House of Commons
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Speaker’s Statement
Mr Speaker
Today marks the fourth anniversary of the death of our friend and colleague Jo Cox, who was murdered on her way to meet constituents in her Batley and Spen constituency. She was doing what so many of us do as constituency MPs, which made her death all the more shocking. May I express on behalf of the whole House our sympathy with her family, friends and colleagues on this sad anniversary? We will never forget Jo or her legacy. We remember her wise words: we have far more in common than that which divides us.
Oral Answers to Questions
(3 years, 10 months ago)
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Chris Clarkson (Heywood and Middleton) (Con)
Aaron Bell (Newcastle-under-Lyme) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Alok Sharma)
Mr Speaker, may I join you in your words about our former colleague, Jo Cox?
We have introduced the Corporate Insolvency and Governance Bill to help companies maximise their chances of survival. The Bill introduces new corporate restructuring tools and temporarily suspends part of insolvency law to help businesses keep trading.
Chris Clarkson
I thank my right hon. Friend for that answer. I was proud to make my maiden speech on Second Reading of that very important Bill, which will provide vital safeguards during the coronavirus pandemic. Can he tell me what benefits it will have for businesses, not just in my constituency of Heywood and Middleton and across the north-west but in the wider country?
Alok Sharma
My hon. Friend is proving to be a real champion for businesses in his constituency, and he raises an incredibly important point. The impact assessment of the Bill’s measures suggests that the three permanent changes to the UK insolvency framework will result in net benefits to business of over £1.9 billion in today’s prices, which is a much needed boost for businesses at this uncertain time.
Aaron Bell
I welcome the Secretary of State back to the Dispatch Box after his recent illness. Businesses in Newcastle-under-Lyme and across the country face the risk of insolvency, especially those with business models that are dependent on socialising. In addition to what he has set out, which I welcome, can he tell us what Companies House proposes to do to support businesses at threat of insolvency?
Alok Sharma
My hon. Friend raises an important point, and this is part of the Bill. While Companies House has extended the period for filing accounts, we will give businesses the maximum period available under the powers in the Corporate Insolvency and Governance Bill for filing their accounts, confirmation statements and event-driven updates. At a time when many companies are focused on surviving, that will be very welcome respite.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Mr Speaker, may I echo your sentiments on the tragic loss of Jo Cox?
Businesses facing insolvency will be under further pressure with the premature end to the furlough and self-employed schemes, and loan schemes are of little help, because they simply add to a pile of debt. Does the Secretary of State agree that the sectors hit hardest by covid-19 need long-term support to survive and rebuild, which means extending the furlough scheme and support loans being written off or converted to equity?
Alok Sharma
The level of support we have provided across the economy is incredibly favourable by any international comparison. The furlough scheme will be in place for a full eight months. That is precisely the support that we have been very keen to give to businesses.
Drew Hendry
Tourism is worth £10.5 billion to the Scottish economy, and before the pandemic it provided 8% of jobs. While some businesses will soon be able to reopen outside areas, vital public health rules and consumer sentiment will mean that most activity is subdued. Will the Secretary of State follow the Scottish Government by setting up a tourism taskforce and use his Government’s reserve powers to cut VAT for tourism and other sectors, to help firms that are at risk of insolvency?
Alok Sharma
As I am sure the hon. Gentleman will know, my right hon. Friend the Secretary of State for Digital, Culture, Media and Sport is working with the tourism sector, and there is regular dialogue with it. I recognise the concerns that he has raised about this sector, which is closed, but that is why we have provided particular support through a rates holiday for hospitality businesses.
Ian Paisley (North Antrim) (DUP)
The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)
We are investing up to £121 million between 2015 and 2021 in hydrogen innovation, supporting the application of new low-carbon hydrogen technologies across the value chain. I have had valuable discussions with businesses on the importance of scaling up hydrogen supply, including with Wrightbus, in the hon. Gentleman’s constituency.
Ian Paisley
I echo the sentiments expressed about our late colleague, Jo Cox.
The Minister will be aware that Germany announced in the last number of weeks that it is investing £5 billion in hydrogen technology. It joins the long list of countries investing billions of pounds, which includes Norway, the Netherlands, Portugal, Japan, South Korea, New Zealand and Australia, as well as the EU. The £121 million to which he referred is very welcome, but it will never make us the leader of the pack in this industry. Let us move on from trials, Minister. Let us move on to real investment in this technology and become the world leader that Britain and the United Kingdom can be in this wonderful technology, which will create jobs and provide more employment across the whole UK.
Kwasi Kwarteng
I am grateful for the hon. Gentleman’s enthusiasm for that technology. The countries that he describes have announced commitments to spending the money; they have not spent the money yet. We will be following and pursuing that technology very rigorously, with full Government backing, in due course.
Virginia Crosbie (Ynys Môn) (Con)
The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)
Since 1990 we have grown the economy by 75% while cutting emissions by 43%, and in June 2019, we became the first major economy to legislate for a net zero carbon emissions target.
We are hosting the COP26 climate negotiations next year. Along with our G7 presidency, we are determined to use our international leadership to drive global climate ambition.
Virginia Crosbie
What assessment has my right hon. Friend’s Department made of the potentially significant role that nuclear power can play, in the hydrogen production from both large and small reactors? Does he agree that Wylfa Newydd, in my constituency of Ynys Môn, is the jewel in the crown of new nuclear sites?
Kwasi Kwarteng
I am grateful to my hon. Friend for that question. New nuclear obviously has an important part to play in reducing greenhouse gas emissions. We are investing in new nuclear. On Wylfa, I am afraid, I cannot comment on the merits of the site, given that the Secretary of State is currently considering a development consent application. That said, there are a number of potentially good sites around the entire United Kingdom.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
The COP26 summit, now rescheduled for November 2021, will be a critical moment in a fight against runaway global heating. We all have a stake in ensuring that it is a success. Building momentum for that summit and establishing our credibility as its host is dependent on demonstrable leadership at home. In that regard, does the Minister agree that there is a strong case for publishing our nationally determined contribution before the end of 2020, and an arguable case for basing that NDC on a significantly enhanced 2030 target that puts us on the path to achieving net zero?
Kwasi Kwarteng
My right hon. Friend the Secretary of State is, of course, president of the COP26. He is committed to publishing very rigorous and ambitious targets for ourselves. As I responded to my hon. Friend the Member for Ynys Môn (Virginia Crosbie), we are second to none in our commitment—our legislation—in terms of dealing with climate change. We have legislation that is very clear and sets the path.
Marion Fellows (Motherwell and Wishaw) (SNP)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
The Government recognise the critical role that post offices play in communities across the UK. This is why the Government have committed to safeguard the post office network by investing over £2 billion between 2010 and 2018, and a further £370 million from April 2018 to March 2021. I regularly meet with the Post Office to find innovative steps to secure network sustainability and the continuity of services across the UK.
Marion Fellows [V]
I thank the Minister for his answer, but during the covid-19 pandemic, when sub-postmasters have proved just how essential they are to our communities, many are handing in their keys as they struggle to make a living, leaving communities without vital services. Pre-covid Post Office figures show that Scotland is still being hardest-hit by the postmaster crisis, with the highest number of closed branches in the UK, increasing by 17% since last year. Notwithstanding what the Minister has just said, in the 2020 spending review, will Ministers agree to maintain or increase the Government subsidy to post offices, to ensure that communities can access a post office branch, or will they continue putting the Post Office on a pathway to privatisation?
Paul Scully
The Post Office is obviously made up of small businesses, which are subject to the same problems as any, and Scotland, with its rural nature, has been affected. That is why we look to temporary post offices and outreach. But clearly, going forward, the Government will reflect the value of postmasters and the post office network in all their deliberations.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Last week, the House united in calling for a judge-led inquiry into the Post Office Horizon scandal—hundreds of lives ruined and innocent people imprisoned by a trusted public institution—except the Minister, who proposes a forward-looking independent review, which will not mention managerial or ministerial accountability, Fujitsu’s responsibility or the key question of compensation. Now the Justice For Subpostmasters Alliance is refusing to co-operate, saying it does not believe that the review will get to the bottom of one of the greatest miscarriages of justice of our times. After all that those people have endured, will the Minister not listen to them and commit to a judge-led inquiry?
Paul Scully
The hon. Lady is mistaken if she believes that the review does not look at the managerial responsibility of all the people responsible for what has happened, and we need to listen to the postmasters’ rebuke. Indeed, yesterday I discussed the matter in a meeting with chief executive Nick Read and Calum Greenhow, chief exec of the National Federation of Subpostmasters. Nick Read committed fully to the review, leaving no stone unturned, which is why I hope that with everyone coming together I can encourage postmasters to engage in the review so that we can get the answers they and the hon. Lady are looking for, to secure the redress and the answers that they need.
Chris Green (Bolton West) (Con)
Douglas Chapman (Dunfermline and West Fife) (SNP)
Dr Jamie Wallis (Bridgend) (Con)
Alison Thewliss (Glasgow Central) (SNP)
Tom Randall (Gedling) (Con)
Sir Desmond Swayne (New Forest West) (Con)
Jeremy Wright (Kenilworth and Southam) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Alok Sharma)
The Government have introduced an unprecedented package of support. This includes grants for small businesses, a rates holiday for businesses operating in the retail, leisure and hospitality sector, a range of loan schemes covering all sides of businesses, the furlough scheme, the self-employment scheme, and a range of tax deferral schemes, all designed to help businesses through this very challenging time.
Chris Green
I thank my right hon. Friend for his answer. Brian and Karen Tinniswood run the Provenance restaurant in Westhoughton, but they have a deep concern about social distancing, which makes it impossible to reopen their restaurant. What consideration has my right hon. Friend given to reducing social distancing from 6 feet to 3 feet, then getting rid of it altogether?
Alok Sharma
The issue that my hon. Friend raises is raised with me regularly by businesses, and I completely understand the economic rationale that his constituents have outlined to him. As he will know, a review is taking place, and we will wait to see its results.
Douglas Chapman [V]
The OECD predicts that the UK recession will be the worst in the developed world. The Federation of Small Businesses in Scotland has issued a similarly depressing assessment. In terms of supporting Scottish business, what have been the key asks of the Department from the Secretary of State for Scotland?
Alok Sharma
I have detailed discussions with all Cabinet and ministerial colleagues. I recognise the challenge ahead of us—there is no doubt about that—but we have provided a significant amount of support for the UK economy, and if that had not been put in place a range of independent commentators have made it clear that we would be in a far worse position.
Alok Sharma
I have set out the full range of support available to all sectors across the economy, and the automotive sector can take full advantage of that. I would point out that the job retention scheme has been widely utilised by the automotive sector, with a recent survey by the Society of Motor Manufacturers and Traders showing that the scheme has been accessed for over 60% of full-time workers in the auto sector.
Alison Thewliss
A number of businesses in my Glasgow Central constituency find themselves blocked from claiming under the job retention scheme as a result of the deficiencies of Her Majesty’s Revenue and Customs uploading real-time information before the outbreak. Will the Secretary of State take up that matter with HMRC and the Treasury, ask for discretion, and make sure that no business that would otherwise be eligible has to lay off valued staff or, worse, go bust, as businesses in my constituency cannot wait any longer?
Alok Sharma
We want to support businesses, and I have set out a range of measures that we have put in place. The hon. Lady referred to a matter that ultimately is for HMRC and Her Majesty’s Treasury, but I am happy to have a discussion with her after questions.
Tom Randall
A few weeks ago, I was pleased to visit Arnold market in my constituency and it was great to see that it was operating very well under the new guidelines. As the wider high street is now beginning to reopen, can my right hon Friend tell me what support his Department will be giving to shops as they reopen?
Alok Sharma
I thank my hon. Friend for doing his bit to support businesses in his constituency. In coming up with the workplace guidance, which has allowed businesses to open safely, we have worked closely with businesses, business representative organisations and trade unions. I have already outlined the support that we have provided for the sector, but what we all need to do is to get out there to support businesses that are now opening. We owe that to them and to the economy to get it going again.
Sir Desmond Swayne
What is available for those fast-growing firms that rely on equity finance and for which loans and grants have not been a good fit?
Alok Sharma
What an intelligent question. On 20 April, my right hon. Friend the Chancellor announced a package of support worth £1.25 billion for fast-growing innovative companies and that, of course, included £750 million in grants and loans delivered through Innovate UK, and a £500 million future fund, through which the Government will invest up to £5 million per company, matched by the private sector.
Jeremy Wright
As my right hon. Friend adapts support for businesses, will he keep very much in mind those important sectors of the economy such as tourism and the creative industries that will need longer to recover and more notice of guidance changes? Will he recognise, as I am sure the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), will have told him, that in places such as Warwickshire those sectors are mutually reinforcing and very important not just to the local economy, but to the income of local authorities?
Alok Sharma
My right hon. Friend, I know, has been engaging with businesses through virtual networks across Warwickshire, and I thank him for the work that he is doing locally. What I would say to him is that, of course, we have ensured that loan schemes are available across the economy. Smaller businesses in hospitality, leisure and retail have been able to access a £25,000 grant. The key issue is to have a safe and phased reopening of the economy to get it going again, which is what we are currently undertaking.
Edward Miliband (Doncaster North) (Lab)
I join you today, Mr Speaker, in both mourning and remembering Jo Cox.
I welcome much of the help that the Government have provided, but, according to Make UK, we could see the loss of 170,000 manufacturing jobs this year. In France, steel got loans within 10 days of applying for them, and aerospace is benefiting from billions of pounds of support, including for low-carbon engines. Here, three months after the crisis began, 60% of companies that have applied for large loans are still waiting and there has been no targeted help for our manufacturers. Will the Secretary of State tell us when specific help will actually materialise for sectors such as steel and aerospace?
Alok Sharma
I do welcome the constructive tone in which we have approached our exchanges over the past few weeks, but what I would just say to the right hon. Gentleman is that if he looks at the sum total of what this Government are providing, he will find that it is significant and incredibly favourable when compared with international comparators. On loans, as he knows, we have increased the coronavirus business interruption loan scheme to allow up to £200 million to be made available, and we will continue to support businesses. He will also know that in certain cases we do have individual discussions going on with businesses.
Edward Miliband
I urge the right hon. Gentleman to get a move on when it comes to those sectors, because they really need the help. I want to ask him additionally about sectors such as hospitality, tourism and the creative industries, which have just been raised. They will take longer to reopen and recover because of public health measures, and I want to ask him about the impact on them of the one-size-fits-all winding down of the furlough. Can he explain to thousands of pubs across the country how they are supposed to find an employer contribution for furloughed employees from August when they are struggling even to survive? Is not the risk of that approach, and we have seen the jobless figures this morning, that hundreds of thousands more workers will lose their jobs, and all of us will end up paying the costs in higher benefit bills and a weaker economy? Would it not be better to have a different approach for those at-risk sectors?
Alok Sharma
We have taken a whole-economy approach, as he knows, and I have set out the measures that we have put in place. With regard to the retail and hospitality sectors, we have provided specific support for them in the one-year rates holiday, as well as the additional support that is available, but the key issue here is the safe reopening of the economy, and that is what we want to continue with over the coming weeks.
Chris Loder (West Dorset) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Nadhim Zahawi)
Our thoughts are indeed with our colleague who was murdered, Jo Cox, and also with the hon. Member for East Dunbartonshire (Amy Callaghan); we wish her a safe return to this House.
We have introduced an unprecedented package of support for businesses across the country to get through this incredibly challenging period. More than £10 billion in grants—grants—has been paid to over 830,000 businesses of all sizes, including £100 million to over 8,000 businesses in Dorset. I want to thank the local leadership there for delivering that. This has explicitly been targeted at those in receipt of rural rate relief, as well as small business rate relief.
Chris Loder
Market towns in West Dorset such as Lyme Regis, Sherborne and Dorchester are thinking ahead, and I am supporting them to look at innovations to boost the local economy following coronavirus. These include virtual high streets and collaborating to improve accessibility of local brands to those who may not be able to get to the town. Will the Minister meet me to look at these concepts and determine how we can support these initiatives going forward?
Nadhim Zahawi
I know better than most, with Shipston-on-Stour, Alcester and Bidford—very important market towns—in my constituency, that it is more important than ever at this time to support businesses to adopt innovative business models. I would of course be happy to meet my hon. Friend to discuss those approaches to reopening our economy in West Dorset and the lessons that this may hold for the rest of the country as well.
Kate Osborne (Jarrow) (Lab)
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
My Department has regular discussions with Housing, Communities and Local Government colleagues on the impact of covid-19 on high street businesses. We have provided unprecedented support to high street businesses. Pubs, shops, and hotels will pay no business rates for 12 months; eligible retail, hospitality and leisure businesses have received cash grants of up to £25,000; and businesses that cannot pay their rent because of coronavirus will be protected from eviction.
Kate Osborne
Businesses across my constituency continue to report the major challenges that have been present since the start of lockdown, particularly a loss of income, mounting debts, enforced closure, insurance policies not paying out, the need to make redundancies, and an inability to plan for the future given the uncertainty of the current situation. Although many non-essential businesses have reopened this week, it will still be a long road to recovery, so will the Secretary of State review the grant scheme to ensure support for our high street businesses that are doing the right thing but could be decimated by covid-19?
Paul Scully
One of the reasons we launched the £617 million discretionary fund was so that we can reach more businesses, but clearly we need to reopen safely non-essential retail, as started yesterday. We need to monitor that. We need to make sure that opening up our economy is the best way, along with the flexible support that we are giving, to make sure that it can start to bounce back, including in Jarrow.
Mr Dhesi
Economically, my constituency has been especially hard hit by the coronavirus crisis, with almost 19,000 employees having been furloughed. But while some businesses have been able to gain access to Government grants and schemes, numerous independent and family-run businesses have not been able to do so and have fallen between the cracks of Government support. Will the Minister urgently review the Government grant and loan schemes, particularly for our high street businesses, so that they too can benefit from them and our towns do not become ghost towns, or mere carbon copies, because we would then lose our much loved independent businesses?
Paul Scully
The hon. Gentleman is absolutely right to highlight the plight of independent businesses. That is why I was pleased to go to Northcote Road in Clapham to see what they were doing there and the community spirit that brings them together. We always look at the flexibility of support, but we will also make sure, with the safe opening of shops now, that the new normal is coupled with a future view of the high street—the new reality, with changing behaviour of consumers—so that in the years to come independent shopkeepers can sustain and indeed thrive as local businesses on the high street.
Lucy Powell (Manchester Central) (Lab/Co-op) [V]
May I, too, put on the record my remembrance of my good friend Jo Cox?
Pubs, cafés, hairdressers and restaurants are the lifeblood of our high streets. Business-critical guidance about their reopening in just two and a half weeks’ time was due yesterday but is nowhere to be seen. Instead, they got another review, making a bad situation much worse. When will they get that guidance? With either 1-metre or 2-metre distancing, most of those businesses still will not be viable, so will the Government finally recognise that vital business support schemes need to follow the public health measures before we see large-scale job losses and the decimation of our high streets?
Paul Scully
As you will see from my hairstyle, Mr Speaker, I am desperately awaiting the opening of hairdressers and barbers too. It is key that we get this right, though. The economic impetus from the hospitality sector in particular is made apparent to me every single day that I speak to its representatives; indeed, I will be speaking to a lot of them later this afternoon. We have to make sure we get that right, with the confidence of customers coming back. The Government’s first priority is to save lives and to work with the scientific guidance. At the moment, when people go out to shop at the businesses that are open today, 2 metres is still the rule, but we will get further guidance as soon as we practicably can.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
The Government have powers under the Enterprise Act 2002 to intervene in certain transactions on national security grounds. We will bring forward legislation to strengthen our existing powers in this area, including enabling Government intervention in acquisitions of assets such as sensitive intellectual property.
Mr Sheerman [V]
First, may I associate myself with our memories of Jo Cox? She was my close friend, neighbour and great comrade and colleague.
Why cannot this Government and Prime Minister wake up to the threat from China, which wants to be the dominant world economic superpower? Does the Minister not realise that China cannot be trusted? It has been stealing our intellectual property from universities, businesses and Government for years. How could we possibly want it to be involved in our telecommunications industry through Huawei, and will we please put a stop to the partnership on developing nuclear power in our country?
Amanda Solloway
We welcome inward investment in the UK’s civil nuclear sector. All investment involving critical infrastructure is subject to thorough scrutiny. Foreign investment and an active competitive economy are key to the UK’s growth. The UK wants a modern and mature relationship with China based on mutual respect and trust.
Scott Mann (North Cornwall) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Alok Sharma)
We have set up a vaccines taskforce to lead and co-ordinate all the Government’s activities to develop and manufacture a coronavirus vaccine. As part of that, we are investing £93 million in a vaccine manufacturing innovation centre, which will be completed 12 months ahead of schedule, by summer 2021. We are also funding a rapid deployment facility, which will be able to begin manufacturing vaccines at scale from August this year.
Scott Mann
Ultimately, throughout this process, we are in the hands of our brilliant scientists. I welcome the Secretary of State’s statement on what he is doing to accelerate opening the vaccine manufacturing innovation centre by next summer, but what more can be done to ensure that we get on top of this disease and address it as early as we possibly can?
Alok Sharma
Of course, my hon. Friend will know that we are providing direct support to the vaccines being developed at Oxford University and Imperial College London. He may also be aware that the Imperial vaccine is now set to enter clinical human trials. We are also leading international efforts to support vaccine discovery and deployment.
Mr Speaker
I call the Chair of the Business, Energy and Industrial Strategy Committee, Darren Jones.
Darren Jones (Bristol North West) (Lab)
UK-EU research collaboration contributes £2 billion to British research and development and accounts for at least 5,000 researchers in British universities, as well as its contributions to covid research and vaccination research. Will the Secretary of State make a commitment that, irrespective of the free trade agreement negotiations with the EU, the UK will seek third country full associate membership of Horizon Europe to keep that money coming into British R&D?
Alok Sharma
The hon. Gentleman will know that we are committed to being a science and R&D superpower, which is why we have committed to spending £22 billion a year by 2024-25 and to reaching 2.4% of GDP by 2027. The discussions with the EU are ongoing, and we will see what they lead to.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
Jeff Smith (Manchester, Withington) (Lab)
Kim Johnson (Liverpool, Riverside) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
I have met regularly with a large number of representatives of hospitality organisations to discuss the issues that they are experiencing, including through the BEIS ministerial taskforce on pubs and restaurants and my own weekly call with sector representatives, the next of which is this afternoon.
Gill Furniss [V]
I, too, record that my thoughts are with Jo Cox’s family today.
The hospitality sector has faced an unprecedented challenge due to coronavirus, which has had an impact on many businesses in my constituency of Sheffield, Brightside and Hillsborough. At the start of the outbreak, the Prime Minister said that he would do whatever it takes to support individuals and businesses. Will the Government therefore extend the full furlough scheme to ensure that the hospitality sector survives and workers in the industry do not add to the shocking unemployment figures released today, and, ultimately, to protect our communities from a further spike of this terrible virus?
Paul Scully
Indeed, Sheffield City Council has paid £87 million to 7,329 business premises. We have provided an unprecedented package of financial support to businesses in the hospitality sector. We continue to work with them. We continue to extend the furlough system and make it flexible, in order to have part-time furloughing, so that people can start to come back to work. It is important, however, that we get the guidance out so that we can work with the hospitality sector to get it to reopened, so that it can start to bounce back.
Jeff Smith
Rumours are swirling about whether, how and which pubs will be able to reopen on 4 July. The brewing industry urgently needs clarity on whether it will be all pubs or just those with gardens. The Minister just said that the guidance will be available as soon as possible, but that is not good enough. We are two and a bit weeks away. Beer needs to be brewed. Some of us need a pint. When will that guidance be available? The brewing industry and pubs need that clarity urgently.
Paul Scully
It is not only that we need a pint. For pubs, it is about not just coming back for the opening, but making sure that it is an enjoyable experience for people, so they keep on coming back. That is what will allow them to survive and thrive, so it is important that we get the guidance out. I am trying to work with the hospitality sector and pubs to make sure that there are as few surprises as possible, but we need to make sure that we are weighing that up with the scientific guidance so that pub people, clients and people who want a pint know that they can go into a pub safely.
Kim Johnson
I send my condolences to the family of Jo Cox.
Workers in the hospitality industry are heading for a crisis. It has been one of the worst-hit sectors by the virus, with a disproportionate number of young, low-paid and insecure workers. My constituency of Liverpool, Riverside has an estimated 11,700 employees furloughed who are employed by small family-run businesses, many of which do not qualify for grant support because they are outside the £51,000 rateable value. Will the Secretary of State fix the loans, extend the grants and plan for recovery to ensure that support for the hospitality sector?
Paul Scully
It is time for me to add my voice to that of Members across the House expressing their condolences to the loved ones of Jo Cox and, indeed, wishing a swift recovery to the hon. Member for East Dunbartonshire (Amy Callaghan). That was horrific news, and I hope that she is back on her feet as soon as possible.
Liverpool City Council, which I have spoken to, has handed out £87,885,000 to businesses, including small businesses and those in the retail and hospitality sector. That is why I was pleased to be able to extend the discretionary scheme to capture more of the businesses that fell short. I know that Liverpool City Council has an economic recovery plan, in addition to “Liverpool Without Walls”, to encourage pubs and restaurants to open safely. That will help young people especially to get back into employment and get our economy up and running.
Sir David Evennett (Bexleyheath and Crayford) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
We want to make the UK the best place to start and grow a business, and it should not matter where in the UK that is. The start-up loans programme has helped more people to realise their dream of starting a business, with more than 72,000 loans, worth £591 million, since 2012. During 2018-19, our growth hubs helped more than 9,500 business starts in England, and through programmes operated by the Government-backed British Business Bank we are currently supporting more than £7.7 billion of finance to more than 94,900 small and medium- sized enterprises.
Sir David Evennett [V]
Start-up businesses are vital to our economic recovery. What more can the Government do to help the very smallest businesses access the right finance quickly to survive during and post covid-19?
Paul Scully
I pay tribute to my right hon. Friend for the work that he has done with small businesses for many years, including when we were working with businesses together. I know that he continues that work. As part of the package of covid-19 recovery measures we created the bounce-back loans scheme, which targets small and microbusinesses in all sectors, providing loans from £2,000 up to 25% of the business’s turnover, with a maximum loan of £50,000. Applications are done via a simple online form. As of 7 June, 782,246 loans, worth £23.78 billion, have been approved.
Stuart Anderson (Wolverhampton South West) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
We have provided a significant package of support to pubs—including a one-year business rates holiday and access to grants of up to £25,000 per qualifying property—through a number of schemes. That is alongside the business support available to all sectors, including access to the coronavirus job retention scheme and various Government-backed loan schemes.
Stuart Anderson
Pubs in Wolverhampton such as the Merry Hill, Oddfellows and the Mount Tavern will have been impacted by covid-19. I welcome the measures the Minister outlined, but what is the longer-term strategy to help pubs to return to a profitable state and to become the vital community hubs that they were before?
Amanda Solloway
I thank my hon. Friend for that question, because it is vital that we recognise how important such businesses are as community hubs. We recognise that trading conditions may be challenging for many businesses for some time to come. We will continue to work with the sector, both to prepare for reopening and afterwards. I understand that the Minister responsible for small business—the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam (Paul Scully)—plans to continue to meet representatives of the sector regularly.
Ian Lavery (Wansbeck) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Nadhim Zahawi)
We are committed to ongoing engagement with industry to ensure that our manufacturers have the support that they need. That includes a roundtable that I am holding tomorrow for north-east businesses, which the hon. Gentleman will be interested in. Our support for the industry includes the unprecedented £330 billion package of business continuity support.
Ian Lavery [V]
I send my condolences to the family of my dear friend and colleague Jo Cox.
UK workers are much more vulnerable to redundancy than French and German workers because the UK Government have announced that they are already winding down their job retention scheme. That is not my view, but the view expressed this weekend by the chief executive of leading aerospace manufacturer Airbus. In France and Germany, the subsidy schemes are set to last for up to two years. Does the Minister not agree that UK workers deserve at least the same job protections and guarantees as have been introduced in other countries? What more can be done to save these vital UK jobs?
Nadhim Zahawi
The hon. Member mentions the aerospace sector, into which the Government have put around £6.5 billion between the Bank of England corporate finance scheme and UK Export Finance, with an additional half a billion pounds of support. We have also put £3.4 billion into the growth deal across the northern powerhouse, with almost £380 million of that going to the north-east local enterprise partnership area, including his constituency of Wansbeck, which is benefiting from that to the tune of around £2.25 million in a science, technology, engineering and maths building at Northumberland College’s Ashington campus. A lot of work is going into this unprecedented package, but we continue to review all our interventions to make sure that UK workers get the benefit of a dynamic recovery.
Holly Mumby-Croft (Scunthorpe) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
On 10 June, the Government announced an independent review to consider whether the Post Office has learned the necessary lessons from the Horizon trial judgments and to provide an independent and external assessment of its work to rebuild its relationship with its postmasters. We are keen to see the review launch as soon as possible, and we are in the process of identifying a chair to lead the work of the review in order to get the answers that we need and to hear those voices.
Holly Mumby-Croft
I welcome that answer and the Government’s commitment to the review. Is the Minister aware of any support for postmasters and postmistresses while the situation is ongoing?
Paul Scully
The December 2019 settlement comprised a comprehensive settlement of £57.75 million. The Post Office has opened a historical shortfall scheme for postmasters who were not part of the group litigation and who want shortfall issues recorded in Horizon to be investigated and addressed. Many convicted claimants are going through a further process with the Criminal Cases Review Commission, with 47 referred to the Court of Appeal. Where convictions are overturned, processes are in place for them to receive compensation if appropriate.
Alexander Stafford (Rother Valley) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Alok Sharma)
My Department, together with Her Majesty’s Treasury, is at the forefront of supporting businesses during these unprecedented times. More than £10.3 billion has been paid out to businesses to date by direct grant and an additional £38.2 billion through the major loan schemes. The Government have supported 9.1 million jobs through the coronavirus job retention scheme and 2.6 million claims have been made through the self-employed income support scheme.
In the past week, I have led five businesses taskforces to listen to and work with the business community and academic experts as we consider the measures needed to support our economy bouncing back. We want to create a cleaner, greener and more resilient economy and the output from those taskforces will feed directly into the Government’s work on the economic recovery.
Alexander Stafford
The Secretary of State will know that the UK has an opportunity to lead the world in hydrogen technology, which will create thousands of green jobs, cut emissions, unlock private investment and increase our energy security. Just as we lagged behind with battery technology, we risk missing the boat on hydrogen as other nations set multibillion-pound hydrogen strategies. The UK needs a hydrogen strategy. Will the Secretary of State meet me and other colleagues from across the House who share my belief in hydrogen to discuss how we can place hydrogen at the forefront of our green recovery?
Alok Sharma
As my hon. Friend will have heard in the earlier answer from the Energy Minister, we are committed to developing hydrogen as a strategic decarbonised energy carrier. We are investing in the value chain and both the Energy Minister and I will be happy to meet him.
Andy McDonald (Middlesbrough) (Lab) [V]
I associate myself with your remarks, Mr Speaker, and those of other Members, about our much-missed colleague, Jo Cox.
