through and of the work being undertaken is that we are on track to achieve what we hope to by the April 2017 date. As to what action we will take against companies that are not ready for next April, Ofwat is putting in place a licence condition requiring water companies to make all necessary preparations for market opening in April 2017.
The noble Baroness, Lady Parminter, asked about stranded household customers. It is obviously important that all customers are looked after. Household customers will remain with the incumbent water company and will continue to be protected through five-yearly retail price controls, which will ensure that bills remain fair and affordable. Information relating to costs and efficiencies obtained by Ofwat from the competitive market will help to inform its decisions on setting appropriate price limits for the household market. There will also be crossover benefits for household customers as innovative services are developed for the non-household market and adopted by household customers. Clearly, the whole purpose is to ensure that the customer is well protected. I am mindful of what the noble Baroness said, and it is something that we should always have uppermost in our considerations.
The noble Baroness asked about legislative priorities and review. I hope that all noble Lords will understand that I am really not in a position to comment on the future legislative timetable—it is fair to say that that is way above my pay grade—but obviously I understand what she is saying.
There will be a review of the exit regulations, which is all part of a normal process. We are committed, as we were during the passage of the Water Bill, to report to the House on progress towards abstraction reform before 2019. I am well aware that although, with our weather, most of us farmers do not see water shortage as a problem—I can tell the Committee that there is no haymaking at the moment—I can say that this is obviously something that we need to have in place. The supply of water for households, industry and non-household customers is imperative.
I turn to some of the points raised by the noble Baroness, Lady Jones of Whitchurch. The database is being developed by MOSL, with the intention of being fit for purpose. It is currently being tested by market participants, ready for the next phase beginning in September. The noble Baroness asked whether there was a guarantee that all customers would have a supplier. Yes, because the exit regulations secure that all non-household customers will continue to have access to a supplier for retail services.
I am just looking to see whether other points were raised by your Lordships that I have not covered. I shall look at Hansard to see whether there are detailed points that would be more helpful. I am mindful that sometimes when matters begin here, they need some digesting. I sense, because I was not here at the beginning, that what has happened has been a success story of people who know a lot about this industry contributing to this process. As my noble friend said, it may involve considerable work for officials and others, but in the end this is what we are here for. We want to get the right solutions, particularly when we have intricate regulations such as these.
We want to get it right. After all, we are dealing with customers who want to be protected, and indeed we want to inform and enable companies to do their best for the customer. That is the whole essence. While I was not involved in the Water Bill proceedings, I think your Lordships offered up to the Government that this was about competition, and we were looking to provide encouragement for customers. That is why, after this lengthy work—I hope noble Lords will understand that I have made my best endeavours to ensure that they have been kept in the loop of what we are trying to do, and have given them the opportunity to comment—I feel confident that we are in the best position we could be. That is why I commend these regulations to your Lordships again.
Electoral Registration Pilot Scheme (England) Order 2016
Baroness Chisholm of Owlpen
That the Grand Committee do consider the Electoral Registration Pilot Scheme (England) Order 2016.
Baroness Chisholm of Owlpen (Con)
My Lords, the instrument before the Committee establishes a pilot scheme under Sections 7 and 9 of the Electoral Registration and Administration Act 2013. New Section 9D(3) of the Representation of the People Act 1983, inserted by the 2013 Act, requires the annual canvass to be conducted in the manner set out in the Representation of the People (England and Wales) Regulations 2001. However, this draft order disapplies that requirement for electoral registration officers—EROs—in Birmingham, Ryedale and South Lakeland; instead it requires EROs in the specified areas to attempt to make contact with a person at each residential address in the area for which they act at least once between the date when the order comes into force and 2 February 2017. The manner in which they do so, however, and whether they take further steps where no information is received in respect of a particular address, will be at the ERO’s discretion. This will enable EROs to test new and innovative approaches to canvassing. The Electoral Commission will report on the pilot scheme and provide a copy of its evaluation to the Chancellor of the Duchy of Lancaster and the EROs by 30 June 2017. The order ceases to have effect on 7 July 2017.
As some of those in the Room may already be aware, the process for the household canvass is prescribed in the Representation of the People (England and Wales) Regulations 2001 and requires electoral registration officers to send an annual canvass form—that is, a household enquiry form, or HEF—to every property in their area. The HEF asks residents to set out whether there have been any changes in the composition of the household since the previous year’s canvass and enables electoral registration officers to identify whether any residents should be added or removed from the register. Where no response is received, as is more often than not the case, EROs are required to issue up to two further forms and to carry out at least one visit.
While the fundamental objective of the annual canvass—namely, the maintenance of a complete and accurate register through regular data collection—is and will continue to be a government priority, informal consultation with EROs over an extended period has indicated that the annual canvass in its current form is not a sustainable way to achieve that aim.
Many EROs, who are on the front line of canvass activity, have told the Cabinet Office that electors find the canvass procedure frustrating and confusing. When electors might know themselves to be registered, perhaps from having recently participated in an election, they do not understand why they have none the less received three letters and a visit from their local ERO.
This year, for example, many citizens will have voted in the local, devolved or police and crime commissioner elections in May, the EU referendum in June and perhaps even a by-election, yet, when the annual canvass takes place between July and December this year, they will receive fresh inquiries about their registration status. The reality is that household churn is only around 20% per annum, thus the majority of canvass activity is redundant. Some 80% of households will be a “no change” on the electoral register.
This tremendously bureaucratic process is no less frustrating for administrators. Having to follow steps prescribed in statute stifles their capacity to innovate and adopt new and more digital approaches to canvassing. From knowing their local area, or from having access to other local council data, EROs may well be aware of the registration status of households in their area. However, the system currently in place does not allow them to draw on their own expertise or on other information held by the local authority. This is not an example of smart working.
Lord Beecham (Lab)
My Lords, I am in awe of my noble friend’s expertise and knowledge on the whole issue of electoral registration. If the noble Baroness is not already in the same position, I think that she will be after my noble friend has spoken to the order.
Lord Beecham
My Lords, I come to this order with a slightly different approach and a different range of concerns from those on which I expect my noble friend will concentrate. We are now in a situation where, whatever happens to the process as outlined by the noble Baroness, the constituency boundaries at the next general election will—contrary to the recommendation of the Electoral Commission—be based on the register as it stood in December 2015. Of course, that does not mean that anyone registering since that date will not have a vote, but it means that the constituency boundaries will not necessarily reflect the, I hope, improved system of registration. Let me give an illustration of the potential differences. In my own city of Newcastle, the number on the electoral register as of last December was 183,961, and it is now 190,770, which is an increase of 6,809 or, by my calculation, an increase of 3.7% on the figure that will be the basis on which the new constituency boundaries are drawn.
The Government have introduced other significant changes, using their majority in another place, to change the whole system. I say that because local authority boundaries will become irrelevant under the new dispensation. I am wondering whether the Minister has—I do not blame her if she has not—seen the report by Lewis Baston, who is an expert in these matters. He recently produced a report for the Constitution Society in which, among other things, he states:
“As it currently stands under IER, the electoral register is too incomplete and unstable to provide a suitable basis for allocating parliamentary representation”.
He says:
“There have been noticeable levels of under-representation, which has varied with social and demographic characteristics”.
He also says:
“The use of the December 2015 purged register has also had a regional effect. London has three seats fewer than it should. Nationally, it has mainly affected urban areas, with the big core cities in particular had poor net completeness in electorate registration”.
However much that is corrected, partly as a result of the order we are discussing, it will not affect the boundaries that will apply in the next Parliament.
Lewis Baston also says:
“If the register numbers in December 2015 are inaccurate”—
they clearly were—
“the boundary review will contaminate the entire basis of the electoral system”.
He points out in relation to the discussions and debates before the boundary review was implemented that the,
“warnings made in 2014, of damage to the representation of London and the metropolitan areas, have come true and the map drawn in the 2016-18 boundary review will under-represent these areas”.
It is of course entirely coincidental that those are the areas in which the Labour Party is currently most strongly represented.
Lewis Baston goes on:
“The dramatic variations in total electorate that have taken place … between December 2012 and December 2015 undermine the idea that at any stage the electoral register is a reasonable estimate of the total local population entitled to vote”.
He cites examples demonstrating that in some places, such as Liverpool, the estimated net completeness of the register as at December 2015 is as low as 81%. By definition, it is therefore about 20% short of what the figure should really be. I repeat that that does not stop voters being registered, but it means the boundary situation has in effect been corrupted. One of the problems, as he concludes, is that there is,
“simply nothing that can be done under the current rules to rectify the problem that student constituencies are likely to be oversized (in terms of registered electors) when the election takes place”.
That is one facet of an issue which is generally of much wider application.
I am not sure whether the Minister will be able to respond to this today, but in my submission there is a very strong case for the Government to review and, indeed, to alter their decision to require the next general election, or at least any general election taking place after 2017, to be held on the basis of the boundaries as currently drawn. There is a need for a proper review of constituency boundaries to reflect the increase in the electoral register and other changes, which, I repeat, the order will help to facilitate. If the Government do not do so, they will have taken such a decision because they perceive a political advantage for the Conservative Party. That is no way in which a democratic process should be regulated, and I hope that the Government will reconsider their position. I repeat that they will return to the recommendations made by the Electoral Commission, who should be consulted in the light of the developing circumstances as we now see them.
Lord Tyler (LD)
My Lords, before I come to the specifics of the order before us, I want to refer to two extremely important issues about the context in which we are discussing it. In the first place, both the Law Commission and the Electoral Commission have given recent advice to government and Parliament that the time is long since past when it was necessary to bring together a lot of the electoral legislation. We have an extraordinary situation now, and it is repeated again this afternoon, where we are referring right back to the 1983 Act. The good ship “RPA” has been covered with so many barnacles over the years that it is hardly recognisable as being a ship at all. The Law Commission has made it clear that it is urgently necessary, in this Parliament, to bring together the legislation that refers to electoral matters. This is for clarity for the parties, for individual electors and, frankly, for us parliamentarians.
For over 11 years, I have been in this Room when we have been amending and referring back to the 1983 Act; on one occasion, I think we even referred back to the 1883 Act. It is not acceptable for the Government to keep putting off this issue. Paragraph 4.1 of the Explanatory Memorandum that accompanies the order—and just that one paragraph, about how all these things fit together, is so complex—makes a very cogent case for a degree of co-ordination and consolidation. In paragraph 8.3, there is the added dimension of ensuring that all parts of the UK march in step. The register is something of such basic importance to our representative democracy that we cannot accept differences taking place on such a scale as has been happening in recent years between the devolved nations of the UK.
In paragraph 7.6, ironically, there is the wonderful statement:
“Consolidation does not apply to this Order”.
You can say that again; there is absolutely no consolidation in this, and it is time that there was. I know that in this particular context that is a technical term, but it makes the point very strongly. We cannot go on with these piecemeal additions, subtractions and amendments to electoral legislation. That is not acceptable, and the Law Commission and the Electoral Commission have been unanimous in making that recommendation to us in Parliament as well as to the Government.
I turn to the issue of the accuracy and completeness of the register, and its integrity. As the noble Lord, Lord Beecham, has quite rightly said, this is a matter of wide concern. The Minister herself said in her introduction that the integrity of the register was the solid basis for our confidence in the way in which our elections happen. As was so clear from the brief exchanges that she and I had last Thursday, the Government simply have not taken on board the fact that we lost some 2 million people off the register last December, and some 2 million people—not necessarily the same people, of course—reappeared to vote on 23 June. In the closing months of last year, we were constantly told by Ministers—I absolve the Minister herself from this; it was not her line of argument—that those who were coming off the register were “ghost voters”. The fact that many of them had voted in the general election some months before was ignored. We now know that there are 2 million-plus more people who voted on 23 June, who were accepted at the polling stations as being eligible to vote and did so, than there were in December. The people who turned up in those many polling stations throughout the country 10 days ago were not ghosts; I hope that the Government will now accept that they were perfectly valid people who were undertaking their democratic right. It is completely ridiculous that we should now be going back to the 1 December 2015 basis for any acceptance of the register as a complete and accurate reflection of those who are eligible to vote in elections in this country.
Lord Kennedy of Southwark
My Lords, I have a few comments to make in respect of the order. As we have heard, the order establishes a number of pilot schemes, all of which are in England—which may cause a discrepancy in relation to what the noble Lord, Lord Tyler, said. The pilot schemes all actually refer to councils in England, although the order itself certainly covers England and Wales. I do not have any objection to pilot schemes in principle: they enable us to see how other methods of collecting data and electorate details work and, if they prove to be more effective, they can be rolled out further to a wider area, which is very good.
My concern with these regulations is that we could get to the point at which the system that we end up with is not as effective as what we have in place now. I am a little worried about the references to cost in the notes. I want an absolute assurance from the noble Baroness that this is not just about driving down costs at the expense of having a robust system in place to make sure that we have a complete and accurate register.
I see the point—as we saw in the guidance note—about how the two-stage process could cause some confusion, but I still think that it is important that we have a robust process in place. Therefore, can the noble Baroness give a guarantee to the Grand Committee that nobody will be removed from the register due to a funding exercise to reduce costs? That would be a terrible place to find ourselves in.
One of the problems the Government have got themselves into, of course, is that they have not sought a wider range of partners to get people to register to vote. I have spoken in the Chamber many times about registration—as have the noble Lord, Lord Tyler, and the noble Baroness, Lady Chisholm. It is important that we look at how we can use other organs of the state to get people to register to vote. Obviously local authorities have a major role, but we also talked about how we want universities to make a habit of getting young people to register to vote, as well as the Post Office and other organs, such as the DWP, where people go to pay their rent and things. How can we use those organs to get people to register to vote? There are other private organisations, delivering public services that we could also involve. I remember many years ago, when I was in New York, people would register to vote at the counters in the post offices. That was quite common. It was about 15 years ago and there was nothing unusual about it at all. In that state at least, they were using other organs to get people on to the register. It was actually part of the service: “Are you registered to vote? We have the forms here, and if you fill them out, we’ll do that”. We need to look at that along with the other organs of state and not just restrict ourselves to people having to respond to a canvass or fill in a form online themselves and submit it.
Baroness Chisholm of Owlpen
My Lords, that was certainly an interesting debate. Indeed I feel I am in the presence of great experts, with the noble Lords, Lord Kennedy and Lord Tyler, so I start from a position of great humility. However, I certainly intend to answer most of their questions.
The noble Lords, Lord Beecham, Lord Tyler and Lord Kennedy of Southwark, all mentioned the boundary reviews and the change in the register following the take-up during the referendum. I covered this pretty well last Thursday, but unless we have a defined date and a set of registers to assess, it is impossible to run a review. The registers used for a boundary review are necessarily a snapshot, and registers always continue to change while a review is taking place. As all noble Lords know, without the implementation of the boundary reviews, MPs will continue to represent constituencies drawn up on the basis of data that will be over 20 years old at the next election. That would be to disregard significant changes in the population in relation to the principle of equal-sized constituencies, which were endorsed by the Committee on Standards in Public Life. The reforms have already been delayed once, and it is vital that we do not delay them any further so that the 2020 general election is not fought on boundaries that will by then be nearly—
Lord Tyler
I am grateful to the noble Baroness, but I have not yet heard any explanation—I fear none is coming—of why we should not use the absolutely solid evidence of the electoral register that was, as it were, tested to destruction on 23 June 2016. What is the objection to using that register for the basis of this discussion? I cannot understand that.
Lord Kennedy of Southwark
May I, too, come back to that point, rather than interrupt again later? I agree entirely with the Minister’s point about the need to have a defined date. It is absolutely right that we have to fix the date—I have no problem about that—and draw the boundaries on the basis of the figures at that date. It is absolutely spot on to say that we cannot move the date around. The problem the Government have to contend with is that we had a fixed, defined date, which was 1 December 2016, but they chose to scrap it and bring it forward by a year. The problem is that that was going to be the date, so all these people would have been on the register and would have been counted. I do not think the Minister was involved, but somebody in government sat around the table and decided to bring this forward by a year. We have never had an explanation of that. We have talked about ghost voters and other problems and this and that, but it was the Government’s decision. The December 2016 date clearly guaranteed the commission plenty of time over the next couple of years to have a review. The review would have come to both Houses some time in 2018, been approved by both Houses and been in place for the election in 2020. However, somebody in government took a decision to bring it forward by a year, and I suspect that decision was made purely for party political advantage. If that is the case, it is absolutely disgraceful.
Baroness Chisholm of Owlpen
Obviously, that was before my time. The reason why the date cannot be changed now is that doing so would involve primary legislation. If such legislation was brought in to change the whole system, it would mean that we would definitely not get the boundaries reviews done in time for 2018.
Lord Kennedy of Southwark
I do not know whether that would have to be done through primary legislation, but I guarantee the Minister—I am sure the noble Lord, Lord Tyler, would do so as well—that the Government would get the full co-operation of both opposition parties and would get it through in a day or two. That would be absolutely no problem whatever. They could get it through next week if they needed to do so. I would provide complete co-operation on that, so there would be no problem about delaying things.
Baroness Chisholm of Owlpen
The problem is that the boundary review has already commenced and the Boundary Commission is expected to report later this year, so that would all go down the drain. There would definitely have to be primary legislation, and there is quite a lot going on at the moment, so would there be time for it? We would need to get it through so that we could do the boundary reviews by 2018, ready for the general election in 2020, so there really is not the time. The review has already started—I ought to move on, otherwise we will move round and round in circles—but that is the reason.
The noble Lord, Lord Tyler, wanted to know how the pilots were chosen. They have been chosen through the EROs, who came forward with ideas and proposals and expressed the wish to participate. He also talked about the Law Commission. The Government are currently considering the commission’s recent interim report on electoral law. This comprehensive and wide-ranging report makes a number of recommendations, including in relation to electoral registration, and it is important that the Government give the report due consideration before making a formal response. I hope he will understand that I cannot pre-empt the Government’s response at this stage. I look forward to continuing the work to improve electoral registration.
The noble Lord asked why the Government do not change the registration on which the boundary review is concluded. I think I have already covered that. As I said, it would need primary legislation, which is not possible at this time. The noble Lord also mentioned the extent of application. I think he was talking about England, Wales and Scotland, and how that worked. The legal jurisdiction is England and Wales, and that is its extent. The order applies only to England because the authorities concerned are all in England.
The noble Lord, Lord Kennedy, talked about looking at postal databases to boost registration levels. The use of data to improve electoral registration is an important tool, and indeed Birmingham and South Lakeland will look to harness the information from multiple local data sources to help target their activity at households. As the noble Lord, Lord Tyler, mentioned, there is indeed a terrible problem with take-up from certain representations in the country, particularly BMEs. We are looking at that, and it really has to be sorted out. It is a problem that seems to keep going on and on. The Cabinet Office is putting this at the top of its list.
Students are a difficult problem as they tend to move house every year. Part of the problem is that the actual academic year starts in September and October but the registration is done in the December the year before. Again, that is being looked into. We are hoping that civil organisations such as Bite The Ballot are having some impact in getting students to register. It was interesting that it seems that a lot of students registered to vote in the EU referendum but did not actually vote when the day came. We are looking into why that was the case. It cannot be that they all slept in from 7 am until 10 pm.
Lord Tyler
I think the answer is that not all of them were given the opportunity, or saw that there was an opportunity, to register for a postal vote. When the period for registration was extended—when, as the Minister will recall, the system collapsed—we did not extend the deadline for postal votes. There was a whole 24 or 36 hours when they could register but could not then get a postal vote. Obviously, many of them would have found that they would not be in the place where they had anticipated registering because it was the end of the academic year.
Baroness Chisholm of Owlpen
I take the noble Lord’s point. Interestingly, all chancellors at universities were written to at the start of the referendum to say, “Please encourage students to register”. At that time the students would have been able to get a postal vote, but I certainly take the noble Lord’s point. I have probably covered all the questions. Is there anything I have left out?
Lord Kennedy of Southwark
The Minister has covered the points and we are very grateful for that. However, I think generally that the Government have to do more in this area. I am sure that they wrote letters to the vice-chancellors, which is great, but this should be included as part of the normal work of the university; they should have to get people to register to vote. With all the thousands of young people turning up at universities every year, part of their induction should be getting them to register to vote. Registration is often seen as going on in the corner over there with the door shut, and few other people get involved. It must be much more of a responsibility when public servants in a variety of roles meet members of the public. That is what we need to do to make it work.
Baroness Chisholm of Owlpen
I agree with the noble Lord. Of course students can register at home as well. However, we are very fortunate today to have a Minister for higher education here, so I am sure she is taking note of everything that everyone has said and will go back and make sure that we concentrate on this one. It is a very important point and the Cabinet Office is well aware of it. We need to make sure that we do more.
Lord Kennedy of Southwark
Also, I thank the Minister for saying that she was in awe of all the experts sitting around the Room. I hope that one day we might be listened to.
Baroness Chisholm of Owlpen
I always listen to the noble Lord. I thank everyone who has taken part and I commend the regulations to the Committee.
Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (Amendment) (England and Wales) Order 2016
Baroness Evans of Bowes Park
That the Grand Committee do consider the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (Amendment) (England and Wales) Order 2016.
Baroness Evans of Bowes Park (Con)
My Lords, as the Committee will be aware, the Rehabilitation of Offenders Act 1974 seeks to support the reintegration into society of offenders who have demonstrated that they have put their criminal past behind them. After a specified period of time, therefore, the Act provides for cautions and most convictions to become spent. When individuals apply for most jobs or seek insurance, they do not need to disclose spent cautions and convictions, nor can they be taken into account by employers and others. Research has consistently shown that obtaining employment lowers the risk of offending. That is the general position under the primary legislation.
There are, however, certain types of employment and other activities that give rise to particular risks to the public. The Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 therefore creates exceptions to the Act so that in some circumstances certain spent, as well as unspent, convictions and cautions must be disclosed and may be taken into account when assessing a person’s suitability for certain positions.
Those areas of activity included in the exceptions order require a high degree of trust, often involving vulnerable persons. It is therefore appropriate that an employer should know a person’s fuller criminal history before an offer of employment is made, and consideration can be given to any necessary protections to be put in place. The three amendments in the order are part of the Government’s ongoing commitment to keep safeguarding measures in step with developments elsewhere. The first provision is designed to align the order with the Police Act 1997 (Criminal Records) Regulations 2002 in relation to certain regulated activity with children; the second covers certain roles within the Independent Police Complaints Commission; and the third relates to judicial appointments, which are already covered by the exceptions order, to allow for the fullest disclosure of criminal conviction information.
There is an anomaly between the exceptions order and the related Police Act 1997 (Criminal Records) Regulations 2002 that needs to be addressed. The Police Act regulations cover both regulated activity concerning children that is unsupervised and carried out on a frequent basis—for example, teaching—and activity that would be regulated activity relating to children if it were done frequently. Examples might be the provision of health and palliative care to children who are sick or disabled, or childminding on a one-off basis during the school holidays. At the moment, however, only such activity that is carried out frequently is covered by the exceptions order. The purpose of the amendment is therefore to align the order with the Police Act regulations so that roles involving unsupervised work with children on an infrequent basis are eligible for enhanced criminal records checks.
The Independent Police Complaints Commission was established by the Police Reform Act 2002 and became operational in April 2004. The IPCC’s fundamental statutory purpose is to secure and maintain public confidence in the police complaints system in England and Wales. It does so by making decisions independently of the police, government and interest groups. It is tasked with investigating the most serious complaints and incidents involving the police across England and Wales, and it also handles certain appeals from people who are not satisfied with the way the police have dealt with their complaint.
By the end of 2017, following a three-year programme of reform and expansion, the IPCC will independently investigate all serious and sensitive cases. The expansion has increased the number of cases and range of matters being investigated. Most notably, this includes an increased number of child sexual abuse and exploitation cases, and allegations concerning the abuse of vulnerable adults.
It is clearly important that commissioners and staff within the IPCC who have contact with vulnerable people or access to sensitive information are thoroughly vetted. The amendment to the exceptions order will permit the IPCC to ask for, and take into account, the unprotected spent convictions and cautions of staff and commissioners whose work involves this type of contact or access. Contact with children by commissioners and other IPCC staff is already covered by other provisions in the exceptions order relating to regulated activity, but contact with other vulnerable people is not covered. The IPCC will be able to ask for the disclosure of this information when recruiting to these positions.
The Constitutional Reform Act 2005 established the independent Judicial Appointments Commission—the JAC—to select candidates of good character for judicial office in courts and tribunals in England and Wales. Prior to the Act, appointments were made by the Lord Chancellor. Magistrates are appointed by the senior presiding judge, rather than the JAC, but are assessed for suitability in the same way as other judicial appointees. As noble Lords would expect, judicial appointments are already covered by the exceptions order, given the nature and responsibilities of such roles. This means that the JAC is currently entitled to ask candidates for details of their unspent convictions and certain spent cautions and convictions that are not protected from disclosure, and can take that information into account.
As I have referred to protected spent cautions and convictions, I will briefly explain what they are. I am sure noble Lords will remember that where an occupation or activity is listed in the exceptions order, full disclosure of all spent cautions and convictions was formerly allowed. In May 2013, however, following a Court of Appeal judgment, which was upheld by the Supreme Court, the Government amended the disclosure policy under the exceptions order to provide that certain old and minor spent cautions and convictions are protected from routine disclosure in criminal records certificates. In other words, they are filtered out of certificates and do not have to be disclosed by individuals, nor can they be taken into account by employers.
Since May 2013, the JAC has not therefore seen an applicant’s full criminal record. The Lord Chief Justice has expressed concern about this position, particularly in relation to dishonesty offences, which may go towards assessing an applicant’s good character. He has therefore supported the commission in requesting this amendment to allow the disclosure of all spent cautions and convictions. The commission is clear that the disclosure of old and minor spent cautions and convictions is required to mitigate the risk to the integrity of the judiciary should details of an appointee’s previous caution or conviction subsequently emerge. The significance of a caution or conviction is considered much greater because of the unique position of the judiciary, including the magistracy. It is a requirement that judges be of good character, and if they did not possess such good character, the confidence of the public in their constitutional function might be damaged.
I hope noble Lords will support the Lord Chief Justice’s view that the integrity of the judiciary needs to be upheld. However, before the Government agreed to support this change, we asked the commission to confirm that it would adopt a clear and transparent recruitment policy on how old and minor cautions and convictions would be treated to make sure that all applications are treated objectively and fairly. I can reassure noble Lords that proper and balanced consideration will be given to any old and minor spent convictions when disclosed; they will not automatically preclude an applicant taking up a judicial appointment. The JAC’s Good Character Guidance has been provisionally amended and will be available to candidates if Parliament approves this amendment and once the order comes into force.
I am sure noble Lords will agree that this statutory instrument is necessary for public protection purposes. It needs to be amended regularly to make sure it is up to date and keeps pace with developments elsewhere. There is always a balance to be achieved in the disclosure of criminal conviction information between the rehabilitation of offenders and public protection. These amendments to the exceptions order are limited in scope, but are necessary for the purposes of safeguarding vulnerable people and maintaining the integrity of the judiciary. I beg to move.
Lord Beecham (Lab)
My Lords, I can confirm that the Opposition—entirely embodied by me on this occasion—welcome the order. I am grateful to the noble Baroness for elucidating some of its detail. I intended to ask whether the magistracy is included in the reference to judicial appointments, and she has confirmed that it is, which I think is desirable. However, I am not yet clear about the position of police commissioners as opposed to officers and whether they are included.
Lord Beecham
Given that police commissioners have an overriding responsibility in relation to disciplinary matters and the like, I wonder whether—I do not expect the noble Baroness to answer now—the Government might wish to consider the position of police commissioners in relation to this. One thinks in a different context of the activities of police forces; for example, in South Yorkshire, where there have been great problems, which are not, I hope, related to this. On the other hand, of course, the police were involved in child abuse investigations and so on, and it might be thought desirable for the police commissioner with overall responsibility for that to also have a clear position on this. I am not asking the noble Baroness to answer now or to make any policy decisions now, but she may wish to take this back to others for a view. All I ask for is that it be considered. I am not saying that it should be definitively acted on but, in my submission, it ought to be considered. With that comment, I am certainly happy to endorse the order.
Baroness Evans of Bowes Park
I thank the noble Lord for his support. As regards the facts I can say, police and crime commissioners are vetted for their suitability—police officers are already covered, and full disclosure is required—but I will take back the comments he made. With that, I thank him again for his support and comments, and I commend the draft order to the Committee.
House of Lords
Outcome of the European Union Referendum
(7 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Lord Privy Seal
That this House takes note of the outcome of the European Union referendum.
The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, our debate today has the potential to be one of the most significant in the recent history of your Lordships’ House. Indeed, I see today as a real opportunity for us as a House to reflect on the decision that has been made and to offer some clear thinking about the issues we now face as a country. It is an opportunity for the House of Lords to show why it exists.
In repeating several Statements over the last week, I have set out the views of Her Majesty’s Government, and I want today to be much more than an occasion for me to set them out again. Over the next two days my noble friend Lady Anelay and I are here primarily to listen, so, in opening, I will try to start the process of reflection by offering my perspective both on the vote itself and on the responsibilities incumbent on this House, as I see them, in the weeks and months ahead.
To state the obvious first, the referendum was a momentous democratic exercise. Over the weeks of the campaign we saw passionate cases put forward by both sides and, more importantly, we saw voters engage with an enthusiasm that we had not seen for many years. Indeed, more than 33 million people from across the UK and Gibraltar exercised their democratic right.
I appreciate that when the votes were counted it was not the result that many of us may have wanted— indeed, 48% of us voted to remain—but the result was clear. By a margin of more than 1 million, 52% of the people who voted elected for the United Kingdom to leave the European Union—an instruction that this Government, and all of us, must respect and seek to act on.
Baroness Stowell of Beeston
It would be possible for us to go over the campaigns again in detail, to look for ways to re-examine the result or to pose again the question of our EU membership, but in my view that would be the wrong thing for us to do. Not only would it distance us further from many of the people we are here to serve; worse, it would be a missed opportunity to serve them better. Instead, we should take this opportunity to play our part in shaping the way ahead and, as I see it, perform our duty of reassuring people about our country’s future by offering some clear thinking about that way forward.
Clearly, there is further work for us to do in determining our future relationship with the European Union. As the Prime Minister said, we are leaving the EU but we are not turning our backs on Europe. The next steps will not be easy. There will be complex negotiations ahead but we should approach them with the clear guiding principle of ensuring the best possible outcome for the British people. As the Prime Minister has made clear, the nature of negotiations, and the shape of any deal we strike, will be for his successor and their Government. That is why it will be for them to decide when to trigger Article 50.
In the meantime, there is a lot of ground to cover in examining the options available so that, when decisions are taken, we put our best foot forward and maintain Britain’s reputation as an open, outward-looking nation, maintaining our strong partnerships in Europe, continuing to play our role on the world stage, holding fast to our values of tolerance and respect, and showing that Britain remains open for business. That is something that we in Government will do with the input of all the devolved Administrations. It is something that I hope this House will play an important part in as well, for among the membership of this House of Lords we have an unrivalled expertise in EU and foreign affairs. We also have a range of EU committees, whose dispassionate scrutiny is admired here, in Brussels and around the European Union. That means that we are well placed to come forward with ideas to make a future deal a success for all parts of the United Kingdom.
I know that noble Lords will express views and have questions about the nature of further parliamentary involvement beyond that and the precise form that it will or should take. Those are valid questions, and the debate among legal minds has already begun. I know that our Select Committees may also choose to examine them, but those are questions which will, rightly, be for the next Prime Minister to address. I am clear, as Leader of this House, that Parliament should have an appropriate role. However, in debating what that role should be, we should be careful to show that our focus remains on delivering the referendum result and on applying all our knowledge and experience to make our future a successful one for the United Kingdom.
That is an important point and brings me on to the broader responsibility we have to bear in mind as we proceed, particularly as an unelected House. In the period since the vote there has been a lot of analysis and reflection about the reasons people voted how they did. The headline from those who voted to leave was clear: they wanted to leave the European Union. Their reasons will have varied and, for some people, may have developed over many years. However, whatever those reasons, we must take that message away and deliver on the instruction we have been given.
In doing so, we must also consider that the vote reflected something else as well: a frustration with the status quo: a sense that voters felt distant from those who exercise power and misunderstood by the people who make the decisions that affect them. So although we rightly must focus on the question of our place in Europe, as we do so, we must not lose sight of that desire for people to be better understood. If we are able to address the challenges we face with that in mind, we will build public confidence in Parliament and this House within it.
That means demonstrating that our focus is on delivering success for all the people of the UK, whichever way they voted, and on finding solutions that fit with people’s understanding of the choice the country made. If we do not, we will miss the opportunity before us and the gaps this vote highlighted will only become more entrenched between old and young, graduates and non-graduates and those living in our major cities and elsewhere—or, to put it another way, the gap between those who have privilege, power and influence and those who feel they do not.
Noble Lords may ask how we can possibly do all this. That is where we can demonstrate the value of our experience and expertise. I was never of the view that the people are fed up with experts, but I do believe that some of those who feel that gap I have just described may be fed up with experts not understanding them. In times of uncertainty such as these, people rightly look to those of us in positions of leadership to use our knowledge and our understanding of the challenges people face to develop an answer that works for them.
That may be the point on which to conclude because it reflects the essential challenge we now face. The result on 23 June was for the United Kingdom to leave the European Union. I campaigned vigorously for remain, as did many in your Lordships’ House, but I stand by the result of that referendum and want to work hard now to implement what has been decided.
As we proceed we must not forget the interests and views of the 16 million other people who voted to stay. In the disappointment many feel about the outcome of the referendum, there may be a temptation to simply leave to others the consequences of the Brexit vote. After all, although the result told us clearly what people were voting against, it did not give us a specific view as to what people were voting for. Yet the public as a whole, however they voted, deserve more. With the referendum result they have asked us to come together and to come up with a solution that works for everyone and achieves the best outcome for Britain on every possible front. It is our duty, as public servants to do just that.
There will be challenges ahead, of that I am sure, but it is for us all to find the way forward to meet them so that the United Kingdom can continue to prosper, as one nation, in the years to come. I beg to move.
Baroness Smith of Basildon (Lab)
My Lords, recently we have seen how strong leadership, good teamwork, thoughtful strategy and real skill can be effective and successful. Unfortunately, it has come not from politics or government but from the Welsh football team, which brought much-needed cheer to us all.
The debate over the next two days is not about the referendum campaign. We are all still seeking to understand what happens next and where we go from here. What alarms me, fuelled by the uncertainty that now affects so many areas of our life, is not only how few answers the Government have but how few questions appear to have been asked beforehand. Your Lordships’ House, with all its knowledge and expertise, which the noble Baroness acknowledged, recognised this and, during the passage of the legislation, asked the Government to prepare not only reports on the impact of Brexit but also contingency plans. The Government declined to do so.
It is therefore impossible to address the uncertainty without recognition of the false promises that were made on such a gigantic scale. The most obvious is the insistence before the vote that £350 million a week would be available to the National Health Service, before that being denied within hours of the polls closing. It is one thing to make promises in good faith, even if they cannot later be fully kept, but it is quite another to tell tall tales knowing that they are complete fiction. Both of those fuelled the current uncertainty.
In Questions last week, the noble and learned Lord, Lord Keen of Elie, was asked about the 3 million EU citizens living in the UK and the UK citizens living in the EU. Unable to offer any reassurances, he merely implied that EU citizens in this country would be used as some kind of bargaining chip when negotiating the rights of British citizens in other EU countries. In this House we all know that is wrong. It is unacceptable and must be resolved urgently. The longer this issue drags on, the more damaging it is.
We have had two prime ministerial Statements on this issue since the result. The fall-out has dominated articles, the airwaves, social media and conversations in our pubs, our shops and around dinner tables up and down the country. Since the result we have less certainty, not more. That is in part because of the way this has been handled by the Government, who apparently have no plan for dealing with the situation.
Having said he would see the negotiations through, the Prime Minister has announced his resignation and said they are a matter for his successor. I feel strongly that those who made their case by relying on information that was known to be false, or made promises they knew they would never be able to keep, have acted without integrity. When the new Prime Minister comes to appoint a Cabinet, it should be uppermost in her mind that commitment to the truth is an essential quality. We all know that we have a difficult road ahead of us and we must all play our part. We have to move forward in a way that is constructive and in the best interests of our country, of British citizens here and abroad, and of those who live and work here. In order to do so we must recognise that there are issues that cannot wait for Mr Cameron’s replacement.
For constitutional issues, absolute legal precision is required. How is the trigger for Article 50 authorised? Is this a matter for Parliament or the Executive? The Prime Minister has said that when to trigger Article 50 is a decision for the new Prime Minister. Is it the view of the Government that the decision lies entirely in her hands? Why would such a fundamental decision not be a matter for Parliament?
There remains a lack of clarity about the process of leaving the EU and when the decision takes effect. During the debate on the Statement, the noble Lord, Lord Butler of Brockwell, to whom I apologise for not telling sooner that I would raise this, asked an extremely important question of the noble Baroness the Leader of the House. He asked for confirmation of whether the UK’s departure from the EU would not be final until the end of the two-year negotiation process, and whether, when the terms of departure were known, it was the duty of the Government to ensure that the public had the opportunity to consider those terms. The noble Baroness did not answer the question, other than to confirm what we already know: that Article 50 will trigger a two-year process and that the current Prime Minister is handing responsibility for implementing it to his successor. But this is an important and serious issue on which a lot of lawyers are already in debate. Having given people a say in initiating the process of withdrawal, should the public wish to debate, discuss and vote on the terms of that withdrawal, will they be able to do so?
On the advice of senior and expert legal opinion, the report of our own EU Select Committee—very well chaired by the noble Lord, Lord Boswell—made the point, in the noble Lord’s words:
“Withdrawal is final only once a withdrawal agreement enters into force, so a member state that had given a notification under Article 50 would be legally empowered to reverse that decision before this stage”.—[Official Report, 15/6/16; col. 1223.]
But in the legal opinion published in an article on the UK Constitutional Law Association website, entitled “Pulling the Article 50 ‘Trigger’: Parliament’s Indispensable Role”, Nick Barber, Tom Hickman and Jeff King—all highly respected and regarded in the legal world—make it clear that once Article 50 is invoked and the clock starts ticking on the two years of negotiation, if no acceptable withdrawal agreement is reached, membership will cease without agreement. So, we have two heavyweight, serious legal opinions that are completely different. I am not a lawyer and it is not for me to judge which is correct, but surely the Government must clarify exactly how this works before embarking on the journey. That cannot be left to the next Prime Minister. Do the Government have a position that they have agreed with the EU and can they confirm what that is?
The noble Baroness said—I think she did so last week, as well—that the role of Parliament in the negotiations is not yet clear. That has been confirmed across the board by senior Conservatives standing for their party leadership. This is a critical issue. It is not just about allowing time for debates and it is not even about the scrutiny of decisions taken by the Government. These are the most profound, complex negotiations imaginable. We have 40 years of co-operation, 40 years of joint working, and 40 years of legislation to unravel and disentangle.
My colleagues in the other place, Seema Malhotra and Stephen Kinnock, have written to the Prime Minister with six key principles for how that engagement could be taken forward. Have the Government considered new parliamentary structures, such as specialist committees—possibly Joint Committees—for working on the detail of the negotiations and seeking advice from experts? And what consideration has been given to the role to be played by the EU Committees in your Lordships’ House and, as acknowledged by the noble Baroness, their vast expertise? Because as well as the legal process of disengaging and removing ourselves from EU institutions, we will have to examine areas as diverse as environmental protection, rights at work, consumer protection, crime and security, and transport, alongside, of course, the all-important trade discussions, which will include the issue of the single market and freedom of movement.
Then there is the legislation provided for through treaties and directives that will need to be confirmed in British law if we wish to keep it. Do we know how many such laws there are and in which areas? I sincerely hope that someone somewhere in Whitehall is trying to compile what I imagine will be the largest ring binder in history.
That is why the role of Parliament has to be clear. Once Article 50 has been triggered, we cannot afford to wait for six months while the Government start to consider what the processes in Parliament will be. In the Prime Minister’s statement there was more about the role of the devolved institutions and the Civil Service than about Parliament. And what about the role of those institutions and organisations affected—local government, our National Health Service, the police, the TUC, businesses, and the education, science, and arts and sports sectors? So many vital decisions that affect our economic, social and cultural life are now on hold.
When Mr Cameron committed to staying on for the negotiations it was accepted as providing continuity, but now the Conservative Party is having a contest for a new leader, who will be the new Prime Minister. The noble Lord, Lord Dobbs, has said that even he could not have scripted this story, and he invented Francis Urquhart and “House of Cards”. The role of Parliament in the negotiations should be set out by those who wish to be the next Prime Minister. The two main contenders for leadership have starkly opposing views, even on when negotiations should start. On Sunday, Theresa May, appearing on the Peston programme, said they should certainly not begin,
“before the end of the year. We need to establish our own negotiating position”.
She is not just a member of the Cabinet that gave us the referendum; she is the Home Secretary. Was the Cabinet really so unclear when it made that decision about what our position would be? Yesterday, Andrea Leadsom said we should trigger Article 50 and start negotiations straightaway. That is a continuation of the “act now, think later” politics that has created the current instability.
Last week, I asked the noble Baroness the Leader of the House about the Government’s programme for the coming year. She said that nothing has changed, but everything has: this is not business as usual. The legislative programme outlined a little over a month ago in the Queen’s Speech seems to limp on without recognition of the huge amount of new work that needs to be undertaken. Journalists have reported that senior civil servants already feel that Brexit will consume their energies for years to come. It will be the central focus of our policies, our politics and our Government: a massive collective effort from everyone and anyone involved in government that no part of the Civil Service will be able to avoid.
From Whitehall to local government, gaps in funding from the EU will have to be plugged, regulation undone and redone, and networks reworked. It is absolutely right that, as the Prime Minister said, the brightest and the best will be needed for this process, but we needed those people to work on our housing policy, to develop the UK as a centre of new digital and technological advances, and to deal with issues like those in our health service and businesses, and the demographic changes challenging our society. Just think what they could be doing now.
There is not a single sector currently being offered guidance or support from the Government on what the EU result means for them. There are no answers yet for our businesses or public services, who employ thousands of EU citizens. There are no plans and there is no advice for our more deprived areas about how to manage the withdrawal of EU funding. And our educational institutions, environmental bodies and the scientific community require advice, support and, above all, information.
Large employers are already drawing up plans to leave the UK, and the Government’s lack of certainty about EU citizens working for global companies based here is hugely damaging. This is the result of economic uncertainty.
The result of cultural and social uncertainty is uglier still and sharply felt. Since the EU result there has been a 57% rise in hate crimes and four times the national average of hate crime incidents have been reported. For those who invested so much in the ideals of Europe and those on either side of the campaign, the current political enthusiasm and interest should be harnessed for good. We want to see it focused in positive ways, not left blowing in the wind or, worse still, fuelling a greater distrust of politics and politicians. I doubt that the noble Baroness will be able to convince your Lordships’ House that the Government understood all the implications of a leave vote when they offered a referendum, but we now need urgent reassurances on the constitutional position and the role of Parliament. I accept that there are some issues that it is entirely reasonable to leave to the new Prime Minister, but not these.
More than ever, we need to unite around a common purpose of decency and tolerance. This is true for tackling the social uncertainty we are facing, as well as our current economic and political uncertainty. When the country is crying out for direction and leadership, we have a duty to answer. I believe that your Lordships’ House can be part of that solution, and as the Opposition we stand ready to play our part.
Lord Wallace of Tankerness (LD)
My Lords, I thank the noble Baroness the Leader of the House for the time set aside today and tomorrow to allow noble Lords to discuss the very profound outcome of the European Union referendum. As I expressed during our exchanges last week, I was devastated by the result of the referendum. Along with many of my noble friends and many Liberal Democrats, I have a profound and deep-rooted commitment to partnership with our European neighbours. Internationalism is in our very DNA. Our commitment is not to an institution in any particular form; rather, it is a commitment to the beliefs and ideals of the wider European undertaking of a peaceful, prosperous and united Europe, kindling a spirit of reconciliation and mutual co-operation among its members and promoting human rights and the rule of law. That is what I and many of my noble friends have striven for over our entire political lives, so the result of the referendum last week is felt very personally on these Benches.
We cannot be expected to give up these core beliefs, nor will we. We believe that Britain should be an outward-looking country that can thrive, innovate and lead in an open global economy, a country that works in partnership with those who share our values to overcome our common adversaries and sees the future benefits of close relations with neighbours and natural partners, investing in each other’s economies and sharing prosperity so that Britain can be even greater than it is now. The cry to “take back our country” is not one to which I can subscribe, because I do not believe that I ever lost my country. Reflecting on the words of my much-missed friend Charles Kennedy, I, too, have multiple identities—Scottish, British and European.
I am also a democrat, so I accept and respect the result of the referendum on 23 June, even if I am saddened by it. I also approach the result with some humility, for I know that I have to accept my share of responsibility not just for the result of the referendum but for the collective failure of politicians, institutions and the media to make the positive case over many years for the European Union and the benefits that it brings to this country. The referendum should give everyone in public life pause for thought. Too often the European Union has been used as a scapegoat or a distraction from failures in government. As my honourable friend the Member for Westmorland and Lonsdale, Tim Farron, has said:
“This vote has been a collective howl of frustration—at the political class, at big business, at a global elite”.
My deep concern is that, as we go forward, there is likely to be more dissatisfaction and frustration as people realise that much of what they were promised during the referendum campaign just will not be possible. The sad reality is that the alternatives offered by the Leave campaign will do nothing to help those in England’s poorer regions, not least because the Leave campaign offered very contradictory positions of what life outside the EU would look like.
That poses a fundamental question for liberal democracy and parliamentary democracy, which is based on attention to evidence, reasoned debate, a willingness to compromise and tolerance. Politics involves an endless conversation in which we learn about other people and see things from their point of view, trying to balance their needs against our own. You recognise the existence of different groups with different interests and opinions and try to balance and reconcile them. As Bernard Crick wrote in his book, In Defence of Politics:
“Politics is a way of ruling divided societies without undue violence”.
Yet we have seen some very troubling and violent scenes since 23 June. We have seen anger and frustration being translated into some nasty incidents of racism and xenophobia. Scores of racist encounters have been documented online, while over the weekend following the vote the National Police Chiefs’ Council revealed that hate crimes reported to our police had risen by 57% compared with the corresponding days four weeks previously. The careless and rash language of some Brexit campaigners seems to have legitimised the prejudice of some people to the point where they are targeting those who are visibly different. Of course it is only a small minority who perpetrate such outrages, but to the victims the impact is 100% and, in the communities from which the victims come, the fear is all too real. This is completely unacceptable and it must stop. This is not my Britain.
I believe that there are many layers and facets to why so many people voted to leave the European Union, some of which have already been mentioned. The vote was symbolic of a rejection of British multiculturalism; concerns about pressures on our schools, hospitals and GP surgeries; the housing crisis; the banking crisis; insecurities about employment; and the decline of our traditional industries. For me, the answers to these wider questions are both domestic and international. There is much that can be done in Westminster as well as much that could and should have been done standing shoulder to shoulder with our European neighbours.
If those who led the campaign to leave the EU have answers, we need to hear them now. Do they want to be in the single market or do they not? What level, if any, of freedom of movement do they wish to see? How will they retain the City’s passported access to European financial markets? Which taxes will go up and what spending will go down? How will they secure a bright future for our children and young people? One of the defining features of the reaction to the referendum outcome has been the utter dismay and even anger of young people, who believe that they have been deprived of the opportunities and freedoms that our post-war generation came to take for granted. Whichever side of the referendum divide we were on, we owe it to our young people to keep alive hope and establish co-operative links that will provide opportunity, of which the Erasmus programme is just one example.