There is a clear racial and class dynamic in the covid-19 death rate, with those in working-class jobs, such as carers, taxi drivers, security guards and retail assistants, who are disproportionately black, Asian or minority ethnic, more likely to die from the virus. Throughout the pandemic, insecure employment practices have left millions without protections at work or the financial support they need to safeguard their income and allow them to self-isolate. Will the Secretary of State as a first step recognise that insecure employment practices are directly responsible for worsening inequalities, including structural racism and discrimination?
Alok Sharma
I add my deepest condolences to the families and loved ones of everyone who has lost their lives in this pandemic.
We are providing support across the piece for all individuals. The hon. Gentleman talks about people from ethnic minority backgrounds. He will know that we hold regular roundtables to ensure that we are addressing individuals in all sorts of groups that have protected characteristics.
Mark Jenkinson (Workington) (Con)
The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)
The Department is aware of several projects being considered on rivers and estuaries such as the Wyre, the Duddon, Morecambe bay and the Solway firth, and we have had frequent contacts with developers. We remain open to considering well-developed, well-considered projects that can demonstrate strong value for money alongside other renewable generation.
Owen Thompson (Midlothian) (SNP)
Alok Sharma
As the hon. Member will know, the latest figures show that over 49,000 loans have been approved, to the value of more than £10 billion. There is a significant number of lenders attached to the CBIL scheme, but if he has specific cases, he should definitely come and talk to me.
Ms Nusrat Ghani (Wealden) (Con)
Alok Sharma
I pay tribute to my hon. Friend for all the work that she did as shipping Minister. We have made the commitment to £22 billion a year by 2025. That is the biggest increase in public funding of R&D, and no doubt, as projects come forward from that sector, we will look at them.
Stephen Kinnock (Aberavon) (Lab)
Alok Sharma
We are working with the steel sector, as the hon. Member will know, and we continue to work closely with it. Of course I absolutely remain committed to supporting a sustainable UK steel sector. We have increased the amount of borrowing that can take place under the larger CBIL scheme but, as I said to the right hon. Member for Doncaster North (Edward Miliband) in answer to an earlier question, when individual companies approach us, we will of course enter into direct discussions with them.
Bob Blackman (Harrow East) (Con)
Alok Sharma
Of course we keep all these matters under review, and I know that there is a range of views on this matter. I would just point out that we did temporarily relax Sunday trading during the London Olympics. That was to support consumers and, of course, the economy as well.
Vicky Foxcroft (Lewisham, Deptford) (Lab) [V]
Alok Sharma
The obligations on employers to take care of disabled employees have not changed. In the guidance that we have provided we make reference to the fact that employers need to take particular care of employees with particular protected characteristics.
James Sunderland (Bracknell) (Con)
Alok Sharma
I again thank my hon. Friend for all he is doing to support local businesses in Bracknell—more power to his elbow. I am sure all of us will do the same in our constituencies over the coming days and weeks. As I said in response to an earlier question, we are reviewing the social distancing rule.
Mr Stephen Morgan (Portsmouth South) (Lab)
Alok Sharma
The hon. Gentleman will know that we have worked collaboratively with employers, employee representative organisations and trade unions in producing the guidance that we have put out so far. We continue to have a good dialogue with individual sectors, and once we have concluded that, we will of course make that guidance available.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
Mr Speaker
Order. We are going to have to clear Members away from the entrance. There are some seats. You will have to sit down. You just cannot gather.
David Mundell
I will begin the question again, Mr Speaker. Will the Minister ensure that contracts for difference funding will only be made available to onshore wind farms in Scotland that have local community support?
Kwasi Kwarteng
I am very grateful to my right hon. Friend for the question. He will know that local consent and local support are absolutely key to the pot one auction, but he will also be aware that planning policy is a devolved matter in Scotland, and it is therefore for the Scottish Government to set up national planning policies and the approach to declining planning applications. He is well aware that this Government have been very focused on local consent right through this process.
Ruth Cadbury (Brentford and Isleworth) (Lab)
Alok Sharma
We appreciate that announcements about redundancies for British Airways staff have been incredibly distressing for the employees and their families. At the end of the day, the use of the Government’s job retention schemes is preferable to making redundancies. That is why we made them available. What I would say in this case is that it is a commercial decision. We expect British Airways and, indeed, all employers to treat employees fairly and in the spirit of partnership.
Kevin Hollinrake (Thirsk and Malton) (Con)
Alok Sharma
My hon. Friend, as ever, raises an important issue. It is why both the CBILS and the bounce-back loans have a 12-month period during which interest is paid on behalf of the business. I would expect lenders to apply similar forbearance where needed in the case of existing commercial loans.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Alok Sharma
The hon. Gentleman raises an important point. As we look to see how we can restart the economy and the whole process of recovery, we will, of course, look at skills as well.
Lee Anderson (Ashfield) (Con)
Kwasi Kwarteng
My hon. Friend raises a hugely important issue. Employment and the possibilities and opportunities for people are something we are absolutely focused on. I assure him that we will do all we can to help those who will be affected by this announcement to get back into work as quickly as possible. This will include working with the Department for Work and Pensions, Jobcentre Plus and Rolls-Royce itself to make sure that economic opportunities and jobs are freely available to those who might be affected.
Kenny MacAskill (East Lothian) (SNP) [V]
Kwasi Kwarteng
I do not think that is a fair characterisation of the situation. We have huge offshore capacity; 35% of the global offshore wind capacity is in the UK, with much of it sited in Scotland. Scottish firms are extremely capable of competing in the auctions, and I do not think it is fair to characterise our position in the way that the hon. Gentleman has.
Mr Speaker
In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I am now suspending the House for five minutes.
Speaker’s Statement
Mr Speaker
I have a short statement to make about the new Division procedure and proxy voting. Details of the new arrangements were in the email sent to all colleagues this morning. Members should record their names using their security passes at one of the pass readers in each Lobby. The queuing arrangements are largely unchanged, although there will be two queues and Members may join either one.
I also want to mention proxy voting. I remind colleagues that the expanded proxy voting scheme applies to Members who are unable to attend Westminster for medical or public health reasons relating to the pandemic. If an hon. Member applies for a proxy vote, this means that they have given me and the House a commitment that they are not able to attend Westminster. It is therefore important that colleagues with proxies do not take part in any physical proceedings or come on to the Estate while they have a proxy vote in operation.
Economic Outlook and Furlough Scheme Changes
(3 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.
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Anneliese Dodds (Oxford East) (Lab/Co-op)
(Urgent Question): To ask the Chancellor of the Exchequer, if he will make a statement on the economic outlook for the UK and the Government’s strategy to protect jobs and the economy in light of upcoming changes to the furlough scheme.
The Financial Secretary to the Treasury (Jesse Norman)
Before I start, may I join with all the words that have been said in praise of Jo Cox during the proceedings so far? I know that many more such words will be said today. One thing that colleagues may not know, amid all the many things that they have been told about her, is that she was very fond of visiting Symonds Yat in my constituency in Herefordshire. I look forward to the day when many other people can do that, following lockdown.
From the onset of this pandemic, the Government’s top priority has been to protect the NHS and to save lives, but we have also made it clear that we will do whatever is needed to support people, jobs and businesses through the present period of disruption, and that is what we have done. On Friday, the Office for National Statistics published its first estimate of April GDP and showed the economy contracting sharply by a record 20.4% on the month. It is clear that restrictions introduced during the lockdown, while necessary, have had a severe impact on output.
However, it is important to note that the OECD, the Office for Budget Responsibility and other external forecasters have all highlighted that the cost to the economy would have been significantly higher were it not for the swift and decisive action that the Government have taken. Measures such as the coronavirus job retention scheme—the CJRS—which has protected almost 9 million jobs and more than 1 million businesses, have helped to limit the adverse impact of the crisis. It is also important to note that the OECD forecast the UK to have the strongest recovery of all the large countries that it looked at, with an unemployment rate projected to be lower than that in France and Italy by the end of 2021.
As we are reopening the economy, the Government are supporting putting people back into work. Last month, my right hon. Friend the Chancellor announced that the CJRS would be extended for four months, until the end of October. From July to October, employers currently using the scheme will be able to bring furloughed employees back part-time. That will ensure that the CJRS will continue to support all firms so that no employer faces a cliff edge.
This remains a very uncertain and worrying time for businesses and employees alike. The Government have set out separately the five principles that must be satisfied before we make further changes to the lockdown rules, which we based on advice received from Scientific Advisory Group for Emergencies. However, I can assure the House that the thoughts, energies and resources of the Government are focused increasingly on planning for the recovery. We will develop new measures to grow our economy, to back businesses and to boost skills. I am confident that the United Kingdom can continue to thrive in a post-covid world.
Anneliese Dodds
The OECD’s global outlook suggested that the reduction in GDP in the UK due to the current hit of coronavirus will have been the largest out of all developed economies. The enormity of the economic impact appears confirmed by the claimant count and other unemployment data out today. It seems that the slow and confused health response is being followed by a slow and confused response to saving jobs, despite the huge long-term costs of unemployment. Labour has called for an exit strategy, but what we seem to have is an exit without a strategy, including on jobs.
Will the Treasury change its one-size-fits-all approach to the furlough and self-employed schemes, which risks additional waves of unemployment? Will it act to encourage young people to stay in education and training, and out of unemployment? Will it build on previous schemes such as the future jobs fund to support the young unemployed, and provide tailored help for other hard-hit groups such as older workers?
Although more support for apprenticeships is desperately needed, it will not be enough. Will the Treasury act now to create the extra support that cannot currently be delivered by Department for Work and Pensions staff, who are occupied with huge numbers of extra claims? Will the Government catch up with other countries that have already announced their stimulus packages, given that many employers are deciding now on whether to retain staff? Will they apply conditions to Government investment to include requirements to promote upskilling and re-employment? Above all, rather than a limited Budget statement in July, will the Government set out the back-to-work Budget that we need, with a focus on jobs, jobs, jobs?
Jesse Norman
I thank the hon. Lady for her questions and comments. Of course, the issues that she highlights are of great importance and receive an enormous amount of attention in the Government and in the Treasury, but I am a little surprised by some of the things that she said. I remind her that the OECD report, in addition to forecasting the strongest recovery, also highlighted the quick and comprehensive response that the Government put in place to deal with covid. It also noted the relative robustness of the UK’s public finances relative to those of other countries. Colleagues are entitled to decide whether they accept what the OECD says, but they cannot discount the bits they do not like and accept the bits that they do.
The hon. Lady refers to the Government’s response as “slow and confused”, but I find that very odd. She said to the CBI in April that “this scheme was about preventing mass unemployment”, and “undoubtedly it has prevented a worse situation, there’s no question about that”. She congratulated the Government, business and trade unions, and said that we saw with the job retention scheme “an excellent example of tripartite working”. I think she is right about that, but I do not think she can take the line she takes now and disavow those other things that she said, when Labour was being a bit more bipartisan than it is at the moment, in praise of the Government’s schemes.
Finally, the hon. Lady talks about the Government adopting a one-size-fits-all approach, but I would remind her of what she said in The Guardian on 20 May 2020:
“A more differentiated approach”—
that is, not a one-size-fits-all approach—
“would, admittedly, pose challenges for the government. Hard choices would need to be made, including how to deal with difficult boundary issues”.
She is right. It is also true that the Government have adopted a more differentiated approach than she gives us credit for, as witness all the work we have done with the hospitality and leisure industries.
So I am a little confused, but I do think it is important to focus on the positive achievements of the job retention scheme and the self-employment scheme, which, as the hon. Lady rightly notes, have prevented a much worse alternative and have been brought into place with great speed and ability by Her Majesty’s Revenue and Customs.
Mel Stride (Central Devon) (Con) [V]
My right hon. Friend will be aware that, yesterday, the Treasury Committee published its report into the gaps that there are in the Government’s support for the self-employed and those employed up and down our country. I do recognise the very considerable approach that the Government have taken to support people through these difficult times. However, there remain over 1 million people who should qualify for furlough or self-employed support who are not receiving it. Could I ask my right hon. Friend to look very closely at the recommendations of the Select Committee report, and to take action so that these hard-working self-employed and employed people up and down our country can get the support not just that they desperately need, but that they deserve?
Jesse Norman
I am very grateful to my right hon. Friend the Chairman of the Treasury Committee both for what he says today and for his report. He will know, and he took considerable evidence on, the constraints that the Government were under in bringing the different schemes into play. I am the last person to decry the energy and the effectiveness either of the businesses that have been supported by the job retention scheme or the self-employed people and businesses that have been supported by the self-employed scheme. Of course, we will take very carefully into consideration the report that he gives, and any positive and constructive suggestions that are contained in that report about how we can improve matters, and we continue to review the situation within the Treasury.
Mr Speaker
We now come to the SNP spokesperson, Alison Thewliss, with one minute.
Alison Thewliss (Glasgow Central) (SNP)
I thank the Minister for the comments he has made. While the support under the schemes, including the coronavirus job retention scheme, is welcome, many of the comments I made on 17 March and 27 April about those who have not been supported still stand. The Treasury Committee would agree that the 1 million who have been left out of this support have been left out of support because of the Government’s own choice—the Government have decided not to support these people—and further issues remain about maternity, the derisory 26p extra given to refugees and those with no recourse to public funds.
The Cabinet Secretary for Economy, Fair Work and Culture, Fiona Hyslop, has written to the Government, identifying tourism, arts and culture, oil and gas, childcare, retail, and rural and island communities as being particularly at risk, so will the Minister now accept that winding up the furlough scheme and putting the costs on to employers is a significant risk and will put people out of jobs? Will he extend it beyond October for sectors that are particularly pressed? Will he look at extending the self-employed support scheme, as many of those people will still require support on an ongoing basis because the work they did is no longer there? Will he look at VAT cuts to tourism and hospitality, which will support those sectors that have seen so much pressure and get them back on their feet at a time when they are really struggling? Lastly, does he agree with Lord Forsyth that there will be a tsunami of job losses, with 3 million people left without work?
Jesse Norman
I thank the hon. Lady for her questions. In the middle of a crisis, with emergency responses being brought out almost every other week, it would be a brave person who could commit to any sensible forecast with a degree of accuracy of what the future may bring. We have already seen astonishing changes to levels of GDP even in a month.
On the points the hon. Lady raises, I just remind her that the job retention scheme has so far supported nearly 9 million people—8.9 million people—and 1.1 million businesses. The self-employed scheme has supported 2.3 million individuals at a cost of £6.8 billion. Both schemes were brought in at record speed precisely to address the critical need to get the vast majority of people the support they would need, and to target that, wherever possible, on the most vulnerable. I do not think that those were mistakes. I do not think it would have been right to delay the process. I think it has been recognised by Opposition Members across the piece that a delayed response—which, on advice received from experts within HMRC and elsewhere, would have been the inevitable result—would have been a mistake and we took the view that we should proceed. I put it to the hon. Lady that the two schemes in question, together with a plethora of other support, have been extremely effective.
Richard Graham (Gloucester) (Con)
Getting skills is the key to employment opportunities for the young. Both the Prime Minister and the Chancellor have made encouraging noises about recognising the importance of apprenticeships. I propose that the Government shoulder the entire costs of the first year of all new apprenticeships awarded this autumn—[Interruption.]
Mr Speaker
Order. The two Members—the hon. Member for Monmouth (David T. C. Davies) and the hon. Member for Aldershot (Leo Docherty)—cannot stand together. Richard Graham, please start again.
Richard Graham
I will start again. Skills are the key to employment opportunities for the young. Both the Prime Minister and the Chancellor have made encouraging noises about recognising the role that apprenticeships can play in that. My proposal is that the Government shoulder the entire first-year costs of all new apprenticeships awarded this autumn. The key point is that further education colleges, other trainers and businesses need to be able to plan ahead so that they can market those apprenticeships. Will my right hon. Friend today give some reassurance and commitment on the support the Government might give apprentices, so that bounce-back Britain’s new apprentices know there are lots of opportunities ahead?
Jesse Norman
I thank my hon. Friend for his question. I am in awe of his ability, without notes, to recall exactly the same wording of his question when asked to give it a second time. That is magnificent. He was obviously an actor in a previous life.
Let me respond to the point my hon. Friend made. He is absolutely right about apprenticeships. He will know that, because he will know of all the work we are doing in Hereford to set up a new model in technology and engineering; a university combining higher education and further education specifically in order, in due course, to be able to extend to degree and degree apprenticeships. He will also know that the Budget—people have forgotten this—and the spending round before it have been very supportive of further education. That is a commitment of this Government. As he will know, the Education and Skills Funding Agency published guidance in this area, and the job retention scheme provides funding for businesses. We will continue to look closely at the issue he describes, and I thank him for his question.
Sir Edward Davey (Kingston and Surbiton) (LD)
May I, like others, pay tribute to and remember our much-missed colleague Jo Cox?
Ministers hint that their recovery plan will at last see real climate action. Liberal Democrats advocate a massive green economic recovery plan and I hope the Government will match it. Will the Treasury Minister confirm that the Government are considering reversing their previous opposition to onshore wind farms in England and Wales, tidal power investment, zero-carbon homes regulation and the many other green economic policies advocated by my party and opposed, abolished and voted against by this Prime Minister and the Conservative party?
Jesse Norman
I do not agree with that characterisation of the Government at all. We have done an enormous amount to support the green economy, but I do agree with the right hon. Gentleman that this provides an opportunity for a big recalibration—a big opportunity for all people across the country to think about whether there is more we can do in terms of green. Those of us with responsibility for the national infrastructure strategy are thinking very hard with colleagues in the Treasury about how we can improve green infrastructure, to go alongside all the measures we have taken to improve and support green businesses.
Sir David Amess (Southend West) (Con)
Some 290,000 people in the theatre and performing arts are really struggling financially at the moment. Will the Treasury look at extending the job retention scheme at least until October, and at extending the self-employed income support scheme, which would particularly help those who have freelance work?
Jesse Norman
My hon. Friend will be aware that the job retention scheme runs until October and the self-employed scheme covers that period as well. This is a source of great concern to us, and the arts have been well supported by the schemes so far. There has also been a separate package through the Department for Digital, Culture, Media and Sport specifically targeted at supporting arts and other organisations. We have this issue very much in our minds.
Chris Elmore (Ogmore) (Lab)
May I first pay tribute to my late friend Jo Cox? We mark today not because of how she was taken and the hate that took her, but to celebrate her life and legacy that we all work towards every day.
May I press the Minister, in that vein, for support for the aviation sector? There will be a £1.6 billion impact on the south Wales economy if British Airways is to keep on cutting jobs across three sites in the region. The Chancellor and the Minister say they will do whatever it takes, so please Minister, for these highly skilled, well-paid jobs across the UK, announce a specific sector deal for the aviation sector, and please do it quickly.
Jesse Norman
I am very grateful to the hon. Gentleman for his warm remarks in relation to Jo Cox, which will be shared by everyone.
The hon. Gentleman will be aware that the aviation sector has already received quite a lot of support through the Bank of England’s covid corporate financing facility and through the large business loan scheme. Colleagues across the Department for Business, Energy and Industrial Strategy continue to engage closely with the sector. I fully understand the hon. Gentleman’s concern both in terms of the strategic nature of the industry and also its relevance to his own constituency, and indeed the UK as a whole.
Dr Kieran Mullan (Crewe and Nantwich) (Con)
The Government can rightly be proud of the rapid and effective steps they have taken to save so many jobs in constituencies such as Crewe and Nantwich, but there are some sectors and businesses that will not be able to open in the near or even medium term—for example, Good Time Charlies, a children’s play centre in my constituency, and Crewe Lyceum theatre. Will my right hon. Friend agree to look at whether some businesses and sectors will need more support in the medium and long term?
Jesse Norman
That may well be true, but I would highlight and remind my hon. Friend that one scheme, the bounce back loan scheme, is specifically targeted at small and medium-sized enterprises, and indeed micro-enterprises. Those loans are on very concessionary terms and do not require personal guarantees up to a threshold, so the organisations that my hon. Friend mentions should be able to benefit.
Caroline Lucas (Brighton, Pavilion) (Green)
May I add my voice to many others in paying tribute to our much-missed colleague, Jo Cox?
The pandemic has further highlighted the deep connection between human health and thriving ecosystems, with the destruction of nature both increasing pandemic risk and driving climate change. With the news of record job losses, will the Minister prioritise the job creation potential of nature restoration at a national level and agree that not one single shovel-ready project will end up indiscriminately destroying nature? Secondly, will his Department establish a new taskforce on jobs for nature, to maximise the number of people employed in protecting the natural world, rather than destroying it? He says the Treasury will recalibrate whether there is more to be done on the green economy; I assure him that there is, and he just needs to get on and do it.
Jesse Norman
Having been an energy Minister, I am extremely aware of the many good things that we have done and continue to do, but I thank the hon. Lady for her contribution.
Miss Sarah Dines (Derbyshire Dales) (Con)
As my right hon. Friend will know, businesses in the hospitality and events sector—including wedding venues, bed and breakfasts and hotels, which are part of the lifeblood of this country and the economy—have been helped tremendously by the Government’s support and furlough scheme. As the furlough scheme winds down in the autumn, will he push for those sectors of the economy to be able to open fully as soon as it is safe for both them and their customers, to help us maintain Britain’s rightful place as one of the most attractive tourist venues in the world?
Jesse Norman
My hon. Friend will know that we have put significant support in place already. I share—as the Government do, and as I suspect the entire Chamber does—her desire for us to emerge from lockdown as swiftly and safely as we can, so I certainly support what she said.
Mr Toby Perkins (Chesterfield) (Lab)
I associate myself with the remarks that others have made about our colleague Jo Cox.
The Chairman of the Treasury Committee, the right hon. Member for Central Devon (Mel Stride), was right about those people who are missing out on the self-employed scheme. We recognise that the scheme was put together urgently. My hon. Friends and I on the shadow Front Bench were calling for the scheme, so of course we welcomed it. But alongside the 1 million people who are unable to work and are missing out on the scheme, the scheme also means that if people continue to work and are unaffected because of their self-employment, they are benefiting from the scheme, while others who need it are not able to. Would it not be sensible for the Government to accept the comments that have been made and scrutinise the scheme? Let us try to make it better and work together, rather than say that it does not need any improvement at all.
Jesse Norman
Actually, we have not said that. We remain interested in positive, detailed suggestions for improvement of the scheme. We have received some that do not appear workable. I will remind the Chamber of what the problem is. Let us not forget that the £50,000 trading profit margin implies average sales of £200,000, so these are not that small businesses compared with many sole proprietorships around the country. With these businesses, it is impossible to tell by any rule-based system the source of any dividends that they are paying, what may be the pay component of them and what may be simply earned from other sources but routed through the company. It has not been possible to devise a system that could operate on this million-person scale or more in the time available, while meeting our central need to act comprehensively and swiftly.
Paul Bristow (Peterborough) (Con)
The Government have done a huge amount to support jobs in Peterborough, with around one in four workers protected through the furlough scheme. Peterborough remains a city on the up, with a new university, city centre regeneration and new businesses coming to us. With that optimism in the air, will the Minister assure me that he will continue to support businesses and workers in Peterborough as we move beyond the furlough scheme?
Jesse Norman
I can of course give my hon. Friend that assurance. I suspect that there is not a Member of this House who, if they look down the lists, will not see the positive benefits of the CJRS and the self-employment income support scheme in support of employed people on furlough and self-employed people in their constituencies. That is a tremendous thing that we can all be proud of.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
As a Labour member of the class of 2015, may I echo the remarks made about Jo Cox? She is much missed, and was murdered in cold blood while doing an advice surgery, which we all do every week in normal times.
I must say that I am disappointed by the Minister’s response. I wrote to the Chancellor on 24 April identifying a number of holes in his safety net, including brand new start-ups, people on dividend pay and the forgotten freelancers in the arts. I have had a make-up artist and a BBC contractor write to me in the last couple of days. Initially, he was thought eligible for furlough pay, but now, as he is not an employee per se, he cannot have it, and he has too many savings to get universal credit. I had no reply—not a sausage. Does the Minister not agree with the OECD’s analysis that, with these overly ungenerous levels of social security support, he is just storing up productivity problems and record unemployment for further ahead?
Jesse Norman
I am surprised that the hon. Lady should say that. As I recall, she and I have had two telephone conversations with colleagues in which we have discussed in detail the strengths and weaknesses and the potential to improve both the self-employed scheme and the job scheme. I do not recognise the view that she takes at all. It is in the nature of these schemes to seek to be as comprehensive and swift as possible, which, I think I recall, was exactly the language used by the OECD in describing the Government’s response.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
Scotland has benefited from the broad shoulders of the United Kingdom, with well over £10 billion of resources coming to Scotland to help fight this pandemic, from the furlough scheme to Barnett consequentials. Will the Minister commit to continue a UK-wide approach in tackling the pandemic, which will have to recognise that different parts of the United Kingdom will see recovery on different timescales and, of course, will see different sectors needing different levels of support?
Jesse Norman
My right hon. Friend is right. I defer to no one in my admiration for Scotland as a country and for its history and people. It is true that in this crisis, as in the crisis of 2007-08, there has been enormous benefit to Scotland from being embedded within a wider Union, where the collective security and financial strength of all can be drawn on. In the case of Scotland, the self-employment scheme alone has 146,000 claims and the job scheme some 628,000 claims, and that amounts to an enormous package of UK Government support for the people in Scotland, and I am very proud of that.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
With more than 600,000 jobs lost between March and May, it would be nothing short of a social catastrophe to end the furlough scheme before businesses start rehiring. France and Germany are continuing their support for as long as it takes. With the right hon. Gentleman’s Government denying Scotland the borrowing powers to take her own action—powers that even councils have—can he now see why Scots are concluding that Britain is not working and why support for independence continues to rise and rise?
Jesse Norman
I do not think that the Scots are concluding that at all. Any rational person looking at the position would understand that Scotland had been immensely strengthened by its relationship and its position within the United Kingdom, and rightly so, because of the hundreds of thousands of people who have been supported. The hon. Gentleman is absolutely right that there is a serious concern about the economic effects of the pandemic, but it is a concern, as the OECD and others have recognised, that we are squarely meeting, and Scotland has been a huge beneficiary and I am sure that it will continue to be so.
Gareth Davies (Grantham and Stamford) (Con)
I thank the Minister and all his colleagues for protecting 13,400 furloughed jobs in my constituency, as well as for the £27 million in grant funding to 2,261 businesses. Does he agree that the best way of getting the Lincolnshire economy back on track is to reopen as many businesses as possible as quickly and as safely as possible?
Jesse Norman
My hon. Friend is of course absolutely right. The whole point of the strategy that we have adopted is to cushion the immediate shock, protect the vulnerable, and then move as swiftly and safely as we can towards economic growth. As he says, we need businesses flourishing, functioning and working together as effectively as possible. The quicker we get that, the more we can support people back into jobs. The tailored approach that we have taken is designed to help them do that.
David Johnston (Wantage) (Con)
Does my right hon. Friend agree that one thing all Members of the House could do is to encourage their constituents to support local independent businesses, such as those we have in Wantage, Didcot and everywhere else in the country, to give them the best chance of survival?
Jesse Norman
Of course I agree with my hon. Friend on that. One of the great sadnesses of this has been the extent to which it is often the smallest and most local businesses—the most independent—that are most adversely affected by the coronavirus.
As he will know, between our job retention scheme, bounce back loans and reliefs and tax exemptions, we have given a huge amount of support in that area, and we will continue to do what we can to support it.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
In my constituency, around 25% of the population, aged 16 to 64, are being furloughed or are receiving universal credit. The additional support for people on the self-employment scheme probably takes the figure to 30%. We recognise, therefore, the scale of the Government’s intervention, but there are many freelancers on short-term contracts or on different ways of working for freelance industries who are not getting a penny, many of whom have a strong and detailed track record with HMRC, so the reverse engineering that took place with the main scheme could be applied to them. The Minister repeatedly keeps talking about the generosity of the scheme, which suggests no shift I assume. Will he be categoric now and tell us whether there is any hope for these forgotten freelancers?
Jesse Norman
What I have said is simply that international and national bodies recognise the comprehensiveness and the relative generosity of our schemes—[Interruption.] They have done that, so that is the fact of the matter. The point that the hon. Lady raises is one on which we continue to reflect. As I have said, we take this very seriously. We want to support all sections of the economy, including self-employed people who have not been able to qualify. There are, of course, other ways in which they may be able to qualify for support within the wide package of support that we have given, but the self-employment scheme at the moment is not one, in some cases, that they are able to use, and that is something on which we will continue to reflect.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
The latest figures show that almost 9 million jobs have been furloughed, including 12,500 in my own constituency—jobs that would undoubtedly have been lost. As we begin to rebuild and reopen our economy, will my right hon. Friend assure me that he will continue to support both businesses and workers as they transition away from Government schemes?
Jesse Norman
As my hon. Friend points out, we are working very hard to protect people in employment. That is what the latest numbers recognise, with the employment number as opposed to the unemployment number. But we must be realistic about this. We are in the middle of a pandemic crisis and there will be further losses; we have to understand that. The key thing is to make sure that we are as robust, energetic and inclusive as we possibly can be in supporting people in employment and supporting them back into employment when they come out of the jobs market.
Jim Shannon (Strangford) (DUP)
First, I thank the Financial Secretary very much for his help on many issues that we have brought to his attention. Will he further outline what steps have been taken to mitigate the scale of redundancies in manufacturing, with special reference to Bombardier and the aerospace industry? Will he agree to meet the working group to discuss this viable industry made up of many local businesses and suppliers, such as Bombardier in my own constituency of Strangford, to save thousands of jobs in the UK in the long term?
Jesse Norman
I fully recognise the strategic importance of Bombardier in the hon. Gentleman’s constituency and, indeed, in Northern Ireland. I have visited it myself, and that is well understood. It would not be appropriate for me to talk about specific companies in terms of the support and assistance that we offer. However, as he will know, across Government we are in constant negotiation and discussion with many different sectors on many different concerns that they have, and we will continue to do that.
Rehman Chishti (Gillingham and Rainham) (Con)
Like many small and medium-sized enterprises around the country, Copper Rivet Distillery in Medway transformed its business overnight during the crisis, working day and night to help with the provision of personal protective equipment, including sanitiser. Many of these small businesses will face economic hardship as the new normal arrives, with cheap and often subsidised imports. Will the Government be using their substantial buying power to consolidate our procurement spending on Britain’s SME sector so that it can invest and compete internationally?
Jesse Norman
My hon. Friend is absolutely right. One of the really heartening things about the early phases of the crisis was precisely the response from distilleries in producing hand sanitiser. I was delighted to be able to make very quickly the changes to the tax regime that supported that. As we go forward, we will continue to review and seek to address the concerns that he raises. It is not by any means a straightforward matter, but the key thing is to continue to push, on a very wide variety of fronts, as rapidly and forcefully as we possibly can.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
Many companies have used the job retention scheme to save cash while they planned redundancies, British Airways being one. BA has threatened over 40,000 staff with redundancy but about 30,000 would be rehired on vastly reduced terms and conditions. Last week I introduced a Bill to make that form of employment practice illegal to protect all employees. Does the Minister think it is fair that any employer should be allowed to make employees redundant from roles that are clearly not redundant and then rehire them on reduced pay— yes or no?
Jesse Norman
I will refrain from commenting on a specific situation; the hon. Gentleman has identified one. But I will say, having not been aware of it, that I will look at his Bill with great interest, and I thank him for drawing attention to it.
Gareth Johnson (Dartford) (Con)
Bluewater in my constituency reopened its doors yesterday and did so in a cautious and responsible manner. It was fantastic to see so many shops there welcoming back customers for the first time. Does the Minister agree that centres like Bluewater should be praised not only for getting our economy back on track but for allowing us to get back to some form of normality?
Jesse Norman
I absolutely do think that. I pay particular tribute to shops, malls and shopping centres that go the extra mile to be particularly safe and careful, within more than the spirit of the regulations, in ensuring that people can use them. I congratulate Bluewater on the extent to which it has done that. If that helps to communicate a wider sense of confidence in the ability to shop, then all the better.
Kerry McCarthy (Bristol East) (Lab)
The Minister is actually giving quite comprehensive answers to most people in this Chamber, which makes it all the more striking how curt he was in replying to the hon. Member for Brighton, Pavilion (Caroline Lucas). Let me have another try. Yesterday, 57 charities wrote to the Government urging them to pursue a green recovery, which could support at least 210,000 jobs, while a report from the Office for National Statistics has just said that vacancies are at a record low. I am not interested in hearing what the Minister did when he was an Energy Minister; I want to know what the strategy is now. What will he do now to ensure we build back better and that it is a green recovery?
Jesse Norman
Of course I have no interest in being curt—the hon. Member for Brighton, Pavilion had discussed green issues and the green recovery just before and we were picking up from that. I and my colleague the Exchequer Secretary, who is the lead Minister on this in the Treasury, remain extremely interested in what we can do to ensure a green recovery. I am obviously not going to announce actions from the Dispatch Box in response to an urgent question, but I can reassure the hon. Lady that I and my colleagues are giving a great deal of attention to these issues.
Damian Green (Ashford) (Con)
My right hon. Friend is correct that the job retention scheme and the self-employed scheme are two of the successes of the Government’s response to covid-19. He will also be aware that preserving as many of those jobs as possible when the schemes are withdrawn is a central and difficult economic task for the Government. To that end, can I urge him to put the full weight of the Treasury behind a move, as soon as it is as safe as possible, from a 2-metre to a 1-metre gap, because that is the single most important act we could take to preserve those jobs?
Jesse Norman
My right hon. Friend will be aware that this is a topic of great topicality. The Prime Minister has launched a review of this and within weeks the matter will be decided. I cannot go any further than that, but he will see the direction of travel quite soon.
Dame Margaret Hodge (Barking) (Lab) [V]
I add my voice to those who are remembering Jo Cox today and continuing to celebrate her contribution.
I chair one of Britain’s precious theatres, the Theatre Royal Stratford East. Like theatres up and down the country, we are only surviving because of the furlough scheme. For as long as any social distancing measures are in place, theatres simply cannot put on performances. Even with a 1-metre distancing rule, only one in four seats can be either marketed or occupied. If we are not allowed to furlough beyond October, our theatres cannot survive and will close forever. What will the Minister do to save our theatres?
Jesse Norman
I massively welcome the right hon. Lady’s support for and chairmanship of the Stratford East. It is a phenomenal theatre, as anyone will know who has acted in Joan Littlewood’s theatre workshop or “Oh! What a Lovely War”. It is a foundational place. She will be aware that many theatre companies have benefited from some of the schemes already launched and that the Government have already made a substantial commitment of support to this sector through the Department for Digital, Culture, Media and Sport, but of course we continue to look closely at it, and it is right that she raised the issue, on behalf not just of the Stratford East and other theatres but of performing art spaces more widely, because the problem with coronavirus is not just the safety aspect; it is also the fear aspect that goes with a pandemic crisis of this kind.
Douglas Ross (Moray) (Con)
Because of the UK’s support, 11,700 jobs in Moray were furloughed and 2,600 self-employed benefited from a share of £7.8 million, but a Scottish Government report has identified Moray as the area in Scotland potentially at risk of the highest number of job losses following this pandemic. What will the UK Government do with the Scottish Government to help businesses and individuals in Moray in the weeks and months ahead?
Jesse Norman
As my hon. Friend will be aware, we have always taken Moray very seriously. We have made a significant investment in the oil and gas sector, from which it is a massive beneficiary, and have supported the city of Aberdeen. We have been very engaged indeed and will continue to look at the sectoral and geographical impacts of the pandemic, but I am grateful to him for highlighting the enormous impact in his constituency of our work so far.
Rushanara Ali (Bethnal Green and Bow) (Lab)
We remember our dear friend Jo Cox today and deeply miss her voice in this House. She was a powerful voice for those who desperately need our support.
Can the Minister commit urgently to support the 1 million people who have fallen through the gaps in provision? The provision that the Government have made is welcome, but we need a focus and a commitment to support the new starters, self-employed and freelancers, as identified by the Treasury Committee, and we need that commitment today. With the spectre of 9 million people facing unemployment, including 1 million young people, what assessment has the Minister made of the number of additional jobs that are likely to be lost with employers being required to pay 20% of employees’ wages?
Jesse Norman
In response to the latter point, we think that a graduated return to employers paying for their own staff and being subject to the usual economic laws of supply and demand is an essential precondition for a proper economic recovery and, therefore, for the sustainability of not just jobs but the economy as a whole. In regard to the wider issues, it would be absurd for me to offer any response from the Dispatch Box to the Treasury Committee report that was filed yesterday, but as I have said to the Chair, we will look very carefully at it and the issues that it raises.
Virginia Crosbie (Ynys Môn) (Con)
I thank the Jo Cox Foundation for all it does.
My constituency is dependent on tourism and hospitality, a sector that was first to be hit by the crisis and is likely to be last to open up. Will the Minister confirm that his Department is looking at new additional measures to support businesses, such as Church Bay Cottages and Catch 22, that have worked so hard to support their community at this exceptional time?
Jesse Norman
I thank my hon. Friend for bringing to the House’s attention and mine the delights of Ynys Môn. As a Herefordian, I am as acutely aware of the importance of tourism to many of our most beautiful areas as she is, but we continue to look at the sectoral inputs, as I have described. In fact, as she will be aware, tourism, hospitality and leisure have already received quite a substantial amount of additional support from the Government. We continue to keep the situation under review.
Mr Speaker
Unfortunately, Jamie Stone is not audible, so I call Sir Graham Brady.
Sir Graham Brady (Altrincham and Sale West) (Con)
As businesses get back to work, there is a cap on the number of employees who can be furloughed. Would it not make more sense to cap the number of hours or the total cost to the Treasury for each firm instead?
Jesse Norman
I thank my hon. Friend for his question. Let me reflect upon it.
Jamie Stone
Further to the previous questions, when the highlands tourism industry eventually reopens, it is likely that very few businesses will make enough money to see them through the dark winter months. In the spirit of the Minister’s previous answers, would he agree to meet me to discuss how the furlough scheme and other support schemes can be fine-tuned to make sure that those businesses survive to next year?
Jesse Norman
Nothing could silence the hon. Gentleman’s voice; I am glad to have been able to hear his question. I would be very happy to talk to him. I suspect that there are several hundred miles between us, but I will make sure that we find some way to talk to each other.
Ms Angela Eagle (Wallasey) (Lab)
I congratulate the Minister on getting through the entire UQ without making a single commitment, although he has made many observations. As a member of the Treasury Committee, I look forward to the Government’s formal response to our report on the 1 million people who are currently missing out on the Government’s schemes. Will he see if he can at least make a commitment before today’s UQ ends? What is he doing as a Treasury Minister to ensure that, as we move from the acute stage of the pandemic to furlough schemes beginning to end, the furlough scheme is not remembered as a waiting room for unemployment rather than the job saving scheme that it should have been?
Jesse Norman
The hon. Lady will recall that the topic of the UQ is the job retention scheme and the self-employment scheme, and their relation to the UK economy in the face of covid, and that is what I have focused on. Of course, as a former member of the Treasury Committee myself for five years, I will take its report very seriously, as she suggests. In many ways, it may well be that people will look back on the job retention scheme and conclude, as the shadow Chancellor has, not only that it was considerably better than any possible alternative or inaction, but that it saved an enormous number of jobs.
Sara Britcliffe (Hyndburn) (Con)
The figures released last week showed just how much of an impact the Treasury’s measures are having. In Hyndburn and Haslingden 11,200 people benefited from the furlough scheme and 3,300 claims were made under the self-employment income support scheme, saving so many jobs and livelihoods in my constituency. As we begin to reopen our economy, will the Minister assure me that he will continue to support both people and businesses in the difficult months ahead?
Jesse Norman
Of course my hon. Friend is right that there will be difficult months ahead. There is no doubt about that. We specifically gave forward guidance on the two schemes in order to give people the reassurance that there would be that tailored support in place for a number of further months, and we will continue to keep the situation under review.
Olivia Blake (Sheffield, Hallam) (Lab)
As we know, regional disparities will occur as a result of this economic downturn. I am proud to say that Labour Mayors and local authorities, in Sheffield and up and down the country, are making regional plans to bring more people out of unemployment. They will not be able to deliver that if they do not have sufficient powers and resources. Has the Minister met local authority leaders, and will he make those powers and resources available?
Jesse Norman
That is a very important question. Of course it is not just Labour Mayors; there are plenty of Conservative Mayors of cities who are—[Interruption.] Well, Andy Street for one. They have been taking a lead in this area too. One of the great things of which this Government and their predecessors can be proud is the extent to which devolution permitted those mayoralties to come into being. The hon. Lady is right about that. As she will be aware, we have made a significant amount of support available already to local authorities as spending bodies. It is for Mayors to work with them, as well as with the substantial amount of infrastructure money that was made available through things such as the transforming cities fund, to help to create an integrated response to the coronavirus crisis at local level.
Steve Brine (Winchester) (Con)
Given the amount of work that continues to take place on making workplaces covid secure, I wonder whether the Minister thinks that we need to revisit the “work from home if you can” message. Is that under review in the context of the furlough scheme being phased out through its taper? If so, on what sort of timetable does he envisage that being done?
Jesse Norman
As a former Health Minister, my hon. Friend will understand very well the importance of this issue, and I thank him for raising it. This question is very much one that is being discussed across Government at the moment. One of the few silver linings to this crisis has been the understanding that, actually, the nature of work is changing as between home and work. One of the things that has not received much notice but I am intensely proud of is the way in which HMRC has been able to organise itself into much more of a disaggregated place in order to support from home all the services that it continues to deliver.
Mr Ben Bradshaw (Exeter) (Lab)
I warmly welcome the Government’s U-turn a moment ago on school meals and any role the Treasury might have played in that decision. Given its devastating impact on jobs, the wider economy and, indeed, Treasury receipts, and as the rest of Europe is opening up, may we please have a U-turn on the Government’s ridiculous quarantine policy?
Jesse Norman
I am afraid I am not qualified to comment on the ridiculousness or no of the quarantine policy. It remains in place in order to protect people, and it will be for colleagues to make a decision about that in due course.
Mrs Maria Miller (Basingstoke) (Con)
Under this Government we have record numbers of women in work in our country, and under the lockdown around 140,000 women—maybe more—will have become pregnant. We are already hearing that some businesses are routinely making pregnant women redundant, despite the law and the furloughing scheme. What message does the Treasury have for those businesses?
Jesse Norman
Clearly, that is an abhorrent practice. My right hon. Friend is right to highlight it, to the extent that it is going on, and, as she says, it is illegal. I am very proud of the support the Government have given to women, as she has said, including through the national living wage and many other matters. I am also pleased that we have been able to make sure that the structure of the jobs scheme goes over enough years so that any impact on maternity is mitigated, so that those women are not affected, or are affected as little as possible, by the decisions they may have made—
Catherine West (Hornsey and Wood Green) (Lab)
The economic outlook is predicted to be 10 times worse than the 2008 global financial crash. In this House, we all know the devastating impact that crash had, but this could be 10 times worse. What urgent measures can be taken to protect people in the creative sector, thousands of whom have been in touch with me, as the Member for Hornsey and Wood Green, desperate to save themselves from penury in the coming months?
Jesse Norman
We do not know how much worse this will be than the 2007-08 crash, if indeed it is worse, and over what period of time we are talking about. We can be more precise about the causation, because the crash was caused by overleveraging in the banking sector and so the UK was hit harder by the crisis than other countries as a result. That was a result of Government inaction. We have touched on the position of people in the creative sectors and there is not much more I can add in the time available, but I am very supportive of the situation and we are trying to assist them.
Huw Merriman (Bexhill and Battle) (Con)
The Select Committee on Transport’s report on aviation has noted that British Airways is looking to make almost a third of its workforce redundant, while taking the job retention scheme for more than half of its employees and at the same time looking to invest £1 billion in a new airline. Will the Minister consider changing the job retention scheme so that companies cannot behave in this manner and rip off the taxpayer at the same time?
Jesse Norman
My hon. Friend will know that I cannot possibly comment on any specific circumstances, but I recognise the work he has done in putting this so squarely in the public mind.
Lucy Allan (Telford) (Con)
I thank the Treasury team for the incredibly agile and decisive support they have given to workers and businesses during this pandemic—across my constituency, we are very grateful. As part of the transition to the new covid economy, will the Minister consider supporting a network of innovative technology accelerators, in Telford and across the country, to create jobs and new start-ups? Will he meet me to discuss this further?
Jesse Norman
I am very interested in my hon. Friend’s suggestion. It is not squarely a Treasury matter—it is more an industrial strategy and Department for Business, Energy and Industrial Strategy matter—but I would be delighted to meet her on the topic.
Stella Creasy (Walthamstow) (Lab/Co-op) [V]
May I associate myself with my many colleagues in remembering our dear lost friend Jo Cox today? On 11 May, the Prime Minister told us:
“If people cannot…get the childcare that they need, plainly they are impeded from going to work, and they must be defended and protected on that basis.”—[Official Report, 11 May 2020; Vol. 676, c. 29.]
A survey by Pregnant Then Screwed shows that 71% of women trying to return to work in the next three months cannot do so because of childcare. So will the Minister set out exactly what he is going to do to protect and defend those women from redundancy and discrimination in the workplace?
Jesse Norman
I thank the hon. Lady for her question. I have not seen the survey that she describes. but I will look at it and discuss it with the Minister for Equalities, my colleague the Exchequer Secretary. Of course there can be no shying away from this issue and if it is as the hon. Lady describes, we will look closely at it. I thank her for that.
Stephen Metcalfe (South Basildon and East Thurrock) (Con) [V]
I thank the Minister and all his team for the extraordinary work they have done to support our economy during the first phase of this crisis. As we look towards the future and our recovery, may I ask him to continue to make bold and innovative interventions in our economy to protect as many jobs and businesses as possible, in both Basildon and Thurrock?
Jesse Norman
I almost did not recognise my hon. Friend with his new coronavirus growth, but I very much accept and recognise the point he makes. I thank him for it, and we will continue to work hard in this area.
Rachel Hopkins (Luton South) (Lab)
Aviation and associated businesses create stable jobs and economic growth in Luton. Coronavirus will impact the industry for the foreseeable future and recovery is going to be much longer. Does the Minister recognise that replicating the French Government’s commitment to ensuring that short-term work schemes and support are available for longer—for, say, two years—would support those long-term affected sectors, retain key skills in those industries and avoid redundancies?
Jesse Norman
We are of course looking closely at other countries to see if they are doing things from which we can learn and benefit. I would have some doubts about a scheme that went on as long as that precisely because we need to return businesses and people working in them to normality as swiftly and safely as we possibly can. This might have the effect of counteracting that, but the point is well made and we will continue to review these alternative arrangements.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
Many of my constituents, such as those working in the creative industries, navigate between self-employment and PAYE—working, yet not qualifying for either scheme. Given that we are extending our support schemes, will the Minister look into how we can support those who, due to nimble working practices as part of a flexible workforce, miss out on both schemes?
Jesse Norman
I recognise that there are some people in that situation, and it is very unfortunate that they may not be able to qualify for either scheme. To be clear, that would mean that they could not have been on a PAYE scheme within the past three years, as described by the rules, or indeed qualify under the self-employment scheme for other reasons. However, we take the point that my hon. Friend makes. We have discussed this in detail and I have explained to the House, again in some detail, why it is hard to reach those people, but we continue to look at that very closely.
Andrew Gwynne (Denton and Reddish) (Lab) [V]
Today’s unemployment data shows that 11,400 across Denton and Reddish are furloughed. There are 3,950 claimants— 2,000 higher than in March—and 800 of those are now under 24. In Greater Manchester, Diane Modahl has been appointed as chair of the new young persons taskforce, which will help to develop a young persons guarantee, but what more can the Government do nationally to help ensure that our young people are not left behind?
Jesse Norman
Again, I almost did not recognise the hon. Gentleman—I congratulate him on his coronavirus hair growth. I think the point that he raises is absolutely right. We are of course looking at the differential impact of the pandemic across the age spectrum, as well as regionally and across other dimensions. It has been well recognised and recommended by many that energetic action in the labour market to support young people and those making a transition between one job and another, or going back into work, will be very much something for us to focus on over the next few years.
Selaine Saxby (North Devon) (Con)
Tourism businesses have been under immense pressure. In particular, smaller hospitality businesses, as in my constituency, need certainty to be able to survive. While I welcome the introduction of part-time furlough for workers, for these businesses to reopen on 4 July, some staff must be taken off furlough now. With part-time furloughing not starting until July, will my right hon. Friend confirm whether there is to be a phased unlocking of the industry, or can part-time furlough commence sooner?
Jesse Norman
No, the rules are as laid out in the guidance on gov.uk. They have a start date at the end of the month and we are in the final three-week coronavirus job retention scheme period, but as my hon. Friend says, we are very much hoping for and working towards a much wider reopening after or around the first week of July. That will potentially be a critical move forward for the country in its response to the pandemic.
Owen Thompson (Midlothian) (SNP)
The Chancellor stated that his priority was
“to support people, protect jobs and businesses through this crisis”,
yet businesses are on a financial cliff edge. Given today’s employment and vacancy rates, and the OECD prediction that the UK is likely to suffer one of the worst slumps in the developed world, does the Minister share my concern that ending support schemes too early will simply push many off a precipice?
Jesse Norman
Of course we want to ensure that there is a phased return to normality. That is what the delay and the extension of the two schemes is designed to do, so we do recognise that concern. I remind the hon. Gentleman that the OECD has predicted the strongest bounce back for this country. That may well be because of our extremely flexible labour markets, from which I hope we continue to benefit as we come out of this dreadful situation.
Laura Trott (Sevenoaks) (Con)
I am sure that the whole House will welcome the remarkably stable unemployment figures this morning, which are testament to the huge amount of support that the Treasury has put into retaining employment. May I urge my right hon. Friend to put the same amount of effort into creating jobs during the recovery, including encouraging inward investment and tech hubs—including some in Sevenoaks?
Jesse Norman
Tech hubs in Sevenoaks are my regular reflection; I thank my hon. Friend very much for her question. Of course, she is absolutely right. As we think about a more sustainable, greener and more productive economy, we need to be thinking about how our whole industrial strategy and posture will change, and I have no doubt that it will involve continued investment and support for technology in all its manifestations across the UK.
Mr Speaker
In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I will now suspend the House for five minutes.
Global Britain
(3 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Prime Minister (Boris Johnson)
Mr Speaker, before I begin, I am sure the whole House will join me in paying tribute to the memory of Jo Cox, who was cruelly murdered four years ago today. Her sister, Kim Leadbeater, spoke for us all when she urged everyone to remember Jo by pulling together with “compassion and kindness”.
I was concerned to learn that the hon. Member for East Dunbartonshire (Amy Callaghan) is now in hospital: we all send her our best wishes.
With permission, I will make a statement about the ambitions of a global Britain and the lessons of the covid-19 pandemic. We are living through a daily demonstration of how events on the far side of the world influence not only British security and prosperity, but something as elemental as the state of our health, and whether we can go to work or go shopping. This crisis offers vivid proof of the seminal importance of international engagement and exactly why our country must perform its global role. I have begun the biggest review of our foreign, defence and development policy since the end of the cold war, designed to maximise our influence and integrate all the strands of our international effort. The overriding aim is to bring this country’s strengths and expertise to bear on the world’s biggest problems, seizing the opportunities of Britain’s presidency of the G7 next year and the UN climate change conference—COP26—which we will host in Glasgow.
The UK possesses the third biggest aid budget and diplomatic network in the world: we owe it to our people to make best use of these assets, which scarcely any of our peers can match. The British taxpayer has a right to expect that we will achieve the maximum value for every pound that we spend. One cardinal lesson of the pandemic is that distinctions between diplomacy and overseas development are artificial and outdated. For instance, to protect ourselves against another calamity, the UK will need to work alongside our friends to strengthen international bodies such as the World Health Organisation, and help vulnerable countries to improve their health systems and achieve greater resilience. It makes no sense to ask whether it amounts to aid or foreign policy: they are one and the same endeavour, designed to achieve the same goals, which are right in themselves and serve our national interest.
On 4 June, I chaired a virtual summit of the global vaccine alliance, which raised enough money to immunise 300 million children. I doubt whether any other occasion will save more lives, avoid more suffering, or produce a better example of the good this country can do by its international engagement, in the true and broad sense, alongside our friends. Yet today, as anybody who has any experience of the matter will know, a dividing line between aid and foreign policy runs through our whole system, with our Department for International Development working independently from the Foreign and Commonwealth Office, and our aid budget parcelled out between different arms of Whitehall.
DFID outspends the Foreign Office more than four times over, yet no single decision maker in either Department is able to unite our efforts or take a comprehensive overview. We give as much aid to Zambia as we do to Ukraine, although the latter is vital for European security, and we give 10 times as much aid to Tanzania as we do to the six countries of the western Balkans, which are acutely vulnerable to Russian meddling. Regardless of the merits of those decisions, no single Department is currently empowered to judge whether they make sense or not, so we tolerate an inherent risk of our left and right hands working independently.
Faced with the crisis today and the opportunities that lie ahead, we have a responsibility to ask whether our current arrangements, dating back to 1997, still maximise British influence. Those well-intentioned decisions of 23 years ago were right for their time. They paved the way for Britain to meet the UN target of spending 0.7% of national income on aid—a goal that was achieved by the coalition Government in 2013, that has been maintained ever since, including this year, and that remains our commitment. Yet those judgments date from a relatively benign era when China’s economy was still much smaller than Italy’s and the west was buoyed by victory in the cold war.
We must now strengthen our position in an intensely competitive world by making sensible changes, so I have decided to merge DFID with the Foreign and Commonwealth Office to create a new Department: the Foreign, Commonwealth and Development Office. This will unite our aid with our diplomacy and bring them together in our international effort.
DFID has amassed world-class expertise and all of its people can take pride in how they have helped to transform the lives of hundreds of millions of people around the world. To select but a few examples, they have striven to protect millions of children across the world from polio, which is now on the verge of global eradication; they have paved the way for millions of girls to attend school for the first time in countries such as Pakistan, as I have seen for myself; they have done their utmost to ease the suffering in Syria; and in Sierra Leone they were central to the defeat of an outbreak of the Ebola virus. All that amounts to the finest demonstration of British values, following in the great tradition of the country that ended the slave trade and resisted totalitarianism.
It is precisely that ambition, vision and expertise that will now be at the heart of a new Department, taking forward the work of UK aid to reduce poverty, which will remain central to our mission. The Foreign Secretary will be empowered to decide which countries receive or cease to receive British aid, while delivering a single UK strategy for each country, overseen by the National Security Council, which I chair. Those strategies will be implemented on the ground by the relevant UK ambassador, who will lead all the Government’s work in the host country. In that, we are following the examples of Australia, Canada and New Zealand, all of which run their development programmes from their Foreign Ministries. We will align other British assets overseas, including our trade commissioners, who will come under the authority of the UK ambassador, bringing more coherence to our international presence.
Amid this pandemic, the House may ask whether this is the right moment to reorganise Whitehall, but I must say that in reality this crisis has already imposed fundamental changes on the way that we operate. If there is one further lesson, it is that a whole-of-Government approach, getting maximum value for the British taxpayer, is just as important abroad as it is at home. This is exactly the moment when we must mobilise every one of our national assets, including our aid budget and expertise, to safeguard British interests and values overseas. The best possible instrument for doing that will be a new Department charged with using all the tools of British influence to seize the opportunities ahead. I therefore commend this statement to the House.
Keir Starmer (Holborn and St Pancras) (Lab)
I thank the Prime Minister for early sight of his statement and for the telephone call we had earlier today. As he has noted, today is the fourth anniversary of the tragic murder of our friend and colleague Jo Cox. I do not need to remind the House of Jo’s commitment and dedication to international aid, or how highly she valued DFID as a power for good. I am sure the whole House will want to send best wishes to Jo’s friends and family on this difficult day.
I join the Prime Minister in sending our heartfelt best wishes to the hon. Member for East Dunbartonshire (Amy Callaghan). To her friends, her family and her colleagues here and in Scotland, it must be very distressing.
We should see this statement for what it is: the tactics of pure distraction. Jo Cox would have seen right through this. A few hours ago, the Office for National Statistics figures showed a fall of 600,000 people on the payroll. The economy contracted by 20% in April, and we could be on the verge of a return to mass unemployment—something we have not seen for a generation. We also have one of the highest death tolls from covid-19 in the world, with at least 41,700 deaths, and the number is likely to be far greater than that. In the last hour, the Government have U-turned on free school meals. I put on record my thanks to Marcus Rashford for the part that he has played in this victory for the 1.3 million children affected. This statement is intended to deflect attention from all of that, and I assure the Prime Minister that it will not work.
The Prime Minister spoke about global Britain, and I want to take that head on. I passionately believe in Britain. I am proud of this country. I want to see it playing a leading global role again—a role that we frankly have not played in the past decade. I want to see Britain as a moral force for good in the world and a force for global justice and co-operation, leading the world on global security, leading the global search for a vaccine and leading the global fight against poverty, climate change and gender inequality. We do not achieve that by abolishing one of the best performing and most important Departments—a Department that has done so much to tackle poverty and injustice.
Labour created DFID, and I am proud of that. Until now, there has been cross-party consensus about DFID. As the right hon. Member for Sutton Coldfield (Mr Mitchell), the former Secretary of State for International Development, said last year:
“DfID is the most effective and respected engine of development anywhere in the world, and a huge soft power asset for Britain.”
Today, he said that the Prime Minister’s announcement would mean, in his words,
“at a stroke, destroying a key aspect of Global Britain.”
I have worked with both the FCO and DFID across the world on rule of law projects and anti-corruption projects, and I have seen at first hand the value of DFID’s work globally.
The Prime Minister says that the 0.7% will not be eroded, but he will understand our scepticism. Will he confirm that the full DFID budget will be ring-fenced in the new Department? Will there be no loss of DFID staff numbers and expertise? How much will this reorganisation cost in the middle of this crisis?
Abolishing DFID diminishes Britain’s place in the world. There is no rationale for making this statement today. The Prime Minister should stop these distractions and get on with the job of tackling the health and economic crisis we currently face.
The Prime Minister
If the right hon. and learned Gentleman does not want a statement in the House about an important Whitehall reform, then I think he misrepresents the views of the House. It is important that we should make these statements, and I am very proud of what we are doing.
Anybody who has any experience of the matter will know that at the moment, for the UK overseas, we are less than the sum of our parts. If you travel to important foreign capitals, where we need to make our points to our friends and partners, you have UK diplomats saying one thing and then finding that the message from overseas aid—from UK aid and from DFID—is different. That undermines the coherence of our foreign policy, and the right hon. and learned Gentleman will know that very well. It is absolutely vital that we have a coherent, joined-up message for our international partners, and that we speak with one voice.
At a time when the UK is spending £15 billion on overseas aid—0.7 % of our GDP— I think the British people will want to know what we are doing right now to make that spending more efficient, and they will want to know what we are doing to ensure that the UK is supporting the campaign to develop a vaccine against coronavirus. I am very proud of what the UK is doing. I think it is fantastic that we secured $8.8 billion at the recent summit to develop a vaccine, and I am very proud of the work that DFID is doing. And yes of course we will make sure that we guarantee the DFID budget, but what will now happen within the new Department is that every single person working in that new Whitehall super-Department—the Foreign, Commonwealth and Development Office—will now have all the idealism and sense of mission that comes from DFID, but also the understanding of the need to project UK values, UK policies and UK interests overseas. This is a long overdue reform and the right hon. and learned Gentleman should support it.
Steve Double (St Austell and Newquay) (Con)
I should like to associate myself with the Prime Minister’s comments on Jo Cox and our colleague, the hon. Member for East Dunbartonshire (Amy Callaghan). I very much welcome his statement today. Can he confirm that this is a merger, not a takeover, and that it has the potential to enhance the role of international development in our foreign policy? Will he also confirm that this Government’s commitment to invest in and support the poorest parts of our world remains as strong as ever?
The Prime Minister
Yes, it certainly does; I am grateful to my hon. Friend. What is actually happening, of course, is that DFID and the FCO are now joining together to become a new Whitehall super-Department for international affairs, which will be of huge benefit to our ability to project Britain’s sense of mission about overseas aid. For too long, frankly, UK overseas aid has been treated as some giant cashpoint in the sky that arrives without any reference to UK interests, to the values that the UK wishes to express or to the diplomatic, political and commercial priorities of the Government of the UK.
Ian Blackford (Ross, Skye and Lochaber) (SNP) [V]
I associate myself with the remarks by the Prime Minister and the leader of the Labour party on the murder of Jo Cox four years ago. That was a day that none of us, rightly, will ever forget. I also thank the Prime Minister and the leader of the Labour party for their comments about my colleague, my hon. Friend the Member for East Dunbartonshire (Amy Callaghan). I know that she is grateful for all the support that is being shown towards her.
Prior to the Prime Minister coming to the House today, the contents of his statement were shrouded in secrecy. We now know why. Unfortunately, it is now crystal clear what is happening. The Prime Minister and this UK Government are using the cover of a terrible pandemic to rip apart the UK’s structures for international development and humanitarian aid. At a time when we should be standing with the world’s poorest and acting as a beacon of hope, the Prime Minister is playing politics. Let me be clear: the Government are blatantly using challenging domestic circumstances as an excuse to wind down essential aid for the world’s poorest. This is shameful, and it is not in our name. We are talking about people burdened with suffering every single day, and on top of that, they too are dealing with this terrible pandemic. If these are the values of global Britain, they do not represent the values of the vast majority of people in Scotland, and we want no part in it.
In taking this decision on DFID, this UK Government are once again ignoring expert advice. Last December, more than 100 charities specialising in humanitarian relief, girls’ education, global health, clean water and sanitation strongly warned against today’s announcement. They warned that merging DFID would be
“turning our backs on the world’s poorest people”.
Only last week, an interim report from the International Development Committee said that the merger would erode accountability and shift funds from poverty reduction. Let us start with the most basic question first—and let us not have the usual bluster, Prime Minister: answer the question for once. Will he confirm that he has read the interim report by the International Development Committee on the proposed merger? Will he also confirm which aid charities he consulted before making this statement today?
DFID employs around 600 people in East Kilbride. Will the Prime Minister guarantee that all those jobs are secure and will stay in East Kilbride? On 8 June, my hon. Friend the Member for Dundee West (Chris Law) wrote to the Secretary of State for International Development asking why the Department was suspending all DFID projects except for a handful of projects that had been identified by the Government as a priority. Will he confirm whether all those suspended projects are now being scrapped?
The Prime Minister
I must respectfully tell the right hon. Gentleman that the policies that we are enacting, for which he expresses such horror—the creation of this new Whitehall super-Department—reflects what the vast majority of the OECD already does. I think I am right in saying that only one in 29 OECD countries does anything different from what we are proposing.