There is a host of unanswered questions and during this debate a number of my noble friends will want to pose some of them from their particular areas of expertise. I hope that, when she comes to reply, the Minister will take them in the spirit in which they are intended, as some constructive suggestions to feed into the work of the unit being led by the right honourable Member for West Dorset, Mr Letwin.
Perhaps I may pose some further constitutional questions today, some of which have already been aired, in particular on the role of Parliament and of your Lordships’ House. First, last week during our exchanges I asked the Leader of the House about the process for triggering Article 50. I still await an answer. Let us remind ourselves that Article 50 states:
“Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements”.
However, there is currently little clarity as to what the UK’s “constitutional requirements” are in this regard. Will this be done by the Prime Minister acting alone, using the royal prerogative? Will there be consultation with Parliament in the form of a debate and vote in both Houses or just in the House of Commons? Does the Prime Minister need the consent of Parliament to act? Should there be legislation? There has been much legal and academic debate and discussion as to how Article 50 might be triggered, but to date there is no legal certainty. While I can see that there is a case for leaving to the new Prime Minister the issue of when to trigger Article 50, this Administration surely must have a view as to how it should be triggered. After all, in February we were blessed with a paper from this Administration on the process for withdrawing from the European Union. One would imagine that they will have given it some attention and thought. It would be to the benefit of Parliament and the country for the position to be clarified as soon as possible.
Secondly, what will be the role of Parliament and this House in particular in carrying out its scrutiny functions and its important constitutional duty of holding the Government to account during the process of negotiation with the other EU member states? What part can be played by the European Union Select Committee of this House and by the European Scrutiny Committee in the other place? It would be extremely helpful to have some indication from the Government of the principles that will underpin parliamentary scrutiny of this process. How do the Government intend to involve Parliament in deciding which laws and regulations that have derived from Europe we will keep and which we will replace? Once these decisions have been made, it is clear that much legislation will be needed to give effect to the process. Can the Minister confirm that Parliament will retain its important scrutiny function in this regard?
There are of course wider constitutional implications following the result of the referendum, bearing in mind that Scotland and Northern Ireland both voted strongly to remain in the EU. How will the Government consult the devolved institutions, by which I mean the Parliaments and the Assembly as well as the Administrations, to ensure that the needs of Scotland, Wales and Northern Ireland are properly reflected in the negotiations? Will Scottish, Welsh and Northern Ireland government officials be seconded to work in the special Cabinet Office unit? What role will there be for the London administration and for local and regional authorities in England to ensure that their diverse interests are taken on board? It would be helpful if the noble Baroness answered these questions when she comes to respond tomorrow evening, but I would welcome a commitment from her that, at least, the unit under Mr Letwin will give most thorough consideration to the issues raised in this debate, that she will return to this House periodically to ensure that noble Lords are kept well informed on the progress of negotiations and that the Government will make good use of the expertise in this House.
In the meantime, I am concerned by what already seems to be the abdication of responsibility by the Government in relation to several matters. This is only the sixth sitting day since the referendum, but I suspect that many noble Lords are already tiring of the expression, “The Prime Minister has been clear that decisions on issues relating to the UK’s exit will be for the new Prime Minister. I am therefore not in a position to make new policy statements in this area”. If there is one glimmer of reassurance, it is that at this time of great economic uncertainty and constitutional crisis, at least the noble Lord, Lord Ahmad of Wimbledon, has been prepared to step up to the plate to address the future of our bus services. How very British.
On one issue in particular, however, this Administration can and should take the lead and state openly and clearly that, come what may, European Union nationals settled in this country will continue to stay. The case for such an unequivocal commitment was eloquently made by the noble Lord, Lord Dobbs, yesterday during Questions. What kind of morality would make bargaining chips of the lives and livelihoods of people legally and responsibly settled here—their families, their livelihoods, their hopes and aspirations? It is not even a practical bargaining position. A Government who cannot even manage to deport foreign criminals with no right to remain are not credibly going to be able to deport up to 3 million EU citizens. In the dying days of this Government, surely the Prime Minister and his Ministers can show some moral fibre and pull something honourable, decent and fair out of the wreckage of their Government.
The Archbishop of Canterbury
My Lords, the events of the past two weeks have led to some of the most traumatic and dynamic changes that we have known. The course of the campaign was robust—as it properly should be on such great issues—but at times veered over the line on both sides: it was not merely robust but unacceptable. Through such comments were created cracks in the thin crust of the politeness and tolerance of our society, through which, since the referendum, we have seen an outwelling of poison and hatred that I cannot remember in this country for very many years. It is essential, not only for this House but for the leaders of both sides and throughout our society, to challenge the attacks, xenophobia and racism that seem to have been felt acceptable, at least for a while.
Just over a week ago, at Lambeth Palace, at the breaking of the fast of Ramadan, I shared an iftar with the new Mayor of London, Sadiq Khan, and the Chief Rabbi. There were more than 100 young people of every faith and of no faith there. That sense of hope and energy for the future carried us through the rest of the week. It is there and we can reach for it. If, however, we are to thicken the crust through which the cracks have come, if we are to move to a place where we are not yet speaking of reconciliation but beginning to get on a path where in future healing and reconciliation will begin to happen, we need to beware. St Paul, in his letter to the Galatians, says to them at one point:
“Love one another, cease to tear at one another, lest at the end you consume one another”.
We are in danger of doing that in the way that our politics is developing at the moment. If we are to tackle that, we have to put in place some fundamental issues to be capable of creating the agile, flexible, creative, entrepreneurial and exciting society—full of the common good and of solidarity and love for one another—which is the only way that this country will flourish and prosper for all its citizens in the world outside the European Union of the future.
The biggest challenge we face if we are to be effective in creating a new vision for Britain, a vision that enables hope and reconciliation to begin to flower, is to tackle inequality. It is inequality that thins out the crust of our society and raises the levels of anger, resentment and bitterness. We have done it before; this is not new. In the 19th century we tackled inequality. In the great Governments following 1945 we tackled the inequality that had been so ruinous to our society in the 1930s and led to the failures of that time.
The tools for tackling inequality are as readily available as ever. They are the obvious ones of education, public health—we would add today mental health—and housing. We must, however, take up those tools and invest in them. I am glad that the education side of the Church of England, which I believe my right reverend friend the Bishop of Ely will speak about later, has just launched a fresh vision for education that draws together not only the need for skills but the need for a whole person, deeply imbued with the virtues, hopes and aspirations that we will need in our society.
However, we also need investment in public health and to narrow the inequality gaps that have emerged in recent years. Last week we saw horrifying figures on the levels of child poverty in this country. We have seen a widening of the unfairness in our society, and with that it is no surprise that some shocking things have emerged in the last few days. Those tools, however, cannot be used effectively if they are held in some kind of vacuum of values. We need a deep renewal of our values in this country. We need a renewal of a commitment to the common good and of solidarity. We need a sense of generosity, hospitality and gratuity, of the overflowing of the riches and flourishing that we possess, not only into our society but across the world.
The issues of immigration and the hatred expressed to those who may have been here for two or three generations are not to be solved by simply pulling up the drawbridge. Neither will the plight of the many British citizens in Europe. This morning I was talking to the Bishop in Europe, whose churches many of them have attended, and hearing of their massive concern and deep insecurity. I am so glad that the noble Baroness, Lady Smith, the noble and learned Lord, Lord Wallace, and the Lord Privy Seal have all been clear about the unacceptability of treating people as bargaining chips. I add my voice to that.
We are to have a new sense of values. On a Friday in December, if the usual channels are as helpful as they have promised to be, I hope to hold a day’s debate on the nature of British values. That has become much more important and I hope that some of your Lordships will be able to participate. We cannot despair. Many of us will have been part of the 48 and some of us among the 52. To bring them together for a country that flourishes for all its citizens is now our great challenge. I started with the scripture of St Paul and I will finish with Deuteronomy. As the Israelites were about to enter the promised land, God said to Moses:
“The eternal God is your refuge, and underneath are the everlasting arms”.
We live in a society deeply embedded in that sense of destiny and of hope. We can catch hold of that hope and be that agile, flourishing and entrepreneurial society that will benefit the poorest and richest—one that will reach out with a forward foreign policy to the poorest around the world and can renew the standards that we believe are the best of this country. I hope that in this debate we will have that sense of optimism and hope.
Lord Lawson of Blaby (Con)
My Lords, one of the most momentous decisions of our time has now been taken. Parliament agreed by an overwhelming majority that the people should decide in a referendum whether our country should stay in the European Union or leave. The people decided, on a massive poll, that we should leave.
It is regrettable that some, unhappy with the result, seek to prevent its implementation, whether by way of a second referendum or some other device. It is difficult to imagine anything more irresponsible, either democratically or politically. I can only assume that living in an elitist London bubble they are blithely unaware of the alienation of a large and growing section of the British people from the London-based political and banking establishment. Any attempt to overturn the referendum result would invite mayhem of the most grievous kind. It would not only be dishonourable, it would be playing with fire. I invite those who entertain this desire to consider the consequences. Incidentally, they might also reflect on what their response would be had the referendum produced a majority to remain in the European Union and the disaffected losers then demanded that it be re-run.
The only question before us is how best to implement our departure from the European Union. Our starting point should be that we wish the best possible relationship with the peoples and Governments of Europe, against whom we have no grievance whatever and a multiplicity of mutual interests. One important point that follows from this is that we must respect the EU doctrine that to remain a member of the so-called single market we would have to accept the freedom of European citizens to live and work here. That is something the British people have made clear is not on, so we must accept that we will be outside the single market. That is scarcely a disaster. The rest of the world is outside the so-called single market and trades happily and profitably with the European Union. You do not need a trade agreement to trade. Moreover, if we were to seek some special trading relationship with the EU, not only would we be adopting the position of a supplicant—which I do not like—but it would be a futile quest.
Following the invocation of Article 50 of the Lisbon treaty, it is important that our negotiations with the EU are completed as speedily as possible. A prolonged period of uncertainty can only be damaging for British business and the British economy. By ruling out the chimera of trade negotiations, a speedy process becomes practicable. Among the issues that will need to be agreed is the position of existing EU nationals resident in the United Kingdom and existing UK nationals resident in the European Union. In common with other noble Lords, I am appalled by the unwillingness of the Government to give a clear undertaking that EU nationals resident here before 23 June will be able to remain, come what may. Not only would it be unconscionable to require them to leave but doing so would be deliberate discrimination against Europeans since there is clearly—and rightly—no intention of requiring Americans or any other non-Europeans resident in the UK to leave. That is no way to build the close friendship we seek with our fellow Europeans across the channel.
Instead of wasting time and energy on a futile and wholly misguided attempt to secure a trade agreement with the EU, the British Government need to focus on how we plan to conduct ourselves as a self-governing nation outside the European Union. A whole range of issues need to be addressed, from the precise nature of our immigration controls—which need to be a single system applying to Europeans and non-Europeans alike—to how we will support our farmers following our exit from the CAP. The Government also need to repeal the European Communities Act 1972, which makes UK law subordinate to EU law, with a delayed commencement date to be determined by Parliament in due course. Meanwhile, a study needs to be undertaken of the vast corpus of EU regulations presently on the statute book to decide which we wish to retain, which to amend and which to scrap altogether. All this is a substantial and vital undertaking, which needs to be started now. It is all entirely in our own hands and not a matter of negotiation with others.
The result of the referendum was a tribute to the courage of the British people. Project Fear may have been successful in reducing the size of the Brexit majority but most of our fellow citizens declined to be cowed. The next Government and the next Prime Minister, whoever he or she may be, will have a historic opportunity to make the United Kingdom the most dynamic and freest country in the whole of Europe—in a word, to finish the job that Margaret Thatcher started—and to become a beacon to our European friends, currently embroiled in a failed and doomed experiment.
Lord Radice (Lab)
I will not follow the noble Lord, Lord Lawson, in what I thought was a less than generous and in some areas ill-judged speech. Of course, it is true that the referendum and the consequences following it have been a shock to many Members of Parliament, not only to those who supported remain but also to those on the leave side as well. You had only to see the faces of Boris Johnson and Michael Gove on the day of their victory to understand that. I confess that the last fortnight has delivered hammer blows to the two great passions of my political life: the relationship between the UK and its continental partners, and the idea of a Labour Party capable of winning general elections. However, all of us—do not laugh on the other side—have a duty to work our way through the linked crises that face us and try to produce long-term policies in the national interest.
I do not want to dwell on the referendum and the campaign itself. We will leave that to the historians—there are some around here. I will just make one or two remarks about it. It is astonishing that David Cameron, who started by advising his party not to bang on about Europe, should have got himself embroiled in an in/out referendum that not only split his party but brought about his own political downfall. During the campaign, the remain side rightly explained the consequences of leaving the EU but it did so in an exaggerated way—I do not believe it was Project Fear but certainly there were some exaggerations—and without making a positive case for staying in. It is a long-standing criticism of British politicians of all persuasions that they failed to make the case for British membership while they had the chance. Even Tony Blair, who was very strongly pro-European, made his best speeches on Europe in Warsaw and Strasbourg rather than in the UK. We are reaping what we have sown.
As for the victorious leave campaign, to its shame it went well beyond exaggeration, especially over the cost of British membership, immigration and the prospects for Turkish membership. We have just heard a wonderful speech from the most reverent Primate the Archbishop of Canterbury. We need to draw important lessons from what happened in that campaign. We all need to act with a certain amount of humility. This is an emotion not always associated with the noble Lord, Lord Lawson, but I think he might have shown it on this occasion.
Where are we today? I suppose that we are where we are. Despite the deep divisions in the UK—with London, Scotland, Northern Ireland and the young, above all, voting the other way—there was a narrow majority for Brexit.
What should we do now? First, whatever the long-term consequences, we must avoid short-term economic damage if at all possible. I welcome the Chancellor’s decision to abandon his fiscal squeeze. I also welcome the Governor of the Bank of England’s announcement that the Bank will take whatever action is needed to support growth. One of the most disgraceful features of the leave campaign was its attack on the Governor of the Bank of England. My goodness, they need him now.
I believe it is right to delay invoking Article 50 for leaving the EU because we need time to work out a post-Brexit plan. Indeed, it was quite astonishing that the leavers had no plan themselves. Only Boris Johnson would have had the chutzpah, in yesterday’s Telegraph, to call on the Government to come forward with a post-Brexit plan. He was meant to be the leader of the leave campaign and, until a few days ago, a candidate for the Tory leadership and a putative Prime Minister. The truth is—as we know and knew all along—that there was not and is not a plan. We need one badly.
The noble Lord, Lord Lawson, referred to the basic conflict of objectives. First, we need access to the EU which is by far our biggest market. Secondly, this almost certainly requires acceptance of free movement of labour. Unless there is some change in the EU position—for example, an emergency break—we are at an impasse which we will need to work through. I do not think we can do it by abandoning our role in the single market. That is a typical Lawson throwaway. I do not believe it will work and it will be extremely damaging to British industry.
If we are honest, we ought to mention the very unpromising political background that has occurred as a result of the referendum vote. I noticed the headline in last week’s Economist—“Anarchy in the UK”. I think that was going a bit far but the reality is that, since the resignation of the Prime Minister, there is no real Government with authority. We have an unseemly scramble for office—more like “Game of Thrones” than “House of Cards”.
The Labour Opposition, with the exception of course of the Labour group in the House of Lords, is also in a mess. Its Members of Parliament have lost confidence in their leader. This leaves us in quite a difficult situation. I will leave the Tory party to its own devices, but there is no doubt that the Labour Party has to sort out its own problems as quickly as possible at this time of national crisis.
My last point is that, in this linked series of crises, we need the help of Parliament. We need Joint Committees of both Houses to oversee any post-Brexit plan that emerges, the invoking of Article 50 and any subsequent negotiations. We have a role to play. In times of national crisis, when governments and parties have been found wanting, we need to turn to our national Parliament for advice and help.
Lord Campbell of Pittenweem (LD)
My Lords, it is always a pleasure to follow the noble Lord, Lord Radice, whose commitment to the European cause is long-standing and equivalent to that of any other. The temptation simply to say that I adopt the speeches of my noble and learned friend Lord Wallace and that of the most reverend Primate is almost overwhelming.
I am deeply disappointed by the outcome of the referendum and I wish to draw some conclusions from that. I hope that the noble Baroness the Leader of the House, will not feel it too presumptuous of me if I say that, from time to time in her speech introducing the debate, I felt more than an echo of Candide: “Everything is for the best in the best of all possible worlds”. Unhappily, it is not.
My disappointment, like that of others, has only been exacerbated by the rise in racial incidents which make me reluctant to believe that this is still my country. Those who have led us out of Europe bear a heavy responsibility which I have yet to see them accept or embrace. Mr Johnson, whose fondness for cricket is well established, has retired to the pavilion, having been run out by his partner. Mr Farage has resigned—not for the first, but for the third time—and I think we can believe, with some confidence, that this may not be the end of the chapter.
The truth is that never in peacetime has the United Kingdom faced such uncertainty with such little prospect of early resolution. We are divided socially, politically and economically, and—this is a matter close to the heart of all of us from Scotland—the very future of the United Kingdom is now at stake. Issues of this kind are often explained by the theory of unintended consequences. I have a different theory—the theory of inevitable consequences. It is a theory that we may have cause to revisit tomorrow after the publication of the Chilcot report. We have alienated a generation of young people. If noble Lords doubt that, they should look at the demonstrations and see the average age of those demonstrating with such commitment and enthusiasm.
We have embarked upon a period of economic uncertainty which is gradually, although not necessarily perceptibly, beginning to affect decision-making. This is not about the stock market or even about the pound. It is about the decisions being made in boardrooms not to invest, not to expand and to consider whether the best interests of their businesses would be served if they were located in the European Union.
There is a paradox. The regions which have had most economic assistance from the European Development Fund have rejected the European Union. How shall we provide the substitute finance in order to compensate them for that unwise decision? The regions most likely to be adversely affected are among those who decided to vote to leave. Again, how shall we deal with the issues of housing, education and transport which may have prompted these individuals to leave the European Union? What about talented individuals and professionals with portable employment skills, such as surgeons and those in information technology, who are increasingly being said to be ready to leave the United Kingdom?
We have just had from the noble Lord, Lord Lawson, assurances that we are entering a new golden age of economic success. Sunlit uplands was the only expression he did not use. We are going to have increased influence in the world but my question is when? No one has yet been able to give an assessment, or indeed made an effort, to lay down a date by which we will enter this combination of Arcadia and Utopia. Any party which went to the country in a general election, effecting to offer promising economic progress, but which could not state the date of it, would be laughed out of court—and rightly. Yet, this is the proposition which the people of the United Kingdom are being invited to accept.
There are two inevitable consequences and it is worth looking outside the United Kingdom. First, the efforts of the European Union to deal with Mr Putin will inevitably be diminished by the departure of the United Kingdom from the Union. Mr Putin has two objectives; they are there for all to see—the destabilising of the European Union and the undermining of NATO. We have helped to destabilise the European Union by the decision we now propose to take. Also the relationship which we enjoy with our closest ally, the United States, will inevitably be different, not least because, of course, President Obama went out of his way to say how important it was for the United States that Great Britain was an active member of the European Union, echoing the policy followed by the White House since the days of President Kennedy. Inevitably, the United States will look for a closer relationship with another country in Europe. That is an inevitable consequence of what we are about to do. I think it is equally inevitable that that relationship will be with Germany, echoing the relationship between George Bush senior and Chancellor Schmidt, albeit that that was some years ago. None the less, it was a productive one.
It is said that we are all Brexiters now. Well, I am not a Brexiter and I hold fast to my belief in the European Union for all its faults. I draw attention to this fact: those of us who argued to stay in were willing to acknowledge the faults in the European Union. However, I never heard those who argued to leave acknowledge any of the merits or advantages of doing so. How long will these negotiations that we are talking about take and how easy will they be? The 27 members with whom we shall negotiate will inevitably be bound to follow their own national interests—how could they do otherwise?—particularly Angela Merkel and Mr Hollande, both of whom have general elections next year which already promise to be fraught with difficulty for them. What will be the role of the legislators? Have we to accept anything and everything which is put before us? An unelected House is in a different position from the other place. What is my responsibility, and that of all other noble Lords, if legislation is put before us which we regard as defective or not part of a sufficiently generous settlement between ourselves and the rest of the European Union? Are we simply to accept these things without quibble? Are we simply to say, “Yes, the people have spoken, therefore we must follow that, even if it is our considered and conscientious judgment that to do so in a particular area of legislation is not the correct thing to do”.?
I discount the possibility of a second referendum. I also discount the possibility of a successful challenge in the courts. However, I say this: those who have brought us out dream of an England that never was and a United Kingdom that never can be. We have set ourselves on that path. It is inevitable that I should follow it, but I tell the House this: I do so with a heavy heart.
Lord Boswell of Aynho (Non-Afl)
My Lords, it may help the House if I confine my remarks as chair of the European Union Select Committee to the immediate task in hand: that is, making the most effective and constructive input we can, as a committee, to the Brexit process. It is not for me, as chair, to express today a view on the timing of withdrawal or of notification under Article 50, or in any way to prejudge decisions that will be for the incoming Prime Minister.
In times of turmoil, it is wise to “keep calm and carry on”, but not to the extent of ploughing on regardless. For our 43 years of European Union membership, our committee and its sub-committees have grounded our work in the scrutiny of documents, and we have together made good use of Members, many but by no means all of whom have specialist experience, alongside an expert staff. We have built a reputation for independent, evidence-based inquiry, demonstrated most recently by the huge amount of interest generated by our report published in May on the process of withdrawing from the European Union.
I should stress that we simply cannot give up on scrutiny. The EU continues to develop legislation and policies with an impact on the United Kingdom, its businesses and its citizens for as long as we remain members. Even thereafter, in areas where continuing involvement with the European Union is possible, such as single-market and security issues, decisions reached now at EU level could have a continuing impact on our future interests. I am therefore glad that the United Kingdom Government have made it clear that they will continue to be represented at Council meetings, and that the Government will continue to provide explanatory memoranda to us for European Union documents.
As a committee we will continue to fulfil our scrutiny duty but will strive to keep it proportionate and will put a particular focus on issues relevant to the withdrawal negotiations and our long-term interests. But our remit is not limited to scrutiny, and it is clear that a new focus on Brexit will be required. We are pleased that Oliver Letwin, who heads the new Brexit unit, has agreed to see us, alongside the Europe Minister, David Lidington, later today. I hope that our committee will be in a position to publish some initial thoughts on how this House can best scrutinise the withdrawal negotiations before the Summer Recess. That is, I suggest, a matter of both operational arrangements and the major subject areas of concern.
We are conscious of the risk of duplication and overload, so we will look at how best to collaborate or co-operate with other committees in both Houses. We will also build on our existing good links with the devolved legislatures and Administrations. It is clear that in a fast-moving situation we will need to enhance communication with all the main players and find innovative ways of picking up the phone and talking to people, and we must be ready to show flexibility and make changes as appropriate. I remind noble Lords that we as a committee are not conducting these negotiations; we are scrutinising them, and our use of resources should reflect that practical reality.
Nevertheless, I note, looking around the House, that there is a rich resource of experience here on the Whitehall side, and I hope that ways can be found for the civil and diplomatic services to tap into this to supplement their existing resources. I myself was once drafted in to help out with a comparatively minor crisis a generation ago, and suggest that Whitehall often does its most productive work when the scale of events demands innovation and flexibility. I should stress, though, that this is not an area of work I would seek to put through my committee.
Instead, we can perhaps as a committee help more effectively in two other areas. First, we are charged with representing the House in interparliamentary relations within the European Union. I hope that we will keep up our bilateral ties and friendships with colleagues in other European member states to maintain mutual understanding in testing times—although, of course, I invite colleagues outside our committee also to maintain that process and to feed it into us. Secondly, I believe very strongly that we have a real duty and democratic obligation to the country, as well as to this House, to do our best to analyse and explain unfolding events. We have all already heard horrible stories of intimidation but are also very well aware of the wider subcurrents of concern and uncertainty felt across our society.
As a committee, we have a continuing duty to provide evidence-based, non-partisan, timely analysis of events as they unfold. Much of that work will continue to bear fruit in reports from my committee, although I am also giving some thought to how I might respond more informally to issues raised by colleagues.
We now have to make the best job we can, for the sake of both our own country and of our neighbours and allies. The process must start with a readiness to contemplate necessary change and to work with others to ensure that, as I hope and believe, the outcome will be one that all of us can live with.
Lord Birt (CB)
My Lords, some voting for Brexit were sincere British nationalists, opting for the romance of freedom and independence. For most, however, it was a vote of pure protest against an elite that has let them down. Our failure in the UK, as elsewhere, effectively to regulate the financial sector and to be prudent with government finances has brought nearly 10 years of austerity.
Immigration is vital to our economy, it enriches our culture and society and I support it wholeheartedly. But the biggest surge in immigration in our history has, in recent years, brought incredibly rapid change to agricultural centres such as Boston in Lincolnshire, and to our older, poorer industrial areas, and it has placed a heavy strain on our social fabric. In the past three years, for instance, Peterborough’s maternity unit has been closed on 41 occasions to women about to give birth—a traumatic experience—for want of capacity in one of the UK’s fastest-growing cities. That is an unpardonable failure of government to forecast need and to provide.
While it is easy to understand the frustration and anguish that has prompted the Brexit protest, the vote is a catastrophe for the UK and for its people. One of the EU’s most important achievements, alongside other international institutions, has been to foster a stable, collaborative environment in Europe after centuries of destructive conflict. This is especially poignant for me at this moment because, 100 years ago last Friday, my grandfather Joe went over the top on the first day of the Battle of the Somme. As a child, I knew him well and was transfixed by his many tales of that horror-laden and wasteful war. Weakening the ties that bind Europe together cannot be in our long-term interest.
For our economy, the consequences are immediately adverse. I have witnessed that for myself in the first full working week since the Brexit vote, and old and trusted colleagues in the finance sector have shared their own direct experiences with me. I will give some examples; I could give more. I have had a briefing on a major Asian financial institution pulling out of a done deal to acquire a major and valuable British company. I know of another sales process involving a major British-owned company which trades heavily all over Europe that was stalled because of buyer unease over Brexit, and because debt financing was now uncertain. If negotiations within the EU are prolonged, our economy will be racked by uncertainty for years to come. The Chancellor has already been forced to withdraw the targets for reducing our still massive indebtedness. We risk a recession and a further shock to our system when we are not yet over the last one, and we risk 20 years or more of continuing austerity, not just 10.
Our only hope is to negotiate terms to remain full members of the European single market. The notion of some in the Brexit camp that we should not want to be an equal participant in the biggest market in the world beggars belief. They appear not to have the slightest notion of how global markets work or of how complex are the activities of leading British businesses. We are paying a high price indeed for their naivety, for the professionalisation of our political parties and for the diminishing life experiences of some of our leaders. Nor do the most buccaneering of the Brexiteers appear to have the slightest notion of how global investors operate: how professional and how aware of risk they are. It will be entirely rational for global investors to be extremely cautious about investing in the UK until there is crystal clarity about all our circumstances.
But negotiating to remain part of the single market will not, of course, be easy, for our negotiating position is now weak. We need access to Europe’s markets far more than Europe needs access to ours. Some EU members will want the UK to pay a painful price in negotiation in order to discourage exit or secessionist movements in their own countries. Some sectoral interests in Europe will press to advantage themselves over their British counterparts. Some electorates, wounded by a sense of British rejection, will want their leaders in turn to reject us. I work a great deal in Europe these days and I had many pained emails last week from European business friends and colleagues. One senior German industrialist recounted an exchange he had witnessed in his local bakery, with an overexcited shopkeeper shouting that Germans had to accept as a reality that the British hate Europeans. Local Mercedes workers in the same queue joined in angrily to assert that Mercedes should find other markets to sell their vehicles. Being nice to the Brits may become bad politics.
Yet we must hope and we must strive. Britain is already a member of the EU on special terms—absent from the euro, absent from Schengen—and there is a mutual interest in the UK remaining in the single market. While other countries will not easily give up the notion of the free movement of labour, perhaps all will recognise the advantages for all members of qualifying that freedom to gain the economic benefits while reducing social friction. Let us hope that we can find an accommodation. If at all possible, we need an exit negotiation which is not prolonged but rather is simple and quick and reduces uncertainty for all. Without that, the white-water ride ahead could be very rough indeed.
Lord Maude of Horsham (Con)
My Lords, I took no part in the referendum campaign. I felt no temptation to campaign on either side and so feel none to revisit the campaign today in the way that some have already done and others will, no doubt, do. Suffice it to say that I found the claims made on both sides of the argument to be exaggerated and overblown. The more I listened to the discussions and debates and the more I read, the more convinced I became that the arguments were far more finely balanced than either side would accept.
I have some history in this. In the late 1980s and early 1990s I had a season ticket to Brussels. I had a seat, successively, on the Internal Market Council, the Foreign Affairs Council, ECOFIN and the Budget Council. At the invitation of my noble friend Lord Lamont, who was then Chancellor, my signature adorns the Maastricht treaty. He found himself unavoidably detained on that day and said, “Francis, this is your chance to put your footprints on the sands of history”. I have frequently been invited to recant that youthful act but have never been tempted to do so, because I think the Maastricht treaty could have been an inflection point in the development of the European Union. It could have been an end to the theology of one size fits all; it is binary, you are either completely in or completely out. At that point we became a partial participant in the European Union. Sadly, after 1997, the differentiation disappeared and the one-size-fits-all ideology regained its momentum.
I shall set out a few reflections on what should happen now. We do not need to rush this. We need to allow time for emotions to settle and for things to become a little clearer. The less seen of Mr Farage in the European Parliament the better. That kind of behaviour is not likely to create good conditions for us to conduct the necessary and difficult discussions that lie ahead. It cannot make sense to trigger Article 50 early when precisely the people within the European Union who are urging it are exactly the people who are urging retribution and who think that Britain must be punished for this intolerable act of insubordination. We need to pick our time and in the meantime engage in sensible, grown-up conversations with other nation states. It does not all have to be done at once. The priority is to maximise our participation in the single market. That is not as simple as it seems because the single market is nowhere near as complete as it is sometimes made out to be. I completely understand the argument, made passionately by the noble Lord, Lord Birt, for certainty. But a bad certainty now does not trump a better certainty later, so taking time makes sense.
Reform of freedom of movement has its own momentum. I suspect that some changes will come on that, irrespective of what Britain asks for. It will be increasing clear that our economic interests and those of the rest of the EU remain closely intertwined. This is not a zero-sum game. Economic activity lost to the UK will by no means automatically migrate elsewhere in the EU. We are and will remain the second biggest economy. If we start sneezing as a result of actions deliberately designed to harm us, economies on the continent with immune systems that are, frankly, rather weaker than ours will soon catch a cold.
There is a danger here of those who have made predictions taking decisions that make those predictions come true. On trade agreements, it was said by the United States that Britain would be at the back of the queue and that no one would want to make a trade agreement with Britain. I tested this in my last week as Trade Minister in Washington, at a dinner attended by many trade experts including several former trade representatives from both sides of the aisle. I asked whether this was correct and with one voice they said, “Nonsense. We would do a trade agreement with Britain in a heartbeat”—and, to be frank, it would be a lot easier than completing the TTIP negotiations with which I was engaged. They are moving extremely slowly at the moment.
Likewise, on EU nationals, to echo points that I have made at other times in the Chamber, the Government should immediately make clear that position of the 3 million or so EU nationals already settled here will be protected. It cannot make any sense to hold out on that. It will be much better to establish the uncontested truth that these 3 million nationals want to remain here. This makes the point of how interlinked our economies are and will remain.
There is a movement towards reform within the European Union. Maybe this is wishful thinking—we have often tried to persuade ourselves that there is a movement for reform. We used to say that Maastricht was the high-water mark of federalism. But clearly there is growing frustration with the outdated certainties of Juncker. There is widespread anxiety about the undiluted doctrine of free movement. We used to talk about the free movement of labour, but that was in a different world without the huge disparities in wealth between member states that enlargement has brought.
Is it wishful thinking to believe that there may be constraints emerging on the freedom of movement that will be sharpened and made more immediate and pressing by Brexit, but also by the French and German elections that are coming up and the need for the mainstream parties not to be outflanked by the parties of the far right? There is a clear need for greater integration within the eurozone if it is to survive. There has to be a question mark over that, given the Commission’s reluctance to use even the powers that it has at the moment to enforce fiscal clarity.
The European Union needs to move away from its binary view of life—that you are either in the club or out of it and that there is only one way to be a European. At the moment we are a 65% participant in the European Union: not in the eurozone and not in Schengen. I hope that the outcome of this vote at some stage will be that we remain a participant—not a member, that decision has made—but I hope that it will not be in a European Union that is in that sense binary, and that what we used to call variable geometry will come to live again, with different countries participating to different degrees for different purposes. That is what could have been and can be again. I put the chances of its happening as no better than 50:50—so we should stabilise as best we can and show commitment to preserving as much of the trading relationship as possible to discourage disinvestment and to encourage investment.
The Government can now make the investment decisions that lie within their power. I am sorry to see the Government deciding to postpone the decision on airport expansion. That can and should be taken quickly. There are also decisions on licences for the exploitation of shale gas—a commodity that will be produced domestically for domestic consumption, with no EU implications whatever—which can and should be made as quickly as possible. So we should take our time before triggering Article 50 and do it in a considered and measured way.
Lord Berkeley (Lab)
My Lords, the Lord Privy Seal introduced this debate. I suppose that we should look on her as the Leader in your Lordships’ House of a caretaker Government who are commitment-light apart from on one thing—her statement that the Government have an instruction to implement the referendum. As I think my noble friend Lord Foulkes tried to intervene to say, the referendum is advisory. We now have a situation in which the campaigners are all gone. We are to have new leader of the Tory party who appears to believe that she has a mandate to leave the EU, but has a blank cheque and few views as to how this should be done and what should be done.
My noble friends Lady Smith and Lord Radice both said—and I agree—that parliamentary approval is needed before Article 50 is implemented. Probably this should be later, when we know the details. It is extraordinary that the Government have not given any information about this. Few people seem to have known what the consequences of Brexit would be and people still do not know, although some are learning fast. Some of those voting to leave in the biggest proportions were the silver-haired generation, like me. I do not support leaving. Sometimes I felt that they were almost fighting the last war. We have to get over this. The fear of migrants is very unpleasant.
The noble and learned Lord, Lord Wallace of Tankerness, and others commented that the younger generation is being committed to an unknown and fearful future. Of course, the Government managed to avoid 16 and 17 year-olds voting on this, which is their future. They are rightly angry—indeed furious—that a small part of the Conservative Party has inflicted this on them without spelling out the consequences.
Europe has brought peace, as many noble Lords have said. In the 1970s, for several years I lived in Romania and saw the effect of the failure and the lack of free movement of people. I do not accept that Romanians, Bulgarians and Polish people should not be allowed to move freely. They are in the European Union, as I hope we are. It is extraordinary that people can want to go back to a time when there were frontiers and you had to get permission to leave and sometimes, in the communist era, it was a great deal worse. Peace is very important and, as many noble Lords have said, it is essential to retain freedom of movement.
The campaigners for Brexit intentionally mixed up the freedom of movement of people within the EU with the problem of migrants. I am chairman of the Rail Freight Group and do a lot of work looking at how we get freight between Calais and Dover with all the migrant problems there.
What people do not seem to realise is that if we leave the European Union, the French Government have already said that they will remove all their controls, camps and everything else to prevent migrants coming here. They will probably start running ferries of migrants across, because as soon as they land in this country they can claim asylum. Heaven help the Home Office if it has to deal with 10 times the number of migrants coming in because we have left Europe. We must keep separate the issue of migrants—how many should come and how that is done, which I know that the Government are taking forward—which does not apply to people within the European Union, where there is free movement, and make sure that everybody understands the difference.
The single market covers much more than the odd truck going across and the odd manufacturer. It covers most of the things that our businesses do in this country. It covers science research—I declare an interest as a trustee of Plymouth Marine Laboratory—manufacturing, finance, which many noble Lords have talked about, agriculture and rail freight, in which I declare an interest as chairman of Rail Freight Group.
The noble Lord, Lord Birt, talked about uncertainties which are bringing massive changes and job losses. Why does the Tory party seem to think that this is a good thing? In the campaign, some of them said that we will keep the single market and stop migration. It is a naive way of approaching negotiations with the European Union to think that we can impose on it what we want and expect it to accept it. I still spend a lot of time in Brussels on rail freight business. We are negotiating between two equal parties, but some of them are heartily sick of the way we have been changing our mind, having a go at them and trying to get little changes here and there over the past two years, so it will not be easy. As my noble friend Lord Radice said, Angela Merkel has said there will be no single market without free movement of people, so we have to sort this out.
It is not right that Parliament needs to implement this on the basis of a very narrow majority in an advisory referendum for the leave campaign, now demonstrated as being based on flawed information, untruths or worse. I fear that the same reason is there now as a year or two ago: the fear in the Tory party of UKIP, which will force even the most pro-Remain Tory Members to vote for Brexit regardless of the damage to their constituents and the UK. I see this as real arrogance and putting party infighting before the needs of the country. It is breathtaking. What is the solution? Perhaps we should be looking for a coalition of right-minded Labour, Lib Dem, SNP and others—even Tories—to stop this disaster in its tracks before it goes even further.
Baroness Kramer (LD)
My Lords, while politicians—I include myself in that group—talk, two parties try to sort out their leadership issues and the leadership candidates for the Tory party, of whom the winner will become Prime Minister, try to sort out what on earth their platform will be for negotiating with the EU, businesses are making decisions. They are not making short-term decisions on market movements today, tomorrow or next week; they are making decisions about their long-term future. So many businesses that I and others in this House have talked to recognise that everything they have heard from the Government suggests that they are not really interested in protecting them. The businesses I have talked to—I should be interested to find others that take a different view—are making their decisions based on access to the single market. Large companies and small—I talked again today with members of the Federation of Small Businesses—require that access to be able to export, which underpins their potential as companies. They are either direct exporters or in the supply chain and need access to the European market.
It is not just an issue of tariffs. They are concerned that as regulations diverge once we leave the single market, they will be required to run two sets of operations: one to meet UK regulations, one to meet EU regulations. It will require certification and documentation, and the estimate is that divergence in regulation is equivalent to a 10% tariff. That already threatens their viability as future exporters into the EU or their role in a supply chain.
They are making decisions now. We know from talking to the Institute of Directors and the FSB’s recent surveys that most companies have imposed a hiring freeze; it turns out that small businesses are actually cutting head count. Most of them have cancelled major contracts. They are deferring investment decisions. I have not heard of any foreign investor who is bringing significant money into the UK. We were the recipients of some of the largest amounts from foreign investment funds. They were behind our business, they countered our current account deficits but they are evaporating. Unless we get action very soon to counter this assumption that we must leave the single market, that process will continue. Companies will operate in their own best interests; that is their responsibility to their shareholders; that is what will happen.
I am fundamentally concerned because, like others, I see no way to square the circle of the leave promise to cut immigration significantly—which means ending freedom of movement—and retaining single market access. We certainly need to hear from those who led leave on how they intend to square that and, if they will not, for them to accept the consequences of the decisions that businesses are making. Businesses are not political creatures; they make their decisions based on what they see as the future of their company in the long term. Many of them are being driven to be more aggressive than ever as they cannot even get guarantees that the foreign staff they have today will be able to work in the UK. That is souring internal decision-making. Many of the senior management of our key businesses come from within the EU, and as they look at that instability, it becomes far more attractive to consider returning to continental Europe.
While I have a couple of minutes, I want to look at two areas. The first is the City. I sat on so many platforms in so many debates during the referendum campaign. To say that leave was insulting about the City would almost be an understatement, but the City is absolutely the heart of our economic viability as a nation. It funds the public services that we need in our country but which, as many have pointed out, have been incredibly inadequate. It is a major source of funding for the infrastructure, the new social housing, and the improvements in our schools and the NHS that we need.
A core of financial services in the City has been its role as the leading location for clearing financial trades. In 2014, London cleared nearly 50% of global interest rates and over-the-counter derivative transactions and nearly 40% of global foreign currency transactions. We are talking of amounts in the trillions in trading volumes. About a third of those were euro-denominated. The European Central Bank has already said that it wishes to ensure that clearing of euro-denominated instruments remains within the European Union, preferably within the eurozone. It was unable to enforce that because of the non-discrimination rules that are structured into the life of the European Union; those disappear the moment we leave. Because of the way that countries are now clearing all their trades on the same platforms in order to be able to net dollar trades, euro trades, yen trades, et cetera, if we lose euro clearing, we might as well lose dollar clearing and most of the rest of the clearing business.
Passporting is utterly dependent on being part of the single market in order to sell our services, but nobody, including the noble Lord, Lord Lawson, ever addresses the issue. I talk to the wholesale insurance industry. Its business is totally dependent on continental European institutional customers. I talk to the long-term asset managers. Their business is overwhelmingly with continental European entities. They will have no choice but to leave if passporting goes. People talk about other ways of doing business, such as equivalence and country-by-country licensing, but both of those require the movement of substantive operations into the EU area. The rules do not allow you to put up a brass plate and operate out of London, but require a substantial transfer of operations.
The last area I want to talk about in the minute I have left is the new world. I work a lot with financial technology companies. We are an absolute leader in this area. Young entrepreneurs come from all over Europe to set up in FinTech here in the UK, and they are terrified of the consequences. As the digital single market forms, they cannot afford to be outside it. Berlin is a serious rival to London. They desperately want to stay here, but they are looking at the realities, and funding has dried up for many of them. We have reports of venture capitalists that have Brexit clauses in their contracts pulling out of deals with companies over the last week. These companies recognise that if they do not move to be within the European family very rapidly, they may be unable to raise the finance which is totally necessary for their future. The very least the British Government could do is step in with the British Business Bank and replace that. There are so many specific issues, and if we ignore them and talk only in broad generalities, we will have no idea of what is coming and no way to cope with it.
Baroness Kidron (CB)
My Lords, more than 30 million of us voted. Turnout was high, and we cannot—nor should we—ignore the outcome. The Government have a mandate and duty to negotiate the best terms of exit, but in negotiating those terms, if we fail to listen to the voters, we risk unleashing a very intolerant pain. By “listen”, I do not mean to the binary of Brexit or no Brexit, but listening to both the large minority who voted to remain and the underlying causes of the vote to leave.
That vote largely came from communities that have already paid the price of a global marketplace, as seen in the almost terminal decline of mining, shipbuilding, steelmaking and other huge swathes of manufacturing. For those communities, that decline, and the decline of trade unionism, have also meant a decline in decent pensions, workers’ education, job security and a place at our table—Government and Parliament are worryingly free of working-class representation. These communities have been the collateral damage of an austerity programme under which cuts to the public sector and local councils have denuded whole regions of an ecosystem that allowed for a level of self-determination and the funds to keep them afloat. The referendum did not create a divided country—it was an expression of an already divided country.
The referendum was framed to ask whether the electorate felt the terms negotiated by the Prime Minister were good enough to stay, and they said no. Although many voters were expressing long-held beliefs, a significant minority were persuaded that they were protecting their communities from the onslaught of 50 million Turks, that they were supporting their beloved NHS to the tune of £350 million a week and that all the benefits of EU membership were available even if we voted out. They were persuaded because that is what they were repeatedly told.
Taking the temperature of a nation to inform government policy is not legally binding, nor is it some absolute principle to which we all hold. Indeed, sadly, the decision to hold a referendum at all was a bungled attempt to keep Government Back-Benchers quiet. It would be a travesty if the future of the country was determined by pitting the interests of the political class against the real needs of those communities which so desperately need a new settlement.
The EU is not blameless. In offering the Prime Minister a lousy deal, and now worrying more about contagion than the Union, it is showing the same lack of political imagination and commitment to common good that we have shown here. Not just in the UK but Europe-wide, there is an explicit and expressed anxiety about free movement. It is an admirable principle, but what about community and protecting communities—both the communities of host nations that feel overrun and the communities whose workers, mothers, teachers and doctors abandon them for the relatively better wages, but not necessarily better lives, elsewhere?
I have been so angered by the deliberate conflation of the refugee crisis and free movement, to the detriment of both and the shame of us all. I welcome migration, with all its economic and cultural benefits, but then I am first-generation British. I live in London with my family and am economically secure. It is a more complicated picture both for the young Bulgarian woman who leaves her children in Sofia to come here to clean on a zero-hours contract for marginally better wages—but not necessarily a better life—and for her UK counterpart struggling to find secure work. As one young Geordie man said to me, “Don’t talk to me about losing jobs—I’ve never had one”.
Union remains an ideal worth fighting for. It provides us with ballast against conflict, trading partners, cultural exchange, an enlightened social project and, in a global world, the collective voice of half a billion people on any subject from climate change to data protection. But if Europe refuses to engage with communities that globalisation and nation states have left behind, that ideal is tainted, not only here but right across Europe.
We are going to hear a lot about democracy today and what is or is not democratic. The Prime Minister stated in the other place that how we now leave is our collective responsibility. But the realpolitik is that Conservative Party members have the privilege of choosing our next Prime Minister, and whoever she is will have the privilege of then deciding how we proceed. Worryingly, we already see an arms race to establish who has the best Brexit credentials, pitching the future security and aspirations of those EU citizens who have already made their home here into doubt—more careless talk from politicians, with real-life consequences, as we have seen so recently in the rise of racist and xenophobic attacks and the violent murder of Jo Cox. What short memories we have.
How can we pretend that democracy is represented by unelected people in Europe working alongside an unelected Government, cobbled together during one of the most unedifying periods of British politics, to bang out a deal that does not even begin to express the need for the housing, jobs and services that the electorate so desperately call for? What of the young, who voted overwhelmingly to remain? The Prime Minister has said that they should “make their voice heard”. They will live with this much longer than any of us, but I am struggling to understand by what mechanism they will make their voices heard. Indeed, how do any of us make our voice heard? I would like to hear from the Government how they intend to represent the 48% of the electorate who voted to remain—workers, the nations, regions, businesses, farmers, the creative industries, environmentalists and so on—within the negotiations. The voices of such a group would undoubtedly be better received in Europe, and it might go some way to persuading all the UK that it has been represented.
Just as we have tested the terms of staying and found them wanting, why not test the terms of leaving to see if they are palatable? A second referendum is not an excuse to ask the same question and get a different result, but an opportunity to ask a more exacting question.
Baroness Goldie (Con)
My Lords, vocabulary is inadequate to describe events post the EU referendum. There have been the appalling and repugnant incidents of racism, which we condemn as of one. On an almost daily basis, the political world has presented us with drama, crisis and shock as the body politic has ripped itself to shreds. Much of that has been accompanied by meaningless platitude, vapid generalisation, acerbic rhetoric and behaviour which transcends anything that even the most inventive scriptwriter for a TV soap opera could concoct. Among all this verbal detritus, a bewildered and divided public are looking for a vision, plan, map, compass or anything which might seem to have about it a whiff of direction or a road to travel. In the midst of this chaos, there are some certainties and we need to sift them out.