We are integrating our foreign policy and our massive development throw. We are going to increase it. We are going to make sure that we do even more to tackle poverty and deprivation around the world and to tackle the under-education of women and girls around the world, which is an absolute disgrace. We are going to use this powerful new Whitehall Department to do that—to give the UK extra throw weight and megawattage. That is what we need. At the moment, we are less than the sum of our parts.
As for East Kilbride, that was the height of absurdity. The right hon. Gentleman says he wants to break up the United Kingdom, yet he wants us to keep jobs in East Kilbride. Of course we are going to keep those jobs in East Kilbride. Of course we are going to support the work of those fantastic people in East Kilbride. He, by his policies, would throw that away.
Tom Tugendhat (Tonbridge and Malling) (Con)
I am very glad that my right hon. Friend the Prime Minister has been listening to a few of the things I have said over the last three years. Bringing strategic alignment to foreign policy is something that many of us have been calling for. I welcome the statement. As he has already said, it brings us into line with CANZUK countries. My Australian opposite number, to whom I spoke only an hour or so ago, praised the decision, as did my Canadian opposite number. It also brings us into line with Norway and Denmark—two countries very well-known for delivering effective aid programmes, not just in their own national interests but in the interests of the people they serve. I welcome the decision.
May I ask, however, that the Prime Minister reinforces the commitment that this is to deliver the technical expertise that DFID has demonstrated over 23 years? Just as we would not ask an ambassador to command a battle group, we would not ask somebody untrained to manage the handling or delivery of the millions of pounds that are so well and so effectively spent by people in East Kilbride and around the world on our behalf.
The Prime Minister
Absolutely. I am glad that, with his experience of foreign affairs and development, and all that he has seen around the world, my hon. Friend supports this initiative. It is absolutely vital that, in the new Department, people are multiskilled and, as I said just now to the House, that people in the Department for Foreign, Commonwealth and Development Affairs understand how development can be a fantastic tool for the promotion not just of human rights and the tackling of poverty around the world but of the values and interests of this country at the same time. That, I think, is what the people of this country want to see.
Sarah Champion (Rotherham) (Lab) [V]
Prime Minister, I am incredulous that you are going down this path. With a single stroke, you are getting rid of our soft power and our international standing, at a time when the development world needs us to stand together and show real leadership. Let me fact-check the Prime Minister’s statement. Aid and foreign policy are very different; one is humanitarian, one is political. ODA spend is embedded in four Acts of Parliament specifically to alleviate poverty, not to safeguard British interests.
DFID is the Department with oversight. The International Development Committee’s report of last week shows that it is the most effective and transparent at delivering aid, and the FCO has been criticised in that regard. So can the Prime Minister please explain: how will ODA spend now be scrutinised and protected; what is the timetable of this hostile takeover; and can he please detail the costs of this restructure at what must be the most inappropriate time?
The Prime Minister
Parliament will of course have the ability to scrutinise the new Department, and I imagine that Parliament will wish to set up a new Committee to do so. The timing of the change, as I said, is September, when we expect to have it all complete. I think, frankly, the hon. Lady is being, and I think many Opposition Members have been, far too negative about this. This is an opportunity for us to get value from the huge investments that we make in overseas spending; to make sure that that spending continues to tackle poverty and deprivation around the world; and to put the tackling of poverty and deprivation at the very heart—think of that: at the very heart—of UK foreign policy. That is something that I think Opposition Members should rejoice at.
Mr Tobias Ellwood (Bournemouth East) (Con)
I have long called for Britain to have a stronger, more authoritarian voice on the international stage as a force for good, but I have also called for a grand strategy, linking not only what the Foreign Office does and DFID does, but also Trade and Defence, to create a grand strategy and international outlook. I have also called for better strategic oversight of DFID’s spending, moving away from the archaic ODA laws, which are now out of date.
I am concerned about the timing of this, because there is an enduring emergency that must be the Government’s priority, and the Prime Minister himself mentioned the defence, security and foreign policy review, which was designed to understand what our Whitehall architecture should be, in understanding what our vision, our outlook, our place in the world should be and aspire to be. Surely, that should come first.
Can the Prime Minister also confirm that, with GDP is expected to fall, and the 2% of GDP target for defence now going to be obsolete, there will be no real-terms cuts in the defence budget?
The Prime Minister
I am grateful to my right hon. Friend. He and I have discussed these matters many times and I think he is basically right that we do need to have an integrated strategy; we do need to have an integrated approach, and that is why this Government inaugurated the biggest, most fundamental integrated review of our foreign, security and defence policy since the cold war.
We are having this discussion now because we need to get going. Yes, it is absolutely right that we face a crisis now, but we also face a post-covid world, when the UK will need to be able to speak with one, powerful voice on the international stage, in which our idealistic ambitions for development are wholly integrated with our views on foreign policy. The UK will speak therefore all the more powerfully for that. This is the position adopted by the vast majority of countries in the OECD, as I say—I think all but one of 29 pursue this approach. It is the right reform at the right time; I believe the House should support it.
Mark Pawsey (Rugby) (Con)
Here in Britain we have companies with great brands and great products, and there has never been a more important time to promote them overseas and in emerging markets. So can the Prime Minister ensure that the new Department will maintain the same level of global political and economic influence that was developed under DFID, while maximising opportunities for UK exporters?
The Prime Minister
Yes, I will, and I think it is only fair that UK exporters and UK companies should get a proper hearing from this Department. I do not know about hon. Members around the House, but many a time I have been asked why on earth such-and-such a water sanitising product, or whatever it happened to be, did not get a proper hearing—did not get a chance for support from the UK ODA budget. Now, we want to have entirely fair procurement. We do not wish to see taxpayers’ money wasted, but it is also vital that where the UK can do great things around the world, whether in clean technology, zero-carbon energy generation or whatever, the UK producers should get a fair crack of the whip.
Sir Edward Davey (Kingston and Surbiton) (LD)
I associate myself with the remarks of the Prime Minister on the late Jo Cox and the hon. Member for East Dunbartonshire (Amy Callaghan).
Britain’s international aid should have one overriding purpose—to help the world’s poorest. Confusing that objective for Britain’s aid budget with other foreign and security policy objectives is a massive step backwards. When the world’s poorest are exposed to the worst pandemic for a century, why has the Prime Minister chosen this moment to step back from Britain’s leadership in the fight against global poverty? Is not the Leader of the Opposition right—this is an appalling version of distraction politics?
The Prime Minister
Absolutely not, because now is exactly the moment when we need to intensify and magnify Britain’s voice abroad and to make sure that when we make our points in other countries about tackling poverty, Her Majesty’s ambassador in that country is listened to with the attention that is due to the person who commands the whole panoply of our foreign policy. That is vital for our success, and that is what we are going to achieve.
Alun Cairns (Vale of Glamorgan) (Con)
I congratulate my right hon. Friend on maintaining his reforming agenda. Can he reassure the House that this is an opportunity to drive the UK’s interests globally and to protect the most vulnerable around the world? He mentioned the UK’s presidency of the G7. Does he agree that this is an opportunity to play a leading role in international organisations such as the OECD, the World Health Organisation and the World Trade Organisation?
The Prime Minister
Yes. Next year, the UK takes up the chairmanship of the G7, and we have the COP26 climate change summit. Our voice in those proceedings will be greatly magnified by having a single, powerful voice for the projection of the UK view overseas. This is a big step forward for global Britain.
Sir Jeffrey M. Donaldson (Lagan Valley) (DUP)
Northern Ireland wants to play its full part with the rest of the United Kingdom in promoting this country overseas, and we are proud of what the United Kingdom has done across the world. As Northern Ireland approaches its centenary next year, will the Prime Minister assure me that whether it is free trade agreements, promoting the United Kingdom as a whole through our diplomatic missions, or drawing on the expertise of people from Northern Ireland in providing UK aid overseas, we will be able to play our full part in these new arrangements?
The Prime Minister
Yes, of course, I can give my right hon. Friend that assurance. Northern Ireland will play a full part not just in these arrangements but, as he fought for, in all the free trade deals that we do.
Sajid Javid (Bromsgrove) (Con)
I welcome my right hon. Friend’s statement and his commitment to our continued effort in terms of international aid. As he may know, just last week the World Bank reported that some 100 million people could be driven into extreme poverty because of the covid-19 crisis. Many developing countries’ economies are already being hit hard, with falling remittances and falling investment. I know that many are also concerned about increasing talk of protectionism in advanced economies, including by some people in this country. Will he take this opportunity to commit Britain to fighting protectionism in all its forms, because trade is as important as aid?
The Prime Minister
Absolutely. My right hon. Friend makes a profoundly important point. There is a risk that some countries may seek to return to protectionism—to an autarkic, beggar-my-neighbour approach. That is not the way of the United Kingdom. Of course, we want to build up our own manufacturing capabilities, to make sure that we have the resilience in our economy when crises hit, but we also depend wholly on free and fair trade, and that is what we will fight for.
Kirsty Blackman (Aberdeen North) (SNP) [V]
International aid is about assisting people who are living in unimaginable poverty. The Prime Minister’s answers today have been massively concerning. Will the priority of the new Department be to help the most vulnerable people in the world or to increase the UK’s voice abroad?
The Prime Minister
It will of course do both. Let me just explain to the hon. Lady: it is no use a British diplomat one day going in to see the leader of a country and urging him not to cut the head off his opponent and to do something for democracy in his country, if the next day another emanation of the British Government is going to arrive with a cheque for £250 million. We have to speak with one voice; we must project the UK overseas in a consistent and powerful way, and that is what we are going to do.
Sir Desmond Swayne (New Forest West) (Con)
So long as the kingdom and this House resemble a stunt by the “1984” junior anti-sex league, the recovery necessary to sustain the Prime Minister’s global ambition, and indeed the £15 billion of international development aid, will evade us; surely a yard is more than enough?
The Prime Minister
My right hon. Friend invites me to comment on the social distancing rules, and he is wholly right that we will continue to review those rules. I am determined to make life as easy as possible for our retailers and our hospitality industry, but we must defeat this virus, as I am sure he knows and I am sure the people of this country understand. We are making great progress as a country: the numbers of deaths have massively come down; the number of new hospital admissions has massively come down. We continue to make progress, but we must make sure that we get the virus fully under control before we make the change my right hon. Friend wants.
Clive Efford (Eltham) (Lab)
In his statement, the Prime Minister said that
“a dividing line between aid and foreign policy runs through our whole system,”
but back in 1994, when that dividing line did not exist, we ended up with the Pergau dam scandal, when we poured billions of pounds of taxpayers’ money into a scheme to win a foreign trade deal on arms. That led to the introduction of the International Development Act 2002, to outlaw linking aid to foreign policy. Can the Prime Minister give us a guarantee that that is not his objective?
The Prime Minister
The hon. Gentleman is entirely right; there was a scandal involving the Pergau dam, and he and I remember it vividly. It was wrong that huge sums were given in aid for a project that did not have a good business case, but the International Development Act protects us from that kind of mistake and that kind of approach, and we will not take that approach. Let me stress: this is not a return to the idea of tied aid. It is very important that the House understands that. This is about coherence and projecting our mission abroad; it about projecting the UK abroad.
Andrew Griffith (Arundel and South Downs) (Con)
In combining these two Departments, does my right hon. Friend share my ambition that global Britain can be a world leader in new clean technologies such as fusion and quantum and hydrogen technology in the life sciences—and, as today we celebrate Sussex Day, also the export of English sparkling wine, creating thousands of high-quality, well-paid jobs in growth industries?
The Prime Minister
Yes. My hon. Friend is absolutely right in what he says about fusion research, where we lead the world at Culham, and he is right in what he says about vaccines and about hydrogen, and indeed we also lead the world in satellite technology, and of course he is completely correct in what he says about Sussex wines, which are the world’s—or among the world’s—finest.
Kevin Brennan (Cardiff West) (Lab)
The right hon. Gentleman is the captain of the ship of state as we navigate the perilous waters of Brexit, of covid and of civil unrest, and his priority is to rearrange the deckchairs of Whitehall. If this really is a merger, presumably— [Interruption.] I will allow him to chunter, and then I will ask my question. If this really is a merger, will the Secretary of State for International Development and the Foreign Secretary, both of whom are sitting on his Front Bench now, be applying equally for the new job of Colonial Secretary?
The Prime Minister
The hon. Gentleman spoke of the post of Colonial Secretary; I do not know quite what planet he is on. We are going forward with a single new Whitehall Department for international affairs, which I believe will add greatly to this country’s global throw-weight. [Interruption.] Opposition Members should applaud this change. It reflects what is done by the overwhelming majority of countries in the OECD—most of our friends and partners; indeed, all our friends and partners I can think of. We should get with the programme and support it.
Madam Deputy Speaker (Dame Eleanor Laing)
Order. Hon. Members must not shout at the Prime Minister. We are here to ask questions, not make long preambles to questions. If we do not have shorter questions, I am afraid that not everyone will get the chance to ask their question. And if the questions are shorter, I know the Prime Minister will thus be able to give shorter answers.
Crispin Blunt (Reigate) (Con)
I welcome this change. The logic of it is overwhelming and it will be a great day for our diplomatic clout. However, that depends on the values that underpin global Britain. Our ability to exercise leadership in the relief of poverty, justice and the international rule of law will depend on those values. They will get an immediate test. In two weeks’ time, our ally Israel will annex elements of the Occupied Palestinian Territories. That will be a grave breach of international law. Surely we must try to divert Israel from that prospect with real sanctions if it breaches international law?
Madam Deputy Speaker
Order. Before the Prime Minister even answers that question, nobody was listening: short questions and then the Prime Minister can give short answers.
The Prime Minister
Yes, I believe that what is proposed by Israel would amount to a breach of international law. We have strongly objected. We believe profoundly in a two-state solution and we will continue to make that case.
Lucy Powell (Manchester Central) (Lab/Co-op) [V]
If the Prime Minister is serious about global Britain, why has he left our world-leading aerospace and defence industry in a downward holding pattern? We have already seen thousands of job losses in communities that can ill afford to lose them. With the right action now, the UK could lead the global race in a green revolution in defence and aerospace. Will he make that his vision of global Britain, rather than another unnecessary Whitehall reorganisation?
The Prime Minister
That is indeed what we are doing. I have spoken to the head of Rolls-Royce and other companies about exactly the vision for aerospace that the hon. Lady describes. There is a big opportunity for this country to lead the world in low-carbon aerospace technologies and that is what this Government are going to do.
Gareth Bacon (Orpington) (Con)
Does the Prime Minister agree that global Britain is not just about pursuing an ambitious independent trade policy, but that at its heart it is about championing values? Does he further agree that to make that a reality we must strengthen our voice on the world stage and be unafraid to call out countries that threaten those values and the rules-based international order?
The Prime Minister
I believe that this will be a profoundly beneficial change for both the FCO and DFID. It will infuse the whole of our foreign policy with the missionary zeal and sense of idealism that characterises the very best of our aid experts. They are the best in the world, and they will now be at the absolute heart of UK foreign policy. That is the right place for them to be.
Wera Hobhouse (Bath) (LD)
All I am hearing from today’s exchanges is that we will only help the poorest in the world if they are buying British goods. Words fail me at the cowardly abdication of Britain’s global responsibility to the poorest in the world. We are shooting ourselves in the foot. The covid crisis can only be resolved if the poorest countries get rid of the virus or control it. Will the Prime Minister reconsider this globally illiterate and morally reprehensible move?
The Prime Minister
The hon. Lady should look at what this country is actually doing to tackle coronavirus around the world, giving more than any other country to the search for a virus. I do not know if she saw what happened at the recent Gavi summit, but she should be proud of what this country is doing to tackle the virus around the world.
Claire Coutinho (East Surrey) (Con)
As someone who started their career in emerging markets, may I roundly welcome this move? Does the Prime Minister agree that as the world changes it speaks to how developing countries want to receive aid: not in isolation, but as part of a comprehensive dialogue across trade, investment, technology, diplomacy and defence so that they can achieve their own goals?
The Prime Minister
My hon. Friend is entirely right. The confusion one finds in the capitals of our partners around the world must end. They must understand that the UK Government speak with a single voice and a powerful, clear message from a new international Department that I think will do a power of good around the world. We already punch above our weight; this will help us to punch even harder.
Nigel Mills (Amber Valley) (Con)
Does the Prime Minister agree that one of the areas of his missionary zeal for this Department should be tackling corruption? If we could make progress there, it would help the stability of regimes around the world.
The Prime Minister
Yes, indeed. The UK leads the world in tackling corruption and money laundering, and once again that agenda will have far more heft after the integration of the two Departments.
Mary Kelly Foy (City of Durham) (Lab)
It is hard to see this decision as anything but a populist stunt that flies in the face of what the coronavirus pandemic tells us: that we are all interconnected in this world. What consultation did the Government carry out with humanitarian and development experts, as well as leading aid organisations, before the decision was made?
The Prime Minister
I can assure the hon. Lady that there has been massive consultation over a long period. It is my own personal and direct experience that the UK, although it does a fantastic job with development aid, could do even better with a powerful, single, integrated voice of the kind I am describing and which we will bring into existence in September.
Alec Shelbrooke (Elmet and Rothwell) (Con)
I welcome my right hon. Friend’s decision. I know from my work with the Westminster Foundation for Democracy when I was the Vice-Chairman (International) of the Conservative Party that often there are tensions between DFID and the Foreign Office over its funding. Furthermore, as he will know, our friends and allies in the Caribbean felt very let down after the hurricanes when they could not get the support they needed. He will also be aware of the money we have put into the refugee camps for the Syria crisis and other things. Can he confirm, therefore, that this decision is not a watering down but will result in a stronger and more efficient approach and that the most vulnerable people in society and the programmes we have to do will get an enhanced service from the UK?
The Prime Minister
That is right. It was one of the absurdities of the rules of the Disasters Emergency Committee that vulnerable island states in the Caribbean were not eligible for ODA, and we had to fight to get that change. Now with this new super-Department we will be able to argue as one across our friends and partners around the world for new perspectives on those problems, and work together to tackle them.
Dame Diana Johnson (Kingston upon Hull North) (Lab)
At this time of national crisis, would it not be better if the Prime Minister used what he described as our megawattage to sort out some of our domestic problems, such as the 20,000 job losses in the caravan industry around Hull, the threat to Hull Trains’ open access service—130 jobs—or getting a grip of the education shambles that his Education Secretary has been leading on so that we can get our kids back to school safely?
The Prime Minister
I am sure that the hon. Lady would want to join me in encouraging all parents to send their kids back to the schools that are open and waiting to receive them. I am sure that she and the Leader of the Opposition will want to join everybody in saying it is safe to go back to school.
Paul Holmes (Eastleigh) (Con)
The Prime Minister has done exactly the right thing to ensure there is a Foreign Office with a laser-like focus on aid and diplomacy, but what involvement will trade have in this mix so that compassionate aid and international trade work hand in glove?
The Prime Minister
We are keeping the Department for International Trade separate, and it is working hard on free trade deals, as it must for the moment, but it is very important that in post—in missions around the world—there will be a single point of reference for Governments who need to understand the UK position. It is a powerful change. The ambassadors around the world will be newly empowered and authorised to project the UK’s point of view.
Mr Ben Bradshaw (Exeter) (Lab)
How is it compatible with global Britain to be the only country in the world at this stage of the covid pandemic, and as the rest of Europe opens up, to be putting up a great, big “closed for business” sign in the form the Prime Minister’s quarantine policy?
The Prime Minister
It is curious that the right hon. Member says that because, as far as I know, the quarantine policy is actively supported by the shadow Foreign Secretary at the very least, and indeed supported by the Labour party. If he is dissenting from his own party, I perfectly understand that, but the reason for our policy is of course to prevent the reinfection of this country, as we drive the virus down, by people coming back from countries where it is out of control.
Mr Laurence Robertson (Tewkesbury) (Con)
Does the Prime Minister agree with me that it is in Britain’s interests to have a poverty reduction programme across the world? Will he guarantee, after this change, that the Government will still continue to concentrate on education and health, particularly the education of girls, across the world and that—not only for the benefit of Britain, but for humanitarian purposes—we carry on the poverty reduction programmes?
The Prime Minister
Yes, and at the heart of the mission of the new Department will be 12 years of quality education for every girl in the world, which I think is probably the single best thing you could do for the future of our planet.
Rachael Maskell (York Central) (Lab/Co-op) [V]
We are in the midst of a pandemic crisis, a trade agreement crisis and an economic crisis. While the Prime Minister is struggling to respond to each of these, why has he decided that now is the time to distract his attention with this internal reorganisation to water down aid, as opposed to addressing the crises sitting on his desk?
The Prime Minister
We are getting on with the business of governing this country, improving our international performance and making sure that the UK is able to speak with a single, powerful voice overseas. That is vital now in this crisis, and it is going to be vital as the crisis comes to an end.
Jacob Young (Redcar) (Con)
I fully welcome this change. We are reassessing our role in the world, and this is the perfect time for it. Does my right hon. Friend agree with me that, as we take this bold step as a new global Britain, we have a lot to learn from our CANZUK—Canada, Australia, New Zealand and United Kingdom—partners?
The Prime Minister
Yes, we do. I thank my hon. Friend, and he is bang on the money. We are simply coming in line, as I say, not just with what Australia, Canada and New Zealand already do, but with 28 out of 29 OECD countries.
Carol Monaghan (Glasgow North West) (SNP) [V]
DFID has funded outstanding research projects with partners in the developing world. The Prime Minister has a keen eye for detail, so he will be well aware that all too often the Home Office applies a colonial mindset to prevent these very same partners from travelling to the UK. The Prime Minister talks of coherence and value for money, so will we now see Departments working in collaboration, or will everyone’s work and money still be wasted by the whims of the Home Office?
The Prime Minister
The Home Office is doing an outstanding job in containing illegal immigration in small boats, working very closely, I might say, with our friends and partners in France.
Jeremy Hunt (South West Surrey) (Con)
I wrestled with this issue when I was Foreign Secretary, but I think it is the right thing to do. In Africa today, there is competition—intense competition—between countries such as China that do not promote democracy and human rights as part of their aid agenda, and countries such as Britain that do, and if we are going to support those British values, we need to speak with one voice. Given that one of those values is eradicating extreme poverty, would the Prime Minister consider allowing the junior Minister who will be responsible for DFID to attend Cabinet, so that people can see that the commitment to eradicating poverty is undiminished?
The Prime Minister
I am grateful for my right hon. Friend’s support. I know that he wrestled with the issue when he was doing the job that I once did as well. I think that he has come to the right conclusion. As for his suggestion on how we will work it in government, I listened carefully to what he had to say.
Chris Bryant (Rhondda) (Lab)
The world increasingly thinks that this country under this Prime Minister is a basket case—the highest excess death rates in the world, the deepest economic collapse, schools returning in complete and utter chaos, and a quarantine introduced after the horse has bolted. At a moment of international crisis, the biggest idea that the Prime Minister has is that he should change the Foreign Office letterhead. This is a nonsense. Does he not realise that this is not a statement on global Britain; it is a statement from little England?
The Prime Minister
I was saddened and disappointed to hear the hon. Gentleman’s remarks. We are making an important change to how we work our foreign policy. He should applaud and welcome that, and, by the way, he should also not run this country down.
Claire Hanna (Belfast South) (SDLP) [V]
Prime Minister, whatever you think about the removal of statues and whatever it is that you are trying to signal with what looks like a very regressive move, there is a clear desire among many people, including in Britain, in the context of the Black Lives Matter campaign, to examine the ambiguous legacy of the British empire. Given the vital work of DFID in addressing inequalities and underdevelopment, some of which I must say are a legacy of the British empire, is this not a particularly shameful moment for you to abolish the very Department that is trying to address those inequalities?
The Prime Minister
We are not abolishing the role of the International Development team; we are exalting them. We are enhancing them and making them part of one of the senior Departments in this country, able to project British views overseas. Yes, of course, we will continue to tackle injustice around the world, but we will be able to do it with a more powerful voice than ever before.
Sir David Evennett (Bexleyheath and Crayford) (Con) [V]
I welcome my right hon. Friend’s statement on global Britain and strongly endorse the merger of DFID and the Foreign and Commonwealth Office to put aid, development and diplomacy at the centre of our foreign policy. Does he agree that the Commonwealth is a power for good in the world and that global Britain should embrace and work strategically with Commonwealth countries in leadership, aid and trade issues?
The Prime Minister
I thank my right hon. Friend very much. He is entirely right. The Commonwealth is a massive and powerful force for good: 53 nations united with a shared tradition and a shared ambition to encourage free trade around the world. We will develop that and many other important causes, which we will address at the Kigali summit when we can hold it next year.
Joanna Cherry (Edinburgh South West) (SNP) [V]
Many of my constituents care passionately about fair trade, because it has the potential to lift millions of people across the world out of poverty. Will the Prime Minister give me a cast-iron guarantee that the plans he has announced today will not result in any diminution of the UK Government’s previous commitment to support fair trade across the world, from Palestine to the Ivory Coast?
Andrea Leadsom (South Northamptonshire) (Con)
Today’s statement is a hugely positive opportunity for the UK to truly lead the world in tackling climate change and decarbonisation and to help some of the poorest in the world to protect and preserve their livelihoods. But will my right hon. Friend reassure us that he will use brilliant UK science and green technology to create and support new jobs here in the UK and to level up right across our country?
The Prime Minister
My right hon. Friend is absolutely right with regard to the development in this country of green finance and green technology, whether it is from wind turbines or new battery technology, and we are proceeding apace with those investments.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP) [V]
I wonder when the Prime Minister will give the votes back to those who cannot attend Parliament. Let me turn, though, to the matter at hand.
The Prime Minister is, of course, famous in his approach to detail. I notice that, in his statement today, he said that the trade commissioner will be under the authority of UK ambassadors. In Latin America, there are 12 ambassadors and one trade commissioner so, Prime Minister, how will that work then?
The Prime Minister
The obvious answer is that, in country, there is a single head of mission—
The Prime Minister
Thank you. That is the ambassador. That is how it works. It is very important that everybody understands that. I repeat what I said to my friend, the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), which is that we will ensure that we keep that investment in East Kilbride and keep supporting East Kilbride, which, of course, the hon. Gentleman, through his desire to break up the United Kingdom, would be throwing away.
Stephen Crabb (Preseli Pembrokeshire) (Con)
I always remember Malcolm Bruce, the former Chair of the International Development Committee, saying, “The thing about DFID is that it’s not as good as it thinks it is, but it’s nowhere near as bad as its critics say.” I am concerned that we should not lose some of the expertise that has accumulated in the Department. One area where there has been big improvements in recent years, which I hope the Prime Minister would agree with and give a commitment to protecting, is the scrutiny and accountability of every single pound of aid money that is spent. Will he give a commitment today that there will be no diminution in the quality of the scrutiny of the money spent in our name?
The Prime Minister
Yes, absolutely. We can be very proud of the scrupulousness with which UK aid is spent, and I am in no doubt that the parliamentary oversight will continue in the current way.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
In a sudden change of plan, I am wondering about the Prime Minister’s thoughts on former Prime Minister David Cameron’s comments that
“the decision to merge the departments is a mistake”
and that the end of DFID
“will mean less expertise, less voice for development at the top table and ultimately less respect for the UK overseas.”
Does the Prime Minister agree with the former Prime Minister?
The Prime Minister
No, I profoundly disagree with those comments. All my experience is that, alas, there is an incoherence in UK foreign policy. We can now rectify that and have a better, more powerful and more positive voice for this country overseas that puts the idealism of development aid professionals at the heart of our foreign policy, and that is what we are going to do.
Alicia Kearns (Rutland and Melton) (Con) [V]
I thank my right hon. Friend for his statement. Having worked at the Foreign Office, at the coalface, I welcome this decision, which will end bureaucratic wrangling, hopefully end the disparity between the treatment of our FCO and DFID staff, and ensure that all overseas postings work as one team because that is how we support allies and those in need. Will he confirm that those raging that this will bring back tied aid and that it is a retreat from the world stage are actually doing a disservice to our FCO and DFID staff, and are wrong?
The Prime Minister
Of course, they are completely wrong. This is a massive opportunity for this country to project itself more powerfully abroad. What we want to see, and what I know we are going to achieve, is a union of the idealism, passion and commitment of DFID with the diplomatic and political skills of the Foreign Office, to make sure that we intensify our mission as one of the great development powers on the planet. That is what we are going to do.
Madam Deputy Speaker (Dame Eleanor Laing)
In order to allow Members to leave safely and others to arrive safely, I will suspend the House for three minutes.
UK-EU Negotiations
(3 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office (Michael Gove)
With permission, Madam Deputy Speaker, I would like to make a statement on the Government’s negotiations on our future relationship with the European Union.
Yesterday the Prime Minister met the President of the European Council, Charles Michel, the President of the European Commission, Ursula von der Leyen, and the President of the European Parliament, David Sassoli, via video conference. The purpose of this high-level meeting, as the political declaration puts it, was to take stock of progress on the negotiations and to agree actions to move forward. All parties agreed that now was the moment to accelerate the pace of these negotiations—in the Prime Minister’s words, to
“put a tiger in the tank”.
The three Presidents welcomed the Prime Minister’s call for greater pace, focus and flexibility in the negotiations, and the tempo of the talks process has now been escalated.
I am pleased to say that both sides pledged yesterday, in a joint statement that was made public immediately afterwards, that they would intensify the talks in July and, if possible, seek to find an early understanding on the principles underlying any agreement. Our respective chief negotiators and their teams will therefore intensify talks from the end of this month, starting on 29 June. I also welcome the Commission President’s statement yesterday that the EU is available 24/7, and we will be too. Meetings will take place every week in July, with a keen focus on finding an early understanding on the principles that will underpin a broad agreement. As the Prime Minister said yesterday, the faster we can do this, the better. We are looking to get things done in July. We do not want to see this process going on into the autumn and then the winter. We all need certainty, and that is what we are aiming to provide.
Yesterday’s high-level meeting followed the second meeting of the withdrawal agreement Joint Committee, which took place on Friday 12 June, again via video conference. I am grateful to the Vice-President of the European Commission, Maroš Šefčovič, for the very constructive way in which progress was made under his chairmanship. In that meeting, I set out our plans to implement the protocol on Ireland and Northern Ireland, and updated the EU on our ongoing work to protect the rights of EU citizens in the UK. This is a priority for the UK Government. I also sought assurance, for our part, that the EU intended to meet its obligations under the withdrawal agreement around the protection of the rights of our nationals currently living in the EU. We have concerns in this area, and we will continue to press the EU to ensure that our citizens’ rights are properly protected.
If we are to make the progress that we all want to see in our negotiations on the future relationship, we all need to be both clear-eyed and constructive. Our EU partners agreed yesterday that during the four full negotiating rounds completed to date, we have all gained greater clarity and understanding of our respective positions. Discussions have been productive and legal texts have been exchanged, even as both sides have had to deal with uniquely difficult challenges posed by the coronavirus pandemic.
But as my right hon. Friend the Paymaster General advised the House last week, following the fourth round of negotiations it is still the case that there has been insufficient movement on the most difficult areas where differences of principle remain. We are committed, in line with the political declaration, to securing a comprehensive free trade agreement with the EU built on the precedents of the agreements that the EU has reached with other sovereign states such as Canada, Japan and South Korea—and we are ready to be flexible about how we secure an FTA that works for both sides. The UK, however, has been clear throughout that the new relationship we seek with the EU must fully reflect our regained sovereignty, independence and autonomy. We did not vote in June 2016 to leave the EU but still to be run by the EU. We cannot agree to a deal that gives the EU Court of Justice a role in our future relationship, we cannot accept restrictions on our legislative and economic freedom—unprecedented in any other free trade agreement—and we cannot agree to the EU’s demand that we stick to the status quo on its access to British fishing waters.