First, the result: the UK decided to leave the EU. I wanted to remain. I do not like the result, which I profoundly regret, but I absolutely must respect it. Indeed, the most certain way of keeping raw and bleeding the wounds of division across the UK is by not respecting that result. The recrimination, regret and blame are for the past. The future is about the new journey which we have been mandated to embark upon, trying to heal and unite as we travel, moving forward with purpose, focus, energy and hope, about which the most reverend Primate the Archbishop of Canterbury spoke so eloquently and percipiently. The second certainty is that within two years of invoking Article 50 of the Lisbon treaty, the UK will leave the EU and the third is that the UK negotiations for that exit can only be led by the UK Government as a member state. Finally, by early September, we shall have a new Prime Minister and a Cabinet ready to lead these negotiations. It seems to me that these are the certainties, but that swirling around them are the tides, eddies, currents and undertows with hidden reefs, which will require consummate skill, astuteness and wisdom to navigate.
On a purely personal level, I observe that I am very sad it will not be David Cameron who leads us through these uncharted depths. I understand why he felt he had to resign and his decision was the correct one, but it makes me no less sad at losing him as Prime Minister. When he became leader in 2005, I had just become leader of the Scottish Conservatives. He was a huge support to me, always available to speak to, always ready with sound advice. He has provided firm and courageous leadership during very difficult and challenging times and I thank him for that tremendous contribution. I will not dwell inordinately on his successor, other than to define what I want, which is someone steadfast in their political views, steadfast with their political colleagues, steeled by experience at the highest levels of government with proven wisdom and good judgment —someone in whom the British public can have confidence. I want someone who is known to and respected by international leaders, including those in the remaining EU countries. I find one person satisfying those criteria and I make no secret of my support—it is Theresa May.
Different contributors to this debate will want to focus on particular aspects and it will surprise no one that I want to talk about Scotland, which voted decisively to remain in the EU, or that Nicola Sturgeon and I interpret that outcome very differently. I voted to remain in the EU, but on the basis that the UK would be the member state. That was the question before me. I read the ballot paper carefully and I do not recall any explanatory note saying, “By the way, if you live in Scotland, your vote to remain will be a Nicola mandate to keep Scotland minus the UK in the EU”. What a completely ludicrous, illogical and flawed proposition. An EU without the UK as a member state is a materially altered and changed EU. Who knows what shape it will take or what shape it will be in? So when Nicola Sturgeon says she has a mandate to try to keep Scotland within the EU, I say, “Just simmer down, you have nothing of the sort”. What she does have is the responsibility, as Scotland’s First Minister, to do all she can to ensure that Scotland’s best interests are at the very heart of the leave negotiations and that involvement can only be as part of the UK negotiations. Now, her Écosse charm offensive—clicking her stilettos around the corridors of Brussels—may assist these negotiations. She is a formidable communicator, but her role and her responsibility is to keep the Scottish dimension at the forefront of the UK negotiations, not to go off on some diplomatic exit frolic of her own.
Many may have doubted how divisive a referendum campaign can be. I have now lived through two doses of corrosive referendum acrimony and what is Nicola Sturgeon’s healing and measured contribution to this crisis? She wants to prepare for another independence referendum. It is a seriously misjudged response. It may reflect the Scottish National Party’s interests; it profoundly disserves Scotland’s national interest. First, 1.6 million votes in Scotland to remain in the EU do not cancel out 2 million votes to stay in the union of the United Kingdom. Secondly, the union she wants to leave accounts for two-thirds of Scotland’s exports; the Union she wants to join accounts for just 15% of them. Thirdly, the fundamental flaws of the separation case remain unaltered and every bit as stark: no central bank, no currency, a worsening budget deficit of £15 billion and business jitters.
My message to Nicola Sturgeon is this: your country’s interests are at stark variance with your party’s interests. Your duty in these turbulent times is to your country. Protect and promote Scotland by being at the heart of the UK leave negotiations. Use your considerable skills and undoubted ability to form and influence these discussions. Use your position to reassure the business community and to engender stability. Above all else, do not wreck that positive platform for progress by reigniting the destructive and divisive process of an independence referendum. We may have made a decision to leave one Union. That decision is precisely why we must strain every sinew to protect and preserve our remaining United Kingdom union.
Lord Whitty (Lab)
My Lords, I was very pleased to be following shortly the remarks of the noble Baroness, Lady Kidron, because like her, I wanted largely to focus on the state of the nation following this vote. We rightly will have all sorts of views about the constitution, international relations, Europe and the economics of the situation, but we also need to take account of what the vote reveals. Like many of my friends and colleagues on all sides of this House, I was devastated by the result. I speak as someone who, against the views of most of my party and movement, campaigned in 1975 to stay in. Even when I had some responsibility for general elections, I do not recall ever crying at the result, but I did after this one. It has been devastating for many of us.
I was devastated but not shocked; I was hardly even surprised. I do not think that any of them are in the Chamber now but there were Members of this House who, two or three weeks before the referendum, told me they had not met a single person advocating Brexit. That applied to others in the London-based elite outside this Parliament and it indicates, perhaps at the extreme end, the difficulties of us in Westminster relating to what was going on in the country. It was not an edifying campaign and the result was not because of the flamboyant leadership of the leavers nor of the ineffective leadership of the remainers. It was a campaign which seemed to be one of fear against prejudice, rather than offering two versions of hope for affirmation. The noble Baroness the Leader of the House said that it was a momentous demonstration of democratic process, and it was. She also said that it was due to enthusiasm, but I do not think so; in some places at least, it was closer to desperation and despair. The elite are not listening to what is going on in large parts of our country. The most reverend Primate the Archbishop of Canterbury had it right today. The issues that people were really moved by were their employment prospects, their lack of access to public services and inequality in our nation.
It was immigration that got blamed, primarily, and the EU got blamed for the immigration. Some of that is logical, but some of the reasons are also that successive leaders of Governments of all parties have not made clear to the British people the benefits of EU membership and have blamed it for decisions, and their effects, which were actually the responsibility of the Westminster Government. A positive side of that campaign never really came across; instead, we opted on the remain side for Project Fear. A lot of why people voted the other way was because of the lack of enforcement of labour standards, the lack of access to public services and so forth. Because of that vote, we have now had a seismic decision in the history of our nation and in our internal constitution and geopolitical position. Those changes have also, as others have said, let other demons out, as we have seen in terms of the racist attacks and other effects on the streets of our cities. It is time that we focused on the basic causes of this vote.
My noble friend Lord Radice said that in effect we have no Government in this country at the moment, and no Opposition, and he is right. To be slightly more facetious, on the Saturday after the referendum result, there was a point when the Prime Minister had resigned, the Chancellor of the Exchequer had gone AWOL, the leader of the Opposition was pronounced officially to be in bed and the then-assumed next Prime Minister was playing cricket, while sterling was already falling and the prospects for the markets were already appallingly facing us. The Government need to get their act together and so does this House. This House can help. As the noble Lord, Lord Boswell, said, we have a key role in our scrutiny committees and the expertise and approach adopted there.
We have to decide which of the seven or eight options—or the three options—of how we in future relate to the EU are to be pursued. However, I fear that some of those options are not on the table. I need to apologise to some of my noble friends for appearing to echo the noble Lord, Lord Lawson of Blaby, but a single market requires single rules, and the single rules of this market include free movement. I hope that there can be some modification but I fear that there will not be much—because, as noble Lords have said, other EU Governments are under equally acute political pressures in respect of negotiating with the UK over the next few months. I chair the EU Sub-Committee on the Internal Market, so I will be at the brunt of this in some ways.
Another thing that appals me about the Government’s position is the lack of contingency planning. Thank God that the Bank of England at least had a contingency plan but, as I understand things around Whitehall, there is no contingency plan either of the immediate position in relation to policies within Europe during this negotiating limbo nor for the long-term position as to how EU-derived legislation on the UK statute book will ultimately be dealt with in future. The House of Lords scrutiny committees can help in that process, but we can only help.
Our political leaders in another place need to accept that they have been turned over in one way or another. I share some of the view of Nicola Sturgeon that the noble Baroness, Lady Goldie, mentioned—but the fact remains that she was the only leader of a political party in these nations of the United Kingdom whose population and electorate actually followed its advice. The rest of us have been seriously disavowed. The House of Commons and the political parties need in very rapid order to get their act together to address our future relationship with the EU, but also to address the problems of a deeply divided and resentful country.
Baroness Bowles of Berkhamsted (LD)
My Lords, George Washington said in his farewell speech to Congress:
“’Tis folly in one Nation to look for disinterested favors from another”—
or, as I might put it from my experience, EU negotiations can be like the knife fight in “Butch Cassidy and the Sundance Kid”: there are no rules, no promises, and there is always a final twist.
There is no reason why our hand should be forced on Article 50 before the UK is completely ready, with a consensual approach; it is not in the national interest otherwise. Regrettably, intimidation, improper exclusion of UK representatives and all kinds of other illegal pressures and innuendos from institutions and the wider commentariat are not new tactics and one can expect them to be deployed on a much greater scale—but we must not give in. Additionally, it has always been impossible to conduct timely negotiations when major countries have been having elections. It is a recipe for prevarication and backtracking, often with long turnaround periods with no true mandate. If it holds up work on a directive, you can imagine what it would do to Brexit negotiations. We cannot have our two years wasted.
Right now, there are also battles for supremacy in Brussels over who fills the UK vacuum—Germany needing Poland, France cosying with Italy and Spain—who gets our agencies, whether protectionism will win, whether member states will assert themselves more strongly over the Commission, whether the Commission will stop being a proxy for the core member states, who in the Commission goes where, or moves, whether the Italian banking situation will smash apart legislative and state aid discipline, whether the French will see off the posted workers directive, and more.
Back here, response to the outcome of the referendum is more challenging and requires more oversight, because leave offered a false prospectus that no plan can fulfil. Some suggest that an EEA-type basis as a quick, temporary harbour, giving market access, is a solution. That brings into play the exact three conditions that were the headline reasons for the leave vote: budget contribution, free movement and control over laws. Many capitals see it as the ultimate humiliation for the UK and say that adjustments are not possible, but, being Europe, they also suggest a few, which are currently unacceptable but may be an opening to the variable geometry espoused by the noble Lord, Lord Maude.
In the UK, it has been argued that we can get a better deal than Norway or Switzerland because we are larger. That misunderstands the current state of mind of the EU 27; they are more wary of giving a good deal because we are larger. Frankfurt, Paris, Luxembourg, Amsterdam and Dublin aim to poach work from the City, but they fear an aggressive offshore UK. So threats of protectionist measures are fuelled by the balance of power in the Council minus us, by the need to satisfy the Parliament, which requires the socialist group on board, and by the perceived need to inflict pain to discourage other breakaways. Such actions may bring international opprobrium and indeed the reverse of the intended effect, but it is a known tendency.
Free movement is well flagged by the Government as an issue for negotiation, but we should look at budgets and laws as well. Repatriation of budget payments featured prominently in the referendum—I think that it was on a bus—and, even diminished to its proper size, it still features in debate. Nevertheless, there is a robust case that saving jobs through market access, especially highly paid ones in the City, can cover the cost of significant payments from tax take alone. Against that, there is a 15% hole in the EU budget when we leave, so there is some leverage there. The EU has already besmirched itself with external cash-not-migrant deals—not that I recommend them.
For both free movement and budget, the basis of any agreement can be free of subsequent unilateral change by the EU. That is not the same when you come to laws. Without the UK round the table, laws can change considerably and unilaterally. This is a problem more in some areas than others. We will not be there when the Commission discusses its pre-drafts with member state experts, nor to amend as texts go through the Council and Parliament, nor in the regulatory agencies that draft standards where currently we chair important working groups. There are many agencies beyond those in financial services, but the powers of the European supervisory authorities and UK influence within them has been an obsessive concern, even while we are so powerful within them. Are we now to become mere note takers?
I know what EU financial services law would have looked like without input from the UK. It is not a static situation and plots are already afoot to make changes. If we buy wholesale into a law-taking regime, at least in financial services, we may be buying a pig in a poke, passports or not. That is a problem that we must solve. It cannot be counteracted simply by channelling more resources through international bodies such as Basel, the FSB, IOSCO and the IAIS, which I observe are also unaccountable international bodies to which we send unelected people. For financial services, mutual recognition or equivalence provisions are another route but, as has been pointed out, the process is tricky and inherently political, and introducing more subjective conditions is already a talking point in Brussels. The question would be how far such changes would upset international relations with the US and whether that, and perhaps resolving the fears of an offshore UK, could give openings or a route to the variable geometry that has been described.
This is a small part of what we face and the plan seems to start from scratch. In some areas, our counterparts are not even just the EU, so never has “Act in haste, repent at leisure” been more relevant.
Lord Armstrong of Ilminster (CB)
My Lords, after 65 years of public service, I do not remember such an unholy mess as we are in now, except perhaps after the Suez affair. It is an existential as well as a political crisis. As a result of recent events, my enthusiasm for referenda, never very strong, has evaporated almost to nothing. I pass over the lies and half-truths, the threats and the promises, the commitments proposed and then abandoned as soon as the votes had been counted and the rancour of the recent campaign. The problem with a referendum is that the issue is presented as a simple binary choice: yes or no, leave or remain. The issue of membership of the European Union is not simple or binary; it is a choice of complex and often conflicting considerations and of deciding where the best interests of the nation lie. Such issues are better decided in our traditional system of representative democracy by Parliament.
In that system, a referendum is advisory, not mandatory. The result of a referendum deserves to be treated with the greatest respect, but it is for Parliament to decide, and in this time of tension a great responsibility falls on this Parliament. We in both Houses of Parliament have to rise to that responsibility at a time when the uncertainties that confront us are unprecedentedly extreme and very long-lasting. We are, as the noble Lord, Lord West, would say, in uncharted and turbulent waters.
We are told that the process of extracting ourselves from the European Union will take five years or more—five years of continuing economic, financial and political uncertainty with the risk of lower investment, less employment and higher inflation as businesses and people speculate over and try to anticipate the outcome.
I cannot rid myself of the fear that we are on the verge of a terrible mistake, for which our children and our children’s children will pay the price. We should be thinking about the effects of the uncertainty on the young going to Europe to work or to study, on the young people from European countries on whom the National Health Service and other public services in this country depend and on the hopes and prospects of those British citizens who have chosen to make their lives in Europe. We should be thinking about the benefits we derive from the EU’s contribution to scientific and technological research and development and, what is more and most of all, we should be thinking about our place in Europe and in the world.
The European Union—the European Community as it was—was created to be one of the institutional guarantors of peace and stability in Europe, and particularly of peace between France and Germany. In this respect, it has been astonishingly successful over the past 60 years, so successful that many of us seem to think—in my view wrongly—that any future European war is simply unimaginable. This is something to remember as we commemorate the Battle of the Somme. It was created also to give the countries of Europe together a degree of influence in a world of global superpowers that none could have on its own. Neither of those purposes has diminished in importance. This country is geographically, genetically, historically, culturally and inescapably part of Europe and we cannot in practice, and should not try to, become semi-detached from Europe. Our place and influence in the world will be weakened by leaving the Union.
For these reasons I hope that, even while the new Prime Minister and his or her colleagues—I must say it is strange to be using that expression “his or her”; it is quite like old times for some of us—develop a strategy for negotiating our departure from the EU a sense of their responsibilities at a time of great uncertainties should lead them to explore even now, at this late hour, whether there is any possibility of reaching an agreement with the EU and its other member countries, building on the changes agreed with the present Prime Minister in February, which would allow them to recommend to Parliament, and Parliament to recommend to the British people, that we have a new deal and do not trigger Article 50 but remain as members of the European Union.
That may not now be possible. If it is not, we shall continue on course to leave the EU, but as the Foreign Secretary said yesterday, and as the Leader of the House said this morning, we must seek the best deal we can for Britain. We should not exclude the possibility that the best deal for Britain might be achieved by staying in the EU. The situation has now profoundly changed since February, and even since a month ago. The new Government will have a responsibility to explore the possibility, even now, of such an outcome and they might find the European Union willing to discuss that.
Such an outcome would resolve, at a stroke, the uncertainties that will beset us as we continue on the course of leaving the EU. It would enable the new Government to concentrate on strengthening the economy and pursuing social reform. It would restore the strength of our nation. It would allow us to continue to contribute to the strength and effectiveness of the European Union and to take part in its reform, which is now necessary and inevitable, and it would enhance the confidence and respect in which we are held by our allies and friends in international affairs.
Lord Lamont of Lerwick (Con)
My Lords, I agree with the noble Lord, Lord Armstrong, on one point: we should not turn our back on Europe. I hope we will have co-operation with Europe, but that is not the same thing as leaving the European Union. While I do not share the gloom of the noble Lord, Lord Armstrong, I confess to a degree of shock on the day after the referendum: shock that the side I had supported had won when I was not entirely confident that it would, and a much greater shock that so many people refused to accept the verdict of the people. There was far too much talk about reversing the result. I was stunned by the intervention of the former Prime Minister Tony Blair, complaining that the result of the referendum had been voted for by only 51.7% of the electorate. This compares with the 43.9% who voted for him, about which he never complained at any time. If we do not accept the result of this referendum, there will be a real awakening of bitterness next time.
I campaigned and voted for the leave side, partly because I have long been sceptical about the allegedly unique benefits we are supposed to get from Europe. More importantly, I am totally opposed to political union, progress towards which seems to me to be going down a blind alley with a dead end. If Europe wants political co-operation, that is one thing, and it should be on an evolutionary basis. It should not be engineered and manipulated by an elite with its own agenda. Europe is an entity without a demos and, thus, it is without the potential for real democracy. Various speakers have referred to their own sense of European identity. Europe has a weak common identity compared with the nation state, which has a strong sense of identity, plenty of life in it and plenty of legitimacy left in it as well.
I agree with the most reverend Primate the Archbishop of Canterbury and the noble Baroness, Lady Smith; I do not believe the status of EU nationals residing in this country and working in this country ought to be a bargaining chip in the negotiations at all. That ought to have been cleared up already. I also agree with the most reverend Primate, the noble Baroness and others, who have very forthrightly condemned the attacks on Polish and other immigrant communities. This is totally unacceptable and must be roundly condemned. At the same time, it is totally wrong to label people who have legitimate concerns about immigration as racist. That seems to me an extremely dangerous thing to do. If we do not listen to concerns about the pressures of population, the pressures on the housing market and the effects on the lower-paid, we are making a great and serious mistake. It is clear from the referendum results in individual areas that there was a very firm rejection of complete free movement of labour. This issue will not go away and will have to be addressed.
We are where we are. The question is, where do we go from here and what do we do about it? I welcome the unit that has been set up under the Chancellor of the Duchy of Lancaster. I hope he and his work will cut through some of the myths that have been accepted uncritically for far too long as conventional wisdom. Myth number one is that the single market has been of unique benefit to the UK. The noble Lord, Lord Birt, repeated that in his speech. But one ought to look at the trade performance of countries that are not members of the EU, such as the United States and Australia, which have managed to increase their exports into the single market faster than we have. You do not have to be a member of the single market to benefit from it.
Another myth is that the UK has free access to the single market. As we pay a budget contribution equivalent to a 7% tariff on all the goods we sell, it is free only in the sense that someone who belongs to a golf club and does not have to pay for every round of golf has free golf: it just is not true. Then we are told that it is impossible to have access to the single market without accepting complete free movement of labour. I was concerned that the Foreign Secretary seemed to accept this. Look at the arrangement that Turkey has. Since 1996, Turkey has enjoyed tariff-free goods access to EU markets with no free movement of people. Turkey accepts the present EU external tariff—about 3%—and there is no restriction on Turkey-EU trade. The important point about the Turkish arrangement is that it avoids the rules of origin. If we set our own tariffs with the rest of the world outside the EU, we would have to accept clearance under the rules-of-origin arrangements, of which there are 9,000 different classifications. This is what Switzerland has to do and there are limits of 30% to 35% placed on the non-Swiss, non-EU content of Swiss goods going into the European Union. The beauty of what Turkey does is that it bypasses all the difficulties of rules of origin. I am not suggesting this should be the final solution or the final arrangement, but it could be an interim one.
Undoubtedly, we face economic challenges. There will be short-term difficulties but, in the medium term, I believe there will be new opportunities. I also believe that what will happen will not be nearly as dire as predicted. Brexit is part of a wider reaction against centralisation in Europe. The Global Attitudes survey released the other day showed that ever-closer union is now rejected by 73% of voters in Holland, 85% in Sweden, 86% in Greece, and 68%, 65% and 60% in Germany, Italy and France respectively. We are not alone. Things that have happened in this country are also beginning to stir in other European countries. Indeed, the impact of Brexit may well be greater on Europe than it is on Britain. We are not alone. The other day, the editor of the Italian newspaper Libero wrote: “The only true functioning democracy is the English one. The United Kingdom proved for the umpteenth time that it believes in the will of the people and that it knows how to respect it with elegance”. We should respect with elegance each other’s views and we should also respect, with elegance, the views of the people.
Airports: Runways
Lord Spicer
To ask Her Majesty’s Government what are their plans for the future development of runways at Gatwick and Stansted airports, in addition to their plans for Heathrow airport.
Viscount Younger of Leckie (Con)
My Lords, the Airports Commission shortlisted three airport schemes in its interim report—two at Heathrow and one at Gatwick. The commission did not include a scheme at Stansted on its shortlist. The Government accepted the commission’s shortlist in December and have since been undertaking a programme of further work to support a decision on a preferred scheme.
Lord Spicer (Con)
My Lords, for one magical moment I thought I would get a substantive reply. But I quite understand that the Government are putting a brave face on an emerging crisis that could be made worse if we are heading towards a recession. Will my noble friend have a quiet word with his Secretary of State and ask him whether he will put the question of Heathrow direct to the Cabinet—because they might be so busy sorting themselves out that they might say yes? Failing that, will he accept that those of us who have taken an interest in this matter will add to our list of good causes Stansted and Gatwick? Those airports are now filling up and running out of space—and it is only 30 years ago that I turned the first sod for Stansted.
Viscount Younger of Leckie
My noble friend has been assiduous in beating the drum on this subject, and today is no exception. The Government are fully committed to delivering the important infrastructure projects they have set out—including runway capacity—on the timetable set out in the Airport Commission’s report. My noble friend will know that my right honourable friend Patrick McLoughlin in the other place made a Statement on 30 June. I have no doubt he is in close touch with the Cabinet on this issue. He made it clear that he was not in a position to make a decision on airport capacity this summer.
Viscount Waverley (CB)
My Lords, what guarantees have been received from Gatwick Airport that the current operational disruption and operational scheduling will be permanently resolved?
Viscount Younger of Leckie
On the question of Gatwick or Heathrow, the noble Viscount will know that three shortlisted schemes have been put forward—two at Heathrow and one at Gatwick. That continues to be the main focus. At some point an announcement will be made—but the Statement from the Secretary of State on 30 June was very clear.
Lord Clinton-Davis (Lab)
When do the Government expect to make a decision on this issue? It has been delayed for so long, and every delay results in grievous loss to this country in world markets. What are the Government going to do about it?
Viscount Younger of Leckie
It is fair to say that the expression “long-running saga” can be redefined. On a serious note, the Government made it clear that rolling out the new runway was extremely important. In December 2013, the Airport Commission’s report stated that the need was acute and that by 2030 we needed to address the capacity issue. Failing to address it could cost passengers £21 billion to £23 billion in fare increases and delays, and £30 billion to £45 billion for the wider economy. I am unable to give a timetable at the moment, but the noble Lord will be aware that there are issues such as air quality that are being analysed at present.
Lord Tebbit (Con)
My Lords, is it not clear that the Government cannot direct international airlines to which airport they will go? The alternative to Heathrow is not Gatwick, Stansted or Boris Island but Frankfurt, Schiphol and Paris.
Viscount Younger of Leckie
I am very aware that airports in Europe have been developing, but the transport network within the UK is exceptionally good, and we should always remember that. There is now a great opportunity—even more so after the result of the EU referendum—to spread ourselves more to markets abroad, and that is exactly what we are doing.
Baroness Randerson (LD)
My Lords, BA operates the majority of Heathrow services. Recently, Willie Walsh stated that the costs of a third runway were prohibitive. He suggested, instead, that we look again at extending the existing northern runway, which the commission suggested was an option. Have the Government taken that into consideration or will they do so now, given the financial and economic emergency we now face as a country?
Viscount Younger of Leckie
I can confirm that there has been no change and that the three schemes remain on the table. We will continue to roll out this programme of looking at the schemes, including analysis on issues such as air quality. That is very important if one thinks about the number of employees at Heathrow and Gatwick: 70,000 at Heathrow. We must get these things right—which is why we are not yet at the stage where we can make a decision.
Baroness Smith of Basildon (Lab)
My Lords, I know that the Minister is a naturally calm person, but he sounds rather complacent about the seriousness of this problem. We were told that the decision was delayed because of the election and the referendum. We are now told that because of the leadership campaign it cannot be announced. Does the Minister understand that British business is feeling very insecure and nervous and needs reassurances? If the Government cannot make a decision on this we will start to wonder whether they can make a decision on anything.
Viscount Younger of Leckie
Yes, I fully understand. I am sure the noble Baroness will agree that it is very important that such a major decision is made properly and with all the facts. We are not at that stage. I have already explained that there are matters of great importance that are being looked at, and I have laid them out. We must get this right.
Lord Trefgarne (Con)
My Lords, does the outcome of the referendum have implications for the decision that my noble friend is telling us about?
Viscount Younger of Leckie
I refer my noble friend to the announcement made by my right honourable friend Patrick McLoughlin. He said:
“I had hoped that we would be able to announce a decision on airport capacity this summer. Clearly, any announcement on airport capacity would have to be made when the House was in session … given recent events, I cannot now foresee that there will be an announcement until at least October”.—[Official Report, Commons, 30/6/16; col. 452.]
Lord McKenzie of Luton (Lab)
My Lords, I draw attention to my interest in the register. I may have mentioned to the Minister’s colleague the strong growth and expansion plans for London Luton Airport, which is just 22 minutes by train from London and serves some 23 million people within a two-hour travel time from the airport. Notwithstanding the Government’s prevarication on Heathrow or Gatwick, will the Minister confirm their continued support for Luton’s expansion and the funding which has been allocated?
Viscount Younger of Leckie
I can reassure the noble Lord that Luton, as well as other regional airports in the south-east, is very much being considered. I have already mentioned the three preferred schemes, but Stansted and Luton airports are incredibly important for providing a south-east hub with links to Europe and further abroad.
Public Health England: Alcohol
(7 years, 10 months ago)
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Lord Brooke of Alverthorpe
To ask Her Majesty’s Government when they expect Public Health England to publish its independent evidence-based report on alcohol.
The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con)
My Lords, the evidence review is currently being peer reviewed and PHE will publish it later this year.
Lord Brooke of Alverthorpe (Lab)
I am grateful to the Minister for that response and I look forward to the report. Is he aware that the latest statistics from the Health and Social Care Information Centre show that hospital admissions due to alcohol-related illnesses are continuing to rise and are now more than 1 million, that the number of deaths arising from alcohol continues to go up, and that the cost to the NHS of alcohol-related problems is more than £2.5 billion? Given the difficulties that the NHS faces in funding itself at the moment, given that the economy may slow down as a result of Brexit so that less funding is available and given that we heard today about the prospect of another doctors’ strike, are the Government prepared to review the plan for the NHS to which the noble Lord so frequently refers? It may need to be changed completely, so what is plan B?
Lord Prior of Brampton
My Lords, that goes slightly beyond the Question on the Order Paper. The Government are committed between now and 2020 to putting £10 billion of new money in real terms into the NHS and we have a plan to deliver on that. Clearly, if the economy changes to a great extent, we will have to keep that in mind.
Lord Shipley (LD)
My Lords, the outside broadcast of the recent England v Wales football match showed alcohol marketing every 72 seconds. How does that help public health? Also, why do the Government permit the marketing of alcohol to reach audiences below the legal drinking age?
Lord Prior of Brampton
This is an important issue which the PHE review will take into account. That review should be published before the end of the year and I am sure that we will take action accordingly.
Lord Smith of Hindhead (Con)
My Lords, I declare my interests as set out in the register. The UK has one of the lowest weekly recommended maximum alcohol intake amounts in Europe. For example, the Spanish recommended maximum weekly alcohol intake is more than double that of the UK. Does my noble friend have a view on whether he thinks our limit is too low or that other countries have theirs set too high?
Lord Prior of Brampton
My Lords, the CMO’s guidelines are 14 units of alcohol per week, which is based on 67 different independent systematic reviews of what constitutes low-risk drinking. That is the best advice that we have available to us and it is entirely up to people whether they take it or not.
Lord Winston (Lab)
My Lords, the Chief Medical Officer famously said recently, “When I reach for a glass of wine, I think of cancer”. Does the Minister seriously think that exaggerations of that kind actually help the public perception of alcohol or mean that as a consequence our experts are completely ignored?
Lord Prior of Brampton
My Lords, as I said earlier, I think that the CMO’s guidelines are based on independent scientific advice. How that advice is communicated to the public is a different issue and the CMO is currently consulting on how we should express that scientific advice in ways that will have the maximum impact so that the public will take due notice of it.
The Lord Bishop of St Albans
My Lords, back in 2011 the Scottish Government passed legislation which meant that there was no financial advantage in multibuy alcohol purchases so that each can or whatever it was would be the same price. That has discouraged the bulk buying of alcohol and as a consequence has reduced levels of harmful drinking. Have Her Majesty’s Government considered a similar law, and if not, why not?
Lord Prior of Brampton
I apologise to the right reverend Prelate, but I missed the first part of his question. He is perfectly entitled to repeat the question, or if not, perhaps I may write to him after this session of Question Time.
The Lord Bishop of St Albans
The legislation passed by the Scottish Government in 2011 means that there is no financial advantage in the bulk buying of alcohol; each can is the same price. That has discouraged people from buying large amounts of alcohol and has reduced the level of alcohol dependency.
Lord Prior of Brampton
I cannot plead that I did not hear the question again, but I am going to have to say that I do not know the answer, so I shall write to the right reverend Prelate later.
Lord Hunt of Kings Heath (Lab)
My Lords, my understanding is that junior doctors have rejected the Government’s final offer by 58% to 42%, which is quite a large majority. Will the noble Lord make a Statement tomorrow in your Lordships’ House on the consequences of this?
On the issue of the limit of 14 units of alcohol per week, I looked at the Department of Health’s website this morning and although it talks about the risks of alcohol, it does not actually specify the additional risks of, for instance, keeping the maximum units for men at 18 per week? The lay summary of the principal expert advice and research given to the Chief Medical Officer again does not quantify the risks. It states simply that there is a raised risk. Does the Minister accept that if we are not prepared to give the public the real facts, it is unlikely that the advice of the Chief Medical Officer will be taken seriously? I wonder if he can have a look at this.
Lord Prior of Brampton
On the first issue, I cannot commit to giving a Statement tomorrow—that depends on decisions elsewhere. Certainly, if there is a Statement in the House of Commons I would expect it to be repeated in this House. On the other issue, the Chief Medical Officer’s guidelines are based on real facts. The last time the CMO issued guidelines was, I think, in 1995. Between then and now the scientific link between alcohol and cancer has changed, so she feels that it is right to put the facts into the public domain. As I said, we are consulting on how we word those guidelines to the public.
National Identity Cards
(7 years, 10 months ago)
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Lord Campbell-Savours
To ask Her Majesty’s Government what consideration is being given to the benefits of introducing national identity cards in the United Kingdom.
The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, the Government have no plans to introduce identity cards for British citizens.
Lord Campbell-Savours (Lab)
My Lords, with Brexit, increasing levels of immigration, concerns over international terrorism, personal security, fraud, voter registration and access to public services, do not advances in biometric detail data collection now give us a new opportunity to consider introducing identity cards? We need them now. We need them urgently. I believe that the majority of the British people want them. The Liberal Democrats can no longer block them. So why not have a rethink?
Lord Keen of Elie
My Lords, the Government’s focus is on enhancing the security of existing documents while at the same time recognising the direction of travel towards digital identities that may reduce the reliance on physical documents. Some 84% of UK citizens in this country hold a UK passport, the vast majority of which are biometric. Those who have immigration status in this country hold a biometric resident’s permit. It is not appropriate to sweep this away in favour of identity cards.
Lord Marlesford (Con)
My Lords, does my noble friend, given what he has just said about passports, recognise that in order to defend our borders it is essential that immigration officers are fully aware of who people are, and that other nationality passports held by a British passport holder should be revealed when the British passport is scanned? At the moment that is not the case. The Home Office has constantly resisted my attempts to get this introduced, largely because it does not like other people’s ideas. Will he kindly see that something is done? Otherwise the Government will be failing in a big way in their responsibility to defend our sovereignty and borders.
Lord Keen of Elie
Thank you, my Lords. And it remains open. Be that as it may, our borders are open to those who carry a British passport. Since the time of Henry V, those who present a British passport have been entitled to enter this country.
Lord Paddick (LD)
Noble Lords will have been appalled by the murder of 32 innocent people in Brussels in March at the hands of terrorists, in a country where the carrying of national identity cards is compulsory. Can the Minister say how identity cards would make us safer in the UK when they appear not to make people in Belgium any safer?
Lord Keen of Elie
As may be appreciated, the position of the Government is that they would not contemplate introducing identity cards at present. If they believed that their introduction would bring a material increase in security, their position would of course change.
Baroness Corston (Lab)
Will the Minister be surprised to hear that when I was a Member in the other place, I held a consultation and conference on identity cards in my constituency? One of the responses that most surprised people was from married women—most but not all from minority ethnic communities—who said that they had no access to their passports, that they did not have a bank card or a savings account and that they could not prove who they were. Indeed, some of them said that when they had become victims of domestic violence and had gone to Bristol City Council, they were told that they could not be rehoused because they could not prove who they were. They said to me: “If you allow me to have an identity card, I would be someone”. Have the Government thought about those issues?
Lord Keen of Elie
It is tragic to hear of victims of such intimidation and control, but I would observe that those who are the subject of such control are not likely to have access to their identity card any more than they do to their passport.
Baroness Kennedy of The Shaws (Lab)
We have heard in the course of today’s debate about the rise in attacks against minorities. One thing that concerned minorities was that if you introduced an identity card it would open the door to harassment of people who speak a foreign tongue or with an accent, or you might have victimisation of people with a different colour of skin. There was a sense in which ID cards would create those sorts of problems for people from minorities. Does my noble friend agree that the answer to the issue she raised is to have better facilities for people who experience domestic violence and oppression within their communities and from their partners? That is the answer, not identity cards.
Lord Keen of Elie
The Government certainly agree that the answer is not the introduction of identity cards.
Lord Keen of Elie
The estimated costs of following through on the original proposals, which began under consultation in 2003, were enacted in 2006 and implemented in 2009, were estimated in 2010 at just over £840 million.
Lord Rooker (Lab)
I accept that the plans for ID cards got out of hand from when they started, at the time when I first went to the Home Office. But the Minister, as Home Office Minister, must know that this country is one of the easiest to work in illegally. That is one of the greatest pull factors for the merchants sometimes of death who traffic in people. Couple that with no ID card and it is money in the bank for these people. First we should stop it being made so easy to work illegally. That goes hand in glove with securing people’s identity. The two things should be done together.
Lord Keen of Elie
With respect, the introduction of the new Immigration Act stamped down on the scope of illegal working in this country. It is not considered appropriate that that should be combined with any system of identity cards.
Lord West of Spithead (Lab)
My Lords, one of the main reasons to have the card is for a person to protect their identity and get access to all the things that can now be done digitally online. When I started the cybersecurity policy and we did all the work with the banks and stock exchanges, we found that it was best to have cards for individuals, with biometrics that can be used with computers—for people’s own security. All this other stuff about checking up on people and everything is a sideline as far as I am concerned. It is actually to save the identity and personal details of the individuals in this country and enable them to get digital access to all the new systems that are coming. The only way of doing that, as we found with the banks and stock exchanges, is to have some sort of card—calling it an identity card gets everyone terribly excited—that has biometrics on to let them do it safely.
Lord Keen of Elie
With respect, it would appear that matters have moved on because we are now in the realms of digital identification, where cards are not required. Indeed, the Government’s own site makes provision for digital identification.
Hate Crime
(7 years, 10 months ago)
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Lord Rana
To ask Her Majesty’s Government, in the light of the reported increase in the incidence of hate speech against immigrants following the referendum on the United Kingdom’s membership of the European Union, what steps they are taking to tackle xenophobia and racist extremism.
The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, the Government are committed to tackling hate crime. The United Kingdom has one of the strongest legislative frameworks in the world to tackle it. In terms of recent events, we are working across government, the police, including national community tensions teams, the Crown Prosecution Service and community partners to send out a clear message. Hate crime will not be tolerated and those who commit these reprehensible acts will face the full force of the law.
Lord Rana (CB)
My Lords, I fear that many hate crimes have occurred against the backdrop of a campaign to which certain elements gave the stamp of racism. Did the Government make any preparations before the referendum for the rise in hate crime? Will the Minister agree that the status of EU citizens and other immigrants in this country must be assured?
Lord Keen of Elie
My Lords, the Government have implemented a series of educational programmes, including by the Anne Frank Trust and the Crown Prosecution Service, which have received the support of the National Union of Teachers. It is close by this afternoon, I believe. In the circumstances, we have taken steps to address this issue. In addition, a cross-government hate crime action plan is to be published imminently. This will drive forward our proposals to deal with all forms of hate crime.
Lord Bilimoria (CB)
My Lords, I came to this country from India as a 19 year-old in the 1980s. At the time of the referendum, I received this tweet: “You are not British-born, so your input into the vote of the true Brits is not required and of no interest to true workers”. Last weekend, a member of our team for 16 years who is from abroad, with an English husband, went to hospital with a broken, bloodied finger and was told by somebody waiting next to her, “You are a burden on this country”. What is going on? Will the Minister and the Government acknowledge that this wretched referendum has caused this? Are the Government really doing enough to address something which I have not witnessed in any way for 30 years, but am now witnessing?
Lord Keen of Elie
No matter what may divide us, we are united in this country by shared values of democracy, free speech, mutual respect and opportunity. If we maintain these standards, we can drive out the criminals who would perpetrate the sort of crimes that the noble Lord has referred to.
Lord Rosser (Lab)
My Lords, if there had been no split on Europe within the Conservative Party, there would have been no Conservative Party referendum. If there had been no Conservative Party referendum, there would have been no significant rise in hate crime. Will the Government now at least do the decent thing and accept that what is happening today is because party interest was put in front of national interest? Can the Minister tell us what specific new initiatives or decisions—as opposed to discussions, messages and plans—the Government have taken since the referendum campaign to address the serious and damaging situation they have helped to create?
Lord Keen of Elie
With respect to the noble Lord, it is not appropriate to seek to draw a line between the referendum result and those who have taken it as an opportunity to express xenophobia and racist positions. I think it is obvious to all that the vote in the referendum can be attributed to a split in the Labour Party and not to a split in the Conservative Party.
Baroness Hussein-Ece (LD)
My Lords, there has been a fivefold increase—500%—in reported hate crime. As we know, the majority of these incidents are not reported. I have been abused online. In the last fortnight, since Brexit, members of my family and people I know, of all colours, races and religions—and of no religion or faith—have been subjected to this. Will the Minister support the initiative by a national coalition of race equality groups, including the Runnymede Trust? These groups have come together to ask for leadership and solidarity from all politicians around this House and in the other place and from the media to reject racism and hate crime and to stop pandering to intolerance. We should have zero tolerance of this kind of behaviour in this country.
Lord Keen of Elie
I agree with the noble Baroness that we, on all sides of this House, are ready to condemn racism and xenophobia. We have a common interest and a common outlook in so far as this is concerned. With regard to the increase in reported race hate crime, there have been significant increases in the period 2010 to 2016, but one must be careful of these statistics because much of the increase is attributed to the fact that we have introduced a better reporting system, including the reporting portal, True Vision.
Lord Tebbit (Con)
My Lords, would it not be a good idea if we all took Her Majesty the Queen’s advice and just calmed down a little?
Lord Harris of Haringey (Lab)
My Lords, it is not simply a question of the referendum campaign making xenophobia and racism respectable again; this is also the responsibility of the Minister’s right honourable friends in the other place who have consistently pandered to this in exactly the same way—for example, the right honourable Theresa May and the campaigns run by the Home Office against illegal immigrants. The Prime Minister’s intervention in the mayoral election in London, talking about extremists, was all part of the same picture. Is there not a pattern which has led to this increase in xenophobic incidents in the last few weeks?
Lord Keen of Elie
With respect to the noble Lord, nothing makes xenophobia and racism respectable, least of all the referendum.
Teachers’ Strike
(7 years, 10 months ago)
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The Parliamentary Under-Secretary of State, Department for Education (Lord Nash) (Con)
My Lords, with the leave of the House, I would like to repeat an Answer to an Urgent Question given in the other place by the Minister of State for Schools earlier in relation to the NUT strike today. The Statement is as follows.
“There is absolutely no justification for this strike. The NUT asked for talks, and we are having talks. Since May, the Department for Education has been engaged in a new programme of talks with the major teaching unions, including the NUT, focused on all the concerns raised during this strike. Even before then we were engaged in round-table discussions with the trade unions and both the Secretary of State and I meet the trade union leaders regularly to discuss their concerns. This strike is politically motivated and has nothing to do with raising standards in education. In the words of Deborah Lawson, the general secretary of the non-striking teacher union, Voice, today’s strike is a,
‘futile and politically motivated gesture’.
Kevin Courtney, the acting general secretary of the NUT, in his letter to the Secretary of State on 28 June made it clear that the strike was about school funding and teacher pay and conditions. Yet this year’s school budget is greater than in any previous year, at £40 billion, some £4 billion higher than in 2011-12. At a time when other areas of public spending have been significantly reduced, the Government have shown their commitment to education by protecting school funding.
We want to work with the profession and with the teacher unions, as we have been doing successfully in our joint endeavour to reduce unnecessary teacher workload. With 15,000 more teachers in the profession than in 2010, teaching remains one of the most popular and attractive professions in which to work.
This industrial action by the NUT is pointless, but it is far from inconsequential. It disrupts children’s education, inconveniences parents and damages the profession’s reputation in the eyes of the public. But because of the dedication of the vast majority of teachers and head teachers, our analysis shows that seven out of eight schools are refusing to close.
Our school workforce is, and must remain, a respected profession suitable for the 21st century, but this action is seeking to take the profession back, in public perception, to the tired and dated disputes of the 20th century. But most importantly, this strike does not have a democratic mandate from a majority even of NUT members. It is based on a ballot for which the turnout was just 24.5%, representing fewer than 10% of the total teacher workforce.
Our ground-breaking education reforms are improving pupil outcomes, challenging low expectations and poor pupil behaviour in schools and increasing the prestige of the teaching profession. This anachronistic and unnecessary strike is a march back into a past that nobody wants our schools to revisit”.
Lord Watson of Invergowrie (Lab)
My Lords, I thank the noble Lord for repeating the Statement in which it was said that today’s strike was politically motivated. Frankly, that is beyond irony from a Government who in March launched a White Paper that was driven first and foremost by political ideology aimed at forcing children into an educational straitjacket while excluding parents, governors and local authorities from the process, so I do not think that we need any lessons on our political motivation.
An hour ago outside Parliament, I met some of the teachers, who feel that they had no alternative but to take strike action because they are faced with a Government who will not acknowledge their concerns, such as teaching posts being cut or not filled when staff leave, growing class sizes and an ever-increasing workload that is contributing to major problems with staff retention. The Secretary of State herself said that there will be no real-terms cuts in school budgets, yet the Institute for Fiscal Studies has calculated that there will, in fact, be an 8% cut per pupil in the year ahead. When will the Minister address these existential issues that are threatening the quality of the education that is so essential to our children’s future?
Lord Nash
I note that the noble Lord met with some of the 9.4% of teachers who have called this strike. I am personally saddened by the strike. We would like to promote teaching as a profession, but there is no doubt that the reputation of teachers is harmed by this strike—or at least the reputation of the 90.6% who did not vote for the strike is affected by the 9.4% who did.
On funding, we have protected the schools budget and the pupil premium. We have substantial resources available through the Education Funding Agency financial toolkits and benchmarking information. A great deal of advice is on offer to help schools with the challenges facing a lot of people resulting from higher pension costs, national insurance et cetera. Multi-academy trusts are particularly well placed to do this and many of them are very effective in this regard. Outwood Grange, one of our most highly performing multi-academy trusts, has a system called curriculum-led financial planning, which uses sophisticated, bottom-up modelling to make sure that resources are focused on the front line. They make this available free to other MATs and schools and it is proving particularly effective in improving resources for teachers.
Lord Storey (LD)
My Lords, it is a sad day for education when teachers feel that they need to strike. It must not be ignored that those hit hardest by this strike will be the pupils and students, who miss out on part of their education, and low-income parents, who do not have the disposable income to pay for childcare on a whim. The Minister has said that these strikes are unnecessary, as the schools budget is the highest that it has ever been. However, by doing this he is steadfastly refusing to acknowledge the dire financial situation that many schools now face.
The noble Lord, Lord Nash, stated in a Written Answer to me on 9 May that the on-costs of teachers’ salaries have risen by 25.4%. On 25 May, he proceeded to reiterate the Government’s promise from the spending review that they would protect the core schools budget in real terms during this Parliament. Why is it then that the Institute for Fiscal Studies forecasts that school spending per pupil is going to fall by 8% in real terms by 2020? Does the Minister deny that figure? Whether he agrees with the figure or not, the Government need to recognise that, with on-costs and other factors, schools are facing real cuts to spending. Will the Minister therefore explain how he intends to keep the promise made in the spending review?
Lord Nash
I entirely recognise the figure. As I have said, many schools and organisations are facing this kind of increasing on-cost—everybody is. We live in a climate of scarce resources. However, as I have attempted to explain, there are many resources available to schools to improve their budgeting. Schools are facing pressures on their budgets that, for many of them, are far greater than they have ever faced. Most school leaders have been brought up in a climate of ever-increasing income and they have never really had to go back to a bottom-up modelling of their schools. When they do that, they find significant savings and it results in money actually being spent where they want it—rather than what is often happening in a lot of schools where sometimes the budgets have grown like Topsy. We are finding much more effective financial modelling in schools now and this is resulting in a much greater focus of resources into the classroom.
Lord Grocott (Lab)
The Minister was complaining that the teachers had a democratic mandate of just 9.4%. Will he tell the House what his democratic mandate is?
Outcome of the European Union Referendum
(7 years, 10 months ago)
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Lord Dobbs (Con)
My Lords, the referendum campaign on both sides was appalling. It verged on abuse. The people of this country deserve better and as a political class, we owe them a profound apology. Divisions inevitably linger and perhaps some are in danger of growing, particularly on immigration. I spoke a few words yesterday and, with your leave, will speak a few more today.
We condemn the outbursts of intolerance—of course we do. However, much of the blame rests squarely on the shoulders of a political establishment that, for 20 years, has chosen largely to ignore the problem. The left shouted down anyone who wanted to discuss the issue, accusing them of being racist while we on the right offered up glib, implausible promises. How did we, as Conservatives, expect ordinary people to react when at one moment we promised to reduce immigration to tens, not hundreds of thousands—no ifs or buts—and only a year later delivered a net total in a single year of 330,000? We share the blame.
I wept when I saw that dreadful referendum poster of refugees. Is it their fault? No, it is not theirs. The fault lies with us. We have been sleeping comfortably with our consciences and have slept too long. As a result, today millions of people who are legally and properly settled in Britain are afraid, uncertain of what we might do with them and to them. They do not deserve such uncertainty. At times politics requires us to climb into bed with some pretty uncomfortable bedfellows. In the case of vote leave, dare I suggest that some of my fellow campaigners forgot to take off their boots?