There must be movement, and the clock is ticking. The transition period ends on 31 December. That was a manifesto pledge on which the Government were elected, and it was the instruction from the electorate in the 2016 referendum: to leave the single market and the customs union and to grant the opportunities of full and economic and political independence. Four years on from the referendum result, no one can argue that this is a rushed or precipitate step. It is delivering at last on democracy. We will manage the adjustment required at the end of the transition period in a flexible and pragmatic way to minimise any challenges and to maximise all opportunities, but the call from Opposition politicians to extend the transition period is not in the national interest.
Staying under the EU’s control after this December would mean paying money into EU budgets that we could spend on our NHS, accepting new laws over which we would have no say—laws shaped in the interests of others—and being prevented from taking the actions that we need to supercharge our economic recovery. That would clearly not be in our national interest. There is no intrinsic reason why a deal cannot be concluded in good time. As Roberto Azevêdo, the director general of the World Trade Organisation, confirmed at the weekend, a deal between the UK and the EU can be reached in a timely way if the political will is there.
The UK’s political will is there. Our position is reasonable, based on precedent, and we still have the time to bring a deal home. That is why the Prime Minister has led the drive to accelerate these talks, to reach agreement, and to ensure that next January, we leave the regulatory reach of the EU and embrace the new opportunities that our independence will bring. I commend the statement to the House.
Rachel Reeves (Leeds West) (Lab)
Four years ago today, I was at Leeds General Infirmary with Jo Cox’s parents and her sister. I will never forget that day and all that we lost. Today we remember Jo and remind ourselves of her values and all that she stood for.
I thank the Minister for an advance copy of his statement today. Following the meeting on Friday, both the UK and the EU confirmed that there is not going to be an extension of negotiations beyond the end of this year, which puts the focus firmly on both sides to secure the deal that they describe in the political declaration. The right hon. Gentleman knows full well what a calamity leaving only on World Trade Organisation terms would be for our country. Last year, the Minister told the Oxford farming conference that small farms would be hardest hit by the barriers and tariffs of trading on WTO terms. That is on top of what many farmers fear from a lack of safeguards from cheap imports with lower environmental and animal welfare standards.
This is not an isolated incident of uncertainty. In the automotive industry, Nissan says:
“We’ve modelled every possible ramification of Brexit and the fact remains that our entire business…is not sustainable in the event of WTO tariffs”.
Similar warnings have been issued by Vauxhall’s owners about their future presence in Ellesmere Port. The Minister has made clear in the past why it is important to secure a deal, so will he explain again today why a deal is better than leaving on WTO terms?
The Prime Minister has staked his own authority on having an “oven-ready” deal, but in his statement the Minister said that we wanted to intensify talks in July and find, if possible, an early understanding of principles underlying any agreement. That does not sound like an oven-ready deal to me, and is a cause of great concern for all of us. The ingredients of such a deal were published, and the country expects them to be delivered.
The Minister has referred today to his manifesto pledges to end the transition period at the end of this year, so may I remind him of some other pledges in that manifesto? First,
“no tariffs, fees, charges or quantitative restrictions”
across all sectors. Will the Government give UK industries and workforces peace of mind and prevent their business models from rupturing in the coming months? Late on Thursday, the Government published a written statement indicating a U-turn on border controls, perhaps recognising that they simply have not done enough to prepare for new rules that they wanted to introduce. That does nothing, however, to help British businesses that export to the UK. The Minister said in his statement that the Government would manage the commitments required, but he cannot make that pledge unilaterally. How will the Government help exporters, who will face those rules from day one?
Secondly, the Conservative manifesto told voters that the Brexit deal would safeguard workers’ rights, consumer and environmental protections. Does the Minister agree that it is essential that the UK defends those standards in all trade negotiations with other countries? People want to see the UK win a race to the top, not be forced into a race to the bottom, overseen by an overseas president.
Thirdly, we were promised a
“broad, comprehensive and balanced security partnership.”
There is no greater priority than keeping the British people safe and secure. On 3 June, with regard to European criminal records data, the right hon. Member for Maidenhead (Mrs May) asked for
“reassurance that as from 1 January 2021, the UK will have access to the quantity and quality of data that it currently has”. —[Official Report, 3 June 2020; Vol. 676, c. 846.]
Will the Minister provide an answer? Two weeks ago, the Prime Minister was unable to do so.
Fourthly, we were told that whatever happens, the UK will respect the Good Friday agreement. Many Northern Irish businesses, including manufacturing firms, have integrated supply chains across the United Kingdom. Unite and GMB members working at Bombardier in Belfast are reeling from the prospect of more redundancies following the covid-19 crisis. We need to stem the tide of job losses, not exacerbate them. Firms in Northern Ireland need to know the real-world detail of the business environment in which they will be operating, the precise checks and controls that they need to implement, and the operational readiness of the systems that they will be using in just 29 weeks’ time. It is far from reassuring that according to paragraph 28 of the UK Command Paper, the Government have so far committed to
“produce full guidance to business…before the end of the transition period.”
That could be December. That simply is not good enough for British businesses.
Finally, on the same day that the Prime Minister claimed that the impasse can be resolved and a deal achieved in July, the Government signed up to two further negotiating rounds, concluding on 21 August. Is July a serious proposal, or is it one of those over-promises to which we have become accustomed from the Prime Minister, agreed in haste to win a headline only to fall by the wayside when reality bites?
With that in mind, and thinking firmly about what is best for the United Kingdom, Labour wants the Government to succeed in achieving the deal that they promised and to avoid the perils of the alternative. The Government must fulfil their pledges to the British people in order to protect jobs, secure our food and medical supplies, and protect our citizens’ safety and security. We urge both sides to show the flexibility required to achieve a deal in our national interest.
Michael Gove
I thank the hon. Lady for her response, her questions and her support for a united effort to secure a good deal in the interests of the United Kingdom and the European Union. May I also once again extend my sympathy to her and others who were close friends of Jo Cox? Her death four years ago was an unimaginable tragedy, and I cannot begin to imagine what it must have been like for those who were so close to Jo.
The hon. Lady asked about an oven-ready deal; of course, that oven-ready deal was cooked before 31 January, which is why we left the European Union. The withdrawal agreement, which we are now faithfully implementing and which includes the Northern Ireland protocol, was a deal that secured support across this House of Commons. We are now taking all the steps necessary to ensure that that deal can be effectively implemented. Of course, we also seek a future trading relationship with the European Union but, if the European Union is incapable of concluding that relationship, we are ready to trade successfully on our own terms. That is why the steps with respect to the border that she mentioned were taken and confirmed last Friday and universally welcomed by business as a pragmatic and flexible way of providing both certainty and the flexibility that is required for business to continue.
The hon. Lady mentioned a variety of sectors that will obviously be affected by our relationship with the European Union. She mentioned agriculture; it is naturally the case that, of course, we want to maintain tariff-free access to European markets for our farmers, but it is also the case, as she knows, that we run a deficit in agri-food goods with the EU, so if there were to be no deal, European producers would be adversely affected to a greater extent than UK producers. But that would be in nobody’s interests.
The hon. Lady mentioned the importance of manufacturing. I agree with her—it is important that we secure a deal that works in manufacturing’s interests—but it is also important that we all recognise that before we left the European Union there was speculation that we would see a flight of manufacturing jobs from the UK to other countries. It is instructive to see the way in which Nissan, to which the hon. Lady referred, has reshored production to the UK, and how Unilever, after thinking about whether or not it should relocate its headquarters to the Netherlands, decided to keep its headquarters in the UK—all, as the BBC might put it, despite Brexit.
The hon. Lady asked about workers’ rights, environmental rights and consumers’ rights. The UK has a proud record in all those areas. Governments both Labour and Conservative, and politicians from Barbara Castle to Margaret Thatcher, have been in the van of ensuring that, whether it is equal pay or the fight against climate change, the UK has led and will continue to lead the world. In any trade or other agreements that we sign, our commitment to the rights of our citizens, to protection for workers and to putting the future of the planet first is absolutely non-negotiable.
The hon. Lady asked about security and the tools and instruments available. We do believe that it is possible to make progress on a suite of arrangements to safeguard the security of British citizens, but one thing that we cannot do is accept the jurisdiction of the European Court of Justice. We voted to be an independent nation and we must honour that decision. Democracy is more important than any other principle.
The hon. Lady mentioned the Good Friday agreement. Of course, the Northern Ireland protocol is there and is being implemented by this Government in order to ensure that the principles of the Good Friday agreement are upheld. One of those is unfettered access for Northern Ireland businesses to the rest of the United Kingdom, and I hope that she and her party will support any legislation that may be required in order to ensure that we have unfettered access for goods across the whole United Kingdom.
The hon. Lady ended by saying that the Prime Minister was showing haste. Indeed, the Prime Minister is determined that we should conclude a deal. It is in the interests of everyone that we have certainty. As long as the Labour party is silent on whether it would seek an extension, uncertainty will still hover over this process.
Mr William Wragg (Hazel Grove) (Con)
Regardless of any mixed metaphors, the EU and the UK have both committed not to extend the transition period beyond December, meaning that time is of the essence and must surely focus minds. Can my right hon Friend assure me that the Cabinet Office has sufficient capacity to work intensively to strike a deal, notwithstanding other pressing matters?
Michael Gove
My hon. Friend makes a very good point. Taskforce Europe, the team that is engaged in making sure that we secure a good deal with the EU, has drawn on resources from across Government, including from the Cabinet Office—it is led, of course, by the Prime Minister’s sherpa, David Frost—but I believe we have an excellent team well capable of taking forward all strands in this negotiation.
Pete Wishart (Perth and North Perthshire) (SNP) [V]
May I start by thanking the right hon. Gentleman? He, more than any other senior Tory, has made the single biggest contribution to the cause of independence in Scotland. It is his supreme efforts around Brexit that have pushed support for Scottish independence to sustained majority support. All of us who support an independent Scotland salute him today, and the statue will soon be commissioned in Aberdeen harbour.
I am sure all that nonsense and Euro-blaming he just spouted looks like progress to him, but for us in Scotland it just confirms why we want to get out of their dysfunctional Union. Just look at last week. The right hon. Gentleman totally and contemptuously ignored the representations from all the devolved Administrations about Brexit extension. He treated them with such disdain that they felt there was no point engaging with him any longer. They decided they would be better off washing their overabundant collective hair than listening to this Government again tell them what they should do and what to think about their chaotic Brexit plans. So I ask the Secretary of State: what is the point? What is the point of devolved Administrations engaging with him and his Government anymore? A tiger has been put in the tank. That tank is labelled “Scottish independence”.
Michael Gove
I am very grateful to the hon. Gentleman for that gallimaufry of not so much mixed as entangled metaphors. May I first of all congratulate him on wishing to erect statues rather than pull them down? I would be delighted to be carved in marble, bronze or whatever is the appropriate material, anywhere in Scotland, but I have to say that I do not deserve it. May I also say that as long as his smiling features gaze down on us, we know that the Union is safe. We know that the cause of Scottish nationalism, despite the ardour with which he puts his case, sadly will not prevail intellectually, morally, economically or politically.
The hon. Gentleman makes the point, of course, that there has been a difference of opinion between the Scottish Government and the UK Government on the question of extension, but there has been extensive engagement between the Scottish Government, the Welsh Government, the Northern Ireland Executive and our Government. Of course, even if we have taken different views, we have also worked together in order to safeguard the interests of our United Kingdom.
The hon. Gentleman made the point that some politicians would have been washing their hair instead of engaging in serious negotiations. All I can say is that rather than washing their hair, they were washing their hands of their responsibility to the people of this country. I hope that his colleagues in the Scottish Government will continue, as they have for most of this year, to engage in the constructive fashion for which they are well known in making sure that the interest of every citizen of the United Kingdom is protected.
Antony Higginbotham (Burnley) (Con)
On 1 January, the UK will emerge as a sovereign trading nation, and it is clear from my right hon. Friend’s statement that with good will on both sides and a recognition of this sovereignty there is a deal to be done. Will he confirm that if a deal is not done, the UK stands ready and able to trade with the world?
Michael Gove
My hon. Friend is right; should we not secure a comprehensive free trade agreement with the EU, we will be free to trade, not just with the EU, but with other nations, to our advantage.
Hilary Benn (Leeds Central) (Lab)
The Government’s decision to abandon the introduction of full customs checks and controls on EU imports from 1 January is a recognition that firms are simply not ready, yet the right hon. Gentleman knows that, regardless of whether an agreement is reached with the EU or not, British businesses will face checks, controls and red tape on exports to the EU from January. Given his decision, and given coronavirus, why does he think British businesses will be able to cope with that?
Michael Gove
British businesses responded warmly to the announcement we made on Friday as a pragmatic and flexible approach. The only alternative to the approach we outlined would be to extend the transition period. I know that is the position of the Labour party in London and in Wales, but we do not know what the position of the Labour party in London and in Leeds is. [Hon. Members: “What?”] We do not know the position of the Labour Front-Bench and the right hon. Member for Leeds Central (Hilary Benn).
Theresa Villiers (Chipping Barnet) (Con)
Will the Minister promise that any fisheries agreement made with the EU will provide for annual negotiations and reflect the UK’s status as an independent coastal state, and that we will not see a repeat of the betrayal we saw in 1972?
Michael Gove
I am very conscious of the mistakes made during our accession and the damage that the common fisheries policy has done, not just to our coastal communities, but to the husbanding of a very valuable marine resource. We have certainly made it clear to the EU that we will be an independent coastal state and we will have annual negotiations.
Ms Angela Eagle (Wallasey) (Lab)
The right hon. Gentleman has come here throwing out phrases such as “tiger in the tank” and is trying to gear up on the optimism, but last week the EU’s chief negotiator said that “progress remains limited”. What makes the right hon. Gentleman think that progress, which has been so limited in the past, will all miraculously resolve itself by the end of July?
Michael Gove
It is the case that progress has been limited, but the impetus that was lent to the talks not just by the Prime Minister but by the three European Presidents yesterday was a clear signal of intent, and we will work with good will with our European partners in order to conclude an agreement as quickly as possible.
Bob Stewart (Beckenham) (Con)
Our two French-speaking dogs cross the channel several times a year, Mr Minister, on a pet passport. On their behalf and on behalf of all other dog owners—
Bob Stewart
Labradors. On behalf of all pet owners who take their dogs abroad on a pet passport, may I ask my right hon. Friend whether similar arrangements will be in place after 31 December?
Michael Gove
Yes, I completely sympathise with my hon. Friend and many other responsible pet owners. In my previous role as Secretary of State at the Department for Environment, Food and Rural Affairs, we worked on arrangements in order to ensure that travellers could take their pets abroad when they are visiting the EU and vice versa. If I may, let me say this: nous défendrons toujours les droits des chiens.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
I can see why, with everything else going wrong for them, the Government want to rehash their greatest hits, but the right hon. Gentleman seems to have missed a fundamental 80% of our GDP, which is services, and financial passporting, in particular. Will he guarantee a financial equivalence regime at the end of all this or is it just blue passports that playing to the gallery allows him?
Michael Gove
I did not mention the colour of passports in my statement, but I am grateful to the hon. Lady for reminding the House that this is one of the many new freedoms we will enjoy outside the EU. I pledged, as did the Prime Minister, always to report back to this House on the progress of negotiations, which is why I am here. On the substantive question, the question of equivalence is one the EU will grant on the basis of an objective rules-based process; it is not a matter for negotiations. Equivalence on both financial services and data adequacy flows as a result of the EU’s internal processes, rather than an external negotiation.
Craig Tracey (North Warwickshire) (Con)
I welcome the statement. From speaking to businesses in my constituency, it is clear that they have gone through an unprecedented time of uncertainty with not only the current pandemic, but the prolonged Brexit saga. What we need to do now is give them clarity, so does my right hon. Friend agree that by rejecting calls to extend the transition period, we will give businesses right across the UK the certainty that they need to successfully plan for life outside the EU and get themselves ready for the many opportunities as part of a more globalised economy?
Michael Gove
My hon. Friend makes a very, very good point. He echoes the words of Carolyn Fairbairn of the Confederation of British Industry, who said:
“We have left the EU politically. We do now need to leave the EU economically. Business does not have any interest in delaying that because that is uncertainty magnified”—
I agree.
Richard Thomson (Gordon) (SNP) [V]
The Prime Minister once famously observed that
“there are no disasters, only opportunities”—
and indeed, opportunities for fresh disasters. While it is hard to negotiate any deal worse than no deal, it is clearly not beyond the modest abilities of even this Government to do exactly that, so why not limit the opportunity for fresh disasters by seeking an extension and taking as long as is necessary to establish a coherent negotiating position and to then negotiate the least harmful version of Brexit that they are capable of?
Michael Gove
It is the case that we have a clear negotiating position—one that was supported in the general election last year—and it will be the case that the hon. Member’s constituents will benefit from the new opportunities that being outside the European Union will bring—being outside the common fisheries policy, having access so that Scots farmers can secure new markets for their high-quality produce, and, at the same time, safeguarding the high-quality standards on environment and animal welfare that are at the heart of the UK’s world brand.
Steve Double (St Austell and Newquay) (Con)
The Government were elected with a substantial majority and a clear mandate: to get Brexit done, without delay or extension to the negotiations. Does my right hon. Friend agree that those who are calling for an extension, although it might enhance their standing in their party leadership campaign, are doing no favours for our country? All they are doing is prolonging the agony and deepening divisions when we all need to unite together, get through our current challenges and grasp the opportunities that Brexit brings.
Michael Gove
My hon. Friend is absolutely right. There is clarity and certainty from some parties in this House. The Scottish National party wants an extension, as do the Social Democratic and Labour party, the Alliance party and the Liberal Democrats. The Democratic Unionist party, like us, does not want one, but there is still uncertainty about what the Labour party wants. As long as that uncertainty lasts, business will want answers.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Over the past few weeks, I have often thought of our friend, Jo Cox, and her call that we concentrate on what unites us. She is much missed.
The north-east is a great trading region. It is part of integrated supply chains—pan-European, just-in-time supply chains—which drive prosperity, jobs and economic growth. Previous Government modelling said that a no-deal Brexit would hit our economy by 10%. Talk of a no-deal Brexit may just be a negotiating position, but will the Minister promise to publish regional economic assessments so that we know who will pay the price for failed negotiations?
Michael Gove
As the hon. Lady knows, my professional career started in the north-east of England, and I have enormous affection and respect for the way in which she champions the interests of her constituents. She is right that part of the north-east’s economic success depends on manufacturing and supply chains. That is why we will ensure that the north-east of England not just is safeguarded, but has its economic prospects enhanced, not least by the establishment—we hope—when we are outside the UK, of a free port in the north-east.
Dr Kieran Mullan (Crewe and Nantwich) (Con)
Does my right hon. Friend agree that every time Opposition Members seek to find yet another way to keep us locked into EU bureaucracy to achieve their policy aims, they are actually saying, in a very clear sense, that they do not trust British voters to make those policy decisions for our country?
Michael Gove
My hon. Friend is right, and he reinforces the observation that I have come to: the louder the Opposition heckle, the truer the question from a Government Back Bencher.
Justin Madders (Ellesmere Port and Neston) (Lab)
The parent company of Vauxhall Motors in Ellesmere Port is waiting for the outcome of these negotiations before it makes any investment decisions. To get a favourable decision, we need a guarantee that there will be no tariffs, fees, charges or quantitative restrictions in the automotive sector. Can the right hon. Gentleman give that guarantee?
Michael Gove
That is the commitment to which the European Union has aligned itself in the political declaration, and we will hold it to that.
Shaun Bailey (West Bromwich West) (Con)
Without repeating what many of my colleagues have said, businesses in the Black Country have one simple ask: they want clarity, and they want us to get this done. Will my right hon. Friend give a message to my businesses in Wednesbury, Oldbury and Tipton that rejecting an extension and getting this done, with the simple ask of a free trade agreement in line with what the EU has with every other country, will give them the clarity they deserve as we come out of these unprecedented times?
Michael Gove
My hon. Friend is right that in Wednesbury, Oldbury, Tipton and across the west midlands, businesses want certainty. That is what our announcements provide.
Chris Bryant (Rhondda) (Lab)
Two industries in Wales are particularly interested in what will happen in relation to any trade agreement. The first is Welsh lamb, because there is a real danger that the Welsh lamb industry will collapse if we do not have a completely tariff-free arrangement with the EU. We hardly sell any Welsh lamb outside Europe. The second is the avionics industry, which is so important in my patch and across the whole of south Wales, where thousands of people are already in great uncertainty about whether their job will still be there later this year. They need to know whether BA, GE and many other companies will be able to flourish in the new environment.
Michael Gove
The hon. Gentleman makes two important points. He is right that the avionics industry is a jewel in Wales’s and the United Kingdom’s crown, and everything we do in these trade negotiations will be intended to support it. He is also right that Welsh lamb is second to none—well, apart from Scottish lamb.
Michael Gove
It is second to Scottish lamb; that is my view, purely as a consumer.
Michael Gove
You don’t know who my relatives are, Chris. All UK lamb is excellent, and we need to ensure that the Welsh lamb industry secures access to not only the European market but new markets as well. In the United States and, indeed, in the middle and near east, there is growing demand for excellent Welsh, Scottish, Northern Irish and English lamb. Access to those markets will make our farmers more secure financially and better able to steward the environment.
Jonathan Gullis (Stoke-on-Trent North) (Con)
I want to pass on to the Chancellor of the Duchy of Lancaster the thanks of the 72% of people in Stoke-on-Trent North, Kidsgrove and Talke who overwhelmingly voted to leave and are delighted that we are not extending the transition period. I am sure that he has a fine collection of ceramics from Stoke-on-Trent in his home and office. Ceramics manufacturers such as Churchill China in my constituency are keen to see us get a really good free trade deal. Ceramics has been put at the heart of the international trade agenda of the Secretary of State for International Trade. I am sure that the Chancellor of the Duchy of Lancaster will confirm that ceramics is at the heart of the free trade negotiation on manufacturing and will happily meet me and members of the British Ceramic Confederation.
Michael Gove
I certainly will. Only last night, I was talking to my right hon. Friend the Secretary of State for International Trade about what more we can do to support the ceramics industry, which is so vital to the economic health of Staffordshire and is a source of pride for all of us across the United Kingdom. Whether it is Churchill China, Royal Doulton, Emma Bridgewater or others, we should do everything we can to ensure that there are new markets for UK ceramics. I know my right hon. Friend will also ensure that we have an appropriate trade remedies authority in the UK, so that inappropriate dumping of ceramics does not undermine UK production.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
The joint statement from the Scottish and Welsh Governments said that meetings including the right hon. Gentleman have
“simply been an opportunity for the UK Government to inform us of their views, not to listen or respond to ours.”
I am sure that that sounds familiar to many Members in the Chamber. His reckless decision not to extend the transition period will cost thousands of jobs at precisely the worst point. Scotland did not vote for this. How many Scottish job losses will he see as a fair price to deliver Brexit on his timetable?
Michael Gove
I and the Paymaster General have enjoyed long conversations with representatives of the Scottish Government. Mike Russell and other Ministers, including Fergus Ewing, are always a pleasure to engage with. They bring a wealth of experience and a light touch to our conversations, which I always enjoy, appreciate, am better informed by and benefit from. The real threat to jobs in Scotland would be a reckless decision to smash the United Kingdom after 300 years of shared prosperity.
Madam Deputy Speaker (Dame Eleanor Laing)
We cannot see Robert Halfon, but we can hear him.
Robert Halfon (Harlow) (Con) [V]
I am glad that you are able to hear me, Madam Deputy Speaker. Given that leaving the EU means that we can control our VAT rates and cut VAT, what progress has been made in taking back control of VAT rates so that we can cut our energy bills and the cost of living for hard-working residents in Harlow and across the country?
Michael Gove
My right hon. Friend is an indefatigable campaigner not just for Harlow but for the hard-pressed citizens of this country. He is right that outside the European Union, once we have left the transition period, we will have full control of VAT rates. My right hon Friend the Prime Minister is dedicated to making sure that we can use that new-found independence to help precisely the constituents for whom my right hon. Friend the Member for Harlow fights so brilliantly.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op) [V]
I am sure that the Minister agrees that all common-sense people now know that we want a deal and we want a good deal, because the health, wealth and prosperity of our constituents depend on it. Can he assure me that we will put real energy into that? It is all right to dig out a campaign for Esso petrol back in 1959, but we need some serious leadership. He must admit, surely, that the breakthrough came only when Prime Ministers at the top level talked about moving it forward. Can we make sure that we take it seriously and that the Prime Minister comes regularly to the House to report on future progress? We need a good deal and we need it soon, because turbulence lies ahead whatever deal we get.
Michael Gove
I am amazed that the hon. Gentleman can recall an advertising campaign from 1959, because it must have occurred before either of us was born. Nevertheless, he makes an important point, which is that we need to accelerate progress in the talks. That is the Prime Minister’s aim and the EU’s aim. I look forward to updating him on our progress in weeks to come.
Several hon. Members rose—
Madam Deputy Speaker (Dame Eleanor Laing)
If hon. Members wish to be kind to their colleagues, I implore them to ask short questions, so the Minister can also give short answers. That way, everyone who has the opportunity to speak will be able to do so. If not, some people will be left out, which is not fair.
Nigel Mills (Amber Valley) (Con)
The last round of talks finished with Michel Barnier waving around the declaration from last year. Does the Minister agree that he should wave it towards EU leaders and ask them to refine his mandate so that he has more chance of making a deal on state aid and fishing?
Carla Lockhart (Upper Bann) (DUP)
Can the Minister outline what further progress has been secured to ensure that no additional declaration forms will need to be completed when sending goods from Northern Ireland to Great Britain? Will the Government guarantee that, in all circumstances, no business will be required to fill out such paperwork, as set out in their recently published Command Paper? Will he commit to visit firms in my constituency that have concerns in that regard?
Michael Gove
I would be delighted to visit Craigavon, Lisburn or anywhere in the hon. Lady’s beautiful constituency to reassure her that Northern Ireland will have unfettered access to the rest of the UK.
Miss Sarah Dines (Derbyshire Dales) (Con)
Does the Minister agree that if the Government accepted the EU proposal of a skewed definition of a level playing field, the UK would be bound to questionable European courts indefinitely, which would be simply unacceptable to the British people, who voted again last year to restore British sovereignty?
Michael Gove
My hon. Friend is absolutely spot on. Of course we are not going to resile from our high standards; our standards will be higher than ever before when it comes to consumer protection, workers’ rights and the environment. What we can never accept—what no independent sovereign nation could ever accept—is the jurisdiction of a foreign court on those matters.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
For years, the directors of Orkney Creamery have built an export market for a high-quality product, which they have improved, with Government encouragement. Will the Minister explain to them what he means when he says that if we do not get a deal, we will be trading on our own terms, because they tell me that if they have to pay tariffs on their exports, they will not be able to compete? If they go, we lose the market for the milk for the dairy farmers. The dairy farmers will then not need the services of the vets or the agricultural merchants or all the other businesses that rely on them. Will the Minister explain to these people exactly what trading on our own terms mean?
Michael Gove
The right hon. Gentleman is an effective advocate for his constituency, not least for the agricultural interests of fellow Orcadians. He is absolutely right; it is a high-quality product and it is always better when we have tariff-free access, not just to the European Union but to other markets. The political declaration requires that the EU should use its best endeavours to get a zero-tariff and zero-quota agreement and that is what we are all working hard to secure.
Mrs Flick Drummond (Meon Valley) (Con)
At present, the UK is offering EU citizens visa-free travel for six months out of 12. The EU is only offering 90 days in 180, which is the same as the standard Schengen agreement. That would be an unwelcome restriction to sailors, travellers and those who have homes in EU countries. Will my right hon. Friend update us on the negotiations in that area?
Michael Gove
Yes. My hon. Friend makes a good point. We want to make sure that we have reciprocity in the way in which UK and EU citizens can enjoy sport, leisure and other activities, including business activities, in the future. I also take this opportunity to wish my hon. Friend a very happy birthday.
Clive Efford (Eltham) (Lab)
The covid crisis has demonstrated the need for international co-operation. Is it correct that the Department of Health and Social Care argued that we should remain part of the pandemic warning and response system of the European Union and, if so, why did the Government not listen?
Michael Gove
I had not heard that. I have not heard any such submission from the Department of Health, but I am grateful to the hon. Gentleman for raising the issue and I will ask my good friend the Health Secretary about it.
Dean Russell (Watford) (Con)
Will my right hon. Friend assure my fantastic business community in Watford and the chamber of commerce, which I speak with regularly, that we are trying to get the best deal we possibly can, that it is not the case that we are trying to chase no deal and that we are working incredibly hard to make sure that we get the best deal for this country?
Michael Gove
My hon. Friend is absolutely right. One of the reasons why the Prime Minister wanted to have the high-level meeting yesterday—one of the reasons why the three presidents wanted it as well—was precisely in order to accelerate progress towards securing a deal. We are ready for life outside the single market and the customs union, come what may, but it is our devout intent to secure a deal. I hope my hon. Friend can tell businesses in Watford, whom he represents so effectively, that their voices are heard loud and clear in Downing Street and the Cabinet Office.
Mr Ben Bradshaw (Exeter) (Lab)
At the general election, the Tories promised
“no tariffs, fees, charges or quantitative restrictions across all sectors”.
Does that commitment still stand?
Michael Gove
That is the commitment in the political declaration, to which both the UK and the EU are working.
Dr Luke Evans (Bosworth) (Con) [V]
I and my constituents were pleased to hear that there will be no extension, but some of my constituents, particularly the businesses in Bosworth, are rightly concerned about how to prepare for the future. What steps are the Government taking to keep businesses in Hinckley and Bosworth and across the UK updated on the progress of EU negotiations, so that they can plan strategically for the future?
Michael Gove
Businesses in Leicestershire and elsewhere will have the opportunity to secure access to an additional £50 million of Government support in order to ensure that they can export effectively not just into the EU but beyond. It is also the case that intense engagement with businesses is being conducted by Her Majesty’s Revenue and Customs, the Department for Business, Energy and Industrial Strategy and others.
Stephen Farry (North Down) (Alliance)
The Northern Ireland protocol is there to protect the Good Friday Agreement in all its parts, but it is right that we do all we can to minimise the impact down the Irish sea. Does the Minister recognise that in the event that we fail to secure a deal with the European Union and the Government opt to trade on their own terms, the impact of that border down the Irish sea will be more severe, with businesses and households facing more costs?
Michael Gove
It is the case of course that we wish to secure a deal, and a deal would be in everyone’s interests, but the purpose of the Northern Ireland protocol, as the hon. Gentleman rightly reminds us, is to uphold the Belfast/Good Friday agreement in all its elements. Critical to that is that we all recognise that under the protocol, Northern Ireland remains not only part of the UK politically, but also part of the UK customs territory. Unfettered access is a right that all parties agree should be maintained.