This referendum was about freedoms and tolerance, not just for a few but for us all. It was about the British sense of fair play and flexibility—nothing to do with racist bullying and kicking out minorities. It was about moving forward, not about retreating to dark old days of an island surrounded by stormy seas. Above all, it was about respect—respect for the wishes of the people, which requires respect for others, no matter what their origins, their colour or their accents. Yesterday the Government said that it would be unwise to offer assurances to immigrants already here without parallel assurances from other European Governments. What are they saying? Is offering assurances unwise? No, it is far from it. It would be an act of humanity, of friendship and of leadership. After all, what was Brexit about if not establishing a sovereign independent Government capable of making up their own mind? We do not need anybody else’s permission. Those days are gone. It is our choice, so I want to press the Government and all those who have ambition to lead the Government for clear assurances that EU immigrants already living lawfully in this country need have no fears. They are welcome and will continue to be.
What are we to have, for pity’s sake? Are we to have mass transportations like we have seen in the Balkans, with vast lines of mothers, bewildered babes in arms, crossing the Channel in different directions? That is the way of madness. It is worth repeating that these people are not bargaining chips, least of all hostages. They are our neighbours and our friends. We Conservatives are not, dare I say it, the nasty party and we must not become one. Any future Government who tried to introduce legislation to send back legally settled immigrants would be out of their mind and soon be out of office—otherwise we would lose our sense of decency. We would lose the superb support that we enjoy in our health service, in our care services, in the contributions we get in every street of every town in every corner of the country—and not least, the superb service we get in our own dining room. Ministers please take note: it is not going to happen; get on with it.
What will happen? It is no one’s interest that we should be cut off from the EU. We are, and still will be, all of us, Europeans. There is no reason why that relationship should not be warm and productive, but I urge the EU in its own interests to find a better means of dealing with this crisis than through its unelected president. I do not wish to personalise this, but if it had not been for President Juncker’s conduct and exquisitely clumsy commentaries—he has been at it again today—I think that remain would have won.
This will and must be a political process, balancing the rights of the UK and the rights of the EU—a process that requires vision and is run not by bureaucracy but by elected politicians, those who can feel the hot breath of the people on their necks. That means above all Frau Merkel, who, more than any other person, holds the future of Europe in her hands. I would say this to her if I could. If not union, then alliance. If not as one, then at least together. If we are no longer bound by law, then let us be bound by bonds of overwhelming friendship. We have a mountain to climb, but the view from the summit might yet prove awesome.
Lord Giddens (Lab)
My Lords, it is a great pleasure to follow the speech of the noble Lord, Lord Dobbs, and I 100% endorse what he said—at least in the first half of his speech. We must all work on these issues.
My starting point is a bit different from that of most other noble Lords who have spoken so far, whose contributions, if I may say so, have been a bit local. One cannot stress too strongly that what is happening in the aftermath of the referendum is being watched around the globe. A country as heavily dependent as ours on overseas investment should be paying due attention.
Not too many articles in the world’s press, to put it mildly, see a plucky Britain struggling through from the tentacled monster that is the European Union. Truth is often conveyed in humour, as the noble Lord, Lord Dobbs, knows very well. A cartoon that has appeared in many papers is typical. It shows a plane with an EU symbol on its side. The hatch door is open and a man in a bowler hat—for some reason, the rest of the world thinks that the British still wear bowler hats—and waving a tiny union jack is poised to jump out, but without a parachute.
This is a world where the global and the personal are intimately bound up with one another, and I must add my experience to those mentioned by other noble Lords. I was walking along the corridor of your Lordships’ House yesterday and bumped into a member of the House of Lords staff whom I know very well. We started talking about football, and then his face crumpled and he said, “I was brought here when I was seven. I have been here for 35 years. What will happen to me? What can I do?”. I therefore wholly echo the sentiments mentioned in the wonderful speech of the most reverend Primate the Archbishop of Canterbury and all the other speakers, including the noble Lord, Lord Lawson, on this issue. There is a huge repair job to do here for all of us and this House can take the lead in some of it.
The metaphor of Basil Fawlty jumping out of the plane might turn out to be worryingly accurate. The outcome of the referendum will be determined by two things once Article 50 is invoked: first, how other nations, global markets and international investors respond; secondly, what kind of deal the rest of the European Union is able to come up with. I remind noble Lords that the European Union is not that mysterious entity, Brussels, but 28 nations collaborating. Individual member states, or small groups of them, have a veto over many issues. Being subject to these twin forces if and when the UK leaves the EU does not look much like increased sovereignty to me. The world today is so massively interdependent that real sovereignty comes only from collaboration with others, whether it is the EU, NATO or the UN.
All noble Lords sitting here know that this referendum, as has been discussed this morning, had an unhappy provenance and was to do with muting squabbles inside the Tory party in the run-up to the last election. However, it is important to see what was going on. At the time Mr Cameron made the commitment, early in 2013, less than 10% of voters put the EU at the top of their main preoccupations. A decision of this significance should have emanated from widespread public concern rather than from factional party rivalries.
The referendum, as we all know, has not quietened divisions in this country. On the contrary, it has served to heighten them. One of the fundamental problems we face, as we all know, is that those who advocated leaving the EU, and won the day, have been quite unable to agree on what leave actually means. Their differences are quite profound. They were not resolved during the campaign but simply fudged.
On the one side are the radical free marketeers—in which category I think I would include the noble Lord, Lord Lawson—who think that exiting the EU will free Britain to trade across the world and who are willing to abandon the single market altogether. Although I may not be correct to, I exempt the noble Lord, Lord Lawson, from my next comment, which is that they care little for tradition or for the past. In addition, many are intuitively pro-migration, which he certainly would not agree with.
On the other side are those who have a nostalgia for evaporating customs and ways of life, who want to close the borders and retrieve lost sovereignty. They are hostile to big business and claim to stand up for the common people. These yawning ideological differences account for the descent of the leave campaign into empty populism, epitomised by Boris Johnson’s absurd remark that in negotiations with the rest of the EU he wanted to have his cake and eat it. I suppose it makes it easy on the digestion.
The British people can make a proper judgment only when there is a plausible plan on the table, a firm outline of which has been agreed and accepted by the other 27 states in the EU. The core dilemma involved is well known, but could quite possibly prove intractable. Not far off half of British exports go to the rest of the EU, and most are services rather than goods. Again, I rather strongly disagree with what the noble Lord, Lord Lawson, said on these issues, because passporting—the absence of regulatory barriers for business firms—is the key to success in this instance. That is not the same as the absence of tariffs.
Exiting the single market, even in the medium term, would be hugely problematic, yet staying in almost certainly involves accepting freedom of movement. If there is a way out of this dilemma, no one has discovered it yet. Precisely because there is no plan, there must be some sort of renewed and extensive public engagement, if and when a deal is agreed with the rest of the EU and starts its passage through Parliament. I am not sure in my own mind what form this should take, but I would not write off the possibility of another referendum down the line, or an election in which this figures as the prime issue.
Baroness Manzoor (LD)
My Lords, the tone adopted by some leading politicians at times during the referendum debate was nothing short of racial incitement to hatred, and demonstrated the worst of British politics. I was so dismayed and concerned by the tone and exaggerations of the debate that I wrote to the Cabinet Secretary, Sir Jeremy Heywood, on 13 June drawing his attention to the fact that some Ministers were failing to comply with the Ministerial Code and the seven principles of public life, which include maintaining the highest standards of integrity and honesty. Despite the scaremongering about minority groups, immigrants, Turkey joining the EU and Turkish Muslims “swamping” the UK, we must not confuse the leave vote with people who are entirely far right in their political views or who are mostly racist or xenophobic.
I agree with my colleague, Tim Farron, who stated that it has been absolutely heart-breaking to see the spike in racist and xenophobic attacks following the referendum. Many warned that the rhetoric of Farage and the leave campaign could lead to a rise in the intolerance we are now seeing. We must be clear that the outcome of the referendum was not a green light to xenophobia. It must not be allowed to damage the multicultural, multi-ethnic and multifaith society that Britain is and will remain. The vote to leave the EU is not, and should not be seen as, a victory for the far right. No serious leader should fall back to regressive policies that demonise minorities or communities, or put in place policies which undermine our civil liberties.
The tone used in debates around immigration was disgraceful, and those politicians who took part in such attacks should hang their heads in disgrace. It is imperative now that all politicians give clear leadership in uniting and condemning racism and xenophobia, and work towards stressing the importance of the key roles that EU nationals play in making Britain—the UK—a success in every aspect of our daily lives. We are all, mostly, a nation of immigrants; it is merely a question of time.
I accept that there are legitimate questions and concerns about the state of our public sector and the services within it. I will share some facts with your Lordships on polling, which were thus: those working full-time or part-time voted to remain in the EU. Most of those not working voted to leave. More than half of those retired on a private pension voted to leave, as did two-thirds of those retired on a state pension. Around two-thirds of council and housing association tenants voted to leave. Among those whose formal education ended at secondary school or earlier, a large majority voted to leave. There is a pattern here and the polls demonstrate that many disadvantaged people in poorer communities voted to leave the EU because—I have heard them say this—they had nothing more to lose.
David Cameron has often expressed a simple message: “If you want to work hard and get on in life, this Government will be on your side”. Yet the terrible tax credit cuts envisaged by the Chancellor, which would have affected over 3 million Britons and their supplements to low-paid work, exposed the hollowness of this claim. Although the Chancellor reversed these cuts, when people move onto universal credit, regrettably, many of the larger and poorer families will again be disadvantaged. Yesterday, it was announced that there would be a cut in corporation tax. This is likely to mostly benefit larger businesses and corporations. Those benefits are not likely to translate into many more jobs, and so will do little for those needing help and support in disadvantaged communities. Indeed, cuts in corporation tax may lead to further cuts in public spending, such as in the NHS and in the welfare budget, as the Chancellor tries to make difficult ends meet.
Clearly, successive Governments have failed to listen, and act upon, improving the lives of the most disadvantaged and vulnerable in our society. You have only to visit places in the north of England to see derelict housing, poor transport infrastructure and struggling communities. Governments have talked the talk, but talk and slogans have not translated into concerted action; the northern powerhouse is one such example. Of course, many people have legitimate concerns about access to hospitals, GPs, good schools, good transport infrastructure and affordable housing, and to decently paid, permanent jobs. But the poor and the disadvantaged feel these issues more acutely, because they often find themselves and their families trapped in low-paid jobs and inadequate and expensive housing, with greater levels of ill health. Social justice and reform must work for everyone, and ensuring that everyone has the best chance in life must surely be a right for all, and not a right for only the privileged or those with power and influence.
The result of the referendum to leave the EU is likely to mean that inflation rises and that benefits continue to be frozen. This will hit the spending power of people on disability benefits, those who are jobseekers and those on low pay. Brexit-voting pensioners have already seen their annuity values crashing with the flight into gilts. Clearly, the disadvantaged people in every area who voted out will be worst hit by job losses and high inflation. What will the Government do to mitigate against this?
The Government have set out their life chances strategy to tackle poverty, aimed at transforming the lives of the poorest in Britain, with a focus on tackling the root causes of poverty, family breakdown, worklessness, drug and alcohol addiction, serious personal debt and assessing educational attainment at 16 years of age. But they omitted to include income as a means of getting on in life. The Government also need to look at reskilling and upskilling people in poorly paid and part-time jobs.
We need a new and inclusive vision, with new and honest politics that give hope to all in our nation—but most importantly to those who need us the most. We want an inclusive, tolerant, equal and fair society, committed to a new set of values of fairness and hope.
Earl Attlee (Con)
The noble Baroness made a fascinating speech, and I am sure that the House was very interested—but where did she get the data to say which way individual voters voted?
Baroness Manzoor
My Lords, they were from polls that Lord Ashcroft undertook, and they were mentioned in the Guardian newspaper as well.
Lord Kerr of Kinlochard (CB)
I very much agree with the noble Baroness’s main theme and, like the noble Lord, Lord Giddens, I pay tribute to the remarkable speech of the right reverend Primate the Archbishop of Canterbury. I cannot match it and therefore will be more mundane in making six points about Article 50.
First, the reference in the first clause of Article 50 to the member state deciding,
“in accordance with its own constitutional requirements”,
has been much discussed, including by the noble and learned Lord, Lord Wallace, this morning. The intention of the phrase was simply to make the point that how the decision is reached is entirely a matter for the member state; just as with ratification procedures, there is no EU template. The question of whether a UK parliamentary procedure is required is one for a UK Parliament and nothing to do with anybody in Brussels. There is no relevant EU law; it is not an EU issue.
I am inclined to agree with the argument of the noble Lord, Lord Pannick, although I am not a lawyer, that there should be a parliamentary procedure. But that is not because I would wish to vote against leaving if there were a vote here. We are where we are and, in the light of the referendum result, I would with a heavy heart vote for leaving. Of course, I believe that it is a serious mistake as our influence across the world will be much diminished. Of course it would be a disaster for our economy and lead to a decade of economic and political uncertainty, as Mrs Leadsom so succinctly put it. Of course, I am also sad and angry that the case against referenda, and for representative democracy, has been confirmed by a campaign marked by mendacity and irresponsibility, in which assertion has trumped—yes, trumped—fact and argument, and in which a Justice Minister said that the people of the country were fed up with experts. I am determined to be dispassionate today. We are where we are and if the Government act on the advice of the noble Lord, Lord Pannick, and put a resolution to the House empowering it to revoke Article 50, I believe that resolution should and would pass.
My second point is that there are those who argue for a different question: for the repeal of the 1972 Act, as the noble Lord, Lord Lawson, argued. I disagree for two reasons. First, my understanding, supported by the report from the committee chaired by the noble Lord, Lord Boswell, is that where a treaty sets out an abrogation procedure—in this case, a secession procedure—abrogation other than by that procedure would break international law as well as EU law. It would, of course, also poison the atmosphere for any continuing negotiation in Brussels. Secondly, although I heard the reference made by the noble Lord, Lord Lawson, to delayed commencement, I do not believe that it would make sense to destroy the foundation on which so much law and so many statutory instruments are based without first deciding which to relabel and retain, which to adjust and which to let fall, as he mentioned. While the small-state, anti-welfare libertarians skilfully avoided saying which they would let fall—health and safety, consumer protection, equality, the environment?—we know that they were not just against Brussels regulation; some of them were against regulation per se. That is easy to sell in general terms but rather harder to sell when it comes down to specific regulations, so we need a more honest and deeper debate before the repeal of the Act.
My third point is about timing. Some in Brussels and some here say that we must immediately press the Article 50 button, while some over there say that there must be no talks with us until we have. This is arrant nonsense. There is no legal basis for it in Article 50, which leaves it entirely up to the member state to decide when to issue the formal notification. It would be very wise for the new Prime Minister, whoever she is, to take time first to study the issues and talk to her new colleagues. Mr Johnson complains that the Government have no Brexit plan. How could they have a Brexit plan when he issued no manifesto on which Whitehall could base its planning? Judging by his article last week in the Telegraph, he is still consistent about his policy on cake: our goods are to have free access throughout the single market but we will not recognise the jurisdiction of the ECJ.; we will play football but bring our own referee; our people will be free to live and work across Europe, but theirs will come here only if they satisfy the controls of our points-based visa system. That is Lewis Carroll’s White Queen and her six impossible things before breakfast.
We need a plan but Brussels will have to wait until we have one, and it must not be based on Daily Mail thinking. Mr Paul Dacre told the country in his leader last Saturday—he was no longer campaigning, as he has won—that Brexit carried no terrors because services are not in the single market. I think I have been unfair to Mr Dacre. I had thought his campaign was driven by an insular ideology, but I now think it is probably just plain ignorance—I am being dispassionate today. My dispassionate point is that the timing of our triggering Article 50 is entirely up to us, whatever Brussels says.
My fourth point is about sequencing. Article 50 is about withdrawal, about divorce. Some in Brussels assert, wrongly, that there can be no trade talks with us until the divorce is through. I refer them to Article 50(2) and the reference there to,
“taking account of the framework for”,
the seceding state’s,
“future relationship with the Union”.
How could the parties to the treaty respect that unless they were in parallel agreeing such a framework, the architecture of the future and the principles on which the new partnership should be based? All the detailed discussion of future relations in trade, finance, energy, aviation, foreign policy and the fight against crime will take years, but there is a treaty requirement to establish the framework before the Article 50 divorce terms are agreed. The Brussels institutions will have to accept that. I would add that our own preparations for that separate, parallel, simultaneous negotiation will be much more complex than the preparations for the Article 50 negotiations.
The fifth point is one at which I part company with the noble Lord, Lord Pannick. In his Times article he referred to a notification under Article 50 as “irrevocable”. He used that as a flying buttress to support his principal argument, with which I agree, about the need for a prior Act of Parliament. I do not think he needs such a buttress. I also think it is a rather fragile one. Nothing in the treaty says that a notification cannot be withdrawn, nor does it say the opposite. There is no precedent to turn to, so it would be a political question. If we were to change our minds on discovering from the Article 50 and framework negotiations what out looks like, I do not believe that our partners would say, “Too late, out you must go”. Some might, like the prodigal son’s brother, be unhappy. Some might be tempted to seek a price. All that is speculative. My point, which is highly academic now but relevant to the concerns advanced by the noble Lord, Lord Butler of Brockwell, is simply that there is no treaty basis for regarding an Article 50 notification as irrevocable.
My last point has already been made and I can be brief. It gives me great pleasure to pay tribute to the noble Lord, Lord Dobbs, for the way he put it: “EU citizens here, hate crime and bargaining chips—this is no way to create a good atmosphere for a negotiation”. Such incidents are being well reported across the continental press. I do not need to add to what has been eloquently said from all sides of the House, but I hope that the Foreign Secretary and the Home Secretary are listening and will reflect again on what they said yesterday. Student politics may have trashed the country but now it is time for the grown-ups to reassert themselves, reassert our values and restore our reputation.
Lord Lloyd-Webber (Con)
My Lords, in 1997 I stood before you to deliver my maiden speech. My priority then was to draw your attention to the ludicrous EU regulations that were inflating the cost of theatre productions in mainland Europe and almost doubling ticket prices as a consequence.
Today, thanks to us being forced to adopt some of these regulations, our ticket prices are unfortunately creeping up, too. Yet, while EU practices have undoubtedly caused great problems for the entire entertainment industry, I am not here today to burden you with further industry-specific tales of woe. These, with almost every other issue, pale into insignificance when compared to what I believe to be the greatest threat to our people for a generation.
This is undoubtedly a time of great uncertainty for our country. The issues being discussed are of immense importance, particularly those so eloquently raised by the most reverend Primate the Archbishop of Canterbury earlier in this debate. However, I fear that, as we continue to look in on ourselves—as we continue to work out what has happened to our country since the referendum—we are at the same time walking blindly into a threat, the gravity of which far surpasses any of the issues that we have indulged ourselves in to date.
Let us not forget that last week’s commemoration of the Battle of the Somme—where more than 57,000 British servicemen forfeited their lives—was a timely reminder of a moment when the continent of Europe and its people were jeopardised for a generation.
Today, I believe that Europe is once again facing a terrible threat and, with that threat, the security of the continent is in the balance. The greatest single threat to peace, in both the United Kingdom and Europe—and with it our stability and safety—is Putin’s unopposed meddling in Syria. While the Syrian situation was, of course, not created by President Putin, his actions and involvement remain a cause for huge concern.
Over the past six months, Russian bombs have decimated hospitals, schools, markets and homes in Syria. They killed more than 4,000 people between September 2015 and early March this year. Russia’s actions have displaced millions more and, in doing so, have played an active role in fuelling the European migrant crisis.
While the United Kingdom and Europe feign to quarrel over what sort of trade agreements we may or may not have in two, three or 10 years’ time, Putin’s involvement is steadily destabilising our European borders and unleashing the fury of war in a sinister echo of the Somme, about which we swore, “Never again”. We should be under no illusion that Putin’s forces rage—and they rage not just against those in combat but against civilians, too.
When the referendum was called, the Syrian migration crisis had not yet exploded. Now the goalposts have moved, and they continue to move all around Europe in many different ways. The frozen conflicts in Ukraine, Moldova and Georgia, as well as the direct armed intervention in Syria and aerial provocations to NATO members, demand that we recognise the Moscow regime as being a huge threat to the stability and security of Europe. It is Putin who continues to move the goal posts, with ever more devastating consequences.
While we immerse ourselves in the aftermath of a referendum and the rest of Europe looks on, trying to make sense of our decision, Putin carries on his airstrikes in support of a discredited Assad regime. Our parents’ generation sacrificed their lives for peace; now is the time to ensure that we are trustworthy custodians of that inheritance. So I shudder to think how Putin must be looking on our travails with glee. By fuelling the migrant crisis and commanding the atrocities of war, he has, directly or indirectly, made historic European divisions bubble to the surface again. Things are working out well for him. He knew that the refugee crisis would strain Europe to breaking point and he was right.
In quitting Europe, I fear that we are hastening Putin’s dream of the break-up of the EU—and with it, potentially, western civilization. Austria recently missed electing an extreme right-wing President, and I understand that the election is to be rerun; Marine Le Pen could become President of France next year; the far right has made advances in Norway and Finland; nationalists run Poland, Hungary and Slovakia; the Putin-fuelled refugee crisis has undermined Angela Merkel, once the most powerful and stable politician in Europe; and the German far right is back in business.
So now, more than ever, we must stand united, as a country and as a continent, to honour our reputation as a great kingdom and provide the moderating voice that Europe needs in order to remain peaceful. I just hope that in five years’ time we will not look back with incredulity at the way in which we wallowed in self-serving arguments about our economic prospects and how to better ourselves financially, while failing to help those in desperate need and completely missing one of the greatest threats of our lifetime looming ominously on the horizon. Our nation’s safety and that of our people has to be our overriding priority.
Discussions about the future of our children and our children’s children are foolhardy and misguided if first we have not addressed their safety. There was much talk during the referendum of securing their future, but they will have no future if Putin’s continued involvement remains unchecked. Instead, we need to seize the initiative and to quickly see ourselves as a nation that looks outwards, geared towards being united against this very real danger, and as the generation who, like our parents before us, pulled together despite the mayhem that surrounds us.
I very much welcome the Defence Committee’s report regarding the Russian threat to UK security today. It rightly questions our understanding of a Russian military strategy and Putin’s ultimate ambitions, and it expresses a fear that he is employing many of the old Soviet tactics that so terrorised generations before us. The committee’s call for improved communication and greater understanding of the Russian mindset is also vital.
By contrast, the inflammatory tone of some of the spokespeople in Brussels fills me with a mounting sense of dread. It fills me with dread because now more than ever we need to build bridges and the next Prime Minister needs to restore faith, trust and good will between this country and our European neighbours. Without that, we have nothing, and I fear that we will leave ourselves and our children open to an insecure and consequently frightening future.
I honestly believe that we are in a race against time, which is why I feel compelled to speak today with a very real sense of urgency. There is no time to lose. Although I do not claim to have the answers, raising this vital question in order that we tackle it head-on, united together, is surely the best way to avoid a situation that has the potential to be truly perilous not just for our people and not just for our country but for Europe at large.
Lord Brennan (Lab)
My Lords, the present state of affairs constitutes a major challenge to the political system of our country—a challenge with which we in this House have to cope. What is now to come and how should we deal with it?
First, I commend to the House many of the speeches today that have given us a role with a special responsibility: to help restore confidence in our political system. The front page of last Friday’s Economist carried the words “Anarchy in the UK”. I read a lot of the continental press every day of the week and over the last seven to 10 days have seen similar headlines, quite apart from a degree of consternation within our own country. The House of Lords, with its experience, expertise and capacity for calm, reasoned debate, is very necessary at the moment, particularly if the Government, because of their election of a leader, do not institute significant action until September. We have a short-term and a long-term obligation.
All of us in the political system should reassure people of our principles and process. I suspect many of those who voted leave did so because of their resentment and not for their appreciation of one side or the other. Many who voted to stay are deeply regretful of the result. They will all need to be reassured now about objectives, process, timing and alternative solutions, and this must be done with transparency. The idea that these negotiations can be conducted in secrecy or semi-secrecy is totally unrealistic. There will be leaking by everyone involved as they think appropriate.
We should resolve the following in the action we need take. There should be a plan—not a plan to have a plan—which includes the basis of a coherent strategy. We should use professionals. We should go out and recruit. There is no reason why we should be concerned about the intellectual competence of our civil servants—trade negotiations are conducted by trade experts, not national civil servants. We have one in the House. My noble friend Lord Mandelson was the Commissioner for Trade in Europe for four years and negotiated with the WTO. So I am talking about cross-party co-operation as well as professional involvement.
On business and finance, small businesses depend on Europe much more than the multinationals—it has the most direct effect on them and their workers—as well as the City of London and others. If we are to negotiate, let us base the strategy on realities. I was for remain but negotiation is hard talking. Sixteen per cent of the continental trade of the European Union comes to the UK. More than £1 trillion of assets are managed in London, put there by European investors. Do we really think that the Germans will give up on their cars? One of its own confederations of business last week said that an attempt to stop that trade would be “very foolish” if its own Government supported it. The same applies to French wine and Spanish tourism. In Italy, 20% of GDP is represented by non-performing loans. With the stability and growth pact no longer working, it prefers Germany’s operation at the cost of the poorer countries. We have to be realistic and tough —and I am a remain man.
In these negotiations we have to talk about alternatives —that is, competent negotiation. Of course we must be friends together, but we tell the other side, “This is what we want, or else”. What of the “or else”? President Eisenhower said:
“Firmness in support of fundamentals, with flexibility in tactics and methods, is the key to progress in negotiation”.
Firmness in fundamentals offers flexibility. The timing of how you put things from one period to the next is critical. Reporting back to Parliament is indispensable if you need, as you must, to maintain public confidence. Then there is the final deal: what is going to happen then?
What about the effect of Article 50 on our politics generally? There is a period until we trigger it—let us say three to six months. There could be an early agreement, but that is highly unlikely. Or, at the end of two years we are out unless there is unanimous agreement to extend that period. Do we realise that, depending on which alternative occurs, that runs through pretty well the whole life of the rest of this Parliament? Indeed, it could go into the next general election. What would we then face compared to the referendum we have just had?
I turn now to new markets. Last Friday, in the United States Congress, the United Kingdom Trade Continuity Act was proposed by Republicans, with, I understand, some Democratic support. It is designed to open the prospect of a United States trade agreement with the UK. That might bring us into or next to the NAFTA with Canada and Mexico. I am not recommending it but pointing out that there is an actual alternative.
We built Latin America in the 19th century. It contains 500 million people and has a vast and emerging infrastructure and other projects that we could supply. China, the Commonwealth, and India are all also economic factors.
One extremely important factor is the geopolitical issues that bind us to Europe: whether we are in the Union or not, terrorism, human trafficking and refugees from conflict will still be there.
Lastly, there is NATO. The Americans may talk to Germany and France out of necessity if we leave, but we are their preferred ally. We should bear in mind that Mr Steinmeier, the German Foreign Minister, last Friday condemned NATO for warmongering military exercises in Poland. Europe is not going to go away, whatever we decide.
Lord Burnett (LD)
My Lords, it is a pleasure to follow my noble friend Lord Brennan; the whole House will have appreciated his profound insight. The noble Lord, Lord Lloyd-Webber, made a most compelling speech about European Union cohesion which I and most other Members will have wholeheartedly endorsed. I draw attention to my entries in the register of interests.
I have always been against joining the European single currency and have campaigned against it. Nevertheless, I very much support our continuing membership of the European Union on the terms negotiated by the Prime Minister. The referendum was held at a particularly inauspicious time. The Government’s accumulated debt is in excess of £1.5 trillion, which is over 80% of our GDP. The annual deficit, although hitherto falling, was £74.9 billion in the year to March 2016. Our current account deficit continues to run dangerously high. In the past we have funded this with foreign direct investment, some of which is both volatile and capable of being moved extremely fast. As the Governor of the Bank of England said during the referendum campaign, we rely on the kindness of strangers.
Despite the referendum result and the downgrading by the rating agencies, it appears that government 10-year bonds can still be sold at a coupon of less than 1%. The Chancellor has abandoned the fiscal squeeze and the Governor of the Bank of England has stated that he will take all necessary actions to protect the economy. We are still creditworthy, but I suspect that if we serve an Article 50 notice, market sentiment will change. Before the referendum and probably as a result of the impending referendum, the economy was showing signs of slowing down. Since the result, and from my experience and discussions with business people, it appears that the slowdown is gathering pace. Deals are falling through or are being renegotiated, and I would draw the attention of the House to reports in last weekend’s Financial Times of major City of London property deals which since the result have now fallen through.
Asset prices, particularly real property, often provide the underlying security for much lending to small and medium-sized businesses and companies. Currently it is extremely difficult if not impossible to fix a value for real property, except perhaps at a vastly discounted price. This is a dangerous situation and I am endeavouring personally to advise borrowers, lenders and other commercial businesses against the backdrop of these very difficult conditions. There are reports of many companies freezing their recruitment, and in some cases unfortunately there have been job losses. The evidence for these reports will start to come through in August when the July figures are published. I hope that the Bank of England and the Treasury will monitor closely the effects of Brexit on our small and medium-sized enterprises, which are the bedrock of our economy and provide so much employment for our fellow citizens.
We are not alone in Europe in having a crisis of confidence in globalisation and to some extent in the institutions of the European Union. Support for the national front in France is rising in the polls, as is support for the AFD in Germany. Elections are being held in both countries next year. The United Kingdom is the second largest economy in the European Union and is important to the Union. Italy is facing major problems with its banking industry. All the foregoing should act as incentives for the European Union, with the United Kingdom, to negotiate some changes, perhaps even changes in freedom of movement.
The noble Lord, Lord Lawson, gave us his plan of what Brexit entails. He was quite clear that we should not bother to endeavour to negotiate access to the single market because this would entail us allowing freedom of movement for EU citizens. It really is a great shame that this prospectus was not put to the British people before 23 June. I take the view that access to the single market is of the greatest importance to our economy, for jobs, opportunities for individuals and businesses, and for investment. It gives us great advantages, not least in our ability to ensure, relatively straightforwardly, that our exports of goods and services to the single market are not unnecessarily impeded. I join other noble Lords in asking the Leader of the House to ensure that we have a definitive explanation of whether Parliament has a role in the Article 50 process and the extent of that role. Will she also confirm that an Article 50 notice, once served by the United Kingdom, can be withdrawn only with the unanimous consent of the UK and all the other 27 EU countries?
I much regret the decision to leave the EU. We are part of Europe and part of European civilisation. In an increasingly interconnected world, it is a dreadful mistake culturally, economically, educationally and for many other reasons for us to abandon the European Union. It will cause damage and hardship to us all, especially the younger generations who voted in such large numbers to remain.
Lord Butler of Brockwell (CB)
My Lords, I start by making it clear that while I join the noble Lord, Lord Burnett, and other noble Lords in greatly regretting the outcome of the referendum, Government and Parliament must accept and act on it. This means that sooner or later Article 50 must be invoked. If an Act of Parliament has to be passed to do so, Parliament should pass such legislation. I accept also that the campaign is over. Arguments that the British people were misled into making their decision are fruitless. The British people made their decision and that is an end to it.
The question, however, is whether the outcome of the referendum prevents any further critical consideration of the decision to leave in the light of the emerging terms on which we do so. Let us imagine a possibility—which I acknowledge now seems unlikely—that the EU partners decide that it is in their best interests to give us access to the single market, combined with an acceptable degree of control over migration into the United Kingdom. Are the Government saying that our response has to be, “No. The people have decided—albeit by a narrow majority—that we must leave, and that is an end to the matter”?
Let us imagine what I am afraid may be a more likely scenario: that it becomes apparent that our economy is being so badly affected by our decision to leave that there is an overwhelming public demand to be able to think again. Let us imagine a petition, not of 4 million people but of 17 million or even 30 million people.
Let us imagine a third scenario, one such as the noble Lord, Lord Burnett, outlined, whereby the effect of the British decision causes such a clamour for reform from other member countries that the EU is compelled to make such reforms—for example, on free movement—that our continued membership would be acceptable to a substantial proportion of those who voted to leave. Is the position of Parliament and Government going to be so rigid that they say to the British people, “No. You decided two years ago to leave. Leave you must”? It would be one thing for our European partners to deny the British people the right to think again, though it is very doubtful that they could do so. It is quite another for the British Government, in two years’ time, to deny the British people any opportunity to change course, even if it becomes apparent that the road is leading over a cliff.
Whatever the merits of a referendum process—and there are some—we have also to acknowledge its weaknesses. I am grateful to a correspondent who brought to my attention an article by the late Lord Beloff, a greatly respected Member of this House who was Gladstone Professor of Government and Public Administration at the University of Oxford. In that article he argued that a referendum is only meaningful to the extent that clear alternatives are set before the electorate. According to Lord Beloff, in the absence of such clarity the electorate would be indicating a very general bias one way or the other, and nothing more.
It may be argued that the referendum offered such clear alternatives. What could be clearer than “Remain or Leave”? A moment’s thought, however, shows that it did not. One of the alternatives was clear: a modified “business as usual” by remaining within the EU. The other was anything but clear. The leave alternative offers a whole range of different futures, dependent on the outcome of uncertain negotiations and unpredictable market decisions. It is indeed a step into the unknown.
So, let us go into the negotiations in good faith, determined to get the best deal we can for the British people in accordance with their decision in the referendum. However, it is in no one’s interests—not ours, nor those of our partners—to rule out any possibility of a change of mind in response to events as they unfold over the next two years. If legislation must be introduced to authorise the Government to trigger Article 50, I shall support it. But I should also support an amendment providing that the departure does not become final until, at the end of the negotiations, the British people have an opportunity to make an informed decision through a general election or further referendum.
Baroness Mobarik (Con)
My Lords, one word stands out in reference to the recent EU referendum: “division”. The most reverend Primate the Archbishop and many noble Lords have stated this today. It was a divisive campaign—some would say by both sides—but the divisions were clearly already simmering and ready to surface when conditions allowed: divisions within our political parties and within our society, and divisions along national lines. In Scotland, the SNP Government, apparently unwilling to accept the legitimacy of a UK-wide referendum, are already calling for another independence referendum and fomenting fresh divisions north of the border.
Of course, I would like to think that the majority who voted to remain in the EU or to leave did so purely on a point of principle. For those like me, the economic argument for staying in the EU was obvious and, as a former chairman of CBI Scotland, I made those arguments on numerous occasions on behalf of members. However, as the owner of a small software company, I could also understand why others would see the EU as an overly bureaucratic machine that impacts on small business in particular in a negative way. That is neither here nor there. We have the result to leave the EU and we must begin the task of developing a new strategy to succeed economically and globally. I point noble Lords to a debate on Thursday on this subject.
Today, I confine my remarks to that word “division”. What has emerged from this referendum is that a whole swathe of the population harboured real resentments and their vote to leave was a means of protest. The social and economic gap that has grown over recent decades has created an inequitable society. That is a ripe condition for blame, particularly for blaming those who look different, speak a different language or have a different culture or religion. Of course, the vast majority of British people who voted to leave the EU did so as a consequence of their genuine concerns. However, there were those on the leave side who disgracefully drew on those resentments and fears when the sole focus became immigration. There is only one word for it, one that we do not like to use but the only one that fits: racism. This has not just been about people from the EU. That infamous poster with Nigel Farage said it all. The racist attacks and verbal abuse since the referendum reflect that this is not just about EU citizens. The P-word and N-word have been used abundantly. Indeed, this has been of such concern in the days since the referendum that the Prime Minister and other senior politicians have made public statements condemning such behaviour.
Since 1968, successive Governments in this country have worked hard to bring about a more cohesive society through race relations and equality legislation. The United Kingdom has been by far the most successful in Europe in giving equal rights to its citizens. That is why this is such a great country to live in and why anyone who comes here loves it and has such loyalty towards it. We have come a long way from 1968 and Enoch Powell’s rivers of blood speech. We do not want to go backwards. I remember that time well and the negative impact that it had on me personally as a little girl in primary school. When you are on the receiving end of prejudice, it has a whole different perspective. It leads to feelings of rejection, alienation, anxiety and depression. Make no mistake, it is not just about overt racism; covert racism can be just as damaging. Those who are sensitive to it and know that it is directed at them recognise it in the most fleeting expression. Every one of us has constantly to question ourselves about our own prejudices if we want to build a strong society and real national pride. Politicians and the media perhaps have the biggest responsibility of all.
Ethnic communities of many hues have enriched the lives of this nation. The food that we eat, the colours and clothes that we wear and the music that we listen to have changed beyond recognition from the days when I came to live here as a child. Many people have come to these shores—Irish, Jews, Italians, people from India, Pakistan and Bangladesh and from the Caribbean, and the recent migrants from Poland and elsewhere in Europe. They, and the many others from around the world, have all contributed immensely to this country. Those who may have come to exploit it are a disgrace, but they are just a small minority. Overwhelmingly, what the newcomers bring is their energy and ambition to build a new life and to do well. That means having a strong work ethic and often an entrepreneurial spirit.
My late father came to this country from Pakistan and worked hard, employing more than 500 people in his various businesses in the 1970s and 1980s. He paid his taxes, he believed in public service and he was a model citizen. That work ethic was a value that he shared with mainstream British society. What we must do now is to build on these values again—and with fresh energy.
Finally, if we were to baton down the hatches and not allow any more immigration, as some would wish, I would make a gentle reminder that the many hundreds of jobs—in the NHS and agriculture, in the hospitality industry, in transport and in every sector—would still have to be done. Enough home-grown Brits would have to be willing to do them.
I urge the Government, under their new leadership, to refrain from the scapegoating of immigrants that some in our main political parties and certain sections of the media have found politically expedient of late. There is a very positive story to be told about the huge contribution made by immigrants to our country. It was not very well told in the run-up to the referendum, but together we can get this message out now. As we move forward, it is important that our Government clarify their objectives on immigration and the means by which to achieve them.
This is a wake-up call to mend our country, to tackle poverty by providing jobs through small-scale manufacturing and other routes, to engender that work ethic and to encourage enterprise. It is a huge task, but one that cannot be sidestepped if we are to avoid social unrest and if we want to continue to be a great nation. We have to learn to respect and value each other’s contribution and our national leaders have to lead the way.
Lord Knight of Weymouth (Lab)
My Lords, it is a great pleasure to follow that speech from the noble Baroness and the excellent speech from the noble Lord, Lord Butler. This is clearly a time of political crisis. So far, two party leaders have gone. My hope is third time lucky and that my own party is able to move forward quickly.
We are also in a constitutional crisis. When I was introduced to this place, I took the oath of allegiance to the Queen and signed up to the Code of Conduct of your Lordships’ House, as do all noble Lords. That code makes clear, in paragraph 7, what our duties are:
“In the conduct of their parliamentary duties, Members of the House shall base their actions on consideration of the public interest, and shall resolve any conflict between their personal interest and the public interest at once, and in favour of the public interest”.
I do not equate public opinion and public interest and think that they are the same thing; they are currently potentially in conflict.
I believe that most of the 52% who voted to leave did so out of a concern for the effect of migration. One of the failings of the remain campaign was to allow it to become a referendum on that issue. Migration is a function of globalisation. The free movement of labour, alongside the free movement of capital and goods, is a founding principle of the EU. I profoundly believe that the migration of capital and, therefore, of jobs away from the UK is now a bigger threat than the migration of workers.
It is not in the public interest for Parliament to ignore the outcome of a referendum, but if the outcome of a negotiated exit is an end to the free movement of labour, and with it free trade, the public interest is not served by supporting that outcome. I like the notion put forward by the noble Lord, Lord Butler. Employers need access to current skills and will migrate to access those skills in an environment free of trade barriers. Perhaps our negotiators will succeed in persuading the EU to act against its founding principles and its own preservation by agreeing to free trade but not the free movement of labour, but I doubt it. Either way, this Parliament needs the assurance from the Government that it has a role in both the negotiating position and in triggering Article 50 so that we can exercise our duties as parliamentarians. What consideration has been given to forming a Select Committee of both Houses to provide detailed scrutiny of this critical process for our nation?
The second huge concern raised by this flawed referendum is the failure of representative democracy. We have seen 75% of the country’s parliamentary representatives who were elected just a year ago ignored in their considered opinion. The two main parties both failed to lead significant parts of their core vote. They were joined by almost every expert on the economy and academia and were still ignored in favour of dishonest populist messages. One of our representatives was murdered in the street and yet this was not enough to cause people to pause for thought. The old model of elected representatives making difficult decisions for us is under strain, but direct democracy is equally flawed. We do not know how to inform the public to enable and empower them to take a considered view. It amuses me when Tory friends campaigning to remain complained that three-quarters of newspapers were against them. For us on this side, the response was, “Welcome to my world”. The echo chamber of social media is distorting and our methods of campaigning are sterile. On-demand TV has moved many away from watching the national news. We depend on an air war fought in the media to drive ideas, mood and education and on a ground war to mobilise people behind the media campaign. That paradigm is redundant.
This House may seem a strange place to talk about democracy. That is partly because we now think that democracy is just about voting. It is not. Voting is just one of the tools of democracy alongside others such as freedom of speech, juries and free access to ideas in libraries and now the internet. We urgently need to review how our democracy works so that we can give everyone a sense that they matter and that their opinion counts and so that we can also be engaged and informed to ensure that decisions are informed decisions.
Finally, we need urgently to address the sense that the majority of electors fear the future and the rapid change storming through society and the economy. We need the proceeds of growth to be more evenly distributed. It is not sustainable for business, politics or society if the rich continue to get richer and the poor get relatively poorer. Employment growth is insufficient if there is no security of income or of housing.
How do we do that? There are no easy answers, but I welcome the Government’s acknowledgment that they have a role in stimulating growth, as represented in the northern powerhouse. Perhaps we need a national powerhouse. I also welcome the ending of the surplus target by the Chancellor and with it, I hope, a loosening of austerity. I would also like to see priority given to skills. I am chair of the digital engagement charity, the Tinder Foundation. We work to get the 10 million-plus adults currently without digital skills confident to use the internet. That work needs accelerating, to give those people a sense of participation in the future. We need to give a much stronger priority to adult skills. If we listen to this referendum, we will have to replace migrant skills with domestic ones to stem the migration of jobs. To respond to that needs urgent redesign of both education and skills in this country.
In summary, we need to respect the outcome of this referendum, but without delivering on it blind to the consequences of the public interest. We need to rejuvenate our democracy and inform and empower electors. We also need active government refreshing the parts of the economy other policies cannot reach.
Lord Dholakia (LD)
My Lords, the referendum on Britain’s membership of the European Union has exposed one of the fundamental weaknesses of our democracy. We define our democracy as a system of government by the population voting to elect Parliament. In its wisdom—or otherwise—our elected Government failed to give us a clear lead and opted for a referendum. It is beyond doubt that the referendum descended into a struggle for political leadership of the Conservative Party, thus obscuring the real issues on which voters had to decide the outcome.
Oscar Wilde once said:
“The truth is rarely pure and never simple”.
How true. The national debate narrowed down to two issues: the economy and immigration. I shall leave the economic aspects to our experts. Suffice it to say at this stage that we are in uncharted waters and that it is almost impossible to envisage what the future holds for us.
The issue that has concerned me most is the way the debate on immigration and migration has been handled. Many electors, whether pro-EU or anti-EU, were seriously concerned that the national debate had generated xenophobia. The wider view about the benefits of trade, jobs, investment and prices, which will have a profound effect on generations to come, was overshadowed by irresponsible statements from some of our leading politicians. I am a keen supporter of our membership of the European Union: now this remains a distant dream. I have never wavered in my belief in a stronger Europe and in our role within the Union. It is time we raised our sights from being little Englanders to look at the changing world where globalisation is an everyday reality.
We cannot ignore a market of over 350 million people on our doorstep. No one owes us a living: we are all interdependent. The issues that affect every citizen in our country include global terrorism, cross-border crime, human rights and matters relating to trafficking and drugs. These are the issues that have destabilised our communities. It is the duty of every Government to provide security for all their citizens. There is always strength in numbers. Look at the large number of young voters in the country. Our first mistake was declining to give them a vote at 16. Those youngsters who were of voting age were clear that their future was better safeguarded by our membership of the European Union. This has now been denied to them.
The way migration issues have been handled is a retrograde step. The United Kingdom is no longer united so far as race relations are concerned. We saw the variations in voting patterns, particularly in Scotland and in Northern Ireland—but there is more to this. It has put fear into black and ethnic minority communities in Britain. I admired the contributions of my noble friend Lady Manzoor and the noble Baroness, Lady Mobarik, on this issue. Attacks on our Polish community, swastikas in children’s playgrounds, and attacks on mosques and temples bring back memories of the early days of migration to the United Kingdom.
Racial attacks and racial discrimination are now everyday realities in the lives of many migrants. Geographically and economically they occupy the most deprived areas of our country. Added to this, migrants face spitting, swearing, shoving and abuse almost routinely. Immigration policies have played a crucial role in successive Governments since the late 40s and early 50s. The difference this time is that the third and fourth generations, born and brought up in Britain, are now victims. There is a limit to their endurance. Sooner or later the matter could degenerate into public disorder, because those born and educated here are more likely to challenge their treatment than their parents did.
There is a dramatic rise in race-related crime. The figures have been given a number of times in this debate. Incidents of abuse suffered by minorities are reported daily. The picture of fleeing refugees as a backdrop to a poster issued by UKIP, and classifying London mayoral candidate Sadiq Khan as a terrorist risk, are simply not acceptable. We must put the blame squarely on our politicians. Of course we have tough laws on incitement and racial hatred, but there is a thin dividing line between what is acceptable and what is not. For the third and fourth generations born and bred here to suffer this abuse is simply not acceptable. Surely this is a recipe for disaster.
It is no longer a valid argument to talk about an integrated society if we continue to single out minorities as scapegoats for our own failures. Like it or not, immigration and free movement of people are even more necessary in the face of change resulting from the growth of the global economy. Increasingly, the global economy relies on the skills of people wherever they are available, and international movement is a key feature of all sound economies.
Few other political issues create the same tension and emotions as immigration and its implication for Britishness. There are three reasons for this. First, the unending discussion on numbers now focused on others coming from Europe. Secondly, our role in the international community: do we face towards Europe or look for alternative markets? Thirdly, the worry about national identity.
I conclude by saying that the referendum has proved that leadership—in or out—is uneasy when confronted by the issue of migration. There is a kind of schizophrenia in the response to immigration on the one hand and community cohesion and a pluralist society on the other. Migration policies are aimed at playing to public fears about mass immigration fanned by some of the media. They militate against the liberal elements welcoming diversity. They make minority communities feel targeted as a problem: their skills and perspectives are no longer welcome. The progress that we have made in our society is too valuable to be played in such a cynical manner by politicians. They must share the blame for destabilising our community. No society can live in peace or be at ease with itself if a section of its population continues to live in fear of being abused. We all have a duty to reverse this trend.
Lord Bilimoria (CB)
My Lords, 23 June was not independence day for Britain; it was the day the UK shot itself in its foot. Our economy has been doing so well. While European economies have been doing badly we have had cumulative growth of 62% since the single market started in 1993. We did not lose our sovereignty. We have had the best of both worlds. We have been in the EU but not in the euro. We have been in the EU but not in Schengen. We pour our beer in pints. We measure our roads in miles. Yet Vote Leave makes claims about red tape and regulations. I have seen in the 10 years that I have been in this House that the regulations that we make—the laws that we make that affect our daily lives—are made by us right here, right now in this House in this Parliament.
We take for granted 1.2 million of our citizens living in the European Union and we have 3 million European Union citizens living here. How dare people even think of sending these people back? These are people who left their families a thousand miles away, who came here not knowing the language to a strange culture and made friends, worked hard, paid taxes, put in five times more than they took out and contributed to our economy. How ungrateful can we be? We should be grateful for the efforts that they have put in. They are welcome to stay here.
We have for many years been saying: “Take control of our borders”. I believe we have lost control of our borders. I have been saying for many years: “Illegal immigration is the issue. Let’s bring back exit checks. Let’s scan every passport, EU and non-EU. Let’s make that first step, rather than making immigration the excuse that we have”.
Our universities will suffer. Already we have lost our AAA rating. Eight of our universities have already lost their credit ratings. Our universities receive £1 billion from the EU. I am president of UKCISA.
Lord Bilimoria
My Lords, I am sorry, but I do not have much time. We have 500,000 international students in this country; 170,000 of them are from the EU.
In the finance sector, big banks have already begun to make plans to move staff out. The Royal Bank of Scotland has lost value of £8 billion. That is more than we put into the EU every year and it is taxpayers’ money.
The biggest lie of them all was the £350 million that we give to the EU emblazoned on the Brexit bus with: “Let’s give that money to the NHS instead”. There was the Vote Leave advertising film showing the NHS inside the EU and the NHS outside the EU. What is going on here? It was completely misleading. These are lies. It is a net contribution of £8 billion a year, 1% of our annual government expenditure per year. That is not going to shift the needle, let alone save the NHS.
What was the Electoral Commission doing? That is what I ask the Minister. In India, which has one of the largest elections in the world, the election commissioner is the most powerful person in the country at the time. Here we have an Electoral Commission asleep on the job. Surely we need to look at the role of the Electoral Commission. Then the result would have been completely different, because I have met people who have said: “I voted to leave to save the NHS”.
We rely hugely on inward investment. The referendum saw the pound plummet to levels not seen since the 1980s, when I was here as a student, when the UK was the sick man of Europe—the 1980s when this country had a glass ceiling for foreigners. Today in this country, anyone can get anywhere, regardless of race, religion and background, yet we hear of these awful hate crimes, attacks against migrants and discrimination, which I have experienced myself. Do we want to wind the clock back?
In this referendum, 72% of voters under 25 wanted to remain in the European Union but, sadly, just over one-third of them turned out to vote, whereas 83% of those over 65 turned out to vote and they overwhelmingly voted to leave. I hope that the youth of this country have learned their lesson for ever: they have to exercise their precious right to vote and come out, regardless of whether it is in or out of term time; they must come out to vote for their futures.
What is more, I forecast that if we left the EU, it would threaten the EU itself. Already, many countries in Europe are demanding a referendum, which could lead to the break-up of the EU, which could lead to the break-up of the euro, which could lead to the biggest financial crisis the globe has ever seen. Already Scotland, a region that unanimously voted to remain, is asking for another referendum. Northern Ireland, which voted to remain, talks of merging with Ireland. We are going to be a withered, shrunken England and Wales. Is it not gut-wrenching to see Nigel Farage, who was so responsible for creating the mess that we are in, resigning as leader of UKIP and this weekend wearing Union Jack shoes when he could be responsible for breaking up our union?
Look at the treacherous behaviour of the people leading the leave campaign. Boris Johnson stabs the Prime Minister in the back and leads Vote Leave. Andrea Leadsom stabs Boris. What a hypocrite she is. She said that leaving the European Union would be a disaster:
“I don’t think the UK should leave the EU. I think it would be a disaster for our economy and would lead to a decade of economic and political uncertainty”.
Wow, how prescient. Michael Gove stabs Boris Johnson in the back. These are the people who led us to leave the European Union. What were people thinking? Project Fear? Project Reality.
The referendum was advisory, and pro-remain MPs outnumber leave backers in the House of Commons, the other place, by 3:1 and in this House by far more. There is now a strong legal case, as we have heard, that Article 50 cannot be triggered until Parliament votes on it. Here is a conundrum: with the lies, the deceit, the treachery and the turmoil that has been caused, will a responsible Parliament affirm the 52:48 referendum result built on such shaky ground? With hindsight—this point has not been brought up by anybody—a decision as important as this should have had a two-thirds hurdle. Changing the fixed-term Parliament in the other place needs a two-thirds majority. To change the Indian constitution, you need a two-thirds majority. There would then have been a definitive result.
As for the Opposition, please forgive me, but Jeremy Corbyn has been absolutely useless as a leader, and his role in the referendum was pathetic. That could have changed the whole picture—and now look at the turmoil the Labour Party is in. On top of all this, we have 4 million people signing a petition asking for a second referendum. There is no legal obstacle to holding a second referendum, and a general election could even be treated as a proxy second referendum on the issue. Would the Minister agree? A MORI poll says that 48% of voters agree that there should be a general election before Britain begins formal Brexit negotiations. A BBC “Newsnight” poll says that a third of voters do not believe the UK will leave the EU, despite the referendum result.
According to Saturday’s Financial Times, the UK is now heading towards,
“lower growth, more uncertainty, a weaker currency and looser monetary policy”.
That is just what I said on 15 June, in my last speech in the debate here. Our airport expansion has already been delayed. Brexit will hugely damage our economy, our businesses, our citizens, our stability and our standing in the world. The Governor of the Bank of England is already talking of economic post-traumatic stress disorder. The Economist Intelligence Unit projects a 6% contraction in the economy by 2020.
Brexit is now the central focus of politics and government and will be for years to come. Just think of the opportunity cost of all that time, which our leaders and civil servants could be spending improving this country and the lives of our citizens. Switzerland voted two years ago by 50.3% to modify the free movement of people—two years later, it has got nowhere in its negotiations with the European Union.
I conclude by saying that this 52:48 vote to leave will not actually achieve the slogan of Vote Leave: “Take back control”. We have actually lost control and will lose more. The irony of it all is that the chief Brexiteer publication, the Sun—wot won it—published a poll just this weekend showing that 67% believed the priority of the new Prime Minister should be steadying the economy. Only 28% of them want tackling immigration to be a priority for the Prime Minister. The irony of that is unbelievable. This wretched referendum was a dreadful decision. This country had the wool pulled over its eyes and was misled by a buffoon and a court jester—the Pied Pipers of Hamelin leading our people over the white cliffs of Dover.
Now is the time for us as a country, in the words of the leave campaign, to take back control. We need strong leadership and we need to negotiate with the European Union before getting anywhere near Article 50. Then, whether the decision is for staying in the European Economic Area with restricted movement of people or staying in the EU with restricted movement of people, we can go to the nation through a general election, properly supervised by an effective Electoral Commission, so that people can make an informed decision about our children’s and our grandchildren’s future, with the youth turning out in full force.
The Lord Bishop of Ely
My Lords, I cannot match that passion, but I join other noble Lords in saying how much I appreciated the speech earlier of our boss—I mean of my friend, the most reverend Primate the Archbishop of Canterbury. He and I have both worked in the north-east and been welcomed by the people of that area, many of whom voted to leave, just as people in fenland in my current diocese and people in east Kent, beloved of the most reverend Primate, did. These people were not, it seems to me, voting against the European Union but were making a great cry—a lament—about not having been heard for several generations by us, the political class. This was their opportunity to make us listen, after feeling excluded for so long.
About 20 years ago I read an essay by JK Galbraith called The Culture of Contentment, which seems prophetic now. It said how politics in the West has been organised for the wealthy at the expense of the poor, and that we would reap the whirlwind of this. In a peaceable way, that is what we are experiencing. There is a poem by the Christian poet George Herbert which includes the line “lament and love”. There now seems to be the opportunity to move ahead together in hope about the future that we might construct together. If I were to point a finger at the noble Lord, Lord Griffiths, the presbyter on the other side of the House, there would be three fingers pointed back at me. Although recrimination is a natural human desire, it seems to me that we have to move beyond that and see how, together, we can as a Parliament support the Government in offering a new kind of leadership for the future.
There are various collective nouns which the clergy have for bishops, the polite one being a blessing. I strongly ask us to think about how we, as Parliament, might seek to be a blessing in the way in which we support government in an urgent redefinition of the leadership that we need across all political parties. It will not do for us to think about a steady-as-you-go way forward, but we need to have leadership which is radical in its imagination, generosity, transparency and rigour for the future of all of our country and all of our fellow citizens.
We are talking about the flourishing of all our people and not for some at the expense of others. As the most reverend Primate the Archbishop of Canterbury referred to, one way of looking at this is through what we, as the Church of England, see as a vision for education into the future. The four pillars of this are wisdom, hope, community and dignity. So many of the people who have expressed their lament have been badly served over generations in developing their skills and aspiration for being real stakeholders in our economy and society.
If we are going to support wisdom, then we need to seek to invest in all that our people need in terms of training and being equipped with the right kind of education, which not only makes them economically productive, but grows in them—in us—the character to be mutually regarding as citizens, as those given to public life in the public service. We need to express hope that nobody is written off. One of our pledges in Church of England education is that no child is to be written off or excluded. That must apply too to the parents of children—no one is to be written off in our society and there is always hope for restoration and transformation across our communities. It is the purpose of all those engaged in political life to seek to make that happen.
All of us belong to community, one with another. I applaud everything that has been said by those who have been speaking against the way in which xenophobia and race hatred have been allowed to creep through the cracks lately and particularly in the last couple of weeks. We need to find new ways of living well together as one community and in fact, of course, it is in churches, temples and mosques where it is most likely that people meet cross-generationally to influence one another in places of safety. On dignity, some of the things people say—often to me—particularly in areas which have voted to leave, is that they do not count and there is no respect for them in the way in which any policy is framed. Dignity and respect are key.
All of this needs to be framed in outward-looking international environments, so that we do not become little Englanders but look outwards. We have a bold and vivid tradition as a country which has looked beyond its shores, not just for imperial adventure but to seek to transmit our values—all that we hold dear—for the advancement and encouragement of other peoples in other places. This is particularly true of our universities. In advance of this debate, I had a long conversation with the vice-chancellors of the University of Cambridge and Anglia Ruskin University, and both were keen to stress their first priority. There was concern for the migrant workers in Wisbech and the EU citizens who form a large proportion of their student body. They are anxious about the free movement of scholars. Scholars no longer live in ivory towers; there are now great highways of academic endeavour across the world, and Cambridge is the most important research university in Europe. How do we continue to make this vivid and real, not only for our own sake but for the sake of others?
The rest of my diocese is largely rural, but the fact remains that many of our farmers farm not just in this country but abroad; every year, half a million packets of lettuce come back into England from a farm that one of our big farmers has in Spain. He is profoundly concerned that proper respect is given to those people who, from abroad, make it possible for our food to be harvested. If it were not for overseas workers, there would be food rotting in our fields right now. So we need to be clear that our emphasis, even when we are concerned about our own country, is on all the implications for community worldwide, for the sustainability of community, and for the common good of which the most reverend Primate the Archbishop spoke, rooted in our application to wisdom, hope, community and dignity for all, so that all our citizens may flourish into the future.
Lord Blencathra (Con)
My Lords, it is a pleasure to follow the right reverend Prelate, with whom I agree entirely. I include in that his wise words of denunciation of that vile minority of racists who have participated in disgraceful attacks; they should be prosecuted, and prosecuted vigorously.
I am glad that I did not follow the noble Lord, Lord Bilimoria, or I would have side-tracked myself with a 20-minute attack on almost every sentence that he uttered. On 23 June, 17 million voters voted democratically to end our membership of the EU and to restore this country to the free, independent member state that it was before 1973. That long-overdue and momentous decision will in my opinion be good for the United Kingdom and good for democracy in Europe. It may well be that Britain will have fulfilled its traditional role, as it did over the centuries—in 1850, 1918 and 1945—of saving Europe from rule by undemocratic and unaccountable government over the whole of Europe. Fifty two per cent of our people voted to leave and 48% to remain—the greatest vote for anything in the history of this country. The losing remainers must stop their bitter recriminations and accept the decision of the people. Some are calling for a second referendum or for politicians to ignore the result. They say that the country is divided because 52% voted to leave; some are pretending that we would not be divided if 52% voted to remain.
On 23 June we saw the greatest rebellion against the ruling elite—including us in this House, I would say to the noble Lord, Lord Bilimoria—that this country has ever seen. The leave victory is narrow in the sense that there is only a four-point difference, but it is absolutely massive when you consider that the leave campaign started from way behind and was up against the full weight of the Government and the establishment. But people ignored the dodgy Treasury forecasts warning of doom and gloom, as well as forecasts from the CBI, the IMF, the OECD and all the other organisations—the best-known organisations. The more the Government called in their friends in the Davos elite, including President Obama, the more ordinary people suspected that they were being sold a pup. I would go so far as to pay tribute to every person in the leave campaign, including in this regard only Nigel Farage—because, without him, we would not have had this referendum in the first place.
Now we must deliver on Brexit. My right honourable friend the Home Secretary has said that the job now is to unite the party, unite the country and negotiate the best possible deal for Britain. To borrow a phrase from Lady Thatcher, I would say, “No, no, no”. The job now is to deliver what 17 million voted for—nothing more and nothing less. I say this as a former Conservative Party Opposition Chief Whip: you will not unite the Conservative Party around a fudge that is half-in and half-out of the single market, with a bit of freedom of movement here and a bit less there, and tweaking our budget contribution. We have tried that fudge over the past 20 years, and it has not worked very well for us. Some 17 million voted to take back full control over our democracy, which was the key runner, as all our leave studies showed—not immigration, but control over democracy and the ability to sack the politicians who are supposed to be in charge of us, as well as control over our law-making, borders and economy.
Of course we must have reconciliation and reaching out to those who voted remain, as well as consultation with Wales, Northern Ireland and Scotland as we negotiate exit, but reconciliation will tear this country apart if it is merely crafty double-speak for compromise on the Brexit policy and selling out the electorate. Already we hear demands from some remainers that it is essential that we stay in the so-called single market, even if it means having to accept freedom of movement and some sort of payments to Brussels. What bit of “leave and take back control” do not they understand? First, it is not a single market. That fiction was sold to Margaret Thatcher by Delors in return for qualified majority voting. It is a single European regulatory zone and not a proper single market—look at the lack of a market in services. We do not have to be a member of the so-called single market to access it. The two are quite different.
I see some Commission officials are saying that we cannot cherry pick nor have EU à la carte. I agree entirely. I do not think we need to do either. First, we are a sovereign country and our Government are not going to negotiate with some Commission officials no matter what the Commission or the Parliament think. We will talk to other Heads of Government, but the Council’s appointed leader, Mr Didier Seeuws, a Belgian diplomat who was chief of staff to Herman van Rompuy, should not be top of the list. They say that he is an able man, and I have no doubt about that, but what planet are they on if they think that the fifth-largest economy in the world, the second-biggest member of NATO, a nuclear power and a member of the UN Security Council will prioritise talking to a minor Belgian diplomat rather than to Germany, France and Italy?
The negotiations are not complex; there is only one difficulty. We need a Prime Minister who will look Angela Merkel and Hollande in the eye and remind them, in the nicest possible way, that they have a trade surplus with us in goods of £70 billion. The City of London has a financial services surplus of £20 billion, so our Prime Minister simply has to say that we are willing to accept the status quo and that we will take no action on their goods if they permit passporting for the City of London. If they try to freeze out passporting, they will get hit with tariffs. It is a simple as that. It is not that complicated, but it requires guts and credibility to do it.
Our trade negotiations would be complex only if we had a massive trade surplus with the EU, not the other way round, and we were begging to be let into the market. On 24 June, the president of the German Association of the Automotive Industry—I am sorry that the noble Lord, Lord Giddens, is not in his place because I think he referred to this fellow—said:
“Following British departure from the EU, it will be in nobody’s interest to make the international flow of goods more expensive by erecting customs barriers between Britain and the European continent”.
Exactly, Herr Wissmann, and I suspect that will also be the view of French car, cheese and wine producers. The leaders of the big countries in the EU, which export far more to us than we do to them, know that it is in their fundamental political and economic interest to have no changes to our and their access to the so-called single market. It is quite clear that some of those who want interminable and complex trade negotiations have an agenda of staying in the EU and want, at most, Brexit-light.
The people have given this country a golden opportunity to prosper once again now that we will be throwing off the shackles of the corrupt, undemocratic, regulatory, job-destroying regime that is the post-Maastricht EU, an EU which has caused the rise of extremist parties in Europe because it denied people democracy and ignored their concerns. The Government have a relatively short time to deliver proper Brexit and meet the expectations of those millions of voters in Labour heartlands and in Tory middle England who voted out. We had a revolution through the ballot box on 23 June. A few thousand remainers marching through London wanting the result overturned will be as nothing if we betray those 17 million voters. The quiet people of England have now spoken, and God help us if we ignore them.
Lord Anderson of Swansea (Lab)
My Lords, we are a proud island people. Traditionally, we been the envy of less happy lands. Historically, we have intervened on the continent only to restore the balance of power against a Napoleon, a Kaiser or a Hitler. Yet, after the Second World War, we began to realise that we had missed the European bus. We tried, after the 1957 treaty of Rome, to find an alternative. I was in the Foreign Office when we built up EFTA but soon realised we were in a cul-de-sac that led absolutely nowhere. We had the two Gaullist vetoes, sought entry on our own terms, and then, eventually, had the referendum of 1975, which confirmed our membership of the European Economic Community. Alas, on 23 June, we went against that. We chose the exit door. Analysis shows that it was the oldies—the key dividing line was those aged above 44—who did it.
The experts so derided by Mr Gove have been proved right thus far. I shall not mention all that the noble Lord, Lord Bilimoria, has said, but we have seen the abandonment of the Chancellor’s fiscal target, the revision of investment decisions and the anxieties of our nationals on the continent and of EU nationals here. Those same experts will now be called on to build a new relationship with the European Union. The question arises of whether we have the experts we need to conduct the new trade negotiations, or whether we shall have to call upon the new world—New Zealand, for example—to redress the balance of what we do not have. Perhaps redundant city bankers and New Zealanders will help us out.
In June 2012, the Prime Minister argued strongly against an in/out referendum as,
“not the right thing to do”,
as it offered only two choices. He changed his position. Can anyone doubt that, essentially, it was changed, not for the national interest but for party reasons—just as he left the European People’s Party when he wanted to be selected as party leader? He who had blown on the flames of anti-Europeanism for much of the last five years has now been consumed by them.
Yet the Prime Minister was right to draw attention to the problem of a referendum offering only two choices—in or out. On 23 June, the people spoke, or at least, 36% of the eligible voters voted to leave. The dilemma we now face is: what did they say when they spoke? Did they speak clearly, apart from indicating that they wanted to get out? The spectrum of possibilities ranges from pulling up the drawbridge to seeking the closest possible relationship with our former partners. You cannot negotiate with public opinion. Some argue for a second referendum at the end of the negotiating process. But there is a problem. What happens if the new package is rejected by the people? Do we have to form another package and another, until a particular package is acceptable to a public opinion that may change over time?
The question we face is rather a Leninist one: what is to be done? How do we limit the damage? The front door is closed; let us see if we can find other ways round. Clearly there will have to be some trade-off between access to what the noble Lord, Lord Lawson, and others referred to as the so-called single market—certainly, industrialists and others know that it is a real single market—and free movement. We will have reduced bargaining power with third countries. Clearly we should try to preserve our beneficial relationships with European institutions, such as universities and collaborative research projects. The European Medicines Agency is probably doomed in its place in London, but Erasmus, surely, is so important that we should seek to preserve it. We will have to leave the European Council; therefore we will have to boost our bilateral relationships with European countries. Our own embassies in EU countries will become more important. The Foreign Office will need more funds.
I was in the Foreign Office on a European desk in the early 1960s, when we had a similar predicament. We were outside the European Union. We wanted to build a relationship, so what did we do? I was on the western European desk. We thought, “Here is an institution that brings together the existing members of the EEC and ourselves”. We sought to build it up and it lasted for a while. There is a still a western European union, but its parliamentary component has gone. Surely we need to try to find some institution—existing or developed—that brings us together with our former partners in the European Union. We will no longer be in the European Parliament. Inter-parliamentary relationships need to be increased. The IPU should be given additional funds, specifically to provide opportunities for UK parliamentarians to meet their EU colleagues.
However, surely the best opportunity for working together is in the field of military, security and intelligence policies. We need to continue the intelligence relationship in gathering and analysing material, and we need a close relationship with the common foreign and security policy, the CFSP, without which both the EU and the UK would be diplomatically diminished. For example, the United Kingdom was part of the EU3 in negotiations with Iran. If outside the EU, there is no reason why, given our weight, we should not be part of similar future initiatives.
On the military side, we should remain associated with the European Defence Agency. We should build on the excellent bilateral relationship we have with the French after the St Malo and Lancaster House agreements, and our experience of working together in the Balkans and Libya. We should seek to expand that excellent bilateral relationship with France to Germany and other countries. Should not our NATO allies also be encouraged to develop niche capabilities?
We shall have to live with the referendum decision and salvage what we can to protect the interests of our country. We should be forced to ask basic questions about ourselves and our role in the world until, I believe, eventually a new generation will seek a closer relationship with the European Union, which, by then, will probably have changed in the direction that we now favour.
Lord Marks of Henley-on-Thames (LD)
My Lords, this vote has threatened the hopes of my children’s generation. Our young people asked, overwhelmingly, “Why would anyone want to leave the European Union?”. They now feel disillusioned, angry, hurt and betrayed. They have grown up as Europeans; they value their freedom of movement; and multiculturalism, tolerance and international friendship are at the heart of their being.
It could have all been different. With high-handed overconfidence, the Government rejected amendments giving votes to 16 and 17 year-olds, EU citizens resident in the UK and UK citizens living elsewhere in the EU for more than 15 years. Thus they denied votes, which could have proved decisive, to three groups of people who are now most profoundly affected by the leave vote.
Like all other noble Lords, I find it shameful that the Government now try to justify bargaining with the cast-iron promise of indefinite leave to remain given to UK-resident EU citizens, so I welcome the Bill tabled today by my right honourable friend Tom Brake MP guaranteeing their right to stay.
Where next? During the campaign, the Prime Minister said that he would invoke Article 50 of the Lisbon treaty immediately if leave won. Then, as he resigned, he said that this would be a matter for his successor. My noble and learned friend Lord Wallace reminded us that Article 50 includes the words,
“in accordance with its own constitutional requirements”.
With no written constitution, the UK’s constitutional requirements for giving notice are uncertain. David Cameron seems to have assumed that notice could be given by exercising prerogative powers. I disagree. I far prefer the analysis of many senior lawyers, echoed by the noble Lord, Lord Kerr of Kinlochard, who argue, broadly, that legislation is required.
Whatever the legal position, there is at least a political imperative which requires a resolution of the House of Commons, as the elected House, before an Article 50 notice may be served. The leave campaign stressed the sovereignty of the Westminster Parliament; it cannot now credibly argue that a non-binding referendum can take the final decision away from this Parliament. Moreover, the treaty does not say whether an Article 50 notice can be withdrawn after service. Again, I agree with the noble Lord, Lord Kerr. A negotiation is real only if the parties can walk away.
Implementing this crucial decision must not be rushed through with ill-considered haste; nor should it depend on the Conservatives’ leadership election. Many noble Lords have said that we must respect the will of the people—and so we must.
Remain fought a sad campaign. We failed to raise people’s sights from the threat to the economy, which many believed was exaggerated or worse. In hock to focus groups, we failed to make the principled case for international collaboration, for protecting our environment, for peace and stability, for freedom of movement. We said far too little about what the UK brings to the European Union rather than the other way around. We failed to refute the notion that while the head should say remain, the heart should say leave. That failure of ours allowed the leave campaign to persuade voters, albeit by a small majority, that they should abandon a relationship of 43 years which has involved facing the world together, making compromises, resolving differences by negotiations and discussions—often, yes, protracted and difficult—to pursue the superficial attraction of an independence that will prove entirely illusory and lead in time to economic hardship, isolation, weakness, disappointment and regret.
Much has been said by noble Lords today about misrepresentation during the campaign. With much I agree. But in six months or a year there may be more clarity and the true economic costs of leaving may have moved from the realms of speculation to a starker reality. The public mood may have palpably changed. The real-life options for our future relationship with the EU may be apparent. The EU may have changed its position. In this context we must end the absurd stand-off between a hurt and angry EU refusing to negotiate before notice is served and our being unwilling —reasonably so—to serve notice before negotiations start. Given our right to serve or withhold a notice at our option, we can do better than rely on ill-defined, informal bilateral talks, as outlined by the noble Baroness, Lady Anelay, yesterday.
The Scottish Government’s threat to leave the United Kingdom is already clearer than it was. Might they not be willing to abandon plans for a second independence referendum if the United Kingdom does not invoke Article 50?
When Parliament takes its decision, my party will stand up for our internationalism and for our fundamental belief that we should play our full part in the European Union. We will take that principled position even if there is a political cost—just as my right honourable friend the late Charles Kennedy did over the war in Iraq, for which we are likely to receive vindication tomorrow, nine years late; and just as my right honourable friend Nick Clegg did when taking us into coalition with the Conservatives at a dangerous time for Britain, and at obvious political cost, leading to five years of stable and successful majority government, but ultimately leading to damaging losses for the Liberal Democrats which, ironically, delivered to David Cameron the overall majority and the referendum that have proved to be his nemesis.
I echo much of what the noble Lords, Lord Armstrong and Lord Butler, said. I trust that not only my party but Parliament will continue to do what Members of both Houses, with full regard for the referendum result, in their consciences believe to be in the national interest of the United Kingdom. That is the basis of parliamentary democracy and of the sovereignty of Parliament. If ultimately Parliament decides that it should put the terms of withdrawal to the people once again, so be it.
Lord Alton of Liverpool (CB)
My Lords, the first political meeting that I attended was as a teenager in 1968 to hear an erudite but rather dry speaker extol the virtues of the Common Market. His arguments, but even more so the wartime experiences of my father and grandfather, clinched my support for entering the Common Market. My father had seen action at Monte Cassino and in the north African desert, his brother was killed in the RAF, and their father had been in the Flanders trenches and later in Mesopotamia and the Holy Land. Siegfried Sassoon’s Great War poetry, read in Picardy last week under leaden skies, 100 years after 20,000 British and Empire soldiers lost their lives on the first day of the Battle of the Somme, vividly recalls those catastrophic events. Sadly, another generation later, such powerful and shocking patriotic experiences seem to have lost much of their resonance.
My support for what became the European Community was also inspired by Europe’s founding fathers: Adenauer, Schuman, Monnet and de Gasperi, who were shaped by their own harrowing wartime experiences at the hands of Nazism and fascism. They were Christian humanists who believed in subsidiarity, solidarity, the promotion of the common good, social justice and reconciliation. It was for those reasons that in 1975, as a young local politician in Liverpool, I campaigned for Britain to stay in the Community, and 67% of the British people agreed.
In the intervening years, what went wrong and what has changed? By 2007, the Community had morphed into a Union and that year I spoke against the Lisbon treaty, because I do not believe in a centralised European superstate, replete with a common currency—so disastrous for countries such as Greece—a European army, or its other trappings. One size does not fit all and is contrary to subsidiarity.
Although I, along with my family, voted to remain in the European Union, it was clear to me that there would be a win for the leave campaign. This was confirmed when I chaired a public debate in Lancashire a week before the vote. The noble Lord, Lord Anderson, reminded us about the problems of binary choices; I could not help thinking that if a third option had been available on the ballot paper I would have voted to remain and reform. Binary choices are by definition narrow, when most things in life are invariably more complicated and subtle. Similarly, in Scotland a third option of devo-max—rather than independence or status quo—would have united rather than divided. If we are to have more referenda we should think far more carefully about the questions we ask.
Just before the vote, someone close to me said she did not know anyone who was voting leave. That comment graphically illustrates how dangerously separated and divided our country has become—it is not only on the London Underground that we need to mind the gap. But the spectre of inequality referred to by the most reverend Primate reminds us that not just gaps but chasms are opening up in society. We need to understand that many people feel powerless, disaffected and angry. Many of them are from northern towns and live in poorer communities, dangerously disconnected from the political classes. It would be disingenuous beyond belief to caricature or dismiss all those who voted for Brexit as xenophobes or racists. I say that as someone whose mother was an immigrant whose first language was Irish, and who greatly prizes this nation’s diversity. But let me also be clear that the scapegoating and hate-mongering, and the deployment of poisonous xenophobic arguments not seen since the days of Peter Griffiths, will have long-term consequences for community cohesion. It is much easier to summon up the tempest than to quell it, and to call up the furies than dismiss them. In this respect I echo the remarks made throughout your Lordships’ House. The Government need to act immediately to make it clear that people settled here will not be weaponised in the coming negotiations. Failure to do so will further poison our world.
Many of the votes cast were angry votes. That anger, fuelled by a scepticism about Europe’s failure to deal with a mass migration of terrified people, was hardly assuaged by Jean-Claude Juncker’s arrogance in telling us just days before this tumultuous referendum that however we voted it would not make any difference. The Junckerism seems to be catching. The noble Lord, Lord Heseltine, said unwisely last week that, “There has to be a way to resist public opinion”. It is bad enough that millions of our poorer citizens believe that the establishment has become impervious to their fate, but it would be unbelievably dangerous to tell 17.5 million people that they will be resisted and not listened to. The key to the future is surely to be found in Article 50, which specifically requires the European Union to listen to an exiting member and, in the words of the article, to take,
“account of the framework for its future relationship”.
This crisis must now be used to create a range of new relationships at every level, perhaps modelled for instance on the EU framework programmes such as Horizon 2020, which is so important to UK science. Switzerland, Israel and Norway are all part of Horizon 2020, but of course are not part of the European Union. It is imperative that political paralysis does not delay work in forging such relationships. These are urgent questions and the Government simply cannot go into hibernation. Skilful negotiators will need wise heads, steely nerves and steady hands to see whether within the framework of subsidiarity, solidarity and the common good we can create new opportunities to live together amicably. We owe it to those who bought our own and Europe’s freedoms with their blood and their lives. We also owe it to all those who now feel marginalised or fearful for their own futures.
Lord Cormack (Con)
My Lords, the noble Lord, Lord Alton, has made a thoughtful and wise speech, and I am sure that every Member of your Lordships’ House will endorse completely what he said, and what has been said by so many, about European Union nationals in this country and our nationals in the European Union never becoming a bargaining counter, and how essential it is that that matter is put clearly, firmly and unequivocally as early as possible.
I have heard every single word of the 35 speeches that have preceded mine and they have been very varied. It is clear that in the three weeks which have elapsed since we last debated the referendum on 15 June, some feelings have hardened. There are wounds that are still deep and there is an understandable elation on the part of some who perhaps did not expect to be so euphoric today. But in those immortal words, we are where we are, and we have got to move forward constructively.
No one has said anything so far in this debate about the necessity of trying to have another British Commissioner, my noble friend Lord Hill having in my view prematurely retired. Nothing has been said about the need for us to take seriously the fact that next year the presidency is supposed to fall to this country. I believe that as long as we are a member of the European Union, we have to be a fully participating member of it.
I want to concentrate my remarks on one issue above all others. I do so in the secure knowledge that if one wants to keep a secret, it is a good idea to make a speech in the House of Lords. I want to appeal to our colleagues at the other end of the Corridor, and particularly to colleagues in the Conservative Party. Today they are casting their votes in the first ballot for the Conservative leadership. Whether one believes that it was wise or foolish of the Prime Minister to announce his resignation so soon—I personally do not think he had any alternative—he did announce it, perfectly honourably. But in doing so he created a vacuum, and time and again we have heard the words which have been cited in this debate: that everything will depend on the new Prime Minister and the new Government. At a time when one of the principal ingredients of a parliamentary democracy is entirely absent—namely, a strong Opposition—we are in a vacuum as far as the Government are concerned. We need a Prime Minister and we need one soon.
Those who are aspiring to the leadership of the Conservative Party and therefore to be Prime Minister of our great country—it is and will remain a great country—have a duty, if over the few days until next Tuesday it becomes apparent that a particular candidate has very considerable support, to row in behind that candidate. My own view, and I would be disingenuous not to confess it, is that one candidate has the qualities referred to earlier by my noble friend Lady Goldie of steely determination, a steady hand and long experience of high office. Theresa May has another very important quality: contrary to what many of my noble friends on the Brexit side would say, I believe that we will get a far better deal in Europe if the Prime Minister of our country is not perceived as hostile by those with whom she is negotiating. I very much hope that, during the next week, we will see a clear favourite emerge at the other end of the Corridor who will be able to assume the mantle of Prime Minister before the end of this month.
I know that people talk about the vote in the country, but what are we talking about? We are talking about an electorate that is twice the size of an ordinary constituency: about 140,000 electors. We are talking of people who are not necessarily representative of the ordinary Conservative voter. In the days when I became active in politics over 50 years ago, the Conservative Party had 2.5 million members. There were 500,000 in the Young Conservatives alone. It really was a mass political movement. It is not any more. It would be self-indulgent for our party in the country to maintain a political vacuum by holding up the election of a leader at a time when we desperately need firm, clear and decisive leadership. We need a Government selected by the Prime Minister in whom that Prime Minister can have confidence and who can have confidence in serving that Prime Minister.
I make no apology for this appeal to friends and colleagues at the other end of the Corridor, and to friends and colleagues in the Conservative Party up and down the country, of which I have many, having sat in the other place as a Conservative Member for 40 uninterrupted years: collectively, we Conservatives have this duty. It is a national duty, and all the more a national duty when—and I grieve about this—the Opposition is in such disarray. I very much hope that we shall soon see a strong, credible leader of a strong, credible, alternative Government but we do not have that luxury at the moment. The responsibility therefore lies on those of us who sit on these Benches in this House, and in another place. I hope that before the end of this month No. 10 Downing Street will have a new occupant in whom we can all have confidence and who will be able to lead the trickiest negotiations that this country will have had for a very long time.
I have heard every speech. I shall have to go in a few minutes because I am launching the House of Lords volumes in the History of Parliament series, with which many noble Lords may be familiar. They deal with that critical period in our history between the Restoration in 1660 and the coming of the Hanoverians in 1714. Having a sense of history gives one a sense of perspective and helps me to overcome some of the gloom that has engulfed me in the past two weeks.
Lord Cashman (Lab)
My Lords, it is always a pleasure to follow the noble Lord, Lord Cormack. When he spoke of a woman to lead with decisiveness and a steely determination to get on with the business, I thought he was talking about Angela Eagle.
I am reminded of the closing words of “King Lear”:
The weight of this sad time we must obey;
Speak what we feel, not what we ought to say.
Therefore, it is with sorrow, not with anger, that I will dwell—unlike the noble Lord, Lord Butler—on the campaign. I recognise, too, the sadness on the government Benches and of the Government at a result they did not want. They campaigned for a very different result. None the less, there is a determination to sort out this mess.
I served for 15 years as an active Member of the European Parliament. During all my time there, and since, I have never recognised the European institutions as represented in this country or in debate. Alan Ayckbourn said that comedy is a tragedy interrupted. We are in the midst of a national tragedy of unimagined proportions, but we have witnessed tragicomedy in the wake of the referendum result as Johnson and Farage, like a latter-day Laurel and Hardy, shuffle off, leaving us with another fine mess that they have gotten us into. Then Michael Gove, having derided and diminished experts, now does a 180-degree pirouette and demands that they be brought in to sort out the mess. You could not make it up.
Into this interesting storyline and web of lies, deceit, hate and, yes, fear, the right-wing British press added its misinformation, disinformation and barefaced lies, undermining informed decision-making democracy. Yes, these are strong words. Truth was sacrificed. Immigrants and migrants were paraded as factors of fear and threats to our way of life. They became figures of hate—to our eternal shame. Was the right-wing press objective and fair, according to internationally agreed principles on election observation agreed at the United Nations? The answer is an unequivocal no. It serves me no great pleasure to state that.
A lacklustre media saw fabrication, ignorance and pure invention go unchallenged and uncorrected by presenters who should have known or been briefed better. The denial of a veto on accession, the £350 million a week that was supposedly going to Brussels, and the EU defence force—most of these claims went uncorrected. The disgraceful depiction of Turkey and Turkish people as negative and a threat to this country is unforgiveable. If nothing else, the leave campaigners owe an apology to Turkey and the Turkish people. I am afraid that I do not agree with the Leader of the House: this was not a great democratic exercise. It was a shameful campaign that diminished Great Britain and our place in the world, let alone Europe. Precisely when we should have supported the EU in the refugee crisis and the euro crisis, we abandoned any sense of solidarity and became self-obsessed and self-serving. In so doing, we threw away a thousand years of history.
We are now in a perfect political storm, rudderless, leaderless—yes, I refer to my own party, too—and clueless. Nearly two weeks after the referendum result, we wait for the leave plan. We wait in vain because plan comes there none. There was no plan—that is absolutely right. That is why Parliament must consider how to act, weighing the options carefully and slowly. This will affect not only our generation but generations yet to come, and the younger generation who feel betrayed—as noble Lords have said.
We must not be defined by right-wing, narrow nationalism nor by racism and xenophobia. Britain is better than that. We are better than that. However, a dark underbelly has been revealed and, I believe, encouraged by the right-wing press. That is deeply disturbing. I woke up on 24 June to feel like I did not belong in my own country, that my values of fairness, decency, human rights, justice and inclusivity had been rejected. Now, I am more determined than ever to uphold those values. They are British values and they are European values—a Europe born out of the ashes of the Second World War: ashes of people’s hopes and dreams, and ashes from crematoria dotted across Europe where people went because they were perceived and portrayed as different. Out of that history came a determination that we would never look away again, we would never scapegoat, we would never see country fight country for power, coal, steel or economic superiority. It is a Europe based on fundamental human rights. A Britain that helped to construct it now turns the other way.
EU nationals, to whom your Lordships have referred, currently reside here. On the issue of giving them reassurance, Downing Street was quoted as saying there will be, “no immediate change” to status. The Home Office Minister yesterday offered little more. However, the Foreign Secretary was quite clear and said it is “absurd” to guarantee a right to stay in the United Kingdom before a reciprocal deal is done for UK expats in the European Union. Whatever happened to leadership? We should show vision, some guts, and above all else some principles—the principles of a country with human rights and civil liberties at its heart, not at the fringes of a negotiating process. The House is clear: afford the right to reside and do it now. These people have settled here; they are employed and have businesses here; they have mortgages, and children in schools here. They are part of the fabric that holds our society together and we must not abandon them.
The most reverend Primate the Archbishop of Canterbury understood well that we must now come together as a nation. I suggest that that should not rule out the prospect of a Government of national unity. The most reverend Primate recognised clearly that inequality is at the very root of the disfranchisement and disempowerment felt by so many. We need to catch hold of that hope he spoke of, not abandon it, and find the means to celebrate difference and diversity as fundamental values of our country—an inclusive and outward-looking country. In the meantime, the comedians are leaving the stage and the tragedy continues to unfold.
Viscount Younger of Leckie (Con)
My Lords, a gentle reminder: several recent speeches exceeded the advisory Back-Bench time for this debate, which is seven minutes. If noble Lords adhere to this, the House might be expected to rise at not too late an hour tonight.
Baroness Walmsley (LD)
My Lords, I am proud to speak from the Liberal Democrat Benches, where we have a leader whose position is secure and who has the support of all of us. I am also proud that it was a Liberal Democrat MP, Tom Brake, who took the only real action to secure the position of EU citizens living and working here. Yet these are small consolations to me today because I have such concern about the effect on the NHS.
Of all the disasters that will result from the EU referendum, one of the worst is the effect on our health and social care services, on which the outcome is likely to inflict significant damage. It was also the subject of the biggest, fattest lie of the leave campaign, one of those that was retracted almost before the ink was dry on the result. “Three hundred and fifty million pounds extra per week for the NHS” was plastered all over the campaign buses and, even though it was frequently pointed out that this could not happen, the leave campaigners cynically waited until after the result reluctantly to admit that it was not true. Where does that leave those who voted leave because they thought it would help the NHS which so desperately needs more funding? Betrayed and angry, that’s where it leaves them. They were conned into delivering their precious votes into the hands of a bunch of charlatans. I know that the noble Baroness the Leader of the House would prefer us to sweep these facts under the carpet and be positive, but they matter—not least because some of those now seeking to lead this country had every opportunity to correct this misinformation, and they did not take it.
So where are we now? We have an NHS which has to rely completely on funding from a thriving economy if it is ever to be able to deliver on the needs of an ageing population—one that rightly demands the benefits of the latest medical and scientific research. It also relies on immigrants. It is estimated that 10,000 EU doctors and 52,000 EU nurses are working in our NHS today. What have we heard from the Government and from those wishing to lead it about these people? Only that they are to be used as pawns in the negotiations to leave the EU. There are 335 EU citizens working in the Norfolk & Norwich University Hospital alone. They do not know what will happen to them in two years’ time. How would that hospital manage if they got fed up waiting for some assurances and went home? It is disgraceful to play a game of poker with these people’s lives and their contribution to our health service. The Government must do the right thing now and give these workers the confidence of knowing that the UK wants to keep them here, contributing to our care and to our economy. What about the thousands working on very low pay in our social care sector, caring for the old and vulnerable and putting up with minimum wages for doing a very difficult job? It is time that the Government took the initiative and said that these EU citizens will be allowed to stay if ever the UK leaves the EU.
Then there is the effect on our ability to recruit the best research talent from abroad and on the pharmaceutical companies that have to invest millions of pounds to develop new drugs and treatments. Reducing corporation tax is not going to reverse the damage to them. Investment decisions are already being made or postponed. Why would highly qualified researchers and medical staff come here when they do not feel welcome and have to jump through all sorts of hoops to get here? The UK is part of a worldwide marketplace for talent and there is a chronic global shortage of highly qualified research and clinical staff. We have just made it more difficult to attract the best.
On the big issue of resourcing, we have heard many times in your Lordships’ House about the £30 billion gap in NHS funding and the £6 billion gap in social care funding. My right honourable friend Norman Lamb has long called for a new Beveridge commission, an independent commission to look at how health and social care should be funded. This is needed now more than ever because the economy is in crisis and it is our taxes that pay for the NHS.
In the next few months, the biggest threat to the NHS will come from a recession-driven round of additional spending cuts, hitting non-ring-fenced budgets such as social care. Such cuts would be almost as bad for the NHS as direct funding cuts and would significantly exacerbate the financial problems of the acute hospital trusts. The promises from the current Chancellor and at least one of the candidates for Conservative leader to abandon their manifesto promise to remove the deficit by 2020 is quite sensible, as they are hardly likely to be able to deliver it if we have an economic recession. While I welcome this pledge, I cannot see how a failing economy will be able to deliver the funding that public services need to survive. The Government need to steady the ship, but we have no captain. This captain is to be elected by 0.03% of the electorate. I do not call that democracy.
Changing models of care are essential for the sustainability for the NHS, but there are now far too many uncertainties to allow health service managers to plan for change. Uncertainty is just as bad for the NHS as it is for the City of London. One recent change with great potential for patient benefit has been the devolution to Manchester of the powers to deliver health and social care. However, even if the Government remain committed to this kind of devolution, the Civil Service will be so busy disentangling us from Europe that they will not have the capacity to do the work. In the longer term, there will be issues about the working time directive. The junior doctors and all the other staff will have to negotiate new maximum working hours and all the other elements of contracts that have been so hard-fought.
Will the Government now pledge that there will be no further cuts to public services? Brexit could undermine staffing, research, service reform, devolution and funding. I find it very difficult to obey the exhortation of the most reverend Primate the Archbishop of Canterbury in his excellent speech to be hopeful and positive. The only thing that gives me hope is the ability of the NHS and care staff to keep calm and carry on in the interests of their patients, despite the turbulent waters into which we have been steered by the man without a plan.
Lord Brown of Eaton-under-Heywood (CB)
My Lords, the noble Baroness, Lady Walmsley, whom it is a pleasure to follow, is an orator. She has spoken eloquently on the question of the NHS. I am but a dry, superannuated lawyer. I shall leave the merits of this debate behind, although I should perhaps begin by saying that I favoured and voted for remain. Indeed, as I had suggested in a letter to the Times, whatever might be thought to be our national interests, the wider interests of Europe as a whole surely dictated that we should remain. But that is now mere nostalgia; the present reality is that the majority of our citizens have voted to leave. We have already lost not only a Prime Minister but the benefits—limited though they no doubt were—that he achieved in the February negotiations.
The only lawful route to leaving is via an Article 50 notification. So much is clear and, I think, undisputed among lawyers. It is clear, too, that we cannot lawfully repeal the 1972 Act—in particular, those parts of it that submit us to the paramountcy of EU law—until we have reached the point of leaving the Union. Until we leave, we need it. Altogether less clear is whether, under UK law, a parliamentary process—probably an Act of Parliament—is necessary to authorise an Article 50 notification of withdrawal, or whether this can be done by the Executive under prerogative powers. As we know, this issue is now apparently to be the subject of litigation. The noble Lord, Lord Pannick, consistently argues the view that he expressed in his Times column last week that legislation is required. In a letter in yesterday’s Times, the noble and learned Lord, Lord Millett, a retired Law Lord, took the contrary view. If this issue has to be litigated, it will be decided, as the noble Lord, Lord Kerr of Kinlochard, said, purely by reference to our domestic law because it depends ultimately on, in the language of Article 50(1), our “own constitutional requirements”. I tend, as he did, to share the view of the noble Lord, Lord Pannick, that legislation is necessary, but that may become an academic issue. The noble and learned Lord, Lord Millett, ended his letter by saying that, in practice,
“it would be politically impossible to implement Article 50 without the consent of the House of Commons”.
I suggest, too, that it would need the consent of your Lordships’ House.
The critical question is this. I suppose there to be a substantial majority of the Members of both Houses—many in the light of the gathering uncertainties as to precisely what Brexit will involve—who are now strengthened in their belief that Brexit will be profoundly damaging to our national interests, let alone the wider interests of Europe as a whole. Notwithstanding this, should Parliament none the less give effect to the outcome of the referendum vote by authorising an Article 50 notification on whatever basis the incoming Prime Minister believes is best?
The arguments for and against our feeling bound to follow the will of the majority expressed in the referendum vote are obvious on both sides. They have already been widely canvassed by several of your Lordships and I shall not rehearse them. They are neatly encapsulated in today’s Times correspondence columns. Vernon Bogdanor suggested that rejecting the referendum result would be “very dangerous” for democracy—in short, a betrayal of the already somewhat fragile trust that the public have in us as parliamentarians. But other letters suggested that since parliamentary sovereignty was a central plank of the Brexit campaign, the campaigners could hardly complain if Parliament now rejects their vote to leave the EU. I have to say, albeit with great reluctance, that like the noble Lord, Lord Butler of Brockwell, I am of the clear view that we have to give effect to the leave vote. This referendum was, after all, legislated for by a large majority in Parliament and designed to settle once and for all a basic question of principle, even though, ineptly, as others have pointed out, it is suggested that we are faced with a simple binary choice.
I shall say a word on the subsidiary question—another legal question—as to whether an Article 50 notification is irreversible. Suppose, following such a notification and negotiations under it, it becomes apparent that, after all, the best deal available would be conspicuously worse than remaining in the Union, could we simply abort the process and simply say that we are going to stay, or would the process have to proceed inexorably to the exit door? The noble Lord, Lord Kerr of Kinlochard, suggested that we could change our mind, and so, too, did Sir David Edward, our distinguished judge who used to be in Luxembourg, and Professor Wyatt in their evidence to the EU Committee of the noble Lord, Lord Boswell. I hope that they are right but I have to say that I have read very powerful legal arguments to the contrary. This is a legal issue which, if it did arise, would have to be decided by the ECJ. Alas, we cannot count on being given a second chance to stay once we have started negotiation and proceeded down that road. Of course, the other 27 states may be happy to allow us to change our minds, particularly if, as the noble Lord, Lord Butler, envisages, the Union had already moved—as one day it is likely to—to a less extreme position on the issue of freedom of movement. However, I am not optimistic about this. I fear that the rest of the Union will not wish to be seen to be trimming this cardinal principle to encourage a generally disobliging state—as they would perceive us to be—to stay with them. That said, there was not a word in the speech of the noble Lord, Lord Butler, with which I disagreed. This is essentially a concurring judgment, not a dissent.