Mrs Heather Wheeler (South Derbyshire) (Con) [V]
I thank my right hon. Friend for his statement. As negotiations continue, to put minds at rest in the aviation sector and especially among my South Derbyshire constituents who work at Rolls-Royce in Derby, will he confirm that after 31 December the skies will still be open, our planes will still be flying and our world-class aviation companies will not be excluded from international work in Europe or elsewhere?
Michael Gove
My hon. Friend is absolutely right. I take this opportunity to say that whether it is the superb workforce at Rolls-Royce or others in aerospace, their technical expertise and manufacturing skill will be central to the future of Britain’s success. We need to make sure that we promote their expertise not just in our relationship with the European Union, but in our relationship with other countries. They are the best of British.
Rushanara Ali (Bethnal Green and Bow) (Lab)
Last week, the Paymaster General admitted that the Government are making preparations for a no-deal Brexit, and we have seen the spectre of panic buying and stockpiling at the start of the coronavirus pandemic. What preparations has the Minister made to prevent stockpiling and panic buying by worried consumers in the event of the disruption and chaos that a no-deal Brexit would cause to the supply chain?
Michael Gove
It is the case that if we leave without a specific free trade agreement, certain steps will need to be taken by Government and by others to make sure not only that we can meet the challenges, but that we can take the opportunities. The Cabinet Office and others constantly review at all points what we need to do, but I think the spectre that the hon. Lady invokes is not one that should bother her or others.
Tom Hunt (Ipswich) (Con)
Does my right hon. Friend agree that the Leader of Her Majesty’s Opposition is beginning to develop a reputation for going to ground on the most contentious issues, such as whether his party supports an extension of the transition period or whether he continues to think backing freedom of movement is democratically acceptable after the 2016 referendum and the general election—
Mr Deputy Speaker (Mr Nigel Evans)
Order. Mr Hunt, resume your seat for just a second, and I will explain that the Minister is not responsible for the policy of Opposition Members. Please could you get to the question for which the Chancellor of the Duchy of Lancaster is responsible.
Michael Gove
I can absolutely confirm to my hon. Friend that we have informed the Withdrawal Agreement Joint Committee that we will not extend. That is the position. That is settled. That is decided. As for his reference to the right hon. and learned Member for Holborn and St Pancras (Keir Starmer), on this question we do not know whether he is the Scarlet Pimpernel or the invisible man.
Claire Hanna (Belfast South) (SDLP) [V]
There is a deep and growing unease in Northern Ireland and, indeed, across the island of Ireland, at the prospect of a no trade deal exit in six months. I will not rehearse now the profound damage that would do to the economy, society and the political structures here, but specifically within the no-deal preparations, what measures are the Government taking to protect covid-19 contact tracing across these islands in the absence of a data equivalence regime after a no trade deal?
Michael Gove
The hon. Lady raises a very important issue. Data equivalence, as I mentioned in response to a previous question from the hon. Member for Ealing Central and Acton (Dr Huq), is separate from these negotiations, but it is important on the island of Ireland that we continue to share information. We have had a very good working relationship with the Government. I congratulate Fianna Fáil, Fine Gael and the Green party on agreeing a programme for government. I wish the new Taoiseach-elect Micheál Martin all the very best in the shared work that we will engage in to deal with coronavirus.
Jane Stevenson (Wolverhampton North East) (Con)
Fisheries seem to be a major stumbling block in the negotiations, with the EU seeking to uniquely link fishing rights to a wider free trade agreement. This is not necessarily a position of cherry-picking, but perhaps one of having their hake and eating it. Does my right hon. Friend agree that unless the EU position changes and it recognises that we are sovereign coastal notion, these talks might flounder?
Michael Gove
My hon. Friend tempts me. The truth, however, is absolutely as she depicts it. We will leave and be an independent coastal state, and the EU will negotiate on an annual basis for access for its fishers.
Andrew Gwynne (Denton and Reddish) (Lab) [V]
As we know, serious crime knows no borders and we will still need to co-operate on these issues once the transition period ends, so will the Chancellor of the Duchy of Lancaster give the House an assurance today that, as from 1 January next year, the UK will still have access to both the quantity and the quality of data through passenger name records, the European Criminal Records Information System and SIS II—the Schengen Information System?
Munira Wilson (Twickenham) (LD)
If the tiger turns out to be a pussycat and we do not end up with a deal in a few short weeks, when will the right hon. Gentleman be providing advice and guidance to the heavily regulated industries and, indeed, farmers in mainland Britain that supply Northern Ireland, so that the people of Northern Ireland can continue to legally receive medicines, for example, from 1 January next year?
Michael Gove
There will be no question, no impediment and nothing to prevent the citizens of Northern Ireland—whose rights I know the hon. Lady has taken a keen interest in upholding—from securing access to vital medicines or any other goods after we leave the European Union.
Mr Mark Harper (Forest of Dean) (Con)
First, I commend my right hon. Friend and our chief negotiator, David Frost, for their resolve in ensuring that we deliver our promise to end the transition period at the end of this year. Can my right hon. Friend confirm that it remains the intention of the Government to negotiate a security arrangement outside the ambit of the European Court of Justice that will ensure that we remain protected from foreign criminals coming into Britain and that we stop criminals escaping the jurisdiction of our courts so that we can bring them to justice?
Michael Gove
My right hon. Friend was a very effective Home Office Minister, and he speaks with great authority on these questions. He is absolutely right. We need to be outside the ambit of the ECJ, but we need to ensure that we have security, criminal justice and other forms of co-operation, precisely in order to ensure that we keep our citizens safe and work with the EU to keep its citizens safe.
Mr Deputy Speaker (Mr Nigel Evans)
I thank the Secretary of State for his statement. Please be aware of social distancing as you leave the Chamber. We will suspend for three minutes.
Automatic Electoral Registration
Tuesday 16th June 2020
(3 years, 10 months ago)
Commons ChamberRead Full debate Automatic Electoral Registration Bill 2019-21 View all Automatic Electoral Registration Bill 2019-21 Debates Read Hansard Text
A Ten Minute Rule Bill is a First Reading of a Private Members Bill, but with the sponsor permitted to make a ten minute speech outlining the reasons for the proposed legislation.
There is little chance of the Bill proceeding further unless there is unanimous consent for the Bill or the Government elects to support the Bill directly.
For more information see: Ten Minute Bills
This information is provided by Parallel Parliament and does not comprise part of the offical record
Judith Cummins (Bradford South) (Lab)
I beg to move,
That leave be given to bring in a Bill to impose certain duties upon Her Majesty’s Government to ensure the accuracy, completeness and utility of electoral registers; to make provision for the sharing of data for the purposes of electoral registration; and for connected purposes.
This Bill has a very simple aim: to ensure that everyone who is entitled to vote in this country is able to do so. It does that by moving away from the current system of electoral registration—one that is complicated, fragmentary and, crucially, incomplete—to a new system where individuals are automatically added to the register using the data the Government already hold. In the current context, as we face a global pandemic that is disrupting every aspect of our lives and society, this is more important than ever. The problems the upcoming boundary review is likely to face as a result of this crisis make it abundantly clear that we urgently need a new approach to electoral registration.
I begin by paying tribute to my hon. Friend the Member for Cardiff Central (Jo Stevens), who introduced a similar Bill in 2017, and Baroness McDonagh, who did so in the other place. I also pay tribute to my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh), who introduced a Bill on automatic electoral registration in 2016.
I will shortly speak about how an automatic electoral registration system could work—indeed, how it does work in many countries around the world—but first I would like to say something about the problems with the current registration system and why the pandemic makes this proposal more relevant than ever.
The right to vote is an essential and fundamental democratic right. Under the current system of individual electoral registration, individuals are solely responsible for registering and ensuring their details are up to date, yet research by the Electoral Commission in 2019 showed that more than 9.4 million people eligible to vote in the UK were either incorrectly registered or not registered at all. It also found that these missing voters were far more likely to be from lower-income backgrounds and black and minority ethnic communities or to be young people or renters. In many cases, these are groups that feel increasingly marginalised and disenfranchised from and through the political process. Indeed, a survey of poll workers at recent elections found that the most common problem they encountered was having to turn people away who wrongly believed they were registered. Not only are they then denied their right to vote, but they are not counted for the critically important purpose of determining constituency boundaries.
Hon. Members will be keenly aware, given the recent Second Reading of the Parliamentary Constituencies Bill, of the importance of the electoral register in determining new boundaries. Operating with an incomplete register risks cementing unfairness into the system for at least eight years. The current crisis makes the situation even more stark. As the Minister acknowledged in the Second Reading debate, the Government now face a very challenging situation. Under legislation, the upcoming 2021 boundary review will be based on this year’s electoral register. Given the cancellation of local elections, the logistical difficulties in the usual door-to-door collection of data and all that that entails, and the significant pressures that local authorities are facing, it is clear that that is not going to be possible. The Government have said that they will consider using a register from a different year, but if we had an automatic registration system that continually updated the electoral roll using digital data from across Government, we would be in a much better place to deal with this situation.
We cannot know what the crises of the future will be, but we can prepare by building a robust registration system that is fit for the 21st century. Individual electoral registration is failing and it is time to seriously consider the alternatives. I believe my Bill improves the resilience and reliability of the electoral system, as well as making it fairer and ensuring that every single person eligible to vote is able to do so. Automatic electoral registration is common sense and current circumstances have shown that it is long overdue. Its fundamental principle is that the state should do all it can to ensure the electoral roll is as comprehensive and accurate as possible.
My Bill would place a duty on the Secretary of State to ensure that all electoral registers in the UK are accurate and complete. It requires public bodies, including Her Majesty’s Revenue and Customs, the Driver and Vehicle Licensing Agency, the NHS, the Passport Office and local authorities to work together and share information for the purposes of registering voters. It proposes taking data sets from across government and public services, and using them to collect information for the electoral register. For example, someone could be automatically added to the electoral register when they are issued with a national insurance number or when they update their passport, pay tax or claim benefits. A new integrated digital system would ensure that the register is continually updated to be as accurate and as up to date as possible. I believe that this is one of the great strengths of the system and one the Government surely welcome given their consistent focus on ensuring accuracy and reducing fraud. Finally, the Bill would require institutions such as universities to collect the relevant information and register students living in halls of residence.
Taken together, I believe these measures represent a straightforward and cost-effective way to modernise our electoral registration system. We would, of course, need safeguards to protect privacy and to ensure the security of the data collected. No one should be added to the open register without their explicit consent, for example.
Automatic registration has received support from a wide range of relevant organisations. The former Political and Constitutional Reform Committee backed automatic voter registration in a 2014 report on voter engagement, while the Electoral Reform Society suggests allowing citizens to register to vote whenever they come into contact with the Government. A report by the Democracy Forum found that implementing a form of automatic registration would lead to considerable improvements in the completeness and accuracy of the register. It outlined various options for exactly how that could be done. The Electoral Commission has carried out extensive feasibility work on automatic electoral registration. It found that digital data sharing, including more automated forms of registration, could be implemented by building on the existing IER—individual electoral registration—infrastructure, and that the reforms were feasible from a technical and operational perspective.
If we look around the world, we find that Britain is actually something of an exception; almost all democratic systems use some form of automatic or automated registration processes. Australia and Canada have both recently implemented schemes of this nature.
A few months ago, none of us here could have imagined the situation that we are now facing. The coronavirus pandemic is making us look again at many aspects of our society and our politics. I firmly believe that the current crisis shows the importance of reforming and modernising our electoral registration system to make it resilient for the challenges of the future that we cannot imagine now, and to guarantee everyone the right to vote and be counted. I commend the Bill to the House.
Question put and agreed to.
Ordered,
That Judith Cummins, Siobhain McDonagh, Jessica Morden, Carolyn Harris, Nick Smith, Karyn Smith, Mike Amesbury, Chris Elmore, Chris Matheson, Martyn Day, Peter Dowd and Tracy Brabin present the Bill.
Judith Cummins accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 30 October and to be printed (Bill 139).
Opposition Day
Free School Meals: Summer Holidays
(3 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Deputy Speaker (Mr Nigel Evans)
The amendment is not being moved, so we move straight into the debate. A lot of Members have shown interest in this particular debate, so please can I ask, in both the opening and the response to this motion, please be mindful that so many people wish to participate?
Rebecca Long Bailey (Salford and Eccles) (Lab)
I beg to move,
That this House welcomes the Government’s decision to provide schools with their expected funding to cover benefits-related free school meals including the national voucher scheme over the Easter and May half-term holidays; notes the decision of the Welsh Government to guarantee each eligible child the equivalent of £19.50 a week up until the end of August to cover their meals over the summer holidays; and calls on the Government to continue to directly fund provision of free school meals, including the free school meal voucher scheme for eligible children over the summer holidays to stop children going hungry during this crisis.
It is a pleasure to open today’s debate on such an important motion—Labour’s call on the Government to provide free school meals over the summer holidays, so that all children can have a holiday without hunger. This is an issue that has gained significant traction over the past few days, with a chorus of charities, legal campaigners, Sustain and Good Law Project, Members across the House, good people tweeting all over the country and, of course, Manchester United star, Marcus Rashford. I am not only proud to be a Man United fan—that one of our own in Greater Manchester never forgot where he came from and used his profile to help those without a voice—but I am proud that he and those who have joined him have shown the very best that our country can be. I am delighted to say that the Government seem to have heard the cries and they appear to have done a U-turn on their decision to end the free school meal voucher scheme over the summer holidays.
I do have questions for the Secretary of State to address—not least, we need confirmation that the guarantee that free school meals vouchers will be provided over the summer holidays is concrete. However, as he will appreciate, this small win will be bittersweet overall if we do not now set about tackling the root cause of why many children are forced to rely on free school meals in the first place—poverty. Marcus, in his heartfelt letter, asked one important question yesterday:
“Can we not all agree that no child should be going to bed hungry?”
If we could all agree on that principle, there would be no debate to be had today.
I know that there are Members on the Government Benches—and, of course, on the Opposition Benches —who agree. They will tell stories of the horrific hardship that families in their constituencies have had to suffer daily. They will illustrate that to succeed in life, a child must have a bedrock of security, love and a full belly. They will transcend party lines to unify together in support of our children, showing the very best side of Parliament today.
Danny Kruger (Devizes) (Con)
I agree with the hon. Lady about the importance of this debate and of working across the House. I am sorry that this topic has become such a political football because it is one that unites the House, but surely the question is not whether to support the most vulnerable children in our society, but how we do that. Will she acknowledge that the Government are working hard with councils, with schools, with businesses and, crucially, with civil society to put in place a system of support and activity through this summer to ensure that children get the support they need?
Rebecca Long Bailey
I thank the hon. Member for his comments. I await with bated breath the details of the Secretary of State’s summer scheme—I have some ideas to suggest to him for how it might be rolled out. Indeed, there is a wider suite of support that our children will need throughout the pandemic and as we exit lockdown. Tackling poverty is just one element.
Ms Angela Eagle (Wallasey) (Lab)
Is my hon. Friend as surprised as I am, if the Government always intended to do this, that they sent out the Transport Secretary and the Work and Pensions Secretary to embarrass themselves defending the indefensible?
Rebecca Long Bailey
All I will say is that I am happy we have reached the point we have today, although it should not have taken a public campaign from a well-known national hero to push the Government into making this decision. That said, they have made that decision and we take these small wins where we can find them.
Tim Farron (Westmorland and Lonsdale) (LD)
I completely agree with the hon. Lady. It is really good news that the Government, as we understand it, are changing their position on the provision of free school meal vouchers over the summer, but does she agree that, to date, the system has been far from perfect? The contractor that has taken on this job has failed, for example, to provide children with vouchers for supermarkets in the villages or towns where they live. Does that not need to be fixed before the summer?
Rebecca Long Bailey
The Secretary of State will be well aware of the issues with the Edenred voucher scheme —the fact that many families have arrived at supermarkets and been turned away, that many schools have had to step in when vouchers have not been readily available and fund school meals themselves, and that in many cases they have not received assurances from the Government that they will be recompensed for that monetary expenditure. Perhaps he can provide those assurances today.
Jim Shannon (Strangford) (DUP)
So far, the Welsh Government and Assembly have agreed to do it, the Scottish Parliament has agreed to do it, the Northern Ireland Assembly has within the last three or four hours agreed to do it, and at long last the Government here have agreed to do it. Society is measured by its attitude to those who are less well off. I congratulate the hon. Lady on bringing this forward and look forward to the Government’s participation and making this a success.
Rebecca Long Bailey
I thank the hon. Member for his comments.
These children are not just statistics. The vast majority are children in working families, where parents are working around the clock to cover bills but where there is never enough. They are the children of parents who perhaps cannot work, through no fault of their own, for reasons such as chronic ill health. They may be the children of communities that have suffered from generations of unemployment and who feel their hopes and dreams are unachievable, no matter how hard they try, because the jobs simply are not there.
Patricia Gibson (North Ayrshire and Arran) (SNP)
I am sure the hon. Lady will agree that it is quite distasteful that the Government have had to be dragged kicking and screaming to this point. I note she said earlier that it is ultimately about not just holiday hunger but the ingrained childhood poverty we see all around us. She talked about other measures being needed. Does she agree that one thing the Government might consider is replicating in England the Scottish child payment, whereby lower income families are given extra help and additional funds to pull them up so there is less need in the household?
Rebecca Long Bailey
I welcome the hon. Lady’s comments. We take these small wins where we find them, but this campaign has demonstrated how the Government can be encouraged to change their position when we bring together our communities and key figures in sport, entertainment and so on, around an issue that our communities are passionate about. Let us move on as a House, tackle the root cause and move on together, united, to make lives better for these children.
Marcus was right in his letter yesterday. He spoke emotionally about his own story. He stated:
“My story to get here is all-too-familiar for families in England: my mum worked full-time, earning minimum wage to make sure we always had a good evening meal on the table. But it was not enough. The system was not built for families like mine to succeed, regardless of how hard my mum worked.”
He is right. The shameful reality is that for so many people in Britain today, no matter how hard they try, they cannot make ends meet. Opportunities are too few, wages are too low and bills are too high. Before the pandemic, more than 4 million children in the UK were living in poverty—that is nine out of every class of 30— and that is expected to rise to 5.2 million by 2022. Child poverty is a pandemic of its own in this country and one that has got far worse, unfortunately, over the last few years. Child poverty reduced by 800,000 under the last Labour Government, but the TUC found that, in 2019, that progress had been completely reversed, with the number of children growing up in in-work poverty alone having risen by 800,000 since 2010. Some 47% of children living in lone-parent families are in poverty, 45% of children from black, Asian and minority ethnic backgrounds are in poverty and 72% of children growing up in poverty live in a household where at least one person works.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The Food Foundation has found that food insecurity has increased by almost 250% since lockdown began, affecting 5 million adults and 2.5 million children. While the free school meals U-turn is welcome, it is not enough. Does my hon. Friend agree with me that we need the Government to raise their game fast to protect the millions of people who are now going to face even more hardship?
Rebecca Long Bailey
I thank my hon. Friend for her comments, and I completely agree. While today’s U-turn is welcome, it is merely a sticking plaster.
Work is often not a route out of poverty any more. Living in poverty does not mean people do not work or work hard, as some would have us believe. Shamefully, children go hungry every year, but this summer will be especially difficult for many families, as job losses and reduced incomes hit household budgets. Research from the Food Foundation shows that more than 200,000 children have had to skip meals because their family could not access the food they need during lockdown. The Institute for Public Policy Research has found that 200,000 more children are among those expected to be below the pre-virus poverty line at the end of the year.
It is very likely that, since the latest data became available, more than the 1.3 million children already eligible for free school meals will become eligible, with 2.1 million people claiming unemployment-related benefits in April alone, an increase of over 850,000 on the previous month. Indeed, in its coronavirus reference scenario, the Office for Budget Responsibility has predicted that the unemployment rate may rise to 10%.
Gareth Johnson (Dartford) (Con)
Does the hon. Lady agree with me that no Government in history have created more jobs than this Government over the last five years, yet every single Labour Government have left power with higher unemployment than when they got into power? Should she not be grateful for the fact that we have a Conservative Government that will actually create more jobs than any Labour Government have ever managed to achieve?
Rebecca Long Bailey
I thank the hon. Member for his comment, but I think he must have been asleep when I outlined the scale of child poverty, particularly the point I made about many children living in working households. A job might be a job, but it is not good enough if that job does not provide enough for people to put food on the table and keep a roof over their heads. That is what many families are going through across the country at the moment, so let us up our game on this.
Not only is it simply wrong for children to be going to bed hungry, but it is likely to heighten the already substantial gap in attainment between the poorest and their peers. “Newsnight” reported last week that the poorest children usually end up five weeks behind where they were at the end of term because of the usual six-week summer break. With potentially six months away from school, I dread to think what the impact of this period will be on the education of the most disadvantaged children this year, without urgent help.
The Government are said to be planning a big catch-up programme for the summer holidays, which will of course be welcome and I wait to see the detail. However, I would be grateful if the Secretary of State agreed today to ensure that, as part of this, he will develop a national plan for education, where local authorities are funded to make a summer holiday local offer to children and young people; where schools are provided with additional resources, such as an enhanced pupil premium to help disadvantaged children; and where public buildings such as libraries and sports centres are used to expand the space available to schools to ensure safe social distancing.
Tim Farron
I am grateful to the hon. Lady for being so generous in giving way. She makes a really important point. Of course, if there are 30 kids in a class, to do this carefully and safely may mean having to split it three ways. Does she agree with me that it is right that the Government fund not only the additional space that will be needed, but the additional teaching assistants we need to make sure that those children are properly looked after and taught?
Rebecca Long Bailey
Indeed. The hon. Member makes an important point. Certainly, I would like the Government to look at sourcing these additional teachers, and encouraging qualified teachers who have left the profession to return to support pupils is certainly one such avenue.
Jonathan Gullis (Stoke-on-Trent North) (Con)
As a qualified teacher before entering this House, I would be more than delighted to return to the frontline and help in any way I can. The hon. Member for Westmorland and Lonsdale (Tim Farron) made a point about schools looking to expand. Rather than spend more money on portakabins and using other buildings, would it not be better—given that the science shows that children are more likely to be hit by lightning than tragically pass away from covid-19—to get all children back into the classroom in September in their school buildings, where we know they are safest?
Rebecca Long Bailey
The Secretary of State has his first volunteer to provide targeted tuition for pupils come September. I look forward to seeing the hon. Gentleman in the classroom once again. I am sure that Members across the House agree that safety has to be the No. 1 priority, and I know that that view is shared by the Secretary of State. We have to work across the House, and the Government really need to start pushing the boundaries and creating a taskforce, with experts, teaching unions and school leaders, to look at how we can safely get children back into school. That will be the best place for them—emotionally and academically—but it is not a trade-off between safety and being back in school. We need to achieve both.
Clive Efford (Eltham) (Lab)
What we do not need from the Government is another rabbit-out-of-the-hat announcement. My hon. Friend has just set out the sorts of things that we need in place if we are going to reopen schools in September, as the hon. Member for Stoke-on-Trent North (Jonathan Gullis) just suggested. That would require the Government to set out a plan now and to start to engage with teachers’ unions, teachers themselves, heads of schools, local authorities and parents to create confidence that it is safe to send children back to school. That is what is lacking from the Government; they need to engage more widely if we are going to create the confidence that children can return safely.
Rebecca Long Bailey
My hon. Friend makes an important point. This is about assuring parents, teachers, school staff, pupils and wider communities about safety, and ensuring that we get children back into school in a very safe way. To do that, we have to have a consensus, which is why I have repeatedly called for the creation of a taskforce to bring together all those in the education sector to come up with the safety principles that need to be put in place in schools to ensure their safe reopening, and to produce a national plan for education so that pupils receive the emotional and academic support that they deserve.
Let me turn to additional support measures. I would like the Secretary of State to look at future GCSEs and A-levels, and to have discussions with Ofqual about changes to account for the work that has been lost during this period in order to provide a fair assessment of young people’s attainment. We also need provisions in the event that there is a second spike resulting in pupils being sent back home and being unable to take exams in the usual way.
Jonathan Gullis
As the hon. Lady will be fully aware, one of the biggest challenges is that although we have a curriculum, schools teach that curriculum in many different orders. How has she factored that into her suggestion for a potential change in the examination process?
Rebecca Long Bailey
The hon. Gentleman may have missed my first sentence on that point; I think that the Government need to have discussions with Ofqual to look at how changes can be managed properly. He is right that different schools take different modules at different times, and different exam boards have exams set out in different ways, but the challenge is not insurmountable. These discussions need to start now, not at the last minute. We have already lost too much time.
I would also like the Secretary of State to look at blended learning. We do not know how long this pandemic will last and we need to provide for adequate home and school learning. I want him to work with the sector to look at the support that pupils will need both in school and at home, and at how much face-to-face contact can be provided remotely and in person.
On digital provision, we know that free laptops have been promised to year 10s and selected children, but I want to see a guarantee that every single child can access their work online. Will the Secretary of State confirm today that—at the very least—he will start with a commitment to providing devices to all children eligible for free school meals if they do not have access to a digital device?
Siobhain McDonagh (Mitcham and Morden) (Lab)
As my hon. Friend may know, only yesterday I presented to the House on a cross-party basis my Internet Access (Children Eligible for Free School Meals) Bill, which asks the Government to look at the means to provide internet access and devices for the 1.3 million children in England entitled to free school meals. Would she urge the Secretary of State to support that Bill?
Rebecca Long Bailey
I thank my hon. Friend for her comment. I certainly would urge the Secretary of State to consider the points that have been made. I thank her for all the work that she has done on this vital issue. It is a sensible proposal and hopefully one that the Secretary of State will respond on today.
It is important not to forget that even children who have not been through very difficult circumstances throughout this pandemic will still have been profoundly affected emotionally. That is why we need to have a national plan for children’s wellbeing to provide emotional and mental health support when children eventually do return to the classroom. These are the building blocks of a national academic and emotional programme for children. Failing to provide the most basic support for children will undermine this effort. The fact is that no child can learn if they are hungry. That is why it is so important that this year, especially, the Government have stepped in to ensure that all children have a holiday without hunger and that they are funding free school meals over that period.
But now that there is a consensus emerging on the damage that child poverty does to the outcome of our children’s lives, I ask Members to truly address these issues. The two-child cap on child benefit and the five-week delay to the first payment of universal credit are cruelly blighting the lives of children and their families. Will Members now pressure the Government to address decimated school and local authority budgets and the closure of Sure Start centres? Will Members’ concerns on these issues be heightened now? Last month, a survey by the National Education Union told harrowing tales of children without coats and with ill-fitting, ripped shoes; children who were tired and thin; children with mental health issues unable to get help; children with bed bug infestations and rats in their homes. It is no surprise that these children often find it more difficult to learn, and no surprise that during lockdown they are likely to have fallen further behind than their peers. It is no surprise that over 1 million of these children do not even have access to a digital device.
Humanity has won a small battle today, but we have not won the war against poverty. I say to every Member here: remember why you are here; remember who put you in this place and why. We are ultimately 650 individual people elected by our communities to protect and improve their lives. We are the voice of the voiceless. That is the moral compass that should guide every one of our days in this place. This summer, when you wander through parks and streets in the place that you call home, with every child that passes you by, innocently unaware of the vast power that you hold over their life, you will wonder, are they hungry, are they suffering—did I speak for them when they had no voice?
We have the power to change those children’s lives—to speak up like Marcus Rashford did. We have seen the true power that campaigns can bring in encouraging the Government to change their position. We now have to build a consensus across this House that this country will not tolerate child poverty and that we will encourage the Government to bring forward a raft of economic and social policies with one aim—to eradicate child poverty.
The Secretary of State for Education (Gavin Williamson)
In this House we all understand the profound impact that this pandemic has had on people’s lives. Supporting those on lower incomes and vulnerable families is at the heart of everything that we do as a Government. We have taken unprecedented action to support individuals and also to support families. We stepped in to pay the wages of over 9 million people through one of the most generous schemes anywhere in the world. We have launched self-employed income support schemes. We have increased universal credit and working tax credit by over £1,000 a year, injecting more than £6.5 billion into the welfare system. This Government have been firmly and wholeheartedly on the side of those who need help and support at every stage of this pandemic. We have provided millions of families with the support they need to pay their bills, keep their homes and feed their families. At times of crisis, we must think, above all, about the most vulnerable in our society. No one in this House, on either side of the Chamber, ever wants to see a child go hungry. We are all united in that simple view.
Let me remind hon. Members of the Conservative party’s record on free school meals. From 2014, free school meals were offered to further education students for the first time ever in the history of the free school meals programme. We extended free school meals to all infant children in England’s state schools, and an extra 1.5 million children are now receiving a healthy school lunch as a result of that decision. In our response to covid-19, we have for the first time provided free school meals for those who are currently at home.
We must remember that free school meals are not about providing financial support for families; they are there to support a child’s education. Receiving a healthy, nourishing meal is a critical way of helping a child to focus and to learn in school. It helps to enable a child to fulfil their potential, which is essential if we want to break the cycle of poverty from which far too many children right across the country suffer.
Ben Bradley (Mansfield) (Con)
My right hon. Friend is correct to say that the will to support these vulnerable children is felt across the House and that it unites us all. I have one concern that I hope he will alleviate. Many of the most vulnerable children do not live in happy, healthy households. We often find that those children—the ones that schools normally look out for—are in a position where their parents are not necessarily going to use those vouchers in the right way, and the current system seems to have no safeguards against that. My constituency has one of the highest levels of domestic abuse and one of the highest levels of addiction anywhere in the country. Can we add, before the summer, a mechanism to ensure that the vouchers are used for healthy meals for vulnerable children?
Gavin Williamson
I can assure my hon. Friend that measures are in place to ensure that the vouchers are not used for things such as alcohol, cigarettes or gambling. That is an important protection. He touches on an important point, because one of the greatest strengths of our free school meals system, where children get a free meal at their school, is ensuring that it is a healthy meal and it is there to support the child.
Tim Farron
I just want to press the Secretary of State on the same point that I asked the hon. Member for Salford and Eccles (Rebecca Long Bailey) about. The issue with free school meal vouchers, particularly in rural communities such as mine, is that someone may live in Sedbergh and not have a supermarket for which they have voucher within 10 miles. Can we look again to make sure that this U-turn, which I massively welcome, is valuable to every child, no matter where they live?
Gavin Williamson
The hon. Gentleman is probably aware that we have already made it clear to schools that they have flexibility on this and that they would be reimbursed any costs if they needed to procure vouchers from a different retailer.
Gavin Williamson
I will make some progress.
It may be that the retailer was in a sparse area and there were no other retailers that the family were able to use, or the family were in an area where there was not a list of available retailers.
Several hon. Members rose—
Gavin Williamson
I ask hon. Members to give me the opportunity to make some progress.
We have understood that, in holiday time, there is a need to offer a wide range of support. This summer, tens of thousands of disadvantaged children will receive additional support through our holiday activities and food programme, which is available thanks to £9 million of Government funding.
Matt Vickers (Stockton South) (Con)
I am incredibly grateful that disadvantaged youngsters in my area will benefit from this support, but my local council was recently unsuccessful in a bid to the holiday activities fund; will my right hon. Friend review that bid and meet me so that we can guarantee that the most disadvantaged youngsters across Stockton benefit from a summer of experiences and opportunities?
Gavin Williamson
I would be more than happy to meet my hon. Friend to discuss that issue. What we have been doing on the holiday activities programmes is an important step forward. To pick up on something that the shadow Secretary of State mentioned, it is not just about feeding; it is about supporting young people in so many different aspects of their learning and broader health outcomes.