Because, however, we are unable to guarantee a second choice—a second bite of the cherry—it is surely imperative that we do not notify our Article 50 decision until we have in place a plan which the Government are quite sure will satisfy those who voted for Brexit and is likely to be achievable in the real world. Alas, at present, plainly no such plan is agreed by all Brexiteers. One has only to contrast the speech today of the noble Lord, Lord Lawson, on the one hand, with the much more cautious, nuanced suggestion of continued close association with the single market in the speech of the noble Lord, Lord Maude, on the other. That is a difference replicated by the contenders for the next premiership. One day, no doubt, the clouds will clear on this issue, but I fear that thunderstorms are all too likely along the way. Boris may have gone but he leaves appalling problems in his wake.
Lord Tugendhat (Con)
My Lords, the story is told that when Hugh Gaitskell made his passionate speech at the Labour Party conference advocating that Britain should not join the Common Market, as it then was, his wife turned to him and said, “All the wrong people are cheering”. That is how I felt when the referendum result was announced and one heard that Marine Le Pen in France was over the moon, Mr Geert Wilders in the Netherlands thought that we had set an admirable example, and Donald Trump even took the trouble to go to Scotland to tell us how well we had done. Those are not the people to whom I hope this country would normally look for cheers. None the less, democracy trumps all. The people have voted, the result is clear and we must now do our best, on behalf of the country, to mitigate the consequences and achieve the best future that we can. As the most reverend Primate the Archbishop so eloquently pointed out, the place we should start is to prevent the sort of views that Ms Le Pen and Mr Wilders and, indeed, Donald Trump, advocate.
It is very important to recognise the damage that has been done to communal and race relations as a result of much of what was said by the leavers in their campaign. I am not suggesting that they intended to inflame communal and race relations, but I do suggest that they were often very careless in what they said and in the posters they produced. The results are perfectly clear: there has been an enormous increase in hate crimes against people from other parts of Europe, and against Muslims and other people from outside the European continent. Emotions have been inflamed and the impression has been given—one has seen this on television screens—that what leave meant was that foreigners would go home, and would go home quickly. One of the responsibilities that the leaders of the leave campaign should now take up is to say explicitly, not just in this House or in the Commons, but in the constituencies concerned, that that is not what was meant, and that those people who are here—I do not mean just doctors, lawyers and people in the City, but people all over this country doing humble and modest jobs to the benefit of our economy—are as welcome now as they were before. I of course welcome what has been said in this debate about not using EU citizens as hostages or bargaining counters. That is quite right. However, a great deal more is needed and the most reverend Primate the Archbishop set us all an example.
However, we need to ask ourselves why in this normally tolerant society so many people have been open to the idea of venting their anger against immigrants. I do not think it is a matter just of numbers, as the situation was often worse in places where there are practically no immigrants at all. As other noble Lords have said, I believe that it arises from a widespread sense of insecurity and a sense among many people in this country that their jobs are at risk or are disappearing. They feel that while they are facing increasing difficulties, others are getting richer at their expense. They feel threatened by social and economic change, of which immigrants are the outward manifestation and thus become the scapegoat.
Much of the remain case, which I, of course, supported, was based on the proposition that a leave vote would damage the country’s prosperity and that of its citizens. I believe that to be true. However, I understand that for those who feel that they have not shared in the fruits of prosperity, it is not such a very convincing argument. I am a strong believer in the benefits of capitalism and globalisation, but I recognise—I have been very much reminded of this by recent events—that those benefits have been very unequally distributed. It is very important now that the Government turn their mind to doing more to ensure that, while the strong are rewarded and encouraged, those who are at risk from and suffering from change are protected and given the means to adapt and adjust.
This problem will get much more severe. The rise of the robots—which was the title of a recent book—and advances in artificial intelligence will put at risk a great many more people who are much higher in the socio-economic scale than those who have been suffering until recently. This is one of the great lessons we must learn from what happened in the referendum. I would say to my own party, too, that we have far too often given the impression that we are in favour of austerity for its own sake, rather than as a means of bringing about a stronger economy. That balance must also be righted.
In the very short time remaining to me, I would like to say a word about Britain and the EU. I hope that our relationship will be as close as possible, not just in trade, economic and financial matters. I hope that we can preserve as much as possible of all that has been built up in the sphere of political, foreign policy and security co-operation. Likewise, I hope that a great deal can be maintained in the area of development, which covers trade agreements as well as aid, where we have co-operated so effectively with our European partners. We must also remember that the EU and NATO are two sides of the same coin. We must not allow our relationship with our EU partners, who are also our principal partners in NATO, to be damaged. There is a lot that can be saved: we must try to save it and build a better future for this country, both domestically and in our relationships with our partners.
Baroness Mallalieu (Lab)
My Lords, there has been a great deal of wailing and gnashing of teeth in the House this afternoon. It seems only a very short time ago that Members on all sides of the House were urging the British public to register to vote and to use that vote. We are all aware that low turnout at elections of all kinds is of great concern and dangerous to future democratic engagement. I cast my vote in the referendum in west Somerset. The turnout there was 79.1%, which was extraordinary and excellent; the result was 39% remain and 61% leave. If democracy is to survive, it is essential that Parliament respect the will of the people. What message would the electorate receive from, and what would their response be to, voices who call for another referendum, a general election, a delay in the hope that something will turn up and change their minds, or those who tell them that their vote is advisory only and that, in effect, parliamentarians know best?
I am grateful for all that the noble Baroness the Lord Privy Seal said in opening this debate. I agreed with every word. Whatever our views, those on both sides of that past argument now have to do their best to give effect to the vote. Not to do so would not just cause irreparable damage to future political engagement and respect for the parliamentary process; even more seriously, when the electorate already mistrust politicians like us and those in another place, we would risk holing parliamentary democracy below the waterline. Political involvement is, of course, heady stuff. We all know that emotions ran high during the campaign and they still do, as can be seen in this House. They cut across friends, neighbours, work colleagues and even families. However, democracy surely means government by all the people. That includes those who do not agree with you, those whom you think got it wrong, those whom you believe were misled by your opponents, and those who were too stupid or insufficiently well-educated to understand—and those are all arguments I have heard in the last week.
The increase in reported racial hatred and abuse is utterly shameful and is rightly condemned by all of us. We should also know that abuse of those who voted to leave is sadly not uncommon as well. As the right reverend Prelate said, there is an enormous amount to be done on both sides to heal the gap that has now arisen. Unless people were deeply unconscious during the whole of the campaign, the electorate cannot have been unaware that serious consequences would follow a vote to leave. It was spelled out in spades; it was amplified; it was repeated every day and embellished almost to the point of farce. Few voters could have been unaware of the possibility—even probability—that they personally might be worse off. Whether one agrees with the majority view or not, people voted for what they believed was right for our nation. That took real courage, in the face of the campaign.
What happens now? Other noble Lords have spoken about the damage that uncertainty is currently doing. That is obvious: talk to anyone in retailing, business or manufacturing. They all have things on hold because they are waiting to see what is going to happen. We have to do what we can to end uncertainty where we can. That means there has to be a clear timetable, which everyone understands, and a clear process which is agreed. People cannot plan their lives if government delay taking action. We have got to get on with it. Secondly, as others have said, EU nationals who are currently here have to have their minds put to rest—not in September, but now. We have a Prime Minister; could he not leave the packing cases for a very short time? At a stroke, he could remove a great deal of distress for many people and their families, and their employers.
Finally, a significant feature of the campaign was cross-party campaigning on both sides. I have lost count of the number of people who remarked favourably on seeing the Prime Minister campaigning with Sadiq Khan—politicians working across the party divide. I believe that the public are utterly fed up with the major political parties obsessing about their internal affairs. On these complex negotiations, I believe that the public want to see co-operation, putting the nation first and above party. That is also essential to heal the divisions which the result has inevitably left. We have surely now had quite enough of recriminations, negativity, hand-wringing and pessimism. Brexit is going to go ahead. However we voted as individuals, we are all of us in a different place now. For goodness’ sake, let us get on with it and make a success of it, as I believe we can.
Baroness Randerson (LD)
My Lords, with the single, wonderful and inspirational exception of our football team, my country has perplexed and saddened me recently. I campaigned in the referendum in Cardiff, which voted heavily to remain, but much of the rest of Wales voted to leave, despite being a net beneficiary of EU money. That included rural areas with a heavy dependence on EU agricultural subsidies, which now face a very uncertain future, and the city of Swansea, which has had many millions of pounds from the EU to build a new university campus. The heaviest leave votes were in those parts of Wales which have benefited most intensively from EU funding.
These areas are at the sharp end when industrial and business investment recedes. Indeed, the Cardiff metro project, designed to link the valleys with the capital city, is already in doubt because of the almost inevitable withdrawal of EU funding. Successive Governments in Britain have proved very unwilling to endorse the use of EU money to assist poorer areas. I recall that the very first big argument in the fledgling Welsh Assembly was about the Labour Government’s refusal to provide match funding—which is, of course, what you need when you have money from Europe. So I am very sceptical that the current or future Governments will simply plug the gap. Anyway, the mythical £350 million a week has already been spent many times over.
A slow fuse has been lit. People seemed to expect an immediate explosion after the EU decision. They looked to the stock market, expecting it to fall dramatically. However, what will actually happen is that business disinvestment will take years as the fuse slowly burns away. I have one plea to the Government: that they ensure that the Welsh Government are fully involved in the negotiations to come. If they are not, the alienation in Wales will only increase. The Government need to beware of creating another Scotland.
I shall now concentrate on transport-related issues. These are practical problems that need to be solved, or at least grappled with. They are issues that affect us in everyday life. I am pretty sure that people who voted to leave still expect to be able to fly abroad to their summer holidays and to buy goods that have been transported safely and in a timely manner from other countries. There is a simple, practical fact about which nobody—no referendum, no decision—can do anything: the continent of Europe, the land mass, stands between us and much of the rest of the world.
The first issue is the Channel Tunnel. The dream of the Channel Tunnel long predates the European Union, but the tunnel was constructed while Britain was a member and it has been executed and managed with EU membership at the forefront. It is privately financed and privately run by an Anglo-French consortium and its scale is simply enormous—400 trains a day, 50,000 passengers a day and 54,000 tonnes of freight a day. The point is that the British border is in France, and that arrangement has already been placed in doubt.
It is clear that many who voted to leave did so in the expectation of tighter border controls. This conflicts with the inspiration behind the Channel Tunnel, which was to have freer and faster movement of both people and goods between Britain and France. Any moves to implement tighter controls or to apply them in different ways will inevitably have an impact on business and on the enormous investment that the Channel Tunnel represents. Have the Government given any consideration to the impact of future models for immigration control on this business, which has invested recently many millions of pounds on expansion plans? How will control of movements through the tunnel work in future?
Turning to air travel, Britain is part of the single European sky project. Europe has competence on air traffic management and the single European sky project defragments European airspace. It reduces flight times. It is good for the environment. It increases safety. Airspace is divided into blocks: functional airspace blocks. We share one—a unified block—with Ireland, which of course will remain part of the EU. About 90% of North Atlantic traffic passes through this block. It is part of the modernisation of air traffic management technologies and I hope that it is pretty obvious that we need to remain part of it. But here is the rub. The European Aviation Safety Agency has competence over our airports, air traffic management and air navigation services as part of this modernisation scheme. So the question for the Government is: will we withdraw from this, or is this yet another part of the EU that we suddenly discover is a benefit and not a burden?
The aerospace industry is worth billions of pounds to our economy and employs thousands of people. Freight transport—whether by road, rail, sea or air—is our lifeblood with, in the first quarter of this year, 700,000 vehicles travelling from Britain to mainland Europe. We all know about the impact last summer of the delays around Dover when we had Operation Stack. It caused loss of time and money for those in the industry, but it also destroyed goods. Delay means the destruction of goods in the freight industry, so changes in border control will affect that.
Finally, I emphasise the importance that EU legislation has had for us on our roads. The tachograph, regulations on drivers’ hours, standards of vehicles, the loading of vehicles: they all affect us every day as we drive on our roads. The EU has at its core a sound principle, and I think that many people are suddenly beginning to wake up to that.
Lord Kakkar (CB)
My Lords, I endorse the comments of my noble and learned friend Lord Brown of Eaton-under-Heywood and the noble Baroness, Lady Mallalieu, who, as many other noble Lords have done, made the important point that it is essential now that this Parliament and Government give effect to the expressed view of our fellow citizens in this referendum and ensure that the most effective way forward is achieved for our great nation in its future relationship with the European Union. To do anything less runs a very serious risk of undermining our democracy, undermining faith in the work of our Parliament and further consolidating some dangerous trends with regard to cohesion in society that have been identified and came to the surface in the aftermath of the referendum.
Before turning to that matter in some more detail, I shall pick up on a point made by my noble friend Lord Alton of Liverpool. In so doing I declare an interest as professor of surgery at University College London and as the UK business ambassador for healthcare and life sciences. My noble friend made the point that there are now areas of national activity that require clear advice and instruction from government in terms of dealing with the consequences of the referendum decision. One such area is that of collaboration in scientific research in Europe, which is well recognised. In the previous Session of Parliament, your Lordships’ Science and Technology Committee undertook an interesting report into the relationship between UK science and the European Union.
There is no doubt that the negotiation as it goes forward provides the opportunity to consolidate that relationship. As we heard from my noble friend Lord Alton and others, many nations that are not part of the European Union have participated in programmes such as Horizon 2020. There must clearly be the opportunity to do that. However, interestingly, there are now reports that European universities and individuals—though not the European institutions—are starting to exclude UK universities and individuals from scientific collaborations to be made in the coming weeks and months. That is clearly inappropriate.
No final decision on the disposition between the relationship of our universities and the European Union has been reached. It would be a matter of negotiation. To exclude them at this early stage runs the risk of destroying important networks and collaborations that have taken years to build. The research opportunities lost as a result could have profound impacts on our economy—research and development is vital to it—and, in the area of biomedical research, on the health of the nation. What advice are the Government able to provide to ensure that UK universities can overcome this potentially important problem by addressing these types of, let us say, unilateral decisions by individuals and institutions in Europe to exclude their UK partners?
I turn to the truly shocking and worrying increased reporting of so-called hate crimes. This is a difficult and dangerous situation. Appropriate discussion and debate about immigration to our country is absolutely justified and it has certainly formed an important part of recent political dialogue, but for that reasoned debate to be hijacked by illegitimate focus on racism and prejudice is completely wrong. It causes deep anxiety in communities from the European Union that are settled here in our great country, and in other well-settled communities. It makes them feel that they are no longer safe to live securely in their communities and in our country, and that is truly a disaster.
We have heard that Her Majesty’s Government have rightly encouraged those who are the subject of these terrible crimes to report them. It would be useful to understand when the Government’s hate crime action plan is to be published. It is very important that that plan deals in some detail with what needs to be done regarding resources for policing and support for community activities and organisations to drive forward better understanding. It is also vital that the question of settled EU individuals and communities in this country is addressed rapidly. A failure to do so runs the serious risk of allowing prejudice to become more established. That is clearly not the intention of anybody on either side of the European argument, and therefore it needs to be addressed effectively and rapidly.
In addition, we need to understand the underlying reasons for this reaction. We have heard them discussed in some detail in this fascinating debate. Those issues must not be ignored. They need to be addressed effectively to ensure that the lessons learned beyond the broader question of Europe can be understood and effectively addressed as part of public policy in the years to come. We must also use this as an opportunity to engage once again with our national values. At the heart of those national values, as we heard earlier from the most reverend Primate the Archbishop of Canterbury, are tolerance and decency. Fundamentally, as our nation moves forward, it will be tolerance and decency which will ensure our long-term success both at home and abroad.
Lord Griffiths of Fforestfach (Con)
My Lords, after listening to many speeches today in your Lordships’ House, I fear that mine will appear to be contrarian. I make it not in a contrarian spirit nor with a contrarian mind. I voted in 1975 to remain in the European Union. The Lord Privy Seal said in opening the debate this morning that the referendum was a momentous democratic event. In our post-war history, the Attlee Government of 1945 and the Thatcher Governments after 1979 were the two watershed events of British politics. The result in this referendum was a response to a single question: remain or leave? It did not fudge the issue, and neither did the result. It was clearly a protest against the growing power of Brussels over our governance in these countries of ours and, for me, a rejection of the sustainability of the European Union in its present form.
The euro is a monetary union without a fiscal or political union. It results in intolerable levels of unemployment in southern European countries and even worse levels of youth unemployment. Schengen is a great idea, but five member countries are putting up fences against other member countries. The established political parties in the European Union have failed to respond to the aspirations of their electorates; the result has been the growth of some very unattractive extremist parties. My noble friend Lord Lamont mentioned polling on ever-closer union in a number of key European countries. Clearly, it is not something that they want, yet I have the strong feeling that, despite all this, the EU will insist on carrying on to become a transnational state.
I believe that your Lordships’ House has a role to play in the next few years in debating this issue, but we need to tread with care. As the noble Baroness, Lady Mallalieu, stated so forcefully, any attempt to undo what has been done will be seen as a betrayal of the democratic process. As my noble friend Lord Lawson said earlier, the result could be mayhem.
For myself, I feel that the vote touched a deeper nerve in our society—something commented on by the right reverend Primate the Archbishop of Canterbury. The vote was a judgment by people about the way that British society has developed over the past few decades; the growing divide between the rich and the rest, between winners and losers from globalisation; the rapid change in our culture, which has left people confused and without a clear sense of identity; and about a sense that modern Britain has become a two- class society with stagnant real incomes for lower-income earners, inadequate housing, high youth unemployment and millions of families without any ownership stake in this society. The vote therefore not only affects Europe but is a wake-up call for us all.
The way forward can be set out only by a new Prime Minister and a new Cabinet. The first priority will be to negotiate an exit on the best possible terms. We clearly have very few trade negotiators but New Zealand is happy to help us and we are in a strong position on the single market. We do not have to assume that during two years of negotiations the arguments will be black and white, because many manufacturing companies in France, Italy, Germany and Sweden depend for their profitability on exporting here. We need a comparable deal in financial services. There is every reason to think that we can negotiate a reasonable outcome. In addition, we will have new trade deals with Asia-Pacific, Latin America and the Middle East.
One thing we cannot duck after the vote is the issue of immigration. Continued immigration is essential for the British economy and our public services—indeed, for our cultural well-being—but following the leave vote, it is also essential that we are able to control our total numbers. The thing that scares people most in this area is not immigration per se but the fact that there is no limit to the number who can come in. If there were controls, we would have much less concern about the issue. Next, we need a coherent economic strategy. The Chancellor has already discarded the objective of a Budget surplus by 2020. You can see the opportunities for tax cuts, such as a 10% corporation tax, and for increased infrastructure spending on London’s third airport, the trans-Pennine railway, the northern powerhouse and public sector housing. Finally, and most difficult of all, we need to set out how we can create a more inclusive economy and society so that each family in this country has a stake in economic life. We need far more houses built across all tenures: private ownership, housing associations and local authorities. We need far more investment in training people for a digital world. We have 865,000 people between the ages of 16 and 24 who are NEETs—not in education, employment or training.
I believe that we can be stronger in trade, in enterprise and in controlling our borders outside the EU. Our identities as four nations will be strengthened by being outside the EU. There are many more challenges but instead of Project Fear, we need Project Success: the conviction that we can do it with greater self-government so that our society can be better. If I look for my inspiration anywhere then, as a rugby fan, it is to the Welsh soccer team.
Baroness Royall of Blaisdon (Lab)
My Lords, the Welsh soccer team is certainly an inspiration, and I am sure we all wish them luck tomorrow evening. I agree with the noble Lord, Lord Griffiths, that we need a much more inclusive society, but unlike the noble Lord, I believe we are in the midst of a political earthquake whose tremors are being felt not only in the United Kingdom but throughout the European Union and the wider world. Whereas once we were a stabilising influence, the result of the referendum has destabilised our economy, our politics and our partners. We are in what some might call a brave new world—but no one has a map and no one has properly considered the options or implications for our country, for our citizens or for the constitution. Throughout the campaign, people were warned not to take a leap into the dark, but it is even darker than I had anticipated. I am still stunned by the lack of any preparations and, at a time when we are in desperate need of strong leadership, there is a vacuum in the Government and the Opposition, as many have said.
The idea of member states co-operating for the greater good to be a stronger voice in the world and to maintain peace and stability is a noble idea, and one whose importance for me has grown in an increasingly fractured and fractious world. This was brought home for me, as it was for many others, on Friday as I watched the moving ceremonies to mark the anniversary of the Battle of the Somme and on Saturday when I laid a wreath at an event to commemorate those who bravely went to fight fascism in the Spanish Civil War, which began 80 years ago. There is more that unites us than divides us—or perhaps not any more.
However, the decision to leave the EU has been taken. I respect most of those who voted to leave, but I have absolutely no respect for Mr Johnson or Mr Gove, backstabbers who have wrought havoc in the country and their party and who exacerbated people’s fears and insecurities by disingenuous propaganda and sometimes downright lies. They threw liberal and humane values to the wind and built on fears of difference. They fanned the flames of division in this country between rich and poor, young and old, and cities and towns. They did nothing to prevent the crack in what the most reverend Primate called the “thin crust” of tolerance.
Like the noble Lord, Lord Tugendhat, and others, I believe that many of those who voted to leave were using the referendum to express dissatisfaction and to vent their anger about a system which does not respond any more to their needs and concerns. Their lives are difficult: they are insecure and constantly worried about their jobs, the roof over their head, problems getting their kids into school, and the long wait to see the GP. They feel that they have no control over their lives, so when simple solutions were proffered for complex problems, and when told that the only way to get back control was to vote leave, of course that is what they did—that is normal and natural. Many people simply believed that their lives could not get any worse. That is an indictment of not just of this Government’s policies but government policies as a whole. My fear is that those people who have given up on the political system and given up on experts will now be let down because the promises made by the leave campaign are undeliverable even by the most assiduous and shrewd negotiators.
Many of the promises cannot be reconciled with reality, including the political reality that Governments in other member states are confronting populist and nationalist forces whose leaders, such as Marine Le Pen and Geert Wilders, have been strengthened by Brexit. The people with whom we will be negotiating are concerned about contagion and are naturally looking to their own electorate as well as considering the changes necessary to make the EU more responsive to the 21st-century challenges on security, climate change, migration and the economy. What, I wonder, will be the impact of Brexit on the rerun of the Austrian presidential election, where the far right was beaten by a whisker? It is a dangerous moment for the EU as well as for the UK.
Can the Minister say who our negotiators will be and who will determine the positions that they will take? At a time of national crisis—which this is—we need national unity and that must mean that the Government cannot act alone. I agree with my noble friend Lady Mallalieu that the public like and want us to work together. As many have said, there must be parliamentary, cross-party engagement. There also needs to be direct access for the Opposition—when we have one—to civil servants. There must be deep involvement of local government, for in many instances it will bear the brunt of change and is best placed to understand the impact in those areas where people already feel left behind. I endorse the call made by Sadiq Khan yesterday that London should be guaranteed a seat at the table throughout the negotiations alongside Scotland, Wales and Northern Ireland, and his call and that of many noble Lords for us to remain in the single market.
How will the Government ensure that the voices of all stakeholders are heard and reflected? As a pro-chancellor of the University of Bath, and someone who is proud of the university’s reputation as a truly international centre of excellence for teaching and research, I express concern on behalf of the university sector, like the noble Lord, Lord Kakkar. What assurance can the Minister give that staff and students from EU countries will be able to continue to work and study at British universities in the long term? The intake for this year will be fine, but what will the impact be on applications for 2017? I understand that eight British universities have already had their credit status downgraded as a result of the Brexit vote, amid concerns that curbs to free movement will hit recruitment of academics and students and that EU research funding will be cut. This is more tangible proof of the damage of the uncertainty caused by Brexit.
Many noble Lords have spoken, and will speak, of Article 50, and how and when it will be invoked. But I wonder how it will be possible to reconcile the tensions between the economic need for speed, to provide certainty, and the political desirability for time. Concern about insecurity for EU nationals has, properly, been emphasised this afternoon. These people are human beings, not pawns on a chess board; likewise our own citizens living and working in other parts of the EU, including those who serve us so well in the institutions.
However long negotiations may take, it is clear that a huge number of our civil servants will be engaged in disentangling us from laws passed during 40 years of membership and in working on new agreements. The usual work of government will be paralysed, at a time when the country is crying out for action that will deal with the blight of inequality. Who, for example, will work on the policies that will improve the lives and life chances of young people? Already shafted by this Government, they have now been so let down by the referendum result.
The deep divisions in our country are sadly not new, but the depth of the divisions was not taken seriously by any political party. If we are to remain a tolerant, united and inclusive country, the first priority of the Government and the Opposition must be to develop and implement policies that will heal that divide.
Lord Bruce of Bennachie (LD)
My Lords, I am delighted to follow the noble Baroness, and concur with her that we are living in very dangerously uncertain times. People talk about uncertainty, but there is real danger, not only here but across Europe. I want to address two specific issues in this debate, and just draw attention to my entry in the Register of Members’ Interests.
The first is the impact on the quality and delivery of UK development assistance, which I do not think has been mentioned in this debate. The UK is the second-biggest bilateral provider of official development assistance in the world, with our contribution totalling around £11.5 billion. We are the first G20 country to deliver 0.7% of gross national income in official development assistance, and we have legislation to focus on poverty reduction and gender issues. Thanks to my friend and colleague Michael Moore, we have legislation to maintain our commitment to that 0.7%.
There is a correlation between those who campaigned to leave the EU and those who want to cut the UK aid budget. However, nothing would give a more negative signal, or more positive proof that the UK was turning its back on international engagement, than for us to cut the amount of our national income we deliver in development assistance.
The UK has an imperial legacy which over the centuries has seen us intervene, not always nobly, in the affairs of most countries in the world. Like it or not, countries such as Pakistan and Nigeria were created by Britain: indeed, we shaped the map for most of our aid partners. Delivering aid in many of these countries may be challenging, but history has passed us a strong moral obligation to help poor people out of poverty in these areas.
David Cameron was the representative of the industrialised nations in the high-level panel to deliver the post-2015 agenda, which determined an aim of ending absolute poverty by 2030 and leaving no one behind. It would be a travesty and a tragedy if Britain turned its back on this commitment. A significant proportion of ODA is delivered through the EU, which the multilateral aid review identified as an effective means of delivering UK pro-poor aid objectives. We should therefore give priority in negotiations to continuing teamwork in partnership with the EU in delivering our development aims. It would put less pressure on DfID to find alternative outlets, which could never have the same reach as the EU, and it would maintain an area of co-operation with the EU that would engender a positive relationship and good will. I urge the Government to resist the siren voices that inevitably will be raised to cut the aid budget and transfer it to domestic priorities. By the way, those who claim that leaving the EU would free the UK to grow faster outside its constraints could hardly justify cutting the budget now.
The second issue I wish to raise is the future of the UK and Scotland’s position. It is true that voters in Scotland made clear their desire to remain in the EU, but it should not be forgotten that while 1.66 million Scottish voters chose remain, over 2 million in the previous referendum voted to stay in the UK. It was reported last week that the First Minister, Nicola Sturgeon, was minded to stage another referendum on independence before the negotiation for the UK’s leaving of the EU is completed, with the suggested question: “Do you want Scotland to remain in the EU or leave with the rest of the UK?”. If this is true, it is an absurd and wholly irresponsible proposition. It may be perfectly reasonable for Nicola Sturgeon to hold talks with sympathetic elements within the EU, but she knows perfectly well that there is little or no prospect of Scotland carrying on within the EU, let alone with the UK’s current opt-outs. When the Prime Minister of Spain made it clear that Scotland was part of the UK and there would be no separate talks—this was echoed by France—the First Minister said that this was no surprise. Of course not, but Spain, France and every other country holds a veto over Scotland.
I have no doubt that many within the EU will hold out warmth and sympathy towards Scotland in the light of the vote, but that is not enough to launch us into uncharted waters on the back of the prodigious uncertainty we all face right across the UK. Depending on the terms of the new UK relationship with the EU, Scotland should not put itself at risk—which it would be doing—of total isolation. Scotland cannot apply for membership of the EU before it becomes independent. It would then face the same obligations as every applicant state. Even the fast track would take years. We would have to establish a central bank, a currency and a fiscal and exchange-rate track record. This would be challenge enough, but if the UK is establishing itself outside the EU, and possibly outside the single market, free movement and all those other issues, then barriers would be going up between Scotland and the rest of the UK before they even begin to come down with the EU. Given all this, I contend the priority for those of us who care about Scotland, its relationship within the UK and between all parts of the UK and the EU, is to secure the best possible outcome that maintains as much as possible of the co-operation and partnership that we value so dearly currently as a member of the EU. Anything else would be to show that independence is an ideological obsession that transcends the economic, social, cultural and political interests of the people of Scotland. The SNP should not let its patriotism lead to a betrayal of the real interests of the people of Scotland. As a passionate home ruler and Europhile, I firmly believe we need to tread carefully and sensitively towards an outcome that maintains the best of the UK and the best of our relationship with the EU.
Lord Craig of Radley (CB)
My Lords, after hearing the Minister’s responses to the fourth Oral Question last Wednesday on the residential and continuing rights of European nationals already living in the United Kingdom, I add my voice to the many, both inside and outside Parliament, and in trenchant speeches today, who have condemned the expressed government attitude. This issue was also discussed in the House yesterday, with much the same equivocation and uncertainties from the Dispatch Box. The Minister referred to negotiations with the EU affecting the single market and trading arrangements, but not those about people. As a “Yes Minister” type of response by the Minister last Wednesday, it was classic. The actual real-life and immediate and future concerns of 3 million people were shuffled under the carpet by a rubric that exuded extreme and noncommittal caution and blindly defied political nous and basic common sense.
As was made obvious yesterday, the Government are not really certain whether to discuss this issue with the EU authorities or with each and every one of the other 27 countries in the EU. That is hopeless; we should be clear what we will do. There are two particular issues. First, what is the right immediate policy and, secondly, what should the long-term steady state be post completion of Brexit negotiations? Surely we would not be starting these negotiations on a favourable footing with the 27 were we so much as even to suggest that some of their nationals already resident in the UK might one day be refused right of abode, be told to leave or be booted out—or is this a sneaky cunning plan to massage a reduction in the net migration figures? I hope not. Do we really mean to start by inferring that we could be expecting trouble from the 27 about the residential status of UK citizens presently domiciled in their countries and so, to counter this, are keeping the 3 million EU residents in the UK as a club in our negotiating locker? This is about real people, their lives and livelihoods, their families and their futures. It is not about foodstuffs, textiles, the trading of goods and services or other inanimate objects. Is this not a situation in which the UK should be giving a clear, positive and constructive lead, which can be welcomed and adopted by the 27 in a win-win outcome?
Let us say without further equivocation that not only will European nationals resident in the UK not be in any way affected in the near term—as made clear by the Prime Minister last week—but that it is the Government’s intention to treat their right to remain as a firm, long-term, red-line undertaking. It should be deliberately adopted as a non-negotiable position. Why must all wait for David Cameron’s replacement? He has stated the short-term position. Is it not down to him to get agreement now, very quickly, to the longer-term one? I urge the Government to make clear this direction of travel and to spell it out now as their intention. I suspect that cooler heads may still seek to establish a halt to—or rather a control of—newcomers after a certain date in the not-too-distant future, but for those already here or arriving to live and work in the weeks before that date, the clear government policy and intention surely should be that the current status and right to remain of EU citizens will not be abrogated by Her Majesty’s Government. In the face of many tricky Brexit issues to resolve, this one, dealing with people and their lives and not with things, should not be left to fester on the pile. I look forward to the Minister’s response.
Lord Balfe (Con)
My Lords, I, too, draw attention to my entries in the register of interests. From time to time, I am asked what I do in the House of Lords as special interests. I generally say to people that I follow foreign affairs and trade unions and they very seldom overlap, but tonight, unfortunately, they do.
I endorse everything that has been said about EU citizens resident in the UK—the eloquent words of the noble and gallant Lord, Lord Craig of Radley, being just the latest—but I want to draw attention to another group of people: the civil servants and public servants working throughout the European Union institutions, many of whom are in a state of near despair, not only at what they perceive as the Government’s neglect of them over many years but at the situation now and what remains to be resolved.
I draw attention to the fact that one of my roles in life is as chair of the Members of the European Parliament pension fund. This puts me in a similar position to many other public servants in EU institutions. The fund covers all the member states and my duty as chair of the fund is to them all. So I will be effectively on the other side of the negotiating table, because it is my duty to ensure that, in leaving the EU, the UK does not escape its duties and liabilities and leave them for other member states to pick up.
There is a saying going round Brussels at the moment and it is very true: “If you are not at the table, you are on the menu”. We are on the menu. There are many UK citizens working in Community institutions who are rightly concerned for their future. They have acquired rights and legitimate expectations which HMG must assume as part of the negotiation process. We are not just talking about Commission officials; we are talking about the whole spectrum of UK citizens involved with the EU and its institutions. Some are still working there, some are retired, some are the partners of deceased pensioners and some are married to citizens from other member states. On my books from the UK I have two widows in their 90s. I have another pensioner who has a daughter with Down’s syndrome. Under our regulations, the daughter gets a pension; the mother is needlessly worried about the future, which was assured but is now thrown up in the air. HMG must face up to the consequences of this foolish decision.
Vice-President Georgieva has been in charge of this in Brussels. At a meeting with staff representatives, one of them said:
“I am coming up to retirement, will my pension still be protected by the Protocol on Privileges and Immunities? And what are the ‘red lines’ for negotiations with the UK regarding UK officials?”.
They then went on to point out that many staff have worked in London and in other places and agencies all their lives. She was asked whether she could reassure them. The Commissioner’s answer was not reassuring. She said:
“All Member States bear responsibility for the pensions of EU officials”.
So far, so good. But, she continued,
“there is no guarantee that pensions will remain protected, such a discussion will have to be factored into the negotiations. As long as the UK remains a member of the EU pensions will be paid from the Community budget; if the UK becomes a third country, it is clear they cannot be bound by the protocol”.
In other words, these civil servants are in a position whereby not only are their jobs under some threat—although, as they are engaged by the Community, they are probably okay there—but their futures are under threat.
I said earlier that many different institutions and groups of people are affected. Most Community officials live in one of the two main places of work, either Brussels or Luxembourg, and most of them work for the European Parliament or the Commission. However, there are the other institutions, such as the European Court of Justice and the Court of Auditors, and the specialist agencies spread throughout the EU, including the European Medicines Agency based in London, which is now the subject of a bidding war to move it from London, with Italy currently in the lead to take those jobs away. All those bodies have UK staff members and they have people who are dependent on the protocols and immunities that we have agreed.
I have mentioned marriages and civil partnerships between UK nationals and those from other countries. The head of administration for pension funds is married to a Swede, who has never lived in the United Kingdom and works for the Commission. She has a reasonable right to expect her pension to be paid when it comes due, through her husband, if he predeceases her. So there are many instances of marriages—and, of course, most staff working for the EU have properties in Brussels, Luxembourg and other places, and children in school there. We are inflicting a huge upheaval on our staff.
What I am looking for from the Minister is three short things. First, I would like to hear a word of sympathy and understanding, which has not been heard from this Government. Secondly, I would like an acceptance that the negotiating mandate when drawn up will include an acceptance that all the acquired rights and legitimate expectations will be met. Thirdly, I know that it is presently too early, but I would like the agreement of the Minister to facilitate a meeting between representatives of the affected personnel and others with the appropriate Minister for the exit negotiations at the appropriate time.
This whole issue has sent a shiver down the spines of servants of all our international institutions. One of the candidates for Conservative leadership is pledged to withdraw from the European Court of Human Rights—or she was until she rewrote her manifesto. But there are numerous institutions. I serve on the pension fund board of CERN, the leading physics laboratory in the world, where people are worried whether Britain will withdraw from it. She could withdraw from CERN. We need to get our act together and remember that if we want the best civil servants to go from Britain and represent Britain in international institutions, they have to be treated with sympathy and decency, which I have not yet perceived as part of this debate. I look forward to it arriving.
Baroness Crawley (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Balfe.
Speaking to a fellow Peer last week on the Lords Terrace, who I knew had a great interest in all things European, I said, “I suppose you’ve read Article 50”. He said, “Read it? I wrote it.” Only in the Lords.
A week is a long time in politics, as Harold Wilson once said, and two weeks is a lifetime. In that time, nearly all my adult certainties have dissolved around me. As a former MEP, like my noble friend Lord Cashman, representing Birmingham in the 1980s and 1990s, I wonder what it was all for. Were the last 40 years the high-water mark for our country’s environmental, social and workplace rights? As someone personally involved in the original EU maternity leave directive in 1992—one of its midwives, if you like—I am particularly angry that we are turning our back on such EU legislation, which has helped hundreds of thousands of British women each year, enabling them to enjoy substantial time off with their newborn babies and to get paid while they are on leave. They are entitled in law—that is, EU law transcribed into British law—to have their job back when their leave ends.
British Governments have not always been enthusiasts for EU workplace rights. In fact, they had to be dragged kicking and screaming even to abstain on the original maternity leave directive, as I recall. So what will future workplace rights look like for a Government now burdened by a slowing economy? Like so much else, we do not know. Will our major cities and conurbations see again the great surge of infrastructure projects and renovation that Birmingham and the West Midlands saw in the 1990s and 2000s—activities made possible by the partnering of EU funding with public and private investment, leading, as it did, to new road and rail infrastructure, the extension of the NEC, the new Symphony Hall, the indoor athletics arena and of course the complete restoration of the city’s 18th-century canal system? “More canals than Venice” was our boast—in a Brummie accent.
No, we will probably not see such partnership again, which is a pity because it was that surge in activity and the jobs that came with it that helped cities such as Birmingham recover from the recessions of the 1980s. It also brought new hope, new prestige and inward investment into that city from firms, many of them European, setting up their HQs there and using the EU rules of free movement of people, goods and services to do so: rules that we rejected on 23 June—indeed, which a majority of the voters of Birmingham and the West Midlands rejected on 23 June. Understanding the underlying causes of that rejection is a huge responsibility for those of us in political life as we move forward, listening ever more closely and acting on inequality and alienation.
The people have spoken and, as a democrat, I must accept the result. However, I am incandescent that such an important question as our membership of the EU, impacting, as it will, on our lives for many decades, was decided in such a simplistic, binary manner and that so many falsehoods and downright lies were allowed to become popular wisdom, leading to so much xenophobia in the campaign and giving a licence for it to continue beyond the campaign, with the police recording an alarming increase in race-hate incidents in the last 12 days.
Where do we go from here? I understand that Andrea Leadsom has called for Article 50 to be triggered as quickly as possible. This is a bit like Captain Smith telling the harbourmaster to let the “Titanic” sail from Southampton as quickly as possible. It is as if we have forgotten that we live in a globalised economy—an economy which may bring prosperity to us all in the UK but will also certainly bring some disruption and harm. We cannot deal with this global reality by declaring UDI for Milton Keynes—for that is precisely how so many global forces, such as China and the USA, will be interpreting Brexit. It will seem to them like an act of provincial suicide, cutting off our neighbours to spite our future and retreating into a cardboard fortress that will be of no help to any of those left inside. My belief continues to be that the EU is an economic NATO. Its much-derided officials keep us from harm while we work, just as our soldiers keep us from harm while we sleep.
In conclusion, I echo the countless questions being asked tonight in families and businesses up and down the country. Will there be an end to present financial uncertainty—Aviva’s decision today is a case in point—or is this merely phase 1? Are our mortgages, savings and pensions safe? Who is going to invest in all those UK businesses exporting to Europe? What is Parliament’s ultimate role in our leaving the EU? What is to become of London’s special financial status? What about the Brits living abroad? Can our farming communities remain robust? Will our young people’s opportunities expand or contract? Will those workers and their families from Europe who are here now be able to stay? Like many noble Lords, I most certainly hope that they will be.
As the daughter of an unskilled Irish immigrant who remembered those signs on the windows of boarding houses in the 1950s, “No blacks, no Irish, no dogs”, I feel particularly aggrieved at the whipping up of fear over immigration during the campaign. I hope that in the coming months we will take a calm, collective deep breath before rushing headlong into Brexit and get the very best deal possible for this country after the deluge. That will take leadership, which is lacking today in the Government and, certainly, in Her Majesty’s loyal Opposition, but I hope that I shall still be around to see a future Labour Government take us back into Europe—a Europe and a UK no doubt chastened and reformed by this searing experience.
Lord St John of Bletso (CB)
My Lords, in my 37 years in your Lordships’ House, I have never known a time of so much uncertainty and public division as in the run-up to the referendum. Now is not the time for post-mortems—judgment has been passed—but now is the time to address the future with a positive approach. While I was firmly in favour of remaining, despite my many misgivings and the many failings of the efficacy of the European Union, I respect the result and feel that it is highly unlikely that we will have another referendum. I share the concerns of many of your Lordships—especially those of the most reverend Primate the Archbishop of Canterbury, who made a most moving speech—about the need to stand united to counter threats of xenophobic behaviour and hate crimes. Now is the time to promote unity and tolerance, provide a clearer road map for the future, attempt to dispel the many uncertainties and consider all the viable options—not that there are many.
The choices facing the United Kingdom form a spectrum. Clearly at the one end is sovereignty and control of immigration and at the other end is full access to the single market. There is no perfect solution. Everything depends on what the UK regards as vital and what the European Union is prepared to agree. I agree with noble Lords who have cautioned about being in no rush to trigger Article 50. We should not forget that we are the fifth-biggest trading country in the world and the second-largest economy in Europe.
On 9 September, our new Prime Minister will face an epic balancing act to interpret the meaning of the referendum, weigh it against what is economically desirable and politically workable and turn it into a negotiating plan. In the past week, among the mass of media coverage, we have heard of various options before we potentially trigger Article 50. There is the Norway option of joining the European Economic Area; there is the Swiss option of being a member of the European free trade area; there is the third option of trading with the EU as a member of the World Trade Organisation, creating a relationship similar to that which the United States, Australia and China have with the European Union; and finally, there is the option of leaving the single market, with the UK negotiating a preferential trade agreement with the European Union, which is sometimes referred to as the Canada option after the comprehensive economic and trade agreement negotiated between the EU and Canada. Each of these options has its major shortcomings, and clearly there are no easy choices, but we should not underestimate the value of passporting for international companies that have decided to have their headquarters in London and the United Kingdom. I understand that several major law firms have been working around the clock providing contingency plans for many international companies that have their headquarters here, are seriously concerned about what will happen if we trigger Article 50 and are potentially looking to move their headquarters to Frankfurt, Paris or Dublin, which will obviously result in thousands of job losses.
I hope that, in addition to the reassurances given by the Governor of the Bank of England, the Chancellor will deliver on his hint to reduce corporation tax and encourage more multinationals to invest in the United Kingdom. Concerns have also been expressed about the collapse of the property market. To this end, I hope the Chancellor will consider the option of reducing stamp duty, which has had a major dampening effect on property trading.
A point that has not been discussed much today is how will Brexit impact on the United Kingdom’s technology sector. The United Kingdom has been a leader in promoting a digital economy, and so much has been achieved in job creation with Tech City and the digital single market. Big data, artificial intelligence, and the internet of things, as well as nanotechnology and robotics, are all set to change the workplace of tomorrow and the future of skills, employees and managers. I declare an interest as advisor to the board of Silicon Valley Bank. It is well known that, since the Brexit vote, many international investors have hit the pause button. Confidence is seeping with this uncertainty. It is imperative that, just as the Governor of the Bank of England has given assurances to the financial sector, so too should there be a lot more reassurances to the tech sector.
Coming so far down the batting order, most of the points that I wanted to address have already been covered by other noble Lords. My children, except for my stepdaughter, all voted to remain in the EU. They were, and are, all concerned about the younger generation’s job prospects after they leave university. They were all concerned about the impact that Brexit would have on university funding and grants—a point that has been raised by my noble friend Lord Bilimoria and the noble Baroness, Lady Royall.
I would like to reinforce the strong calls by my noble friend Lady Kidron and the noble and learned Lord, Lord Wallace of Tankerness, that our Government need to promote hope for our youth, who need their voices to be heard.
In summary, I repeat my call at the beginning of my speech, that while we have taken a large step into the unknown and into uncharted waters, now is a time for promoting tolerance and unity, for a more considered and realistic roadmap for the future and for strong leadership.
In the words of the late Jo Cox in her maiden speech,
“we… have far more in common than that which divides us”.—[Official Report, Commons, 3/6/15; col. 675.]
Baroness Hooper (Con)
My Lords, at the first direct elections to the European Parliament in 1979, I had the good fortune to be elected to represent Liverpool, my mother’s home town. Those were the days of single-member constituencies, which we all regret. One bright spot when the results of the referendum came through 11 days ago was to hear that Liverpool, unlike many other northern industrial cities, had, overall, voted to remain. This is, of course, in part, because Liverpool, as a once-great port, is internationally minded and outward-looking. But I like to think it is also because the funding from both the Social Fund—which kicked in after the Toxteth riots in the early 1980s—and the European Regional Development Fund had been appreciated.
It was a privilege to serve in the first directly elected international parliament in the history of the world. It was an aspirational place, motivated by all the possibilities that a united Europe, a peaceful Europe and a dynamic Europe could be a new force for progress, development and good in the world. There are a number of former Members of the European Parliament and indeed commissioners in your Lordships’ House, but I think only my noble friend Lord Balfe and I represent the 79-ers. One of the key successes of that first Parliament and of the European Union, the single market, came out of that first Parliament. I still call it a key success in spite of the persuasive words to the contrary from my noble friend Lord Blencathra.
I can remember how the late, lamented Bos Ferranti and the German Member Dieter Rogalla started the campaign for the single market in the early 1980s. It was pounced on by others, notably Margaret Thatcher, who felt that this was a policy to which she could give wholehearted support. Indeed, I made my maiden speech on the freedom of the skies. This illustrates that, when the United Kingdom took a leading and positive role, it led to benefit for all. There are other rare examples of this but, on the whole, the United Kingdom has seemed a reluctant and negative member and this has influenced the general public.
Like many others, I worked in the remain camp and was bitterly disappointed by the result, in spite of the fact that almost half the voting population voted to remain. It was a close call, but it was clear. Like others, I deplore the exaggeration and vehemence that characterised the campaign and particularly the false and misleading representations which I heard from some Brexiteers who, as has been remarked already, planned for exit without having and exit plan, and who now seem largely to have disappeared from the front line. If there was a Project Fear, it was on that side.
Today, however, we are faced with the result and we must look ahead to our future outside. Whatever is negotiated to define our relationship with the remaining members of the European Union, I hope it will be as positive and constructive as possible. It is, after all, breaking new ground for a country to secede, so we should not feel constrained in considering all possible options and aspirations. The important thing is that the negotiations should be carried out calmly and courteously. I agree with much of what has been said about our place in the single market, world trade, not turning our backs, immigration and all those who must be rejoicing over the weakening of what had appeared to the rest of the world as a successful, solid, democratic and united bloc.
There are a few particular issues I wish to raise in the context of negotiating the new relationship. The overseas territories, for which we have responsibility— 11 tiny territories, from Bermuda, now the largest, to Pitcairn, the smallest—all made it clear that they hoped we would remain part of the European Union. The one most greatly impacted and the only one geographically within the European Union is, of course, Gibraltar. The people of Gibraltar are still in shock, because the result of the referendum puts at risk Gibraltar’s current successful economic model and exposes it to new threats from Spain. There are two key issues for Gibraltar: the freedom to provide services and a free-flowing frontier. I hope, therefore, that my noble friend Lady Anelay, in her unenviable task of winding up this huge debate, can give us some reassurance that Gibraltar will also be able to participate in the negotiations and will form an integral part of whatever agreement is worked out between the United Kingdom and the European Union. Can she also give us her reaction to the novel suggestion that constituent parts of the United Kingdom, notably the nations that voted to remain—and of course that includes Gibraltar, Scotland and Northern Ireland—could together continue their European Union membership under a new definition of the term “member state, United Kingdom”?
My other particular area of interest is Latin America. The noble Lord, Lord Brennan, made reference to the trade opportunities in that region. Any country with which I have had recent contact is completely incredulous that we should have chosen to leave.
The European Union has treaties with Mexico, Central America and Chile, and negotiations are ongoing with Mercosur, whose members include Argentina, Brazil, Uruguay and Paraguay. I now challenge the Government to give priority to negotiating new trade treaties with many of these countries, and perhaps especially with Mercosur, where the European Union has found things very challenging.
This debate has, quite rightly, concentrated mainly on general principles and major issues, but many other issues also require special consideration. There is so much to unravel. I trust that this debate will be seen as an important early contribution to the thinking and preparation of our new status. As the noble Baroness, Lady Royall, said, it would indeed be nice to know who our negotiators will be. Whoever they are, I wish them the very best of British.
Lord Carlile of Berriew (LD)
My Lords, it is always a pleasure to follow the noble Baroness, Lady Hooper. On matters European, she brings to this House both knowledge and wisdom. She may also still be the most popular Conservative in Liverpool—admittedly a relatively small cohort but still a great distinction.
I wish to headline my comments with a question. Where does Parliament stand in all this? I propose to address some of the comments raised by, for example, the noble Lord, Lord Kerr, the noble and learned Lord, Lord Brown, and others earlier in the debate, but I want to focus on the process that follows the referendum, especially the role of both Houses of Parliament. In that context, we in this House are entitled to assume that Her Majesty’s Government have assessed the legal and constitutional consequences, and I believe that in the closing of this debate we are entitled to hear what advice the Government have been given about those consequences. I will not hold my breath but it will be astounding if they have not been analysed properly.
What concerns me, among other things, is the relationship between democracy and democracy. We do not legislate by referendum but it is part of our democracy. I suggest to your Lordships that, in adopting one expression of our democracy—the occasional referendum—we should not supplant another, permanent element, which is the deliberative democracy we have in Parliament.
I wanted, and voted, to remain but I recognise that we must respect the result of the referendum. However, that does not mean that we slavishly leave the European Union whatever the terms may be. I suggest to your Lordships that the clear duty of the Government and of both Houses is to attempt in good faith to give effect to the will of the majority expressed in the referendum. However, I also suggest that it is absolutely clear, as a matter of law, that Parliament would not be bound to give effect to the referendum if the only terms on which the UK could leave the European Union were shown to be seriously damaging to the national interest. Indeed, I cannot believe that the leave campaign wanted to damage the national interest.
To put it another way, I invite the noble Baroness, in responding to this debate, to confirm the following: that, despite the referendum result, if empirical analysis of negotiations shows that the disadvantages faced by the United Kingdom on leaving the European Union are disproportionately damaging to the national interest compared with the advantages of remaining, Parliament will properly have the right to show its will accordingly. I believe that the answer to that must be, “Yes. Parliament would have that right”, but we are entitled to know the Government’s view.
Lord Carlile of Berriew
Perhaps I may be forgiven. I turn now to some narrower legal issues. I ask the noble Baroness, in responding to the debate, to explain the effect, if any, of Section 2(2) of the European Communities Act 1972. As I understand that section, if the trigger to leave the European Union, as seems to be agreed, is the Article 50 process, that process falls squarely within Section 2, and I shall explain in a sentence what that means. To pull the trigger of Article 50, Section 2(2) requires the Government, at the very least, to obtain the consent of both Houses of Parliament to a requisite statutory instrument. If that is so, does not Parliament have a legitimate expectation that considerable detail of the proposed terms of exit from the European Union will be disclosed as part of the relevant statutory instrument, or at least in the Explanatory Notes, and that it will therefore be a transparent part of the proposed Article 50 process?
Do the Minister and the Government agree that the ultimate decision to leave after the Article 50 process has been completed is one for which legislation is required and for which, therefore, the views of both Houses of Parliament are necessary? At the very least, even if legislation is not required, can the noble Baroness agree in due course that for so momentous a decision as leaving the European Union, which I suggest—I hope without extravagance—is comparable to a decision to be involved in a war in some part of the world, the Government should accept that a fully informed decision must be required of Parliament, or at least of the House of Commons, the elected House? In sum, I am saying that we need to know the legal position. This House and the other place need to understand the legal rules behind this process. An attempt was made to explain them in a paper published a couple of months ago but a host of questions have arisen ever since.
Finally, I ask the Minister to explain how this House and the other place are to be informed on a real-time basis of the work of the team led by Oliver Letwin MP, as announced by the Prime Minister. We have an excellent House of Lords committee, chaired by the noble Lord, Lord Boswell of Aynho, who spoke earlier, but that is surely only part of the picture. Would it not be sensible for a Joint Select Committee of both Houses to be established for the specific purpose of providing scrutiny of this most important process?
A complex historic process has been commenced by what I regard as a simplistic binary question. Many untruths and half-truths were told during the referendum campaign, possibly by both sides. Now, we need confirmation that, in contrast, the parliamentary part of the process will be legal, decent, honest and, if truthful is too much to ask for, at least reasonably well informed. Pericles, one of the great originators of democracy, said:
“Although only a few may originate a policy, we are all able to judge it”.
I suggest to your Lordships that Parliament should be allowed to judge this issue in an informed way—not one that is slavish to the referendum—before a final conclusion is reached.
Lord Hennessy of Nympsfield (CB)
My Lords, we are living through a molten time for our people, our politics, our society and our country. We are living in the aftershock of an extraordinary event of a magnitude which, in my judgment, none of us has experienced in peacetime. In my lifetime—I was born in 1947—there has been but one geopolitical shift that comes near to it. I refer to the disposal of the British Empire—another dash for the exit. That remarkable transition, however, was very different from the caesura of Thursday, 23 June 2016, as it took place over several years, its timetable was largely, if not wholly, in the hands of UK Ministers and it left remarkably few scars on the surface of our country’s emotional geography.
The decision to leave the European Union, although its ingredients were long in the making, was, by contrast, sudden and breath-taking. It was as though all the dials needed resetting almost in one go. Whitehall departments were unprepared, as other noble Lords have mentioned. Apart from the Treasury, which had plans in place with the Bank of England to stabilise the markets, government ministries were expressly forbidden to draw up contingency plans for exit.
We may pride ourselves on being a back-of-the-envelope nation, but this was excessive. Never have I encountered so many people with so few ideas about what to do in the face of a first order crisis. The litany of post-war crises, which, as a professional historian, I write about from time to time—the sterling devaluations of 1949 and 1967, the Suez affair of 1956, the IMF crisis of 1976 and Black Wednesday in 1992—seem mere blips on the radar screen in comparison.
Never in my lifetime has our politics seemed so envenomed, poisoned still further by a palpable dearth of trust between the governed and the governors. All this at a time when our two major political parties give every appearance of eating themselves, with copious tranches of nervous energy absorbed by their internal stresses and strains.
In my judgment, the referendum result was like a lightning flash illuminating a political and social landscape long in the changing, exposing yet again fissures we knew about—disparities of wealth and life chances—but whose depth and rawness I admit I had not fully fathomed.
What can be done? Winston Churchill, that supreme wartime crisis manager, had a favourite phrase about “rising to the level of events”. That is our pressing duty—all of us in public and political life and the civil and diplomatic services too.
It is time to stand back and take a long, candid and careful look at ourselves. May I suggest that we need two separate but related inquiries? First, our place in the world. Can we, should we, still aspire to punch heavier than our weight in the world in the way that we do when on autopilot as a nation with a remarkable past and a continuing and sustained appetite for global influence? Secondly, we need to look at our internal constitutional arrangements—the relationships between the nations, regions and localities of the United Kingdom. In my darker moments, I think that 23 June lit a fuse beneath the Union. I profoundly hope not, as a man who loves Scotland deeply and cherishes the union of the United Kingdom almost beyond measure.
My preferred instruments for these inquiries would be a pair of royal commissions—an ancient institution, rusted by disuse, but it is time to unsheathe it. Failing that, perhaps a brace of Joint Committees of Parliament.
Of one thing I am certain: now is the time to think above our weight, to draw deep from our wells of tolerance and civility; perhaps even to fashion a new political vocabulary to help us think aloud together as a people and a nation about what is to become of us; to rise to the level of events; and perhaps even to surprise ourselves and the watching world by the quality, the care and the foresight of what we do.
Lord Flight (Con)
My Lords, the Government need to start talking up the UK economy now. The UK has had the most remarkable success in recent years in the explosion of new businesses in new technology areas, offering huge scope for the future and huge opportunities for investment. The eventual result that I believe will come about will leave us trading much as before with the EU, but there are huge trading opportunities with India and China. America, interestingly, is coming round to proposing free trade with the UK. The Chancellor has promised to lower corporation tax to 15%; 12.5% would compete with Ireland and be very attractive for company headquarters here. However, the Government need to spend the next two months explaining urgently why Britain cares deeply about attracting investment and jobs and what we have to offer.
I declare my interests in the register and it would be appropriate for me to talk specifically about Brexit and the City. At a macro level, the importance of our financial service exports to the EU should not be exaggerated. Some 50% of our total financial services are exported, of which only 30% go to the EU—that is, 15% of the total. This represents about 1.2% of GDP. The largest exporter is investment management, of which 80% is non-EU. As to those firms that wish to engage in the retail business in the EU, most already use Luxembourg or Dublin UCITs. Eighty-eight per cent of insurance exports are to locations other than the EU—North America and Asia. The most affected sector is investment banking and related banking, where 80% of EU capital markets business has been done in London. The big players in London already have operations on the ground in continental Europe but may look to move significant numbers of staff out of London to their continental European operations if we do not end up with access to the single market.
The financial services industry overall is of major importance to the UK economy and our largest industry. In aggregate it employs 2.1 million people and raises £66.5 billion a year in tax. Together with other related services, it accounts for a total of £75 billion of overseas income. There are also obvious multiplier economic effects from the expenditure of those working in the sector. It is, therefore, a valid point that we do not want our biggest industry damaged as a result of Brexit.
Therefore, the issues are: what sort of deal should we aim for; how should we organise and negotiate it; with whom should we negotiate; and how strong is our negotiating position? First, we will need a tough negotiating team under the Cabinet Office, which has been set up. I note that it is under the Cabinet Office and not the Foreign Office. I suggest that this should also include experienced senior politicians—for example, the two ex-Chancellors in this House, the noble Lords, Lord Lawson and Lord Lamont, and, potentially, Peter Lilley, who handled the introduction of single market regulations in the first place. It also needs to contain talented business representatives such as Luke Johnson. From a domestic perspective, it might be worth while including Nigel Farage or his successor. Among other things, this would give representation to the many who voted for Farage. It would also help to deflate the elitist attack on ordinary folk who voted for Brexit.
Before we activate Article 50, we would be wise to work closely with Germany in formulating what I will call a “heads of agreement”. Our negotiating position is, in principle, strong, reflecting both the EU’s huge trade and current account surpluses with the UK—the latter in excess of £100 billion per annum—and that the EU could not impose a harsh settlement on the UK to prevent a domino effect while, at the same time, seeking to manage a major banking crisis in Italy and to nurse the eurozone back to health. Failure to mend fences with London would risk a financial and economic crisis in the EU, exposing the disastrous economic and financial effects of monetary union. As Italy’s Finance Minister has commented:
“There is a cocktail of factors that could lead to disintegration”,
and:
“We face a double reaction from Brexit: financial and political”.
Clearly there are also domestic political considerations. While there was a clear Brexit majority, 48% voted to remain, and there is a need to get whatever will be the required measures through the other place, where there is obviously a substantial remain majority. The new Government would be wise, therefore, to opt for a sensible and broadly acceptable compromise package for the next few years and, certainly, to achieve single market passporting.
If required as a sweetener, we should be willing to agree to contribute a reduced amount to the EU budget. The loss of the UK contribution, which net will be about £10 billion next year, is a serious financial issue for the EU.
The ideal package would be a free trade deal between the UK and the EU, with the UK withdrawing from the free movement of EU citizens, and passporting of financial services based on equivalent regulation applying to the UK financial services that are exported to the EU and as provided for under MiFID2, which is effective in 2018. Such a package is achievable and would be in the interests of the EU as well as the UK. It may be that it would be packaged as EEA membership but that would clearly work only if the EU agreed that there would be no free movement of EU citizens to the UK. That could be achieved by going back to the pre-Maastricht rules guaranteeing only the right to work, or by following the model of Liechtenstein, which is a member of both the EEA and EFTA but has been allowed to opt out of the migration issue.
The City has indicated that that it could live comfortably with the EEA option or a hybrid version that safeguarded EU passporting for financial services. But I repeat the point that others have made: as the leave campaign promised, we need to agree and clarify the rights of EU citizens already resident in the UK to remain when we leave the EU. That is something we might be able to agree with the EU right now.
Lord Davies of Stamford (Lab)
My Lords, I suppose it is a pleasure to follow my old friend the noble Lord, Lord Flight, but as usual, I disagree with almost everything he has said. However, it has been a revealing and worthwhile debate and I was particularly struck by the analyses of the noble Lords, Lord Butler, Lord Kerr and Lord Carlile, all three of whom have a higher regard than I for the result of the referendum. I consider it to have all the legitimacy of a transaction based on a false prospectus. Of all the deeply depressing aspects of our country’s current prospects, the one that I find saddest and most disturbing is that we have chosen to commemorate the 100th anniversary of the Battle of the Somme by rekindling the fires of nationalism. What a horrible message to send externally or internally—and internally, we have already seen some of its results.
A lot has been said about the economic damage of Brexit, and I will come on to that, but not much has been said about the non-economic assets that we shall lose if we proceed to Brexit. They are very important and I want to say a couple of words about them. We in this country essentially have two citizenships: our own and that of the European Union. The latter gives us the right to be treated as a citizen by 27 other countries, and to work and study abroad. At an earlier stage of my life, I had the wonderful experience of working and living in Paris for three years. All I needed to do was to put my things in the back of my car, drive over to Paris, turn up at an office the next day and start working. I did not have to apply for a work permit, to go through an Australian-style points system or to report to the police every three months; I did not have to deal with any bureaucracy at all. The younger generation will not have that benefit and their interests have been seriously betrayed in this matter.
Part of what EU citizenship gives us is the right to free medical treatment on the continent. Elderly people and those with existing medical conditions might not be able to travel on the continent at all without that assurance. That would be a very severe change in their quality of life, and a rather horrific prospect. There are all sorts of smaller things, too. If you are having a wedding or other major celebration you will not be able to go over to Calais and buy some drink at French prices. As a result a lot of those celebrations will not take place, or not in the same way. That will be very sad. We should think about these things now because within the next few years we will miss them very much when, if we are not careful, it is too late to do so.
I do not want to repeat what has been said on the economic impact. I think it will come home to people in the next few weeks. They will notice an increase in prices when they go to the supermarket, fill up with petrol or pay their fuel bills. Incidentally, the Brexit campaign told people that fuel costs would fall if people voted for Brexit because fuel duty would be reduced. In fact, the reverse is happening. People have been lied to, hoodwinked and cheated—no other words in the English language more accurately describe the situation.
The uncertainty being created is particularly damaging but over the long term, as the noble Lord, Lord Flight, himself acknowledged, it will be a very serious matter if we lose the banking and insurance licences on which some of the highest-value aspects of the City and London’s position as the capital of the single market are based. I think the noble Lord underestimated those important points.
The Brexiters and the Government say, “That’s all right, we’ll have a negotiation and everything will be fine”. We will get the best of all possible worlds, we hear: we will have full access to the single market as we do today, we will not need to pay anything to Brussels and we will not have freedom of movement. It is most unlikely that we could make such a deal. First, the Brexiters, including the noble Lord, Lord Flight, are completely wrong about the balance of advantage and disadvantage in the prospective negotiation. At stake in our trade within the single market is 14% of our GDP in exports. No country, other than the Republic of Ireland, has exports to the UK that are more than 3% of its GDP. We shall in fact have a discrepancy of four or five times our relative bargaining power in those negotiations. Why would the continentals agree the deal known colloquially as Norway-plus? I can think of at least five reasons why they would not, and there may be others.
The first is a matter of elementary logic: the Prime Minister was unable to negotiate such a deal in February when there was presumably an incentive for the continentals to make concessions, in so far as they wanted us to stay in the European Union, as I believe they genuinely did. Why would they not make such a deal when there is an incentive but make one when there is none? Secondly, the European Union as a whole has made it clear for many years that it is not interested in bespoke deals. It did one with Switzerland but that has not had a happy outcome and it is not going to do it again. It will want to maintain the credibility of that position and is unlikely to change it.
Thirdly, I do not think that the European Union will want to make a concession to us which will cause a precedent for other countries which might want to leave it. Fourthly, to give us a better deal or Norway-plus is an insult to Norway. I cannot imagine why in heaven it would want to do that at all. It makes no sense to me. Fifthly, any bespoke deal would take years and years to negotiate. At least if we have the Norway deal—the EFTA or EEA deal—the template is already there and the negotiations could be shorter.
We will find ourselves with a choice of three regimes: the status quo; the EEA deal that Norway has, which involves freedom of movement and financial contributions to Brussels; and the Lawson approach. The third of those would cut the ropes altogether, leaving us to sail away and deal with the European Union rather on the same basis that Paraguay does. Faced with that choice, what would a rational man or woman decide? The public can make a rational choice only when faced with the actual alternatives, which may be those that I have set out. But if others can be negotiated contrary to my expectation, so much the better. The public cannot make a rational and fair choice unless they honestly see the alternatives, just as you cannot go into a store and make a fair choice unless you see the range of goods available. The same holds for when you buy a house or make any other decision, such as an investment decision about going into gilts or equities. Of course you would want to look at the options separately, and the British public must be given that opportunity. On that, I agree with the noble Lords, Lord Butler, Lord Kerr and Lord Carlile.
It would be a denigration of democracy to deny the British public a say when we know what the real possibilities are from which they might want to choose. We can then be absolutely straight with them, and I hope there could be an honest campaign in which they look at the advantages and disadvantages of all those regimes. It may well be that when they actually look into the abyss, they will decide they do not want to jump in. But if they do decide to do so knowing what it is, at least that decision will have democratic legitimacy.
Lord Curry of Kirkharle (CB)
My Lords, I will try not to duplicate previous contributions to the debate. Unlike many of the comments I have heard over the past 10 days and again today, I am not going to indulge in spilt milk. I believe that we should accept the referendum result and move on. I should like to comment on two issues that arise as a consequence of the result, both of which are extremely important and relevant to the debate. The first is the impact on agriculture and the second is about legislation. My interests are as recorded in the register, but let me refer to three. I farm in Northumberland and I am a beneficiary of the EU basic payments scheme. I chair the Prince’s Countryside Fund and until the end of last year I was the chair of the Better Regulation Executive.
Some 40% of the EU budget is spent on supporting agriculture through the much-maligned common agricultural policy, so Britain’s farmers have a keen interest in the withdrawal process and life after the CAP. The common agricultural policy has dominated agricultural policymaking for almost 40 years and reforms have taken place every five years or so. The consequence of this process is that no sooner did we complete a round of reform than we began on the next. For those not familiar with the agricultural sector, let me explain why support from the CAP is so important.
We no longer subsidise food production in Britain, with a minor exception in Scotland. Farmers continue to receive an annual payment, which has certain obligations attached known as cross-compliance. The principle, which was promoted in a report I was responsible for in 2002, of justifying public support only for the public goods that farming provides which the market does not deliver is important. This principle was endorsed in the recently published report by EU Sub-Committee D of this House, of which I am a member, on the resilience of the farming sector in the light of commodity price volatility. Farmers care for the countryside and the landscape of Britain, they deliver environmental management and habitats, contribute to food security and are critical to a successful tourism sector. These are outcomes for which the market will not reward.
The basic payments scheme is the tool to reward farmers for these outcomes. Most farmers would prefer not to be dependent on this payment and accept that it will be diluted over time, but for now and for the medium term it is essential. As noble Lords will be aware, there is currently huge pressure on farm incomes due to prolonged low commodity prices, particularly for milk but for other commodities too. A recent report commissioned by the Prince’s Countryside Fund found that 20% of farming businesses are in fairly serious financial difficulty, with more than 50% dependent on other sources of income outside farming—and this with the benefit of the EU basic payment scheme. Without it, at present a significant proportion of farmers would have to shut up shop, so a sensible transition from the current system of EU support to whatever emerges from the negotiations as a domestic policy to replace it is essential.
Despite the red tape, the form filling and the bureaucracy, the funding is important. Farmers are rightly concerned that with the attitude taken by the UK Government in successive EU reform negotiations, this support could be at risk. The UK Government have led the pack of EU member states trying to drive down the costs of the common agricultural policy, so the concern is real. I am not demanding a continuation of subsidies for farmers, but I am requesting that future policy design is cognisant of the need for a smooth transition, otherwise we could seriously undermine confidence in what is a vital component of the UK’s largest industry sector by far, the agri-food industry. I understand that last night the candidates for the Conservative leadership did commit to continuing support for agriculture, which is very reassuring, so why do I still feel uneasy?
An additional factor which is of concern is the vital access to EU markets for our produce. Of course this is reciprocal and EU member states will want access to our market, but I should remind the House that approximately 40% of our sheep-meat is exported to other EU countries, particularly France. No other commodity is so dependent on EU markets. This market has been developed over a period of 20 years and is vital to our sheep farmers. Members of the House may recall that we have had a few problems in the past on this issue. We do not want a return to the dark days of lamb wars.
I am very encouraged that the response to the referendum by the National Farmers’ Union is to take a positive approach and begin to debate the key issues that should be considered within a new policy framework while we wait for the new Prime Minister to pull the trigger on Article 50. I have listened with keen interest to contributions from many wise Members of this House on this subject today.
I am, however, extremely concerned about the potential for delay in the timescales involved in the negotiations. This was commented on earlier by other speakers. The sooner we communicate the process, the better in my view. The scope for negotiations to become extremely complex, to miss deadlines and to drag on for years and years with continuing uncertainty for the entire business community, including the agri-food sector, is a real and unwelcome prospect. We need a plan with realistic but stretching deadlines as a discipline to frame our negotiations so that not only industry and institutions can plan and monitor progress, but the public can too. This is hugely important.
I also endorse the comments made earlier on the essential need for scientific funding which is currently available from the European Union for our research institutions. If we are to address the productivity challenge that we face here in Britain, we need to invest in science. We need a commitment that the Government will continue to meet that science obligation.
Let me address the concerns I have about the regulatory world, having only recently stood down as the chair of the Better Regulation Executive. Others have already expressed concerns about this subject. Approximately 50% of our regulation originates in the European Union and all of it will have to be reviewed and retained or replaced. Let us take the opportunity to try and reduce regulatory burdens in the process. One of the reasons for the support to leave was that of perceived intrusive EU regulations, so we now have a unique opportunity to design “fit for purpose” regulation that supports business growth and positions the UK as a great place to do business.
My second concern on this subject is that of regulation that is currently in the pipeline from the EU or likely to be progressed during the exit process; it is an interesting dilemma. Having read the helpful report of the EU Committee, chaired by the noble Lord, Lord Boswell, on withdrawal from the European Union, I note that it is silent on the subject of whether we as a member state have to adopt EU regulation that is introduced during the withdrawal process. It would seem bizarre that we should introduce regulation that we might conceivably abolish soon afterwards. I hope that the Government have a view on this subject.
I could go on but other speeches have covered areas of concern. Let me just emphasise a point made by the right reverend Prelate the Bishop of Ely. Immigration policy must recognise how important seasonal labour is to the agri-food sector. Our highly efficient food producers, processors and manufacturers will have to move production overseas if they do not have access to seasonal labour. We actually have a great opportunity to increase our self-sufficiency in food and to reverse the current downward trends, as well as to increase our exports, but only if the key components are in place, including seasonal labour. I hope that the Government will recognise these important issues.
Viscount Trenchard (Con)
My Lords, I agree wholeheartedly with the views expressed by my noble friend the Lord Privy Seal in her opening remarks. It is not helpful that some noble Lords seem to be suggesting that the question of whether we stay in or leave the EU can be reopened or should be subject to additional conditions being met such as a parliamentary vote or a referendum on the terms of our departure. The position is clear. One year ago the Government were elected on the back of a promise to hold a referendum on the subject. The Prime Minister stated that the question was of such importance that the people should take the final decision. Your Lordships’ House and another place assented to the Prime Minister’s view and the referendum was held. It produced a clear majority vote to leave. Members on both sides of the debate have made exaggerated claims. Surely it is now incumbent on noble Lords to play their part in securing the best way forward for this country and to make the most of the new opportunities that our decision to leave offers us.
The country needs a Government who are confident in our future and will act with confidence. I was fortunate to represent a British bank in Japan during most of the 1980s. The high regard in which the United Kingdom under Baroness Thatcher’s leadership was held by Japanese leaders of business and government during that period was of inestimable assistance to me in my task of securing access to the Japanese financial markets for the firm I represented, and through the British Chambers of Commerce and the European Business Council in Japan for other foreign businesses. I will travel to Japan next week and will meet the leaders of several companies that are major investors in this country, and shall carry a positive message about the future opportunities for them.
Of course I do not want to give the impression that I think it will all be plain sailing. Like other noble Lords, I welcome the creation of the new unit of government under my right honourable friend Oliver Letwin to negotiate Brexit. The unit must immediately be given powers to obtain full information from all departments of state on our interactions with the EU so that decisions on how to proceed can be based on hard facts and not on myths. I agree with the most reverend Primate the Archbishop of Canterbury, my noble friends Lord Lawson and Lord Lamont and others that the Government should give immediate and clear assurances about the endurance and permanence of the rights of residence of the citizens of other EU states who are living here and who have made this country their home.
There is much anxiety about the single market and what will happen to our trade with it in both goods and services if we leave. Some people argue that we should leave the EU but remain a member of the single market. They argue that our trade in goods and financial services will be seriously harmed if we do not negotiate continued access to the single market. If membership of the single market is so important, why has its trade with many non-EU countries grown so much faster than ours has? We can continue to grow our trade with the EU under WTO rules as a fallback position in our negotiations. If free movement of people is a prerequisite of access to the single market, we should walk away from it.
In any case, why is free movement of people essential to a free trade area? Is it only essential because the leaders of the European Commission and other European institutions think that the EU is a state and that its citizens obviously therefore have the right to live and work anywhere within its borders? Freed from EU procurement rules, the UK Government will again be able to level the playing field and award infrastructure contracts to British companies rather than state-owned foreign companies which can circumvent state aid rules. There are many harmful directives governing the way we run our businesses, such as the EU utilities directive. Social legislation, such as the working time directive, which is damaging to job creation, can be repealed or amended.
I was delighted to learn that the Chancellor has continued his policy of lowering corporation tax in a giant downwards move of 5%, to a rate of 15%. That level is not so different from the Irish level of 12.5%. Perhaps the Irish will decide to rejoin the United Kingdom, with equivalent status to Scotland, when their EU membership requires them to harmonise their corporation tax rate at a much higher level. That would of course remove any talk of a “hard border”.
Freed from EU regulation the Government could do more to help the economy. How about creating tax-free enterprise zones around ports and airports? And the Government really cannot put off a decision on the third runway at Heathrow any longer. The Government could create tax-free or low-tax enterprise zones, some of them linked to the northern powerhouse project. We will be able to take many such new initiatives when freed from the shackles of EU rules.
Trading with the EU under WTO rules as a fallback position would not be so bad, given that the total paid in tariffs would be considerably less than the cost of our EU membership. The lower pound would also help our exporters reduce the deficit. It is highly questionable whether the single market in services is about trade liberalisation at all. As the late Ronald Stewart-Brown of the Trade Policy Research Centre concluded in his excellent report of March 2015, the single market in services, especially financial services and insurance, is much more about EU integration through EU-wide supervision and regulation.
As for passporting, the European regulator has recommended that the EU’s fund management passport should be extended to Guernsey and Jersey. If the regulatory regimes in these two non-EU states are good enough for ESMA, surely our own FCA should be good enough too. In any case, passporting rights are significant only for the fund management and insurance sectors, whose aggregate exports to the rest of the EU, at £5.9 billion in 2013, were less than 9% of the UK’s financial services and insurance exports worldwide, at £68.5 billion.
The Swiss Government are shortly to start renegotiating their trade agreements with the EU, following the decision of the Swiss people in a referendum to end free movement of people. That means that the two largest financial services markets in Europe will be setting up new arrangements for trade at the same time. This will surely provide an incentive for EU negotiators to honour the commitments they have made under the GATS, which confers rights on all WTO members.
We will have a very strong hand in negotiating a comprehensive new trade agreement with the EU covering goods and services. It should not be as difficult as many claim. After all, we start from a zero-to-zero tariff position. Furthermore, we might decide not to terminate our annual net contribution of some £10 billion immediately but to run it down over a reasonably small number of years. We will surely also wish to remain a member of European programmes such as the Horizon 2020 science programme, of which there are 15 non-EU members.
I hope that the new Government will move swiftly to start to work out a new relationship with the EU, which is what the people voted for and what many on the remain side also want. That would be good for industry and for the City and we will even get on better with our European neighbours, too.
Lord Hylton (CB)
My Lords, the referendum result has provoked much instant comment. The response of the continental Catholic churches is, however, perhaps more thoughtful than some. The bishops of Poland saw a threat to European unity. A spokesman for the Bishops’ Conferences of the EU wanted to see a commitment by all to a Europe of the spirit, based on human and moral values. Another bishop pointed out that such values demand better care for children and old people, rather than just ever-increasing average incomes.
European states within and outside the EU should pay much greater attention to two key concepts. The first is solidarity, which means that we support each other in meeting common needs: for example, the issues arising from refugees and migrants, or climate change. The second is subsidiarity, which means that decisions are taken at the lowest level consistent with the nature of the issue and the resources available. Subsidiarity calls on the higher levels of authority to help the lesser ones.
Pope Francis himself, in one of his airborne conferences, spoke of the common good of the British people being linked with peaceful coexistence for the whole of the European continent. This prompts me to think of the six states of south-east Europe that are not already EU members, which would greatly benefit first from association and then from full membership.
I turn now to our response to the vote. Some of our institutions might be thought to have become redundant: for example, the EU committees of both Houses and the British Members of the European Parliament. In a debate on 27 June, and again today, my noble friend Lord Boswell of Aynho stressed the continuing importance of our EU Select Committee. He might have been expected to say that, but I am glad that the Leader of the House agreed with him. I see the committee having a vital role in challenging policymakers and interviewing witnesses about our disentanglement from our existing membership. They, and indeed British MEPs, are likely to have an important role in clarifying issues for the sake of our national interests, and for the benefit of Europe as a whole.
Assuming that the vote to leave has to be accepted, I would like to see this country positioning itself as the EU's best friend, able to interpret Europe to the Commonwealth as well as to the USA. Britain should remain, as it traditionally has been, the supporter of small states. In any case, we should enhance our role in the Council of Europe, the Organisation for Security and Co-operation in Europe, NATO and, of course, the Commonwealth. The latter, I believe, should seek to enhance its skills in mediation and conflict resolution. In trades and services, we should move closer to non-EU member states such as Switzerland, Norway, Turkey and Israel. At the same time, we should seek the maximum possible free trade with the USA, India, China and Japan.
In the interests of the continuity of our own soft power, we should maximise our links with the continent—all the more so if we seek to be the best friend of the EU. There are many ways to do this: for example, the twinning of towns and cities, exchanges of all sorts, and through science, sport and culture. We should not be afraid to encourage people-to-people connection with Russia, as we began to do even in the semi-frozen conditions of the Cold War. Détente can come from knowing each other at a personal level.
I trust that when the new Government are formed, they will strive to reunite this kingdom and to keep us related in the closest possible way with our continental neighbours and friends. As we used to say, “Vive l’entente”. We should reject stereotypes and work to understand each other, both at home and abroad. The most reverend Primate the Archbishop of Canterbury struck just the right note in calling for new vision and old values. We must surely rise to the occasion.
Lord Vinson
My Lords, all of us at Westminster are responsible for the tangle we are in, and have only ourselves to blame. As we think about getting out of Europe, we should think of how we got into this state.
We pushed on as internationalists with a well-intentioned daydream of a united republic of Europe. We set out to minimise the distinction between natural citizens and outsiders. We gave complete disdain to patriotism, which—inescapably—is the tribal loyalty that gives the social cohesion that glues society together. We wilfully overlooked the democratic deficit that is the inherent weakness of the European Union and which, coupled with the demise of the euro, will lead to its eventual downfall.
We, the economically privileged, preached about the benefits of immigration, and damned as racist those who disagreed and moaned about the inadequacies of the health service. But we refused to face up to the effects of population growth of half a million a year. I have sat here most of the day and hardly anybody has mentioned the horrendous problem we will have in this country of trying to accommodate a further 5 million people over the next 10 years, in the same way that we have been bottlenecked by 5 million over the past 10 years. It is nothing to do with race, creed or anything else. It is to do with the huge overload on our services. We have not faced up to this, and to the effect that it is having on our hospitals, schools, prisons and housing, and not least on the wage levels of those less fortunate than ourselves. The silent majority who have had to suffer the consequences used Brexit to express their concern. They voted for reasonable control of immigration and there will be riots if this is not implemented.
Then we come to the problem of the young. Everybody says that they voted to stay in. The problem there is that they have yet to experience that democracy is a frail concept. Democracy when it works gives social stability while it is believed in, but it is incompatible with the coming reality of a centralised, unaccountable governance of Europe. The noble dream of ever-closer union is having the opposite effect. Many of those who voted for Brexit felt that their views were being ignored, particularly by the party that hitherto represented them. They felt deserted by the Labour Party and theirs was a cry for help. They were patronised and assured, but not convinced, that all was well and that, being at the heart of Europe, we could influence policies. Little did they know that at the Council of Ministers, where we have only 14% of the votes, of the last 72 proposals put forward by our Government, none was accepted. So much for having influence. The EU is a dysfunctional system that depends on arm-twisting and the pressure of a thousand lobbyists. It is a perfect example of regulation without rectification—an updated version of “no taxation without representation”—that has caused those who care about democracy to demand the bringing back of self-administration.
On a more positive note, trade crosses all borders. Tariffs may hinder trade but they seldom stop it. The Woolsack in front of us is a symbol of our timeless trade with the continent. Some 14 million jobs in the EU are partly dependent on our custom. They need to trade with us—and will. You do not have to be a member of the single market to trade with it, so the only obstacle to trade is tariffs—which on average are less than 2%, except on cars where, as we buy so many more cars from them, a deal is bound to be done. Of course, we never did get, in spite of trying, free trade for services.
Meanwhile the good news is that the pound has dropped some 7%, so that the tariff cost is now well offset. Our pound has been overvalued for years. A lower pound will help correct the huge imbalance of trade and borrowings. It will make our manufacturing industry, and farming, very competitive. That is greatly to the benefit of all those out of work who have good manual and dextrous skills—skills, incidentally, that are unsuitable for coffee shops, through which it is difficult to get the productivity that the economy needs.
So now we have the perfect moment to get our economy moving along the right lines. A revitalised Government should encourage saving, not even more debt. We are borrowed up to our eyes, both personally and nationally. We should start a new form of infrastructure bond that is pension suitable, and use the proceeds to develop, as a priority for job creation, a massive investment in our decaying infrastructure. We should get on with Heathrow. We should scrap the entirely unsuitable HS2. We should get out of the engagement with Hinkley Point, which is already a dying technology. There are better nuclear ones on the immediate horizon. We should, regretfully, look at our wasteful overseas aid, every penny of which adds to our overseas indebtedness because we have to borrow it before we can spend it. We should use the savings to increase our defence expenditure, which sometimes is the best sort of aid we can give to other countries. We should now have the opportunity to borrow cheaply and to get on with the massive building of hospitals, schools and transport that our infrastructure needs. We should get Britain cracking.
Unshackled, in due course free from excessive EU bureaucracy, and with compliance only when needed, this great country—one of the largest economies in the world—will prosper, with control of its own borders and sovereignty restored, as a major trading nation on the right side of history.
Lord Howarth of Newport (Lab)
My Lords, the fractures in the United Kingdom by region, education, class, age and race that have been so searingly exposed by the referendum are paralleled across the European Union. The referendum precipitated a crisis in Britain which has been long in the making. Identical pressures have also been building across the EU. The EU is blighted by the socially polarising effects of market forces, compounded by the deflationary effects of the single currency and the democratic deficit in its governing institutions. The EU cannot last as it is, but there is no prospect of fundamental reform. The far right is on the rise across Europe. The EU is not a safe haven. We are right to leave and to take full responsibility for ourselves.
The remain campaign urged the British people to vote for the status quo. It should not have been a surprise that a majority refused to do so. In the years since we joined the EU, people in former industrial communities have seen the destruction of their way of life. Jobs for life have been replaced for many by intermittent, precarious employment. Unskilled migrants have depressed wages. Training opportunities have been withdrawn. Homes for many have become unaffordable, while unearned wealth has piled up for others fortunate enough already to own assets. Steeply tapering benefits have blocked the way out of poverty. Those reliant on social security—social solidarity—have been jeered at as skivers and scroungers. The public realm—social services, libraries, parks—has withered. People now struggle to get an appointment to see their doctor. Mental health services have collapsed. The Resolution Foundation tells us that 11 million households have seen their living standards stagnate since 2002. In his powerful speech, the most reverend Primate spoke of the shocking extent of child poverty. Approaching a million 16-24 year-olds are not in employment, education or training. Many fear that their children and grandchildren will be worse off than they are.
This is not all, of course, the fault of the EU; we have made damaging policy choices in Britain. But the EU is inextricably associated with the ravages of market forces and globalisation, which have been among the deeper causes, along with the disruptions of the digital economy. The slogan “take back control” was profoundly appealing to people who feel victims of forces they are powerless against and that the politicians who should look after them have done too little to control. The referendum was a vote of no confidence in the powers that be—in the major political parties as well as Brussels.
What should we learn from the referendum? What are the implications for British politics? The neoliberal orthodoxy that has prevailed since the mid-1970s, in Britain and in the EU, has run its course economically and politically. Weakly regulated and greedy bankers led us deeply into debt, both private and public, wrecked the public finances and the Government’s capacity to ameliorate social conditions, and left the people to pick up the tab. The extreme inequalities and excessive rewards for the few generated by global capitalism have weakened consumption and investment. The centre-right may try to persist with this toxic orthodoxy, though even the Chancellor seems to be in retreat. The centre-left must now reinvent social democracy, as the SNP, subsidised by English taxpayers, has done with political success in Scotland. This will be difficult to do with the overhang of debt, but the lesson of the referendum is that we must share wealth and opportunity more equitably. We must rebalance the economy away from financial services and away from London. Policy must sustain demand and investment where the market shies away. An interventionist state must provide security, addressing the sources of poverty. The damaging dichotomy between public and private must be put behind us.
New politics as well as new policies are needed. The campaigns on both sides were ruthless and angry. Many found in the referendum that their sense of personal identity was inseparable from their sense of national or European identity. The result was anguish for the losers. Some of them have lashed out in demeaning, snobbish contempt for those they see as ignorant, bigoted, selfish leavers. It also produced vicious racism from some of the winners. There was a moment, however, during the campaign, after the murder of Jo Cox, when everyone paused and people realised that crude antagonism, abuse and threats will not do. We need to nurture that recognition. The challenge for the new political leadership is to appeal to our better nature, abate the politics of anger, reconcile our people and heal our national psyche.
We have to start by demonstrating respect for those with whom we disagree. Like it or not, the decision to leave the EU was an expression of sovereignty by the people to whom Parliament had referred back this great constitutional issue, and it must be accepted without demur. Any other course would disastrously intensify disaffection from Parliament, deepen the gulfs in our society and stir up street and mob politics.
After the parties have resolved their leadership issues, and after we have held a thorough debate about the options for establishing new relationships with Europe and the world, there should be an early general election. A new Parliament is needed, predicated on the new reality. A new Government need to be equipped with a mandate for the negotiation.
At the election, the parties should also explain how they plan to renew our politics, to rehabilitate democracy across the UK. We must fund politics differently, so that the parties are not seen to be beholden to sectional and remote interests and the aura of corruption is removed from Westminster. Real decentralisation of power and resources is needed throughout Britain. The Scots can be won back for the union. Opinion is far from monolithic in Scotland and the economic prospects for an independent Scotland would be dire.
This is a critical turning point. We must build confidence among both remainers and leavers in our future outside the EU. We must remake our politics and democracy. We must find ways to uphold democratic values and authority in a global economy so that markets are servants, not masters. We must recreate our international friendships and trading partnerships and cherish our cultural links with Europe and the world. We must attract investment and talent, raise skills and transform our productivity. We must convince people who are fearful and pessimistic that politics will work for them and that prosperity will be fairly shared. We must support vulnerable communities and instil confidence within them that immigration is not to be feared; and, among minorities, that they are welcome fellow citizens. We must find shared principles and ideals. Britain can be liberal and kindly, purged of xenophobia and hate crime. With leadership, all these things are possible. If politicians, spiritual leaders, community leaders, social activists, journalists, opinion formers and citizens fail in this, we will see the debilitation of parliamentary government, insurgent fascisms of the left and the right, a crumbling of our society and a disintegration of the United Kingdom.
Lord Maclennan of Rogart (LD)
My Lords, the European Union is something to which the United Kingdom has belonged for 43 years. I cannot see that it has done harm overall to the United Kingdom. We are one of the most productive and wealthiest countries in the world. The referendum, which has numbed us because it was intended to bind Parliament, has left out of the count two nations of the United Kingdom—Scotland and Northern Ireland. That is something we ought to consider in thinking about the future.
We have experienced peace in western Europe for more than 70 years, and that seems to me a justification of the building up of connections within western Europe. Despite the fact that Parliament is the sovereign power in the United Kingdom, the Prime Minister decided to call a referendum which was not advisory. The campaigners for Brexit did not spell out what the relationship with the European Union would be if vote leave won. In consequence, a future relationship with the European Union has to be negotiated together with the withdrawal agreement. If, during the course of the negotiations, the terms of the future relationship seem disadvantageous to the United Kingdom, and to the European Union as well, we are permitted under Article 50 to withdraw from the negotiations. An example might be if the United Kingdom had to revert to the World Trade Organization rules and have tariffs imposed on our exports to the EU. It would be a similar situation if we had to impose tariffs on EU imports.
As a number of noble Lords have mentioned, since there is a multiplicity of directives which have changed the law of the United Kingdom, it will take a long time to analyse what needs to be reformed. Consequently, as this is a matter for the United Kingdom itself, triggering Article 50 of the Lisbon treaty should be delayed until that analysis is completed. Furthermore, as individual member states of the European Union will have the power to veto elements of the agreement on the future relationships of the United Kingdom with the Union, it would be wise to promote those discussions before invoking Article 50, which is the only way of withdrawing from the European Union consistent with EU and international law.
Before the referendum, the EU Select Committee of this House produced a very clear report on the process of withdrawing from the European Union. It was advised by two heavyweight lawyers, Sir David Edwards and Professor Derek Wyatt QC. They advised that, if the withdrawal negotiations did not proceed to the advantage of the United Kingdom, Article 50 would not prevent the UK withdrawing from those negotiations. In that process of weighing up the interests of the United Kingdom, Parliament, as the representative and democratic body of the British constitution, should be given every opportunity to assess the progress of the negotiations. If Parliament decides that what is proposed is highly disadvantageous to the economic, social and cultural future of the United Kingdom, it might call for a second referendum, which should be advisory only.
The Earl of Sandwich (CB)
My Lords, I am always comforted by the words of the noble Lord, Lord Maclennan, who knows more than almost any of us about the workings of the European Union. I have detected a degree of referendum worship in this debate, and that worries me. I am one of those who is unwilling to accept the so-called people’s verdict. I never wanted a simple majority vote of this kind. My gut feeling tells me that the UK is not suited to referendums: they are unnecessary and divisive. As has been pointed out, they are advisory and do not, and should not, formally bind Parliament.
Secondly, we know that we can correct the mistake in due course. Other referendums have had to be replayed, most prominently when Ireland rejected the Lisbon treaty in June 2008 and had to repeat the exercise the following year, with a swing of 20%. Better than that, like the noble Lord, Lord Howarth, I believe that there should and will be another general election. Thirdly, it was a neck-and-neck result. It was a protest vote, full of sound and fury. The British public and media love a good horse race. The Scotland poll was the same; it is like penalty kicks or goals in injury time. Either way, half the people remain dissatisfied. Compare that with votes following a sensible debate in the House of Commons. Parliament should represent people every four to five years and make decisions. Democracy does not require referenda and there is now a strong legal opinion that only Parliament can get us out of the European Communities Act 1972.
Fourthly, referendums can be manipulated by Prime Ministers for their own ends, to unite their parties. Harold Wilson did it in 1975; David Cameron did it in 2016, having fulfilled a promise to Eurosceptics. Then you get distortions: the referendum may not be about Europe at all. Popular issues like immigration, which surfaced in France in 2005, and abortion, as in Ireland in 2008, can skew the result. Again, we have heard the simplistic, xenophobic voices of anti-immigration. What happens after a referendum? Everyone is still reeling from the shock. Politics and family life are turned upside down. This is not how our affairs should be conducted.
Millions have signed up to the petition to reverse the referendum and to require a two-thirds majority. On the day before the vote I had the chance through the IPU to meet election observers from Europe. I talked to a young Swiss MP who was astounded that I should reject referendums since Switzerland is ruled by them. They can even have three on a given Sunday. Switzerland has its own political character and each canton may differ on policy.
Brexit has undoubtedly shaken the dice in Europe but most leavers conveniently forget that the EU is not monolithic. Closer union is not the unanimous view of member states and there are many countries outside the eurozone. Only last week, the Visegrad group of four eastern European countries warned the Commission against more euro-based integration. There is a spectrum of opinion in Europe. During the coming negotiations we should stay close to countries like Poland and the Czech Republic, not with any intention of breaking up the EU but in order to arrive at a more practical arrangement of the Union in which national parliaments take more initiative. In the EU Sub-Committee we spent some time on recommendations that would strengthen member state parliaments, and these should be followed up.
There is another dimension: international development, mentioned earlier by the noble Lord, Lord Bruce. I have always regarded part of the task of the first 12 or 15 member states to be to reach out to former communist countries and to assist them towards the democratic Copenhagen principles. To me, enlargement has been a formal responsibility of the Union. There are several practical examples of aid going to projects such as EULEX in Kosovo. We also need to keep the needs of applicant countries in mind. They are at this moment stricken by migration and terrorism.