Jonathan Gullis
My right hon. Friend will be well aware that in Stoke-on-Trent we have the wonderful Hubb Foundation, run by Carol Shanahan, the owner of Port Vale football club. Linking with the comments of my hon. Friend the Member for Stockton South (Matt Vickers), I urge the Secretary of State to look into how we can expand the holiday programmes so that every town, city and village has some access to great programmes that not only help with health and wellbeing but do educational work to help the most disadvantaged in our communities.
Gavin Williamson
I am very familiar with the schemes that have been run in Stoke-on-Trent and have had the opportunity to meet Mrs Shanahan, whom I commend, as well as a Stoke-on-Trent City Council and its leader Councillor Abi Brown, who have played such an important role in the opportunity area that we have established in Stoke-on-Trent, which is making a real difference to so many children’s lives. I would be happy to discuss in more detail with my hon. Friend, as well as my hon. Friend the Member for Stockton South (Matt Vickers), how we can make sure that, with holiday activity programmes, we can make a difference to children’s lives, not just through food but through activities.
Aaron Bell (Newcastle-under-Lyme) (Con)
Further to the point made earlier by my hon. Friend the Member for Mansfield (Ben Bradley), the Government have done a huge amount on free school meals over the past 10 years and we should be proud of that. These are unprecedented measures for unprecedented times, but the best place for free school meals is in school, so will the Secretary of State confirm his intention to get all pupils back to school in September?
Gavin Williamson
My hon. Friend is absolutely right, as we would always expect from a Staffordshire Member of Parliament. He is right that the best place for free school meals to be delivered is in schools, where we can ensure that the very best is given to the child, and that emotional and educational support is wrapped around that child. That is why we need to ensure that every effort is made to ensure that all schoolchildren are back in schools for September.
Joy Morrissey (Beaconsfield) (Con)
Does my right hon. Friend agree that having children in school is essential to closing the inequality gap? I wish to highlight the excellent work of the Lighthouse in Bourne End, which works with children with learning disabilities and helps them with their summer programme. We need more programmes like that to help people to get back on track and to help vulnerable children. We do not need to throw extra things at children so that they can work at home; we need them back in school with their teachers, learning in a secure environment where they can grow and the inequality gap can close.
Gavin Williamson
My hon. Friend is correct in her assessment: the best place to really benefit children is school. She is also right to highlight the amazing work that is done by so many voluntary organisations throughout the country.
Patricia Gibson
The Secretary of State will perhaps recall that last year the Children’s Future Food inquiry was published. One of its recommendations was that an independent UK watchdog for children’s food should be established immediately, so that we have committed and energetic leadership to deliver for children. Such a watchdog has not been established; are there are any plans to establish one? What are the obstacles to doing so?
Gavin Williamson
I should make some progress, if my hon. Friend will forgive me, because I am very conscious that Mr Deputy Speaker requested that we keep our speeches short.
Next summer, I want to be looking at how we can do so much more to support our children by making sure that we see a greater and larger roll-out of our holiday activities programme, including through the new £1 billion fund that we pledged in our manifesto to help to create more high-quality childcare, after-school clubs and support during holidays. But I think we all understand that this is not a normal year. Schools have been closed as part of the essential measures that we have taken to defeat this deadly virus. We took that action in order to save lives, but I knew when we took that decision that our focus had to be on those who were most disadvantaged. That is why we were one of the first countries in the world to keep schools open for children from the most vulnerable backgrounds; it is why we invested more than £100 million in remote education, including delivering laptops and internet access to some of the most disadvantaged children so that they can continue learning—I very much want to look at how we can start to expand that and do more to ensure that all children have the support they need; and it is why we took swift and decisive action to ensure that we could continue free school meals for eligible children who were staying at home.
Jason McCartney
On behalf of the 13,532 vulnerable children on free school meals in Kirklees, I thank my right hon. Friend for his announcement today about continuing free school meals through the summer. As Marcus Rashford said, this is not about politics; it is about doing the right thing for vulnerable children and their families. Will my right hon. Friend continue to focus on doing the right thing for these children?
Gavin Williamson
I assure my hon. Friend that I will continue to focus on doing the right thing. That will be the key aim of all this.
My hon. Friend makes a really important point about the vulnerable children right across society. I would like to take the opportunity to thank the many teachers and teaching assistants, the social workers who have worked so closely with schools, and the police who have identified some of the children who are most vulnerable—those who needed someone to take the opportunity to reach out to them and make sure that they came into school and had a safe place to come. They have done a magnificent job, and I think everyone in the House is deeply grateful for the triumphant and heroic efforts that they have all made.
Paul Bristow (Peterborough) (Con)
Does my right hon. Friend agree that the support that teachers and schools have offered to vulnerable people goes much further than just a free school meal? Some of the most vulnerable children in schools in Peterborough have received regular phone calls from their teachers making sure that they are okay and they are looked after during this difficult time.
Gavin Williamson
This is where we need to drive things further, to build up layer upon layer of support for children who are not in school to make sure that they are constantly learning, that they do not fall behind and that they constantly move forward in their education and benefit from the world-class education we have in this country.
Many schools have done an amazing job of keeping free school meals going through either food collections or deliveries. Where schools were unable to do that, we set up the national free school meals voucher. That scheme was established at pace, and over £150 million-worth of vouchers have been redeemed through it.
Alongside the voucher scheme, we continue to provide schools with all their expected funding, including funding to cover free school meals, and most schools right across the country have continued provision in school for those children who are most vulnerable. On top of that, the Department for Environment, Food and Rural Affairs has provided an additional £63 million for local authorities to help those who are struggling financially to pay not just for food but for other necessities at this incredibly difficult time.
Although many children are now returning to school thanks to the outstanding efforts of hard-working teachers and all those who work in schools, we are not yet out of this crisis. In schools, homes, workplaces and, above all, the NHS, people up and down the country are still making extraordinary sacrifices to overcome this deadly disease.
Free school meals have always been a term-time provision, and that is what they should be, but while we are in extraordinary times, we must not be bound by the constraints of what normally happens. A Government should always listen to the people who need them most. I would like to extend my particular thanks to Marcus Rashford for using his public position to amplify the voices of those who must and should be heard. By speaking out for the less fortunate and raising the phenomenal total of over £20 million in just a few days, he represents the best of Britain and is a role model for all the children who look up to him for inspiration.
We should never be ashamed to listen. I am pleased to announce that we will provide additional funding for a covid summer food fund, to enable children who are eligible for free school meals to claim a six-week voucher. As we prepare for schools to reopen fully in September, we will ensure that no child goes hungry. As we move forward, we will continue to do all we can to support disadvantaged children through not just free school meals but a long-term and sustained programme of catch-up activities, to close the educational gap, which has widened during this period, and ensure that every child in this country can achieve their full potential. We are finalising those plans, and I will shortly be in a position to outline them to the House. We will not be moving our amendment, and I commend this motion to the House.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
For the first two speakers—Maria Eagle and Alexander Stafford—there will not be a time limit. Thereafter, the time limit will be five minutes.
Maria Eagle (Garston and Halewood) (Lab)
I am very glad that the Government have reversed their decision not to continue to fund free school meals through the long summer holiday, despite the amendment on the Order Paper, which I am glad they are not moving—we would not have thought that it was even there, listening to some of the interventions from Government Members. That was the least that they could do.
I would like to thank and congratulate Marcus Rashford, the talented young footballer who has spoken so powerfully from his own experience and who has repeatedly put his money where his mouth is, supporting FareShare financially during the covid crisis and writing to all Members of the House to urge them to support reinstating free school meals over the summer. He has just won his first political campaign.
I know how much football fans in my city of Liverpool —through the efforts of Fans Supporting Foodbanks, led, inter alia, by my hon. Friend the Member for Liverpool, West Derby (Ian Byrne)—have done to support those facing hunger. They have been at the forefront of efforts to alleviate the spiralling increase in hunger and food poverty caused by austerity and the covid crisis. They have been supported financially by players during the covid crisis too, to ensure that they can continue to do their work and be the bulwark against hunger that they are.
Siobhain McDonagh
Is my hon. Friend aware of the great activities of AFC Wimbledon, whose fans stand outside 22 stores a day and deliver 1,300 food parcels each week? They are a small team with an incredibly big heart.
Maria Eagle
They always have been that. I was not aware of those numbers, but I am now.
For many years—from the Front Bench when I was on it, and now from the Back Benches—I have highlighted the ever increasing food poverty crisis that my constituents have been enduring, driven by savage cuts in public spending and support for families. The nature of the job market, which is dominated by insecure work, low pay, short-hours and zero-hours contracts, has been one of the drivers of increasing food poverty, but it has been made much worse by the covid crisis.
Ms Angela Eagle
I thank my honourable and sororal twin for giving way. Does she agree that the state of the labour market and the precarious nature of much work is one of the most shameful legacies of the Conservative party?
Maria Eagle
I do agree with that analysis, as it happens, but I would have to agree in any event in order to keep the peace in the family, even at a distance. My hon. Friend is correct. Precariousness in the labour market—particularly under-employment, as it used to be called, with zero-hours contracts being a prime example—is one of the main causes of the financial instability that leads to the food poverty that I have seen increasing in my constituency over the past 10 years to a remarkable degree. It has been made much worse by the covid crisis. Children are the most innocent victims of that. In the past three Parliaments, I have repeatedly seen incomprehension on the faces of Ministers. They have not seemed to accept that there is a real problem of hunger out there when I and other hon. Members on the Opposition Benches have pointed it out to them, but there is. It was real and growing before covid. It is bigger and starker now.
Free school meals are a direct way to tackle food poverty for children in normal times, but what if the schools are closed or the parents’ income has been removed while their bills remain or are at best deferred? That is what the covid crisis has done. Some 18,000 children are eligible for free school meals in Liverpool, including more than 3,500 in my constituency. Some 29%—close to a third—of all children in my constituency live in poverty.
There are two other problems: first, that things are getting worse, and secondly, that the capacity of local authorities to assist has been systematically undermined and is diminishing rapidly because of Government policies. Before the covid crisis, unemployment in my constituency was at 4.5%. Today’s figures show that the claimant count has almost doubled in two months to 7.9%, which is above the national average. A further 11,500 jobs are furloughed, which is some 18% of the working-age population in my constituency, and 2,600 people are taking up support from the self-employment income support scheme.
Those schemes are valued and important, and I congratulate the Government on instituting them, but many of those livelihoods will be severely at risk over the next two to three months as the Government schemes are brought to an end. Liverpool city region research and other research into the job situation in the Merseyside area suggests that up to a quarter of all jobs are at risk as a fallout of the economic consequences that we are suffering because of covid. The reality is that unemployment in my constituency is likely to be even higher soon.
Unemployment over 10% and a quarter of jobs at risk of going—that reminds me of something. It reminds me of the early 1980s in Liverpool, which was truly the worst of times. I remember it; I was there. Many of my constituents are now in desperate need, having found themselves unemployed with bills still to pay and a financial reckoning heading straight towards them.
In many areas, queues formed quickly outside retail outlets yesterday, as non-essential shops began to reopen, but I am told that the longest queue that formed in Knowsley was outside a local pawnbrokers. There has been a 389% increase there in universal credit applications since before covid. As universal credit is a passport benefit to free school meals, the need is obviously increasing hugely.
Meanwhile, the ability of Liverpool City Council and Knowsley Council to respond and provide extra help is being removed by a Government who have not even kept their own promise at the beginning of the crisis to pay councils the full cost of covid. Far from being paid back what they have paid out, both councils in my constituency have received only about half the costs incurred. That is a recipe for removing their ability to further help children in need as the crisis of child hunger worsens.
In Liverpool, the council was spending £108,000 a week funding a £10 voucher for children eligible for free school meals. It is a good job that it did, because the chaos engendered at the beginning of the Government’s scheme meant that Government vouchers were not forthcoming for weeks. Last year, the council spent a quarter of a million pounds providing city-wide play schemes that included food for the children using them across the city. It is not clear if it will be able to do that in 2020 because of the financial shortfall. In Knowsley, the council has spent £360,000 funding meal vouchers for children, which it will not get back from the Government.
During the lockdown, local councillors in Knowsley and Liverpool have overwhelmingly used their discretionary funds and their volunteering time to feed people, including children. That is all in addition to the food provided, eventually, by the Government’s shielding scheme. The Torrington Drive Community Association in Halewood has delivered more than 2,000 meals and is currently delivering 120 meals, three times a week, including 150 packed lunches for children. In Belle Vale, 2,600 food packs have been given out at three distribution centres, with new families still coming in and asking for help. In Cressington, local councillors have spent £9,000—all of their discretionary funds—simply feeding people, including children, who need support, with the help of Can Cook kitchen, a food poverty charity, whose work I have highlighted before. Yes, I am glad that the Government have seen sense, and have decided to give help that will feed children over the summer holidays; it will be given directly to their parents in the form of vouchers. The Government should not, as some of their Members were close to doing, equate poverty with fecklessness. It is wrong to do so, and I know that the Secretary of State will not fall into that trap.
The Government need to step up to the challenge of making sure that the next few years in Liverpool are not a rerun of the early 1980s. They could begin by giving Liverpool City Council and Knowsley Borough Council the full costs of covid, as they promised they would. In the longer term, they must address the underlying causes of holiday hunger, child poverty, low wages and insecure work. It is only when they do so that this problem will truly be solved.
Alexander Stafford (Rother Valley) (Con)
It is an incredible honour to speak in this debate and give my maiden speech. Schools and the health and nutrition of our children are of paramount importance. No parent should have to worry about where their child’s next meal might come from, so during this crisis it is right that the Government will step in to protect the most vulnerable in our society, just as they have done repeatedly throughout the pandemic. This is conservatism in action. Although these are testing times for the country and our communities, everyone, especially people in Rother Valley, will pull through stronger than ever before.
To many people, the name “Rother Valley” focuses the mind on our beautiful Rother Valley country park, but to me and all who live there it is a selection of beautiful small towns and villages, proudly situated in Yorkshire, that are wrapped up in a love for their country and their home. We have a diverse range of communities, from Bramley to Wickersley, Laughton-en-le-Morthen to Ulley, and we even have our own Wales. There is something for everyone, but it is our industrial heritage that is a great source of pride in Rother Valley.
Coal mining has played an important part in the development of our area, with some of the country’s most important mines situated at Maltby, Kiveton, Thurcroft and Treeton. Many areas of Rother Valley have a long history of mining, but in Whiston the mining of whitestone was recorded in the Domesday Book. However, our history boasts more than just our contribution to industry. There have been settlements at Dinnington since neolithic times, and at Anston since the palaeolithic period, and there are other ancient settlements at Aughton, Swallowsnest, Woodsetts and Todwick.
We have also had our share of historic houses at Thorpe Salvin, Hellaby, Aston and Firbeck, with the former owner of Firbeck Hall being a source of inspiration for the novel “Ivanhoe”. In more recent times, history was made at Rother Valley outside a coking plant in 1984, when the infamous battle of Orgreave took place. We have strong farming areas around Harthill and Hooton Levitt, not to mention the majestic beauty of Roche abbey, which fell foul of Henry VIII’s awful anti-Catholic measures.
It would be remiss of me to give my maiden speech without acknowledging that I would not be standing in the House today were it not for the love and unwavering support of my family and friends: my parents, Theresa and James, who taught me from an early age that it is not where you have come from but where you are going in life that matters; my brother, Gregory, for helping to inspire me to go into politics; my daughter, Persephone, who was an unwitting campaigner during the election; and, of course, my wife, Natalie, to whom I owe this victory and all other successes.
My predecessor, Kevin Barron, formerly “Red Kev” and more recently Sir Kevin, was first elected four years before I was born, and although we would disagree on many things, his love for our area and his championing of anti-smoking measures are to be much applauded. One thing that surely separates me from my predecessors is the collieries. Whereas all of them had close ties to the mining community, either working in the collieries or for those who did, my ties are more with the steel community, which is also key to our local prosperity. Times have changed, and as they have done so, so have the people of Rother Valley. We look to a better, brighter future for our children and our children’s children.
Nevertheless, some things do remain constant, and that is what I espouse. The traditions of the Conservative party—hard work, law and order, family values and Christian morals—are timeless, classless and ageless. Those are the values of Rother Valley and they are ones that inspire me. Those are the common values that bind this great nation together. Love your family, love your friends, love your country, love your Queen and love your God, and you cannot go wrong. That is the contract of those who have gone before us and those who will go after us. These are the values that have spread prosperity, wealth and hope to billions across the globe. Britain, this small island nation, has a great history, and through our values and ideals it has changed the world for the better. It is these universal values that will continue to improve the world.
Rother Valley is not a huge place, but I know that each and every constituent can and will change the world for the better. We have done so before and we will do so again. You will never find a more industrious, hard-working, family-loving, patriotic people than those across Rother Valley. We are rightly proud of our history, heritage and culture. We are not a people to tear things down; we would rather raise them up. It is these attitudes that have driven the wealth of South Yorkshire and, ultimately, the wealth of this great nation.
In this House, we often hear the places that turned blue for the first time being referred to as “left behind”, but I can tell you, Mr Deputy Speaker, that the men and women of Rother Valley do not feel left behind. Instead, they feel empowered. Rather than being told what their lives are going to be like or should be like, we have chosen a different path, one where we will no longer be taken for granted, and where our voices and our votes do matter. We do matter and last December we spoke with one voice. Just like outside Jericho in the days of old, we blew the horn of hope and the red wall came tumbling down. Some voters lent me their vote for the first time. I say to them, “I will not let you down. I will listen. We may have disagreements and different opinions, but the first and foremost job of a Member of this House is to listen and that is what I will do.”
No more will people in Rother Valley be neglected and forgotten. As I look upon this House, whose very walls were crafted from the fine stone of Anston in Rother Valley, I am mindful of the words of that great barbarian King Gelimer as he was paraded in chains through Constantinople by Justinian’s general, Belisarius, following the great liberation of Carthage: “Vanity of vanities, all is vanity”. For what matters in this House is not just the pomp and splendour, although these traditions are incredibly important, but the people we represent, the beating heart of our nation who put us here and whose very presence we honour by being here. Come what may, I will always be true to the people of Rother Valley, as I know they will always be true to Britain.
John Cryer (Leyton and Wanstead) (Lab)
I will be brief, Mr Deputy Speaker, because I have no choice. I pay tribute to the maiden speech by the hon. Member for Rother Valley (Alexander Stafford). For a moment, I thought I was in The Old Vic towards the end of it, but it was a superb speech and we all look forward to hearing from him repeatedly in the future. I also pay tribute to his predecessor, Kevin Barron, who is a friend of mine and of many people on this side of the House—and, indeed, on the other side of the House. Kevin was a miner for many years at Maltby colliery. As the hon. Gentleman mentioned mining, I should say that Kevin had his arm broken during the miners’ strike, on the picket line at Maltby colliery. The hon. Gentleman did not mention that, but he might be aware of it.
Returning to the subject of the debate, I want to speak entirely about my constituency. In Leyton and Wanstead, just over 2,000 children are entitled to free school meals. They are concentrated in the four or five poorest wards in my constituency, which means they are among the poorest wards in London, which means they are among the poorest in the country.
This is not an area that has been de-industrialised. It is one that is fairly near the heart of one of the richest cities in the world, in one of the biggest economies in the world, yet we have 2,000 children entitled to free school meals. Communities such as the communities I represent will find it inexplicable that the Government had to be dragged kicking and screaming into making a U-turn four hours ago, after days and days and days of pressure from outside this place, from within this place and most notably from Marcus Rashford, as has been mentioned frequently. If Ministers had not finally done the right thing and decided to make this U-turn, that would not have been inconsequential for the people living in Leyton and Wanstead among those poorer communities, because, as my hon. and right Friends have mentioned, it comes on top of a history of deprivation and of working long hours. Many of those children, and many of the children who are not entitled to free school meals but who nevertheless are not among the richest people on the planet, have parents or single parents who work at two or three jobs, who work all the hours that God sends, and who were already facing financial difficulties before the virus struck and before the lockdown.
Leyton and Wanstead is the fifth highest constituency in the country in terms of people furloughed: 33%—one in three—of people living in Leyton and Wanstead are on furlough at the moment. If we put that together with all the other financial constraints, and with zero-hours contracts and with vulnerable working—across the country that runs to about 4 million people at the moment—and if we add on top of that an end to free school meals across the summer holidays, it is clear those families and those children would have been facing a vista that is too appalling for many of us to contemplate.
I will finish on the following comment. The Government should bear this in mind. It is not a direct quote from Winston Churchill, but it certainly paraphrases something he said in the 1930s: no British Government can make a better investment than putting food into British children. Bear that in mind.
Laura Farris (Newbury) (Con)
I would like to start by congratulating my hon. Friend the Member for Rother Valley (Alexander Stafford) on an excellent maiden speech and his lyrical description of his constituency. I also congratulate him on the arrival of his daughter.
I warmly welcome the Government announcement of the covid summer food fund to provide meals through the school summer holidays, and I am grateful to know that, as a new MP, when I raised my voice, the Government were listening. There are three reasons why I felt this was the right thing to do.
The first is the simplicity of the implementation process. I know there is a convenient narrative that the Conservatives were going to keep children hungry through the summer holidays, and I know that that was not the case. I am grateful to the Minister for taking time with me yesterday to explain what the plan was for families who are facing extreme difficulty during the summer, and I considered very carefully what was suggested—the £63 million that was being made available to local authorities to fund families in need, and the £9 million to fund holiday camps where lunch would also be provided.
Jane Hunt (Loughborough) (Con)
Does my hon. Friend agree that there is an excellent opportunity here for voluntary sectors to get involved over the summer and beyond? Organisations such as Passion in Shepshed look after children on a day-to-day basis, offering them food, but also places to do homework and extra work, and support and assistance in every way. Does she agree that there is an opportunity there?
Laura Farris
There is an opportunity, and in fact an imperative, to involve wider civil society in getting kids back into school.
While I saw the force in the Minister’s plans, the simple truth to me was that they introduced a layer of bureaucracy and administration, and I was concerned that there was a risk that some of that funding would be delayed, or it might vary or be uneven between local authorities. The fact of the matter is that 1.3 million children are eligible to receive free school meals. They have been identified; their eligibility has been confirmed. They are already receiving the meal or a voucher if they are not in school at the moment. If we have the capability and the will to help children through this period, it is incumbent upon us to find the most direct and accessible means of doing so.
My second point is that it is absolutely right that 12 weeks into the lockdown, we fix our focus very firmly on children. I have thought about the sequencing of how we proceeded through this period. The Government’s starting point, which was absolutely right, was the extremely clinically vulnerable and their protection, and, in fact, the provision of food was an integral part of that. I think that 2 million food boxes—I may be wrong; it may be more—have been distributed in the last 12 weeks.
We then turned our focus to workers and the unprecedented package of support for the 9 million people benefiting through the furlough scheme and the 2.5 million people benefiting through the self-employed income support scheme. We then looked at charities and businesses across every sector, whether it was in terms of grants, business interruption loans, bounce-back loans, future funds or discretionary loans. There was such an array of options, and yet the category of people that we know the very least about are children, and particularly, disadvantaged children, because the fact is that their emails do not fill our inboxes.
Patricia Gibson
To refer to the points that were made in the previous intervention, we all have very important charitable groups in our constituencies. We could all reel off their names and they do fantastic work, but does the hon. Lady agree that essential services, particularly regarding children’s hunger, cannot be contracted out to charitable groups? That is surely the Government’s job, and the reason that these charitable groups have grown up is that the Government have failed.
Laura Farris
I thank the hon. Lady for her contribution. I do not agree that the Government have failed, but I do agree that it is desirable that we provide free school meals, and I hope that she has understood that that is the tenor of my speech this afternoon.
My right hon. Friend the Secretary of State’s Department made arrangements for vulnerable children to attend school, but we know that take-up has been relatively low. Arrangements were made for children to learn from home, but the evidence suggests, certainly from heads in my constituency, that this has been quite patchy. Although the Government took unprecedented steps in relation to domestic abuse, the truth is that we do not really know what happens behind closed doors. None of this is a criticism of the Government. The lockdown was an imperative and it was right that schools closed when they did, but in my view it underscores the urgency of prioritising the needs of particularly vulnerable children going forward, and I see continuing to fund free school meals during the holidays as a fundamental part of this.
To turn to my final point, I think that the provision of free school meals places a value on many of those parents whom, historically, we have not really valued enough. I think of my children’s friends at schools they have attended, who have received direct support from the Government, either in the form of the pupil premium or through free school meals. Those children’s parents have been cleaners, bus drivers or hospital porters—what we now call frontline staff, but even six months ago we might not have used that term about a cleaner. They are people who have been doing low-paid and sometimes, in the context of covid-19, dangerous work. That is my experience of one school in one city, but I think that we can transpose those families’ stories across the country.
I know that when the summer holidays come, they are challenging at the best of times, particularly for families on low incomes, and particularly when you do not have the resources of perhaps grandparents to pick up the slack of childcare or camps in the usual way. In my view, it is right that we get on the front foot by providing direct support for families like that at this exceptional time.
Andrew Griffith (Arundel and South Downs) (Con)
It is a great pleasure to follow my hon. Friend the Member for Newbury (Laura Farris) and to congratulate my hon. Friend the Member for Rother Valley (Alexander Stafford) on his virtuoso maiden speech, proving that his constituents made an extremely wise choice. I am pleased to be able to speak in today’s debate, and congratulate the hon. Member for Salford and Eccles (Rebecca Long Bailey) on securing it. Our children have only one chance at childhood and one chance of getting the education they need. Education, as we Government Members know, is the best way out of poverty. It is the best way of levelling up and sometimes, sadly, it is the best escape from a home that lacks the love and support that we all want for our children but is not always available. That means that teaching is among the most important vocations in society. Teachers are the people we trust to bring up our children, to inspire them, to teach them our shared values of tolerance and respect, and for the environment—
Miriam Cates (Penistone and Stocksbridge) (Con)
Will my hon. Friend give way?
Miriam Cates
As a former teacher, I absolutely agree about the value of teachers. Does my hon. Friend also agree that, while the support for free school meals is extremely welcome, the best thing we can do for the long-term futures of our children is to get them back into school in front of teachers—the professionals who know how to educate our children—and we will close that attainment gap?
Andrew Griffith
My hon. Friend makes, characteristically, the apposite point. I want to thank all the teachers and heads across West Sussex for their huge efforts made all year round, but particularly during the pandemic. I am pleased to report that all schools in my constituency of Arundel and South Downs are open to at least some year groups. In particular, I want to pay tribute to the parents, pupils and staff at Clapham and Patching school in my constituency, who only yesterday learned the wonderful news that they have saved their 200-year-old village school from closure. I congratulate the excellent South Downs Education Trust, which put forward the successful proposal to maintain the school.
As other Members have said, a hungry child is not a learning child, and is a tragedy that we should not accept in our society. I welcome the Government’s announcement today adding to their very extensive support in this area. I want to highlight the national school breakfast programme, which gives thousands of children in some of the most deprived areas the opportunity to attend a breakfast club. That programme so far reaches 1,800 schools and serves a free nutritious breakfast every school day to 280,000 children.
It is working. A systematic review of the effects of breakfast carried out by the University of Leeds found a positive correlation between breakfast consumption and children’s cognitive function, including improvements in a child’s attention, memory and executive function. In 2016, the Education Endowment Foundation and the Institute for Fiscal Studies carried out a randomised control trial and found that pupils in schools supported by the school breakfast programme made an amazing two months of additional academic progress over the course of a single year. In supporting today’s motion, I congratulate the Government on that valuable scheme, as well as thanking the charities Family Action and Magic Breakfast for all that they do to deliver it.
Naz Shah (Bradford West) (Lab)
On days like this, I despair of this Government and their complete lack of understanding, care and emotion towards the very real issues in our country. [Interruption.] It is not a laughing matter for children to be raised in poverty and not have food. It is not something to laugh at. I am happy to explain what it is like to the Government Members who think it is funny.
What it is like to live in poverty is to be palmed off, like I was as a child, to social services, to go away for a week at a time. I went to Scarborough. The only memories I have of that time are that I went birdwatching and it was awfully cold staying in a dormitory. Only this afternoon, I rang my sister to ask, “Do you remember when we used to go to Scarborough because Mum used to send us there for summer holidays?” That is what poverty is—memories that you do not want to recall as an adult, even in my mid-40s. These are not memories that my constituents’ children should have to recall in generations to come.
I despair because today it has taken the experiences of a 22-year-old black man using his social media to get this Government to do the right thing. Our Prime Minister keeps saying, “I am going to take back control.” Who actually took control of this debate today? It was not us in this House. We should have been leading on this issue and doing the right thing before it needed a massive campaign by Marcus Rashford. I absolutely appreciate and thank him for taking that leadership, and others for supporting him, and our those on our Front Bench, who lobbied early this week and talked about the issue previously, but the Government should not have had to be dragged here kicking and screaming.
The Government should not need an international debate—just like today on child poverty—on racism for them to realise that they have failed to provide race equality in the UK, even according to their own recommendations. The Government should not need the entire country to scream in their face to act on a lockdown for us to be protected from covid-19. When it comes to saving millions, they are happy to do so for Tory donors. The figure quoted in the press as the saving made by approving a Tory donor’s Westferry development is £30 million to £40 million, yet we cannot find £120 million for our children. [Interruption.] I will make some progress. When it comes to defending the indefensible with a No. 10 adviser, this Government seem to find their mojo. They do not heed the campaigns that the country is screaming for.
Naz Shah
I will not be giving way; I will make some progress.
Bradford West has one of the highest rates of child poverty. It is in the top 10 according to the charity End Child Poverty. Its findings show that 50.9% of children in my constituency live in poverty after housing costs. The Government’s own statistics show that almost 40,000 children across the Bradford district are living in poverty. Those children are not mere statistics. Each one of them is a Marcus Rashford, except the cycle of deprivation will mean they may never get out of poverty.
Marcus Rashford epitomises what happens in spite of, not because of, poverty. One of the reasons he felt the campaign was needed was that poverty was his experience. One of the reasons my hon. Friend the Member for Ealing North (James Murray) tweets about it and talks about it is that he also experienced life as a child of a single parent on free school meals, just like I did and just like my siblings did. Will the new yardstick in this place to get the Government to do the right thing be a campaign by a footballer or by somebody who has a social media following? Is that what the yardstick is going to be? That would be a crying shame.
Yes, the Government can say that they are running pilot schemes in constituencies such as mine—
Patricia Gibson
I am thankful that the hon. Lady has shared her experience today with the Chamber. I intervene as someone who grew up benefiting from free school meals. Does she share my real disappointment that a year after the Children’s Future Food inquiry, which was about childhood hunger across the UK, the UK Government still have not formally responded to its report?
Naz Shah
I absolutely agree with the hon. Lady. We need to continually raise those points in the House. The Government can say that they are running a pilot scheme in constituencies such as mine, rolled out by the Department for Education, but such schemes simply do not go far enough.
The fight against child poverty and desperation needs much more intervention. In 2018, the programme reached 2,000 children in Bradford. Although I welcome it reaching every single one of those 2,000 children, what about the other 38,000? Businesses, charities and grassroots organisations in my constituency have been working tirelessly on that, but I am sorry—funding the NHS, protecting our streets and feeding hungry children are not the responsibilities of our charities; they are the responsibilities of democratic Governments of the first world. They are our responsibility. Perhaps those in government do not know how it feels to live in poverty, but they sure know how to make U-turns. For once I can say that I am glad about the U-turn the Government have made today.