We must assist the EU in achieving a better migration strategy. That should not be difficult. We need to realign ourselves and renegotiate the whole question of the single market and open frontiers. I celebrate our diverse society and our economy’s need for migration. The right wing all over Europe has taken encouragement from our exit vote and must be resisted with strong arguments. We should have learned something from the Dutch example in keeping down Mr Wilders.
I doubt that the EU will be hostile to us because we matter much too much to them. The noble Baroness, Lady Randerson, made the powerful case earlier for keeping our communications intact. The initiative must come from our own Government as soon as the leadership question is resolved. We must not enter the formal Article 50 negotiation but must set out a new manifesto with a view to a general election. A new start will not necessarily overthrow the referendum result, but it should provide a mandate for renegotiation on our own terms.
A referendum is neither a fair process nor a way of determining policy. It is an appalling muddle-maker. We must stop the in-fighting, support a stable new Government not dominated by Brexit, get closer to key European nations, come to terms with the EU, make use of the Commonwealth and the WTO and focus outwards once again on our relations with the Middle East, Russia and the rest of the world.
Lord Maginnis of Drumglass (Ind UU)
My Lords, it has been an interesting and informed debate, which I will approach perhaps from a more factual perspective, in line with the approaches of the noble Lords, Lord Vinson and Lord Howarth of Newport. I have always detested referendums in so far as our democratic system evolved in a manner where it was intended that the United Kingdom will be led by knowledgeable and principled parliamentarians who are meant to be known and elected locally, not by polls conditioned from above by faceless party manipulators.
It was a risk and a folly that the Prime Minister and Government would cede that privilege to the conditioned prejudice of the masses rather than to reasoned and honest logic. It was even less justifiable that the Prime Minister offered this referendum merely as an incentive to sway the electorate at the time of the last general election. Now, inevitably, in the Brexit case we have the nonsense where the losers are clamouring for a rerun. What comes after that—and again after that?
Despite the fact that our Prime Minister neither made the right decision nor succeeded in negotiating a tangible alternative deal with our EU partners, let me say that I am quite ecstatic at the outcome. Yes, ecstatic in so far as the old morality, the “auld decency” with which I grew up and which I have tried to represent as a schoolmaster, as a soldier, as a businessman and as a parliamentarian, seems to be dying on the vine of political correctness and internal party convenience. We now have the opportunity of a lifetime to reform and to ensure that our Britishness is rejuvenated, and that we do not flounder from tactic to tactic but relearn the value of strategic thinking and planning before setting out tactics in motion.
I hope that we in the United Kingdom now recognise how we have let democracy slide by allowing law-making powers to pass to non-elected foreign civil servants we cannot kick out, and that this has happened without popular consent. Subsequent transfers of British power have been made by a series of stealthy EU steps deliberately disguised as technical changes. Undemocratic diktat at the expense of our national sovereignty lies—or lay—at the heart of the EU.
So before we overindulge in self-flagellation in relation to our decision, we should strive to find out how Europe came to this undemocratic state. We surely understand the complex personality of Commissioner Juncker, President of the unelected European Commission. This is the crook, cheat and self-confessed liar from a country the size of Norwich who for 20 years dominated Luxembourg politics, running the grand duchy as his personal fiefdom.
Herr Juncker used Luxembourg’s security service to blacken rivals while he lined his pockets by conducting lucrative sweetheart deals with multinationals. Under his premiership, the duchy reinvented itself as Europe’s secret tax haven on an industrial scale. He was eventually forced to resign after a scandal involving telephone tapping of political opponents. Such basic standards of government would disbar Herr Juncker from any public office in the United Kingdom. Yet what was Herr Juncker’s comment on becoming President of the Commission? “I don’t have to worry about mere Prime Ministers any more”.
Interestingly, our Prime Minister initially objected to him but found Mrs Merkel in his way and failed politically to stifle the dubious Luxembourger. In so far as Mr Cameron is no longer a major player, it is the same Mrs Merkel who now moves to give the said Herr Juncker his P45. Ironic.
I wish I had time to develop my argument, but the clock defeats me. Suffice it to point out—others may expand on this caution—that the political parties in the UK, like Juncker’s European Union, have become or are becoming the property of bureaucratic academics, many of whom have emerged after university from little more than glorified bag carriers to their elders onwards to elected appointments and to run the country. However decent they may be, they are too often lacking in real practical experience, so that we have become dominated by diktat, not democracy. Internal party manipulation dominates practical objectivity and common purpose—the Leader of the House will, I know, be able to put that in context.
Today, Prime Minister Cameron’s political mismanagement has been fortuitous and opportune in so far as it opens the way for reform here in Parliament. The return of “auld decency”, and strategic purpose rather than tactical U-turns, awaits. We neglect this opportunity at our nation’s peril.
Lord Suri (Con)
My Lords, it has happened: Project Fear, for which my side was mocked and sneered at, has become Project Fact. The pound has plunged, with terrible short-term consequences for businesses which import large quantities of stock. The FTSE 100 and FTSE 250 both took hard knocks. The vast overseas operations of the former have brought it back up but the FTSE 250, far more indicative of our economy, is still being battered by the markets. However, I will not dwell on this. I fully accept that the will of the people is sovereign, and the power that this and the other place have is entirely sourced from them. There can be no talk of a second referendum or of overturning the result. That would be a democratic outrage and poison British public life for generations. The people have spoken and it is up to us as lawmakers to implement their decisions. That said, there are important choices to make ahead.
We will need to renegotiate our position not just with Europe but with the world. We are now free to make trade deals and should move quickly to get into contact with our Anglosphere colleagues and the Commonwealth, so that we can make up more of our trade with countries that are proving to be channels of global growth. Having been in the EU so long, and not in control of our trade policy, our own departments responsible for trade have been run down. We will need to take on far more trade negotiators, up from the 40-odd that we currently have. A sensible idea would be to have the trade department set up a training scheme in conjunction with friendly countries, so that we can get negotiators learning the skills from those with experience.
I noted recently that yields on our 10-year gilts have fallen under 1%. Now is not the time to be making swingeing cuts to the trade department and Foreign Office, which will be crucial to our future success. I encourage the next Prime Minister to rethink these savings and recognise that investment in diplomacy yields significant economic rewards, not just political capital. Furthermore, we will need to rethink our European policy. The people voted to leave the EU but they did not vote for a recession. If we were to leave the single market, which was pushed for by the late Member for Finchley, we would do tremendous damage to our economy. I have heard numerous friends in this place say that the single market is an anachronism, shrinking and burdensome. This may be right but an essential fact remains: the single market is the only existing free-trade bloc built for the demands of the British economy and designed to cover high-value service industries. Without financial passporting, the City of London would suffer huge movements of banks from the UK to those jurisdictions with access. Frankfurt, Amsterdam and Paris are already making overtures to banks domiciled here.
Since we have only two years to negotiate a new deal before our time expires under Article 50, it makes sense to go through a stop-gap while we negotiate a more comprehensive settlement. The EEA is off the shelf and can be an effective placeholder. We would have uninhibited access to the single market and regain control over our own agricultural, fishing and trade policies.
I will make one final point. Now is not the time to turn away from the world. Global challenges face us which can be faced down only by governmental co-operation. In a way, I am glad that we have left the EU. The new European integration will be characterised by more governmental co-operation. The age of integration, meaning ceding powers and sovereignty to Brussels, is over. We must be a part of that change and work with our European allies for a better future for all our citizens.
Baroness Kennedy of The Shaws (Lab)
My Lords, the British electorate have given the political, financial and business establishment a massive kick in the teeth by voting to leave the European Union. The vote will plunge Britain into uncertainty for years to come. It also reverses the solidarity on which the European continent’s stability was based—that great vision for peace and justice which excited so many of us when we were young, and which undoubtedly still excites so many of the young who have taken to the streets in recent days.
Warnings came from every quarter but, if anything, those warnings goaded a defiant mood in people. Europe's failings—undoubtedly there are many—were simply not sufficient to explain what Britain has done to itself. This was a revolt, as the noble Lord, Lord Howarth, and others have said, against global capitalism and neo-liberal economics. I say that as someone who firmly believes in pluralism and mixed economies, and that you cannot create the kind of chasm that we are creating between rich and poor in the world, but also here in Britain. We have left too many people behind. They know it, they feel it, and they are angry.
A majority of people showed their disdain for politicians who had embraced an economics that caused the 2008 financial meltdown, forced austerity upon them, gave them stagnant working-class wages, increased immigration, denied them decent housing, made them wait longer to see doctors, made them have difficulty in getting their children into schools, and allowed tax havens and tax-fiddling for the rich. They also knew that many of the people seeking to come here, wanting asylum because they are fleeing persecution or war, do so as a direct result of that disastrous war in Iraq, and what we have done to the Middle East. The fact that some of these issues had no direct link with the European Union did not matter. It was a convenient target in a febrile angry moment, much like the makings of Trump in the United States. We now may see Europe unravelling. Our vote got a hurrah from Geert Wilders in Holland and Marine Le Pen in France, who want to follow suit, and no doubt there also was applause from the right-wing party that is back in the running in Austria. We also know that Putin, Trump, Sarah Palin and a whole collection of people who do not bring down much admiration from me are also celebrating. We have leapt into the dark, and it is truly dark. Jettisoning the status quo for an unknown is full of risk of financial downturn, possible recession, higher unemployment and political turbulence.
I want to speak about law because it is my area. I have just come from a European Union Select Committee that met this afternoon in the later hours, and there heard from the Minister, David Lidington, and from Oliver Letwin, who is of course in charge of the Brexit unit. Mr Letwin described a review of law that began eight days ago—law in huge quantity. The whole of the Government Legal Service has been mobilised to map the statutes and the statutory instruments, the “by direct effect” instruments, the jurisprudence—all of it—and it will be kept to that work for a long time to come. Yet what we did not tell people was that many of those laws have greatly improved their lives, particularly in employment law, providing protections for part-time workers, agency workers’ rights and people who are in fixed-term work. Then there are the rights to holiday leave, collective redundancy, maternity and paternity leave, equal pay for women and anti-discrimination in employment. All those things, which would not have happened because of the Thatcher attacks on trade unions, were protected by our involvement in the European Union.
The European Union has given us environmental protections and climate change targets. I know that they are not attractive to the noble Lord, Lord Lawson, a denier as he is of climate change, but they are very important to many of us and to future generations. Then think of the collaborative work that has been done on crime and security, terrorism and trafficking. If, as the noble Lord, Lord Lawson, suggests, we leave all that behind, we will be cut out of the Euro warrant, Eurojust and Europol, and out of the mutual legal assistance that is so important. The intergovernmental work on harmonising, for measures such as the Sale of Goods Act and protection for consumers, copyright law and digital commerce, is all to go out the window, along with data protection law. Then there is all the stuff that we know about in relation to education—the ways in which long-term research will be put in jeopardy.
Then there is the issue of sanctions. I chair the Justice Sub-Committee of the EU Select Committee, and sanctions is one of the issues that comes before us all the time. Think of how effective those have been in bringing Mr Putin to heel. It is all much more effective when done at the European level. Think of the contracts that have been entered into in trade relations, which reach beyond any leave-by date, and how we are going to have to revisit that. And now there are constitutional arguments about who gets to trigger Article 50, and so on. We are grieving; we are all going through that passion of grief, when people are told that they have a terminal illness, they start off in shock and are numb and then get angry and reach for other alternative possibilities that might keep them alive. That is what we are all going through—a terrible process of grief, for those of us who want to remain in Europe.
The Minister said today that the Government agree that there is a role for Parliament. There has to be one, because we have to repeal the European Communities Act 1972. There has to be one because of all this legislation. I am afraid that we have opened a door on turbulent times for our Parliament but also for our society and, I suspect, for the whole of Europe. I want to invoke to all noble Lords the Latin mantra of festina lente—to hasten slowly—and to be very careful of what we are doing, because we do not know where we are going. I echo something that my noble friend Lord Howarth said—that this may provide an opportunity for us to rethink where we went wrong, across our political parties. It is a responsibility that could be put at the doors of previous Governments of any colour. We failed to look after a whole section of our communities and now is the time to think again about where we went wrong.
Baroness O'Neill of Bengarve (CB)
My Lords, were the referendum campaigns a great exercise in democracy, or were they a great exercise in talking past one another? I fear that the disarray which we now witness and the retractions, revelations and recriminations that spill out every day suggest that large parts of these campaigns were not even an exercise in communication, and that the public were not offered adequately described alternatives or the means to judge the real options, opportunities or risks.
This sorry situation is the fault not of the electorate but of the political class and the media. The options were not set out adequately or responsibly by those advocating them. The public did not believe the Government’s economic forecasts, which is not surprising since such forecasts are a specialised art form based on complex assumptions and quite unsuitable for mass communication. One has to say that even those who voted for leave may not have been convinced by many of the claims made by the Brexiteers, some of them since simply retracted. What opponents dubbed respectively Project Fear and Project Fantasy failed to explain either accurately or simply what was at stake or what would happen in the event of each outcome. Neither the process of invoking Article 50, and the role of Parliament in that process, nor the constitutional risks for the future of Northern Ireland and Scotland, and thereby to the integrity of the UK, were adequately communicated to voters.
Independent information was impeded rather than provided. Institutions charged with presenting expert and independent evidence—the Bank of England and the Institute for Fiscal Studies—were accused of being partisan when they did so. Publicly funded institutions such as the Office for National Statistics, the research councils and others whose task is to present evidence-based views were placed in purdah. The BBC often gave equal time to differing opinions but seemingly could not provide sober and informative challenges to the claims that were bandied around, so the elementary conditions for checking and challenging claims and arguments that democracy requires were simply ignored. Nor, it appears, did the Government make preparations for the contingency of a majority for Brexit. A civil service unit for negotiating was not established until after the referendum. Expertise in trade negotiations had been run down and was not being repaired. There was no explanation about the process for invoking Article 50, and the findings of the admirable report of your Lordships’ European Union Committee on the process were very little known.
How did this damaging decline in democratic standards come about? The causes are quite complex and I shall mention only two. One is an everyday matter but the other is fundamental. The everyday matter is that social media make it possible for people to think that they are in touch with a wide range of views and information, even when they are not. Unless the media ensure that the range of views, evidence and arguments is available and taken seriously, public engagement cannot flourish. If the media ignore, caricature or rubbish some positions, democratic decision-making is hardly likely to work well.
Last year at a meeting of an all-party group on hate speech, I realised how insidious this can be. Facebook gave evidence to the group that it removes postings that incite hatred after a certain number of complaints—the informants thought it was about 20—but it also reported that these postings are promptly reposted and recirculated, creating a continuous torrent of abuse and incitement. We are all aware that social media create echo chambers that contribute to the radicalisation of extremists, but perhaps we are not sufficiently aware of how they can undermine democratic debate. Crowdsourcing is, no doubt, a fine way to find out about consumer products because each contribution is independent and the results are cumulative, but it is a rotten way to source judgments when inputs are repetitive and the opinions that surface and prevail are echoes.
Additionally, there seems to be widespread confusion between rights of self-expression and press freedom. Both are covered by the term “freedom of expression”, but they differ. Rights to self-expression are for individuals. We often follow John Stuart Mill in thinking that rights to self-expression protect individuals and should be restricted only when their self-expression is likely to harm others. His classic example was shouting “Fire!” in a crowded theatre where there is no fire. However, Mill did not think that institutions or the powerful, including the press, have rights to self-expression. After all, they have no selves to express. He supported a free press for different reasons: because it can support freedom of discussion and debate, and enable citizens to encounter a wide range of relevant views and opinions—and to check and challenge what they read and hear.
What is past is past. Looking ahead, I have two questions for the Minister. First, will the Government make it a red line not to agree to any settlement with the European Union that damages the very people who were led to believe—or misled to believe—that Brexit would address their concerns, their interests and what they felt to be their exclusion? Secondly, will the Minister consider whether to make it a red line not to agree to any settlement with the European Union that abandons the common travel area we have with the Republic of Ireland, and have maintained since the 1920s, and that risks destroying the peace process in Northern Ireland and the UK?
Lord Naseby (Con)
My Lords, my European involvement started in 1963, when I joined the Young European Managers’ Association. I followed it up after being elected MP for Northampton South in 1974—with princely majorities of 179 and 142—and I campaigned hard in 1975. I imagine a number of your Lordships also took part in that campaign. The staying in Europe side was behind in the early polls, yet the campaign was successful. I also spent eight years on the Council of Europe, in particular on the health committee. I was the proud chairman of the group that set about drawing up a European-wide protocol for autopsies after the disaster of the “Herald of Free Enterprise”, when over a dozen nations had separate procedures for autopsies.
Understandably perhaps, I voted for remain. I did so not for reasons of trade, but primarily because of my belief in the importance of security and peace across Europe. The Prime Minister decided for his own reasons to call a non-binding referendum. He must have known it would be a huge risk; it was a huge risk, and one we now have to deal with.
The people have spoken, 33 million of them. They have spoken with great clarity about what they want, and they want out. It is Parliament’s responsibility to make that happen. It is the responsibility of Back-Benchers like myself to probe and ask questions of those who will make it happen. First, there is that short word, “time”. Time is not on our side; it is a luxury no one can afford, particularly when it comes to choosing the next Prime Minister.
I have to ask: why can we not speed up the whole process? Clearly, the chairman of the 1922 Committee has speeded up his element of the process and I congratulate him. Just eight days after the result, we have had the first round of voting this evening. As I said, he is to be congratulated, but I am afraid I do not congratulate the chairman of my party for resigning the minute the decision was made to choose Brexit. When it comes to the responsibility of people in my party—and I have been in the Conservative Party for over 50 years—I thought the top of the party would show leadership. There is not much leadership when there is a bit of gunfire and you disappear out of the trenches. I am appalled, quite frankly, that the chairman disappeared. But it goes deeper than that.
I rang my association early last week and asked, “Have you heard anything from central office?” The answer came: “No, nothing”. I ask the same question of the Front Bench. As a paid up member of my party for 50 years, I do not know who is running central office at this point in time. I have had no communication, nor, to the best of my knowledge, has my association. Frankly, that is not good enough.
Why do we not speed up the second stage? It is pretty clear that there will be another vote on Thursday and one of the remaining four will go. If one looks at history, one suspects that we may be down to two by the weekend.
Lord Naseby
My noble friend has information that I am not aware of. If we are down to three, then it is certainly true that by Thursday night we will be down to two. If we can run a by-election in four weeks when somebody dies in office and there is no candidate—we have done it several times in recent years—and if we can run a general election campaign in three weeks, why on earth are we waiting for eight and a half or nine and a half weeks to elect a future leader of the Conservative Party? I do not understand why we have to wait. What is so magical about 9 September?
I am quite prepared for Parliament to sit an extra 10 days until the end of July. We used to sit until the end of July and most of us made our plans on the basis that that was likely to be the case this year, so why on earth do we not have the recess start 10 days later? We would then know that we had a Prime Minister in situ who had the whole of the long recess to sit down quietly and deal with the huge challenges that she—I imagine it will be she—will have to face. As I said, why is there so little urgency?
Do the Government not understand the fragility of the confidence out there? I can understand why people are sceptical: the Prime Minister has never made a decision on London airport, and that is a tragedy in itself because it is central to the whole development of this part of England. We need to get on and make some decisions.
Finally, what should we do now? I believe that we have to have a leader who stood up for and believed in Brexit. I make it clear—there is no point in hiding it—that I believe that Andrea Leadsom is the right person. I worked with her on my Private Member’s Bill. She is tough and intelligent, and she fought a good campaign for Brexit. One key issue was immigration, and I question whether the present Home Secretary, who is dealing with that policy—and how disastrous it has been—is really the right person to take us forward.
I ask the Front Bench whether it would not be better to clear up this whole process, get the Prime Minister elected, leave it to her to decide what initiatives need to be taken, and not set up all these mini-groups at No. 10, the Cabinet Office and BIS. It should be left to the incoming leader to do all that. If we choose that route, we will have a Prime Minister who has the time, the energy and the resources to deal with these things. To me, the statement that Andrea Leadsom made about the 3 million EU citizens here having their position safeguarded was an indication of the leadership that she can and will give us.
Lord Cotter (LD)
My Lords, as someone who wished to remain, I join in supporting the many speakers who have already expressed their disappointment and concern that the referendum voted narrowly for out. There undoubtedly will be—there are already—major problems for our economy, which means that our financial situation and, most importantly, jobs are at risk.
In a letter published in my local newspaper, I referred to the need, in voting, to consider the future for our families, our children and future generations. This still applies. For our young people in this country, when it comes to jobs, the economy, trade and the ability to travel easily, it still applies. There have already been marches by young people in great numbers throughout the country, and notably there have been very large protests in London.
Our youth have to be considered. I joined in one of the young people’s marches in London and spoke to many of them individually. They said to me that the politicians in Parliament must do something. I said, effectively, “I wish”. I also said, “It is down to you people to keep up the protests. It is in your hands”. I have certainly encouraged—and will continue to encourage—young people to keep making their voice heard.
Having caused such disruption and instability, the two main leaders of the out campaign, Farage and Johnson, have resigned from their roles and washed their hands of it all. The campaign for out, in particular, told untruths, such as money for the NHS which, it has been acknowledged, will not happen; and about the numbers of migrants, saying that 1.5 million would come from Turkey, which was scaremongering and not true. It is deplorable and disgraceful that they lit the fuse, caused a lot of the problems and then ran away.
I support the call from my colleague, the noble Lord, Lord Carlile, who talked about the need for transparency in the negotiations when they are carried out, and the right of both Houses to consider the terms for dealing with the future when it comes to Article 50 and otherwise. This is a very important point.
I agree with the point made by the last speaker that we must have clarity on the future of EU nationals who already live in this country.
With those pleas and those points I shall finish early because it is getting late.
Lord Williams of Baglan (CB)
My Lords, like many in your Lordships’ House, I did not expect a few weeks ago to be speaking in a debate today on the UK leaving the EU, but that is what we are now doing.
Formally, of course, it is the EU but, for all intents and purposes, there is little difference between the EU and Europe. In that regard we are joining the outsiders: Norway and Iceland, Switzerland, Albania—that country much beloved of Michael Gove—and the rump states of the former Yugoslavia, Bosnia and Herzegovina, Serbia and Montenegro. We cannot build our future on relations with this small band of countries. It is abundantly clear that our non-European allies and economic partners, such as the United States and Japan, saw our future within, not without, the EU.
We now have to find our way in an uncertain and even dangerous world with few friends. Even before 23 June, it was clear that the Obama Administration was becoming increasingly critical of the present UK Government. Leaving is a rejection of the other, and a rejection of our long-standing partners in the European Union. In the United States it is often said that leavers are losers. History is full of departures with unforeseen results—among these, the Confederate States, which left the United States in 1860 to be defeated a few years later in a bitter civil war; and the League of Nations, of which the great Woodrow Wilson was one of the architects but whose country, the United States, refused to join, dooming the League of Nations from the start. President de Gaulle took France out of NATO, only to readjust a few years later when the Soviet Union invaded Czechoslovakia. What sort of outcome is it when it is difficult for the friendliest foreign ministry in the world to find anything positive to say about a retreat from the world which, in itself, directly imperils the union of these isles?
I warn, too, as a former UN Under-Secretary-General, of the threat to our position as a permanent member of the Security Council. We are now the smallest and weakest of that group. Three members—the United States, Russia, and China—are great continental states with economies and populations much larger than ours, which is set to decline even further. Then there is France, which is soon to be the only EU state permanently on the Council. On its own, France will, I believe, increasingly seek to use its position to claim de facto to be the voice of the European Union. There is a real danger that just as our political strength has been depleted and our economic future looks uncertain, our moral authority and influence in the UN will decline.
It was not the Prime Minister of a Middle Eastern autocracy or a Latin American dictatorship but the Netherlands’ Mark Rutte who sadly said of the referendum outcome:
“That country now has collapsed—politically, economically … and you will have years ahead of you to get out of this mess”.
Those are harsh words but they are harsher when they come from one of our closest allies and a fellow member of NATO. They move me to ask the Minister what measures the Government anticipate taking to repair the UK’s reputation and global influence, and how they will counter the perception of UK isolationism, which is now, I believe, widespread.
The situation is complicated even further by the current Conservative Party leadership campaign, as noted by the noble Lord, Lord Naseby. It is taking place at a pace that is incomprehensible for any other country. That in the 21st century we are taking a month or more to elect the leader of one of our great democratic parties, and our Prime Minister, is incomprehensible to anyone outside of these isles. We cannot live, especially at this time, without an active Prime Minister. He frankly cannot hide behind the closed doors of No. 10. On the contrary, there is a strong case for him visiting key allies and economic partners such as the United States and Japan, to calm nerves in Washington and Tokyo. This cannot be left for two months. And when I speak of two months, September is the opening of the General Assembly of the UN. Every Head of Government in the world will be present and we cannot be unseated.
The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, for the House’s information, the Prime Minister is attending the NATO summit this weekend. To suggest that he is not attending the current global summits is inaccurate.
Lord Williams of Baglan
I am grateful to the Minister. That is exactly the sort of thing I would like to hear and I hope the Prime Minister can do more in that regard in the coming weeks. We must be conscious, too, of NATO. In these times, when we are set to leave the EU, we must pay it greater attention, and I am glad the Prime Minister will be going to that summit. It is true that the vast majority of NATO members are also in the EU; that is, aside from Norway, Iceland, the US, Canada and Turkey. It is particularly important to make it abundantly clear that though we may—quixotically, as historians are likely to note—be leaving the EU, our commitment to the UN and NATO, and, for that matter, the Commonwealth, is as strong as ever. I call on the Minister to consider an action plan to demonstrate our internationalism at a time when most of the world will be agreeing with the Dutch Prime Minister.
The Earl of Caithness (Con)
My Lords, Europe has a long history of being a turbulent continent and I agree with the noble Lord, Lord Armstrong, that it could return to turbulence again if we are not very careful. As we have recently remembered, 100 years ago, as so often in earlier times, Britain’s influence on affairs on the continent was through the gun, bullet and bayonet. A further conflict occurred some 20 years later, but then there was a massive change. For the past 40 years our influence has been at the negotiating table, and that influence has been considerable.
Looking back, it is to our discredit that as politicians who served in Government, we have failed to sell the message that we were influential and there were good things that came out of the EU as well as irritations. Indeed, it was often worse. We have tended to blame Europe whenever possible. Most of the press and broadcasters are equally to blame, with headlines that bear little reality to the truth. For 40 years there has been a steady drip-drip negative effect on people’s perceptions of the EU. The referendum campaign was bitter, negative and divisive, as was the one in Scotland a couple of years ago. Due to the exaggerations and lies told, there is increasing distrust of the “ruling elite”, and that is a negative of the referendum; it will make government harder.
Politicians are held in even less regard than they were before the campaign, and it was then at a disappointingly low level. In business life those politicians who made such outrageous claims would probably have been sacked. Regrettably they remain MPs, and unfortunately will doubtless come here in due course. Given the inaccurate propaganda campaigns, will Her Majesty’s Government now amend the remit of the Advertising Standards Authority so that in the future it has influence over non-broadcasting advertising during election and referendum campaigns and can act in a way that it cannot now?
In another respect the referendum campaign has been a huge success. It has enabled a revolution to take place through the ballot box without there being violence except for the tragic death of Jo Cox and without one side imprisoning the leaders of the other. In how many other parts of the world would that have been possible? Unusually, I disagree with the noble Baroness, Lady Mallalieu, on the question of how well aware those who voted were of the implications of the vote. The EU Select Committee highlighted in its recent report the fact that numerous surveys have shown the UK to be the least informed member state on how the EU works. The Electoral Commission confirmed this in its polling during the referendum, which showed that 69% of the public were not well or very well informed about the EU and that 16% said they were not contacted about the referendum. Our democracy is indeed a flawed vessel and we need to learn lessons from that.
Now that we have decided to change our position in the EU, we are moving into uncharted territory, and we badly need a plan and leadership. This afternoon in the Communications Committee we received evidence on how important it is for the Government to give that leadership. London is the centre for the creative industries in Europe and they, like other businesses, are already seeing contracts lost and concerns raised about the future. People need to be reassured that as we change position, the UK is open for business now and will still be a good place for business in the future.
Inevitably our debate has been centred on UK interests, so I am particularly grateful to the noble Baroness, Lady Bowles of Berkhamsted, for reminding us of the implications of our actions on the rest of the EU. Too often we overlook that. Most seismic shocks have ripple effects and the EU is reacting in different and unexpected ways. One area is that its budget will have to change dramatically. Change is already starting to happen as the Commission and member states jockey for positions as a result of our decision. Who knows, it might become a very attractive unit of which we want to be a part in the future, but before that let us not forget that we cannot demand what we like. We will soon have to negotiate with the Commission, the EU Parliament, other member states, probably the WTO, EFTA and the EEA while keeping the devolved Governments on side as well. It is not an option for us to say how those negotiations are going to take place. It will be like playing chess against more than 30 people at the same time. That is why continued regular contact and good relationships with them are so important. Sadly, Mr Farage has served this country ill by his rudeness.
When it comes to trade and renegotiations, our position will a tricky one. I gather that we have only 20 active trade commissioners, compared with the 600-odd specialists working for the EU. Can I ask my noble friend what plans the Government have to recruit from the private sector? Indeed, how many are needed to help the brightest and the best of our Civil Service in this endeavour?
I add my name to the questions posed by the Leader of the Opposition and the noble and learned Lord, Lord Wallace of Tankerness, on Article 50. I also ask my noble friend whether she expects the EU to invoke Article 128 before or after Article 50 is served. Can the Minister confirm that the noble Lord, Lord Kerr of Kinlochard, is right in saying that under Article 50 a withdrawal agreement must include the outlines of the future relationship and therefore the Swedish Commissioner is wrong to say that they are separate? Can an Article 50 notice be withdrawn and, if so, what is the procedure for that?
I have some other quick questions. What discussions have the Government had with the European Banking Authority about moving its headquarters from London? Has the leave campaign submitted a list of laws that they claim have been imposed on us by the EU and which they would like to see repealed immediately? Given the importance to Scotland of universities and scientific funding, what steps are being taken to ensure continued participation in programmes such as Erasmus and Horizon 2020? Given that these are delegated competencies, what action can Scotland take on its own in these areas? I have been told of provisional contracts and courses already being cancelled. What are our liabilities and commitments with regard to the EIB when we withdraw from the EU? In relation to the EU budget, what are our liabilities and commitments if we withdraw from the EU before 2020, and what will our position be if we have to help negotiate the next budget?
We are now a divided country, and today’s debate has shown that. Sadly, the leave side are showing no signs of understanding the concerns of those who wish to remain. That needs to change. While I regret that we will no longer be at the top table in the EU, influencing decision-making, we have to move forward positively and together as a country.
Lord Judd (Lab)
My Lords, I am very glad to follow such a challenging speech. The Lord Privy Seal, in introducing this debate, laid great emphasis on her desire to see us starting the task of restoring confidence, trust and the credibility of politics in general. Of course we must do that. It is, however, a huge task, because it is very difficult to estimate the scale of the damage done by the recent campaign, which included a false prospectus, a total lack of any thinking about what was to happen if there was a vote to come out, and the gay abandon with which so much of the prospectus was discarded when the result became known. That was almost deliberate sabotage of the whole concept of political responsibility.
I was able to go to some estates during the campaign. The estates had just lost any sense of being part of a political process, and here was a chance, whipped up by opportunists, to register their protest. That, of course, is what happened. We have to rebuild connections, not only with the estates but with a lot of people in society who feel that they are not part of the political process. It would be very difficult to say how badly betrayed many of our young people—among them the brightest and best—feel about what has happened. “Betrayed” is the right word. They feel that they were beginning to enjoy belonging to Europe, to enjoy the opportunities of working in Europe and of being in this wider community. They liked the sense of being part of an international community and they saw their hope being destroyed by what had happened. I asked myself how it contrasts with my formative political years, which were after the Second World War. What characterised the political debate then was that there was hope. People were thinking about what they were going to do for the future and how they would do it. There was a real political debate about that.
What is to be done? I suggest that in one sense the task remains very much as it has been for a long time. I have said in this House before—and I am sure I will be forgiven for saying again—that the first reality of existence in the modern world is to understand its total interdependence. In economics, we must find international solutions. We cannot find them on our own. We are not the centre and in control of a great British empire. That is long gone. We must find our way forward with the international community.
Then there is the single market. I have never understood how you can argue for a single market and not have the free movement of labour. It is not a single market if you do not have free movement. If we say that the free movement of labour is not possible for all sorts of social and other reasons, what are we thinking about compensatory policies rather than this blind shibboleth about the single market?
Take climate change: the consequences of climate change are accelerating all the time. There is no way we can solve those on our own. We must co-operate with others. Migration will itself be accentuated and speeded up by the effects of climate change. We are not on our own with health, either. Look at the concern and rushed emergency measures that had to be introduced when there was Ebola in west Africa. That is a melodramatic example, perhaps, but it is an example of the reality of the international interdependency in health.
I feel strongly about security as I care for the security of my own family and of my country—of course I do. Anyone working in the sphere of security will insist that we must appreciate how it has become an internationally interdependent issue. Security and terrorism are not national but international issues. People trafficking is an international issue. Crime has become internationalised. How can we deal with these issues if we are not co-operating with others?
As we go on with the Brexit arrangements, I want to hear the positive thinking by the Government about how we handle our part in the world. We should not just react but contribute to finding the way forward for the world community. We want to know more about what our strategic thinking is about NATO and about our relations with France, for example, with whom we have been building close relations, particularly in the maritime dimension.
We also want to know not just about numbers of migrants—how many can be accommodated and what control we have over immigration. That is to underestimate the significance of the whole issue. We must hear the positive thinking of the Government on how you enable the communities to which immigrants are coming in disproportionate numbers to absorb them. What are we doing about schooling, hospitals and housing in the areas where most of them come? This is the kind of positive thinking we need: we must know why and how we can do it better not as members of the European Union. How will we improve the situation? We must start hearing those arguments from the Government. I am very glad that the noble Lord, Lord Boswell, emphasised so trenchantly that the European Union committees of this House, which have gained such high significance and reputation in the world, will have a key part to play in overseeing the whole process.
Viscount Waverley (CB)
My Lords, the noble Lord, Lord Judd, rightly stressed that the European Union is so much more than economic affairs. He is absolutely right. The United Kingdom has not distinguished itself in its relationship with Brussels and EU member states over 40 or so years. Conceivably, our temperament was not conducive. The EU could have given us so much more if the relationship had been handled differently, with Britain taking partners through fewer disruptions and promoting the positive elements at home.
The undignified manner in which the referendum debate as a whole was conducted did not serve this country well. The upcoming Prime Minister and those charged with delivery on the mandate of the people might wish to display a degree of firmness, but in an appropriately polite manner now that the will of the people is known. We should encourage an immediate end to needless rhetoric. Within the European Union, we must build sympathy for our position, and not antagonism. We must establish an appropriate environment for relationship building and future negotiation success, not just with the Council and Commission, but bilaterally. Yes, we have a comparative advantage by being a major economy. Having access to it and by it will be key moving forward, but it is a new world order out there and maintaining our position of being the world’s fifth largest economy could become a challenge.
The new world, where many of the opportunities now lie, is competitive in spirit and determined to succeed under its rules. In parallel, we must focus urgently on putting our domestic ship in order. Lessons learned from the alienation of Britain’s working class by successive recent Governments in turn led the people to remind Westminster that they are sovereign. The Scottish vote, while appearing on the face of it to be wholeheartedly for the remain camp, did not deliver the strength of result many had expected.
The long summer ahead could become unsettled and a period of increased concern and tension. We should embark on an immediate national endeavour to understand the type of society we wish to become—one driven by social justice, forward thinking, innovative, successful, tolerant, inclusive and giving the citizenry the qualities they expect in life, providing aspiration with opportunity. Let us strive to put the respect factor back into our vocabulary. Let us be visionary about health and education management, job satisfaction and security. Let us take the aggressiveness and stress out of day-to-day living. Let us start to become far-sighted in our forward planning.
Priorities have changed. Emphasis must now be on a new set of challenges. It can no longer be business as usual. We need to instil a sense of urgency. A rapid national consultative process is underway and should be undertaken to determine tomorrow’s priorities. Now is the time to rekindle our relationships. Our ambassadors in EU capitals and globally will, I hope, be assessing developing local attitudes towards future Brexit negotiations in Brussels, and the scope for parallel bilateral and post-exit discussions.
In conclusion, government and negotiators must be held accountable, either throughout the process or at settlement stage. What will be the contribution of this Parliament to ensure the will of the nation is negotiated in the United Kingdom’s long-term interest? In what order will the difficult questions ahead be addressed; agreement on the least contentious issues first, or turning minds to freedom of movement and trade access, for example? Will Parliament remain sovereign on the exit negotiations? If, after all this, the Government fail to negotiate a settlement in the national interest, and a groundswell of opinion appears to oppose, what then? Testing times, my Lords.
Lord Glenarthur (Con)
My Lords, I am among those who, while accepting the result of the referendum, deeply regret that it will lead to the United Kingdom’s withdrawal from the EU. Of course, I share the frustrations of many about some aspects of the way the EU operates and the downside to us, as to others, often expressed as loss of some parliamentary sovereignty, which membership inevitably involves. But I certainly do not feel that it is in any of our own or our present European partners’ interest to see the entire EU project shaken, and perhaps collapse, which our departure conceivably might precipitate and which some seem to wish for. Europe as a grouping is as important as any other international grouping in a truly international world, albeit in this case with a European Parliament to bring effect to common purpose within it. Much hinges, therefore, on the terms of our withdrawal and the measures that can be put in place to allow the UK to retain an association with the EU and its agencies post-withdrawal which does not massively disadvantage the United Kingdom or diminish its voice.
I would like to raise one rather specialised area involving regulation, and ask the Government what thought has, or is, being given to it, even in these early days. Although I shall deal with just one area, I suspect that the principles apply to many other regulatory and regulated interests. As various entries in the register of interests have made clear, for many years I have been involved in the aviation industry. This industry, in its various forms, is very tightly regulated. The noble Baroness, Lady Randerson, referred to this earlier this afternoon. Our own UK regulator, the Civil Aviation Authority, has over the last 20 or more years become an agent for a wider European body, although it still retains a national remit. Initially, the United Kingdom became a member of the Joint Aviation Authorities, based in the Netherlands but working across Europe and influencing much more widely than that. In 2003, JAA morphed into the European Aviation Safety Agency, reaching full maturity in 2008. This agency sets the regulatory regime for all aviation in Europe, covering aircraft type certification, operations, maintenance, licensing, simulators and a whole host of other matters, including approval of organisations involved in the design and manufacture of aviation products, which, of course, are created worldwide.
In addition to member states of the EU, the countries of EFTA and, I think, members of the European Economic Area, are granted participation under Article 66 of the basic regulation and are members of the management board but without voting rights—something we have been fortunate to have all these years. There are degrees of wider association with EASA for countries across the globe, because aviation in many forms is of course truly international.
The United Kingdom has played a substantial part in getting EASA to a point where it is mature and successful. I have had some direct personal experience of that through bodies with which I have been involved over the years. We have brought influence to bear to support sensible progression in regular and sometimes innovative fields of aviation. We support strict safety regulations but we also strive continually to influence the authorities to ensure that regulations are practicable, well thought through and able to maintain the viability of emerging advanced techniques in aviation. However, the United Kingdom, acknowledged as expert in its aviation manufacturing and operating standards and skills, may well not be able to play anything like such an effective part in future, by virtue of its withdrawal. Who knows, we might not ultimately even be a member of EFTA or the EAA. Then where would we stand? All I can say is that our withdrawal would be much regretted.
When she winds up this massive debate, perhaps my noble friend will be able to give some assurance that, as part of the withdrawal process, the Government will do all in their power to ensure that the influential and powerful voice of the UK’s aviation expertise and the experience of our own Civil Aviation Authority—and those who work with them—are not wasted or become less influential as we withdraw from the EU. A reduction in our influence on aviation regulation will be massively detrimental. Our expertise will be missed and its loss much regretted by those EU countries with which we have worked so closely and for so long.
The Duke of Somerset (CB)
My Lords, first it would be useful to analyse the causes and reasons for the unexpected and dismaying referendum vote. We know that large swathes of the poorer parts of the country voted out. These are areas of industrial retrenchment, mostly in the north and the Midlands. They are far from the south-east and London, which were more inclined to remain. It is job losses and deprivation, stemming largely from the mining and steel crises of the 1980s, which have made people disillusioned with the political classes of all persuasions here in London. They feel ignored and abandoned, unheard and cut off from the wealth that emanates and dissipates from our great capital city.
Earlier, the noble Baroness, Lady Kramer, told us about the wealth generation that comes from the City of London. However, how many of the successful companies and enterprises based there have spread their wealth and success northwards? Have they sponsored or supported hospitals or schools, or any new housing? I think probably not. Globalisation is not working for many of the disadvantaged. The fact that big international businesses largely avoid paying any tax has been camouflaged by economic growth, so the better-off have not really noticed it. Austerity has also affected the lower-paid relatively hard.
It is secondary, and perhaps part of the media agenda, that migration has meant competition for jobs, access to services and housing. While I deplore and condemn the hate crimes that we have heard so much about this evening, I do not think it is always racism per se, but frustration and an easily identifiable blame target that is responsible. Far too many are disgruntled that the political and economic system appears rigged against working people. This perhaps explains why Mr Corbyn retains such high support among the Labour-voting non-elite. The massive long-term problem that a new Government need to tackle is moving wealth north and west, sharing it more equitably with all the regions of the UK.
We should also blame the unelected leaders of the European Union, Messrs Juncker and Tusk, for their arrogance, intransigence and head-in-the-sand attitude. Their failure to allow Mr Cameron any worthwhile concessions in his pre-vote negotiations is typical of their position of paralysis. Their fear of contagion ignores the increasing clamour for not only their resignations but changes of direction in EU policy, which might yet save the project from disintegration. This is what happened to earlier superstates such as the Soviet Union and the British Empire where regionalism and national identity were ignored. Some central European states reckon that our vote highlights the rejection by many EU citizens of increasing federalism, so any knee-jerk reaction by Brussels for deeper integration could create a two-speed Europe with the eastern countries wanting more repatriation of powers and more accountable democracy.
Freedom of movement is a fine principle but it has caused huge problems that have to be addressed. Improving housing and creating and encouraging jobs in our own deprived areas is one part but controlling migration is another. That we need overseas labour and talent is incontrovertible. The National Health Service and the food trade would soon collapse without them, so a points-based system that acknowledges our need for low-skilled workers may be best. This could be linked to a mechanism that limits overseas workers’ ability to claim some benefits, such as that for unemployment. However, it is not too late to remind ourselves that EU citizens have contributed £20 billion more in taxes than they have taken out in benefits.
We need a strong leader and a Prime Minister who will not allow us to retreat from the world or countenance isolation and intolerance. We must continue to embrace our European friends and strive to steer them away from the corrupt and largely unelected constitution that the disaffected people of the UK and Europe so despise. We can do this by being liberal and open with our future trading terms, minimising tariffs and, most importantly, giving immediate reassurance to those Europeans already settled and working in the UK. They contribute so much to our economy and must be allowed to stay here for good. Reciprocally, those British people living, studying and working in mainland Europe must be allowed to remain without restrictions or bureaucratic hurdles. Four of my children live in Europe or have European interests. One of them, in Naples, is translating between Italian doctors and Libyan and sub-Saharan boat refugees. Let us not condemn all our young to a narrow future of less opportunity, unable to work or to do good works outside this country.
Some noble Lords have suggested that we hold another referendum in two years’ time when our exit position is clear. Can the Minister comment on the legal status of this proposal, which would involve rescinding Article 50 at that point? Such a course of action would allow the country to vote and decide on a political choice where we know the exact ramifications, which were unclear to many this time round.
It appears that our strongest negotiating card is to delay invoking Article 50. We should postpone that until the most important question has been answered: the question of the future of citizens living abroad on both sides of the channel. One hundred years ago, we experienced a catastrophic political failure that culminated in the Battle of the Somme and the Great War. The EU was created out of that horror. Let us not compound today’s great political failure by not attending to this crisis without understanding and fixing the reasons, or by ignoring the potential of these islands to rise, shake themselves and point Europe towards a fairer and different route to prosperity, peace and optimism.
We live in a counterfactual democracy. What has happened to the admirable enlightenment and ambition for truth and clarity? Have modern politicians abandoned truth for dogma and half-truths? Where is this taking us?
Lord Willoughby de Broke (UKIP)
My Lords, I bumped into the noble Lord, Lord Howell, before coming back into this debate, and he reminded me of the old Chinese proverb which says that it is important to have the last word. I am delighted to have the last word, and I am sure than noble Lords, whatever they think of my views, will also be pleased, after a very long day, that this is the last word this evening.
I thank the noble Lords, Lord Flight and Lord Blencathra, for their generous words about Nigel Farage, and disagree totally with the noble Viscount. Without Nigel Farage and his brilliant leadership of UKIP, the people of this country would never have had the opportunity to have a referendum on whether they wanted to continue to contract the government of their country out to Brussels or wanted to become a self-governing democracy again. It is thanks to Nigel Farage that we had the referendum, whose result was clear. There is no question of course of having a second referendum, as we have heard discussed tonight. That is absolutely off the table.
I agree with the noble Lord, Lord Naseby, that the Conservatives must now stop playing that popular parlour game Cluedo, whether it is Mr Gove in the parlour with the bread knife or Mrs May in the drawing room with the knitting needle—regardless of who did what to who, that is over. It is time that they organised themselves and elected a new Prime Minister as soon as possible, so they can get on with implementing the mandate given by the result of the referendum. That is absolutely clear. It does not really matter who is Prime Minister; they have the mandate and they must get on with it. That means there is no room for compromise on the basic arguments of the referendum: who makes our laws and who controls our borders. Those absolutely cannot be bargained away in some smoke-filled—or un-smoke-filled—room in the European Union parliament or any of the other buildings of the institutions of the EU.
I agree with the noble Viscount, Lord Trenchard, that we should not agonise too much over the single market. Let us just remind ourselves that we do not need to be a member of the single market to trade with the EU. We are a major economy, and all major economies, whether it is China, the United States, India, Canada, Australia or Japan, trade with the EU without being members of the single market—so can we.
I have a helpful suggestion for the Government at this stage. They should negotiate with the member states directly, leaving the entirely discredited Commission to wither on the vine. Nobody pays any attention to what the Commission says any more, particularly under the leadership of Herr Juncker, and we would get far quicker and better results if we negotiated directly with members states. I can already hear the objection that this runs contrary to the solemn and binding EU treaties, but of course the solemn and binding treaties have already been broken on many occasions. France and Germany both, in succession, broke the very solemn and binding stability pact. Later, “Mr Solomon Binding” was nowhere to be seen when the EU had to organise bailouts from some member states to others, directly contrary to Article 125 in the treaty of Lisbon. Mr Solomon Binding could be left on one side when it comes to negotiating with the EU. It is not the treaties that matter, but expediency, and the Government ought to remember that.
We have heard a lot tonight about the so-called misleading remarks made by the leave campaign during the referendum. That is an Oscar-winning case of the pot calling the kettle black. Let us just remind ourselves of what happened to all those absurd predictions made by the Prime Minister and his dream team of Mr Blair, Goldman Sachs and John Major. World War 3 has not broken out; we have not yet had an emergency Budget from the present Chancellor; manufacturers in our motor car industry have been at pains to say they will continue to operate here and not move their factories elsewhere—indeed some of them are opening new factories here; the stock market is at, what, a three-year high; the weaker pound has made our exports more competitive; and Andy Murray is looking very good at Wimbledon. I nearly missed one thing out: we can now run our own country. I do not think that is too bad a result.