Paul Maynard (Blackpool North and Cleveleys) (Con)
It is a pleasure to be able to talk in this debate, which is on such a fundamentally important issue. I thank Ministers for what they have said today. It has helped me to avoid my worst nightmare of having to vote with the Labour party, which I spent the day fearing I might have to do. I am grateful for that, if nothing else. I also put on record my thanks to the hon. Member for South Shields (Mrs Lewell-Buck) for all she has done over the years on this issue. It has been largely unsung, and she deserves much more praise than she gets.
It is hard not take an interest in this issue when one represents a town such as Blackpool. We have eight of the 10 most deprived areas in the country. Two of them are in my constituency. No one will know my constituency better than the Secretary of State, given that he preceded me there as a candidate. He will know that we are probably not facing a V-shaped economic recovery in Blackpool, where we have a fragile visitor economy and where the impact of coronavirus will be felt not just this year but for many years to come.
Nor will we see a V-shaped recovery in educational attainment, I fear, having had too many of our pupils away from education for too long. Too many of my primary schools see 50% of their pupils in each class change every year, as families move around the town in insecure, short-term tenancies in poor quality housing where the possibility of proper home education simply does not occur. That is why we see the inevitable spikes in food bank demand every time the summer holiday comes around, despite the very best efforts of so many charitable organisations around the constituency. In this context, I want to name Hannah Boyd, the curate at St Mark’s, who has done so much in Grange Park.
This is why I really welcome what Ministers have said today. I think they are doing the right thing. Merely rolling over to yet another programme of free school meals over another school holiday does not tackle the fundamentals of this. We would simply be having this debate every time there was a school holiday, with people asking whether we were going to roll it out again and again. Now, we have a chance to try to tackle some of the more fundamental issues that we face, which I know the hon. Member for South Shields and many others have been focusing on. I want to see a much more decentralised approach to tackling holiday hunger. We do not need yet another overly bureaucratic national attempt that tries to fit our young people and communities into a one-size-fits-all solution. Blackpool’s needs are very different from the needs of Staffordshire, Bradford and many other communities.
This represents an opportunity to think a little more deeply about what we want to achieve in relation to holiday hunger, because it is really a symptom of many other issues, not least that of financial insecurity. We still have too many people in absolute poverty. That is when families have been below the poverty line for three years out of four. That is a real concern of mine in Blackpool, and there are so many ways in which it can be tackled that I could easily spend the next 20 minutes talking about them. Tackling financial insecurity is the first step towards tackling food insecurity. We need to address issues such as food deserts, which mean that some of my poorest families cannot access good-value food, and cheap fresh food in particular. We also need to promote ideas such as community shops, which were around a couple of years ago but have now disappeared into nothing again. There is so much that we can do.
It is true that the coronavirus lockdown has acted as an accelerant on the fire of so many of the burning injustices that the last Prime Minister spoke of on the steps of Downing Street. Whether we call it social justice, compassionate Conservatism or levelling up, I really do not care. I just think this happens to be the right thing to do. Many people across the country in some of the most deprived communities voted for us for the first time last December. That is why we got to hear the maiden speech from my hon. Friend the Member for Rother Valley (Alexander Stafford) today. They did not vote for us for any particular reason. They voted for us because they wanted to see a bit of change, and because they wanted to feel that they were special. We should not see them as pawns to be exploited in pursuit of one particular political objective. We need to ensure that we represent them. They may have lent us their vote, but they deserve our full attention. William Hague said in The Daily Telegraph today that the lockdown would cause an era of “inequality” and “social tension”, and we now have an obligation to bring about not just the economic recovery from coronavirus but the social recovery too. What the Secretary of State has put forward today is the first step in that direction.
Ms Angela Eagle (Wallasey) (Lab)
It is a pleasure to be called to speak in this debate. I would like to compliment my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) for calling our Opposition day debate on this issue and forcing the Government to confront their inexplicable decision to abandon the programme of food support over the summer. I welcome the U-turn, although it would have been very difficult to learn from the Secretary of State’s contribution that there had been a U-turn at all. It was almost as though the Government were always going to do this. However, it took a huge campaign to achieve it, and I for one welcome the fact that the Government have conceded that the school voucher scheme will go on over this summer. I also agree with the comments that this kind of ad hoc approach is not a good enough way of tackling the issue of holiday hunger.
We know that, as Opposition Members have said, this has been caused by problems in our labour market: low pay, precarious work, and, due to a period of austerity, benefits not being good or generous enough to supply people with the basics. We also know that that hits the most vulnerable. We know that 200,000 children have skipped meals during the lockdown. We know that child poverty has increased since 2010. We know that seven out of 10 of those in poverty are in work. We know from the Trussell Trust that there was an 89% increase in the need for emergency food parcels in April. We know that there has been a 107% increase in parcels given to children. In my own constituency of Wallasey, 3,910 students were eligible for the voucher scheme. Having had a look at the increase in unemployment since March of 1,880, I know that that will be going up. There is extreme pressure.
I talked to a lot of my schools who have been dealing with this issue. Many of them say the same thing: that the food voucher scheme has helped to reduce financial and mental anxiety during the difficult times caused by the lockdown and covid; that vouchers to purchase food at least ensure that people do not have to worry about the basic requirement of being able to feed their families; and that without the Government making this concession children would undoubtedly have gone hungry, resulting in intolerable strain and collapse in our communities.
Layla Moran (Oxford West and Abingdon) (LD)
Does the hon. Lady share my concern that a number of families who are eligible for the scheme may not have even had the vouchers? That could be an administrative issue or that they just do not know about it. That means that this is no silver bullet and that the Government need to continue to introduce schemes that will reach those who are the hardest to reach.
Ms Eagle
Absolutely. I think all of us experienced the chaos that was around when the scheme began. Many teachers who contacted me were pulling their hair out. Many schools spent a lot of money—as did local authorities—to ensure that food parcels were available until the voucher schemes were up and running. There were very many issues with them.
There are those who say that civil society should do this work and that the food bank system is an example of how lucky we are to have an engaged society, but one of the first things that happened when covid struck was that the entire food bank structure in my area had to close down because it was managed mainly by people who are in the older categories who then had to shield for their own wellbeing. The local authority then had to take on a lot of the central distribution of the food bank structures that had grown up to feed thousands of children in Wallasey every summer.
The Government need to pay great attention to how much support they give to the structures that are there to ensure that something as basic as access to food is available for the most vulnerable children. It means, of course, that those children can study and learn, and get a better chance than they would otherwise have had if they were wondering where their next meal would come from. The covid-19 crisis has shone a not very flattering light on the plummeting levels of social justice we have seen in this country throughout the years of austerity. It has shone an unflattering light on the edge that many of our fellow citizens live on, whether they are in zero-hours contracts, in precarious work, only just able to manage, without access to savings, or only one wage away from disaster. It is an issue for all of us to think about how this can be improved, but it is particularly for the Government to ensure that they tackle it, given that they are in power for the next four years.
I welcome the U-turn, and I would welcome it even more if the Government recognised that there was an issue and dealt with it more proactively, rather than being forced, by the fantastic and magnificent campaigning of Marcus Rashford, to U-turn at the last minute.
Gareth Johnson (Dartford) (Con)
We all want to do the right thing for struggling families, but we all also want to ensure that there is fairness for the taxpayer, so it is important that the right approach is adopted.
This Government have been financially very generous throughout this outbreak. We have seen the multibillion-pound furloughing scheme, which has saved the livelihoods of millions of people in this country. Assistance has been given for the self-employed, and extra money has been invested in the NHS to help cope with the battle against covid-19. Of course, free school meals have been provided throughout his time in schools, or where schools are not open in the form of vouchers. In addition, they have been provided to children over the Easter and Whitsun periods, and will now cover the summer.
Nobody can claim that this Government have not put their hand in their pocket during the outbreak to help the British people. However, it has not stopped there. Universal credit and working tax credits have seen uplifts to the tune of £6.5 billion, and 2 million food packages have been provided. The list of assistance that has been given is extremely lengthy, yet, of course, it is not our money. It is taxpayers’ money—money that will have to be paid back not just by this generation of workers, but by their children and quite possibly their grandchildren as well.
Layla Moran
I absolutely take the hon. Member’s point, but surely it is a question of priorities. Does he not agree that the taxpayer would much rather that £120 million-odd was given to feed hungry children than, say, to a Brexit festival?
Gareth Johnson
I am quite astonished that Brexit has managed to be shoehorned into this debate; I am quite happy to talk about Brexit and the opportunities it gives us. I do think that what has happened and what the taxpayer wants is fairness. It wants fairness: yes, it does not want children starving, but it also recognises the fact that there are huge burdens now on our economy and that that money needs to be paid back. We should not get ourselves into the situation of trying to pretend that the state can provide everything in every situation. That is simply not affordable.
Assistance for families to provide food for their children through the summer is very important. Where parents are out of work and in need of help, it is right that the Government provide assistance. Nobody has ever disputed that. Our plans were originally to provide support through local authorities, but now a summer food fund will ensure that children will not go without food provision over the summer, and they were never going to.
This Government have spent money to an unprecedented level, and that money has been targeted at those most affected by this outbreak. The furloughing scheme alone will cost up to £100 billion, and the scheme will still be operating during the school summer holidays and well into the autumn. If anybody doubts this Government’s commitment to free school meals, I can point out that many Conservative Members, including the Secretary of State—unfortunately, he has just popped out—were the ones that supported four to seven-year-olds getting free school meals for the first time, which did not happen in 13 years of a Labour Government.
Several hon. Members rose—
Gareth Johnson
I will not give way now.
We believe in assisting families hit hard by the virus not just over the summer, but throughout the entirety of this outbreak. Assistance has been given for children to stay well nourished, and various schemes have and will be implemented. These schemes will provide for children, and ensure that a safety net exists.
Most importantly of all, we have financially been there for people during this outbreak. This Government have not shirked responsibility when it came to giving people in work a helping hand and assisting those who are not in work. This is all going to have to be paid back at some stage, and it is going to hurt, but it is right that we step up to our responsibilities during this dreadful time.
Tonia Antoniazzi (Gower) (Lab)
I want to speak in this debate today not just as a proud Welsh Labour MP but as a former teacher and a single parent.
We once again find ourselves in a position where a high-profile campaign has forced an embarrassing U-turn from this Government—a U-turn that will benefit thousands of children from some of the most disadvantaged homes. I want to echo the sentiments of my colleagues in recognising the work and dedication of Marcus Rashford in forcing this change of policy. He is exactly the kind of role model I want for my son—even though my son is a Man City fan—and for all the children in my constituency of Gower and in Wales.
I started my teaching career in the autumn of 1997 at Standish Community High School in Wigan. I saw at first hand the impact that a Labour Government had on lifting children out of poverty. When I later returned to teach in Wales, it was obvious that the wellbeing of pupils was at the forefront of the decisions made by the Welsh Government. I am proud that making sure that all children in my school did not start the day hungry was a priority for the headteacher and governing body of Bryngwyn School in Llanelli, where I last taught. They were inclusive, caring, and looking to provide for all pupils who came into their care. This is not something new in Wales. But until today’s screeching U-turn from this Government, children in England would have been losing out on support that they desperately needed. I am proud that kids in receipt of free school meals in Wales will always have that support from a Welsh Labour Government.
The challenges faced by these children and their families across the UK during the holidays are many: the cost of extra meals, finding free extra activities, and worrying about not being able to afford the uniform or the right shoes, school bag and equipment. I know that feeling of dread very well. It is not just parents of children on free school meals who need help and support—it is also working parents on low incomes, single parents, and all those recently affected by covid-19.
Since becoming an MP, I have focused in my community on supporting parents and children in Gower over the summer period. My office and I, like many Welsh Labour MPs, have run schemes to recycle uniforms for local schools, put together back-to-school bags, and made and distributed packed lunches over the summer holidays. We work together with the Welsh Labour Government and Labour-led Swansea City Council, who make huge contributions every year to helping families in Gower and across Swansea. We create and give that extra support for those families, and it goes beyond just free school meals. It is also very pertinent to note that the level of support in Wales is significantly higher than anywhere else in the United Kingdom. An allowance of £19.50 per child, per week, is £4.50 more than in England and up to £9.50 more than in some Scottish council areas. This can make a huge difference to these families and to the feeling of worth of these children.
But what message does it give to our children when the Secretary of State for Transport said this morning that there are more important things than feeding schoolchildren, or when the Secretary of State for Work and Pensions tweets Marcus Rashford making a flippant comment and then attempts to correct it, while other Conservative Members demean Marcus’s own personal life experiences and the experiences of others like him? The lack of empathy and inability to relate to the problems families are facing across this country is endemic among Conservative Members. Really, how can a Government be so tone-deaf to an entire country? There are Members in this House who will have known the challenge of putting food on the table. Many of us are driven by our own life experiences to help people—to pull them up the ladder and not to push them down.
I would like the Government to recognise what the Welsh Labour Government have put in place. On that point, I am proud that a Labour Government in Wales are committed to prioritising the wellbeing of our future generations. Although I am pleased that the Government have reversed their position, it does prompt the question, why did they not think our kids were worth it before?
Sally-Ann Hart (Hastings and Rye) (Con)
First, may I join colleagues across the House in paying my respects to Jo Cox? I was not fortunate enough to serve in the House while she was a Member, but her reputation and causes live on in this place and she is hugely missed by Members on both sides of the House.
I am extremely fortunate to be a Member representing the beautiful constituency of Hastings and Rye. From our stunning coastline to our historic castle, world-class engineering companies to renowned pubs and restaurants, we have so much to be proud of, but we are also a constituency blighted by poverty and deprivation—ills in our communities that have plagued families for generations. I was elected on a promise to support the most vulnerable in our communities and ensure, as the Prime Minister has said many times, that we level up the area, so that all can benefit from the opportunities of the future. It is because I am acutely aware of these levels of deprivation, which I see every week in Hastings and Rye, that this debate is so important to me.
I am unashamedly committed to the Conservative ideas of a small state, individual responsibility and upholding the value in the institution of family. Yet, at a time of economic and health crises, I see that the most deprived are being punished disproportionately with worse health outcomes, suffering more from the closure of schools and being dependent on institutions like our food banks and charities. So there is clearly a role in these unprecedented times for the state to intervene.
We must recognise that the argument for free school meals to be available during school holidays is not new. A 2016 survey by the Association of Teachers and Lecturers found that children from disadvantaged backgrounds were returning to school after the summer holidays less than healthy because they had gone without food. To assume, though, that people who are less well off will not or cannot feed their children is, I am sure, somewhat insulting to disadvantaged families. In fact, during the coronavirus, many families have not accessed free school meals or the voucher scheme, but, as my hon. Friend the Member for Mansfield (Ben Bradley), who has left the Chamber, highlighted, we must not shy away from the fact that, unfortunately, some parents just do not or cannot prioritise their children’s needs over their own. We must turbo-charge our efforts to look at the underlying causes of the neglect of some children by their parents, tackling the root cause rather than just allowing the Government to step in and do the easiest thing—throw money at the problem.
This Conservative Government, under our Prime Minister, have committed to combat poverty by improving education, jobs and our economy by levelling up. As I said, as a Conservative I believe in a small state, which protects individual freedoms and allows people to take responsibility for themselves and their families. Small government may sound uncaring, but it is not. A big state is much more callous, as it engenders dependency and therefore ultimately lacks accountability to the electorate. We cannot let the state take over a parent’s job—a parent’s most basic responsibility to feed and keep their children safe. It cannot be right that Government usurp the domain of the family and the most basic role of parenting. We cannot excuse people from the basic responsibility to their children; it is fundamental to being a good parent. We cannot have a culture that encourages the Government to take over the most basic roles of parenting, and we cannot have a culture where parents expect the Government to feed their children so that they can have money for other things. We cannot take away a parent’s opportunity to take responsibility for themselves and their family.
As Conservatives, we have a good track record in government of supporting the most vulnerable through access to work, increasing the tax threshold, free school meals, the living wage and providing more free childcare. We have shown through other policies that we are committed to helping the most vulnerable. We will get our economy back on track following coronavirus and make it strong again, creating more, higher-paid jobs. The values that I spoke of earlier—individual responsibility, a small state—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I am afraid the hon. Lady has come to the end of her time.
Mike Amesbury (Weaver Vale) (Lab)
From one Wythenshawe-born lad to another, thank you Marcus Rashford. As a United fan, it has been a pleasure to see so many people united from across the football family and well beyond, taking a powerful stand for children. Marcus stated passionately that this was about “humanity”, not politics—a humanity shaped by his direct experience of growing up in Wythenshawe, Manchester in child poverty. Actually, I partially disagree with Marcus on that point. Together with campaigners in Parliament and beyond, he has led change. He is a change maker, striking his political goal of feeding 1.3 million children this summer—Marcus Rashford one, Prime Minister Johnson nil.
Mike Amesbury
No.
Before the Prime Minister’s U-turn, Minister after Minister told us, “We don’t normally fund free school meals outside term time.” Well, we do not normally furlough 9 million workers. We do not normally ask people to isolate, distance and bubble. We do not normally close down schools in the middle of the school year. Nothing has been normal since March. This pandemic has required an extraordinary response from the party of small government and an extraordinary response from society.
This enforced U-turn—we remember the Order Paper, just hours ago—is a victory for children and a victory for common sense. But we cannot be in denial about the economic fallout from covid-19. This is only just the beginning, and it comes on top of 10 years of austerity. We cannot be in denial about the impact that this will have on the poorest in our society: the economic effect of the virus is pushing more families into poverty, and more children will go hungry, from Palacefields to Leftwich in my constituency.
As my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) pointed out, the IPPR estimates that 200,000 more children will now fall below the poverty line and are at risk of hunger. This is not the time for a small state—it is the time for Government to get on their side, surely. In the long term, we need to look at the extraordinary number of children who are living in poverty in this country. We need to work hard to stop child poverty at its roots, rather than treating its worst symptoms or coming out with ideological claptrap and stereotypes. Hunger does not understand term dates. It does not understand ideological nonsense. Wouldn’t it be wonderful if we all worked together, grew up a little and ended child and food poverty once and for all?
Madam Deputy Speaker (Dame Rosie Winterton)
To try to have any chance of getting everybody in who wishes to speak, I am going to reduce the time limit to three minutes. I have given the hon. Member for Watford (Dean Russell) notice of that.
Dean Russell (Watford) (Con)
Thank you, Madam Deputy Speaker; I will now get rid of half my speech—which, thankfully, I had not actually written, so that is all good.
I pay tribute to Jo Cox, as Mr Speaker did this morning. Sadly, I never got to know her or meet her, but we shared a passion for tackling loneliness. I will continue to take that fight on in Parliament, even though she is sadly no longer with us to do so.
I wish to speak about the challenges that all of us in this Chamber face in working together—we have heard a lot about that today. The challenge is that when the Government listen, we get attacked. When I hear the phrase U-turn, as I have in most speeches today, I do not hear U-turn; I hear, “Thank you. You listened.” That is the sentiment that we need in order to work together to tackle the really big issues. Since the start of this this pandemic we have worked together in a really great way, especially in the early days. I would say that Government have been agile in our approach.
Mr Kevan Jones (North Durham) (Lab)
In respect of what the hon. Gentleman has just said, there is an amendment on the Order Paper that the Government will not move; had they moved it, would he have voted for it?
Dean Russell
I thank the right hon. Gentleman for his intervention. Thankfully, we were in a position that I knew we would be in and anticipated throughout, because, to be open, I too have been lobbying the Government on this issue. I have used strong words behind the scenes, because it has been very important to make sure that this particular situation was sorted. I want to get on with my speech, but my point is that I feel it would have happened anyway, because that has been the movements and music behind the scenes.
The point is that we have to get away from this football politics—excuse the pun on Marcus Rashford—because we have to make sure that we work together cohesively. Throughout the whole of this pandemic, the Government have adapted. We have listened, changed and improved. We have ensured that the most vulnerable in society are being looked after. Look at how many people have been furloughed, how many businesses have been sorted with bounce-back loans and how many children in the vulnerable category were able to go to school.
I have been going every Saturday with an amazing charity called One Vision and another charity initiative called Sewa Day, along with the Salvation Army and others, to deliver food. At least once every single week, if not more often, I get the opportunity to go and see people face to face and help them where I can, but I have known that that is in addition to all the support that the Government are giving.
Do not get me wrong: the reality is that it is important that children in school are fed. It is absolutely a human right. I am a member of the Joint Committee on Human Rights, so I see this and am very passionate about it. We cannot feed a child’s mind unless we feed their stomach first. We have to hold that at the core of this. But unless we all spot areas where we can improve and work together to improve those things together, we end up with this political point scoring—a fear of adapting, because if we U-turn, the newspaper front pages will say we have failed. Let us praise the successes we have had and the opportunities to work together, and let us look at moving forward on that so that we can make a real difference.
I have one last point to make. When we have these opportunities to change things and adapt them, let us look at how we move forward in the next six months to a year, and the next two or three years. The voluntary sector absolutely has a part to play, not only to help provide support but to be the eyes and ears. The Government have worked hard to collaborate, not just at a party level but with business, charities and organisations to make sure that we are doing that.
Claudia Webbe (Leicester East) (Lab)
I add my voice to those thanking Marcus Rashford for his inspiring and tireless work against child hunger. I also pay tribute to 15-year-old Dev Sharma, the Member of Youth Parliament for Leicestershire and an ambassador for the Food Foundation, for championing the right to food for all children.
I could not agree more that in 2020, in the sixth richest country in the world, it is appalling that we are even having this debate about how to feed our children. Marcus is brilliant, but it should not be left to pioneering premier league footballers to paper over the cracks created by a decade of cruel austerity. The Government should be ashamed of their record: 200,000 children going hungry; 45% of African, Asian and minority ethnic children living in poverty; and 1 million more children projected to be in poverty by 2022.
Paul Bristow
The hon. Lady talked about the large number of people from ethnic minority backgrounds—in her constituency, perhaps—living in poverty. Will she congratulate the charities in Peterborough that are working with the Conservative city council there to ensure that people from ethnic minority backgrounds are helped during this difficult time?
Claudia Webbe
Indeed, I praise all the voluntary organisations, particularly in my own constituency, that have stepped up to provide food banks at a time when poverty has been stark, and the many faith organisations that have stepped in to help during these times.
I know from my own experience what it is like to be a child on free school meals despite both parents working, and what that means for survival, progress and opportunity. In communities like mine, this Government have normalised hunger, poverty and hopelessness. Some 42% of children in Leicester East live in poverty. Years of austerity combined with insecure employment means that an estimated 44,000 children in Leicestershire are living below the poverty line, even though the vast majority—31,000—have at least one parent who has a job. The fact that a job no longer provides a route out of poverty, or even guarantees that our children will be fed, represents an unforgivable breakdown of our social contract.
Before covid-19, 51% of children in one area of my constituency were in child poverty—and that was before this unprecedented crisis. Nearly 6,000 households in Leicester East are in fuel poverty, meaning that 14% of schoolchildren in my constituency are living in a situation where parents are forced to make the impossible choice between keeping their family warm or going hungry.
Beyond school meals, this Government have completely failed young people in Leicester in terms of education.
Patricia Gibson
It is clear from the Order Paper that the Government were not intending to support this motion today. We were told that one of the reasons was that the approximate cost would be £120 million and that it might set a precedent. Does the hon. Member agree that feeding hungry children at school is quite a good precedent to set?
Claudia Webbe
I do.
I want to make the link between poverty and achievement. Central Government funding per pupil has dropped by 8.4% since 2013. At the same time, my constituency has a lower than average GCSE attainment level, and only 6% of our students%—less than half the national average—achieve AAB at A-level. Do this Government not believe that young people in my constituency deserve the same opportunity to receive a good education? Do they not believe that it is a national scandal for any child to go hungry while billionaires and big corporations make ever-increasing profits? Two thirds of the current Cabinet were privately educated, yet they systematically deny working-class young people the opportunities that they were afforded.
That this Government of the super-rich by the super-rich and for the super-rich could have listened to these figures and still even thought about denying vulnerable children the security of a daily meal is beyond callous. The Government would have known from their own equality impact assessment that their plans would have impacted black communities worst. Therefore, they would have lent themselves to the charge of institutional racism. They would have known that the right thing to do was to take the data, follow the evidence and change the outcomes towards the transformational change that Black Lives Matter demands. Instead, it was left to Marcus Rashford and young people such as Dev Sharma from Leicester to present the case for humanity.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. The point I am trying to make is that if people take interventions, it gives them extra time, but it prevents others from speaking, because we will not be able to get everybody in. That is why people need to think carefully before they take interventions, because it honestly does stop others speaking.
Dame Diana Johnson (Kingston upon Hull North) (Lab)
The reason the Government are in such a mess on this issue is that they did not put together a strategic plan for education and children at the start of covid-19 in the way that they did for the economy. I recognise the work that they have done on that with furloughing and so on.
I congratulate Marcus Rashford and all those who have campaigned for many years to make sure that during school holidays, children can receive food if they need it. It is rather sad that it has taken the covid pandemic to force the Government to acknowledge that holiday hunger has existed for many years. People such as the chair of the all-party parliamentary group on school food, my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson), and campaigners such as Lindsay Graham have been talking about it for many years. It is also worth the House knowing that in the 1960s and 1970s, provision was made during holidays for children who were on free school meals, so the idea that it has never happened before is not correct.
I care deeply about this issue. Some 24% of children in Hull are on free school meals, against a national average of 15%. In my constituency, at least one in three children live in poverty, with 3,600 children on free school meals. In previous years, under previous Labour Administrations, Hull City Council introduced free school meals for all children in primary and special schools because it recognised that for children to do well academically, they need to have good nutrition. I pay tribute to it for that work.
I also remind the House that in 2009, I was an Education Minister in the last Labour Government. One thing that we did then was to introduce universal free school meal pilots in Durham and Newham. Sadly, when the coalition Government came in, they scrapped those pilots, but they showed a clear link. We all want to see our children do well and grow up healthy with a good education.
I have several questions for the Government. I want to make sure that my local authority gets its fair share of money. When will the allocations be made? Will the schools that found the Edenred system difficult to deal with be reimbursed for the work that they are doing to support children and families? Will the support continue indefinitely now that we recognise that holiday hunger exists? Finally, why has Hull never received a penny from the Government’s £9 million scheme for holiday activities, even though it has applied and is the fourth most disadvantaged area in the country? Some £999,000 has gone to Suffolk and £766,000 to Hampshire, but in Yorkshire and the Humber only Leeds has received any money at all.
Alison McGovern (Wirral South) (Lab)
I rise on the fourth anniversary of the death of my friend Jo Cox. We remember her every day.
I want to thank England’s—[Interruption.] Go on then, Mike—Man United’s Marcus Rashford. We are all grateful to him. I thank the Secretary of State for answering his call, which will undoubtedly make a difference, although I suspect he is now having a word with the Secretary of State for Health and Social Care for taking a pop at our footballers at the beginning of the covid crisis, which has now come home to roost.
Holiday hunger is not a singular or new problem. It has its roots in insufficient family incomes, the cause of which is labour market fragility, which my hon. Friend the Member for Wallasey (Ms Eagle) spoke about. We know that the problems in the job market are about to get much worse. Added to that are rising prices in crucial areas such as childcare and the harm to the power of the welfare state in this country, which will be my focus in the minute I have remaining.
The Conservatives have been in charge for 10 years. They have had enough time to show us their priorities, and here is what those priorities have been. The shutting of Sure Start, the end of the child trust fund and the cancellation of the health in pregnancy grant foreshadowed George Osborne’s £12 billion of welfare cuts. The Conservatives ripped the Child Poverty Act 2010 from the statute book, they introduced the two-child policy, which sent a message to children in families of three or four kids that the state does not care, and they introduced the benefits freeze, which sent the same message to families of all sizes. Child benefit has been cut by £350 per year for a family of two kids, and the local housing allowance has simply failed to keep up with rents. The Conservatives demonstrated their priorities by forcing people off tax credits on to universal credit even if that made them worse off. All of that was on top of low wage growth, which is compounded for many—particularly for single parents—by their inability to work ever more hours. For families in this country, there simply are not enough hours in the day.
Those are the choices that have been made. Holiday hunger is simply the consequence of all that. It is the consequence of the Government picking holes in the blanket of the welfare state for 10 years. Each and every one of those policy choices has had consequences, and here we are. At the end of the day, this is about putting money in people’s pockets or not. My party has lost four elections in the past 10 years, and that is on us. Meanwhile, four Conservative Chancellors have put 600,000 children in this country into poverty, and that is on them.
Mrs Emma Lewell-Buck (South Shields) (Lab)
I am pleased that the Government have scrapped their active pursuit of a policy direction that would have seen 3 million children go hungry this summer, but it should not have had to take the powerful, heartfelt and game-changing intervention of Marcus Rashford to get to this point. The anxiety felt by families over the past few weeks could have been avoided had the Government acted sooner.
Clearly, when cross-party MPs signed my letter to the Secretary of State earlier this month asking for an extension of the voucher scheme, the money was there, so why has it taken until now? Even before coronavirus, children were regularly going without. Ten years of Tory Britain has seen a forceful and deliberate dismantling of the safety net that once existed to support those who, through no fault of their own, were struggling.
It is no secret that I do not trust this Government. We have a populist Prime Minister who has a habit of making sweeping announcements, such as this one today, when he knows his popularity is waning. Many of us have been here before. He lauded the holiday activities and food programme, yet this year it was predicted to reach only 4% of eligible children. He then announced £63 million of local welfare assistance, but that is not ring-fenced, so it will not be spent exclusively on free school meals.
I sincerely hope that the Minister can give us some of the detail we need about today’s announcement, because we are heading for a deep recession. This money will help us this summer, but the Government must start being honest about the drivers of food bank use and release the reports they are burying about that, and they must ensure that no child, let alone children in one of the richest countries in the world, goes hungry. Frankly, too many have already. I sincerely hope that today is a serious turning point.
Nick Smith (Blaenau Gwent) (Lab)
I wholeheartedly support the Labour motion and I am glad that the Government now recognise the strength of our case. It is important at this time that children who need help will be fed over the summer.
Let me illustrate my point by referring to a crisis that my sisters and I experienced when we were young. We were children in a single-parent home in the south Wales valleys. We benefited from free school meals and clothing grants through our early years. At those times, those meals were a godsend. When I was 14, our mum had a terrible mental health episode. She moved away and left me and my two younger sisters to fend for ourselves for a few weeks, then my dad came back from being a seafarer to look after us. Mum did leave us with a £10 note, which was a big help, but she was in a terrible state. It was the start of ongoing very poor health for her, and she was to die at 42 years of age.
I vividly remember the day after my mum left. I worked as a paper boy and there was a muesli promotion in one of the women’s magazines, so we had packets of muesli for breakfast for the next few days. Over those few weeks alone, we three kids pulled together, relatives stepped in and we managed until my dad came back. At school, we had free school meals. Those meals kept us going. Of course, it was a very unusual situation, but so is a global pandemic: people are having to feed their families while earning 80% of their normal wages; and people on sick pay are having to survive on £95 a week. This summer, too many families will find themselves in poverty and some will have to deal with a crisis. They may need that school-meal lifeline.
My message is simple. The Government told us at the start of the pandemic that no one would be left behind. We should stand up for children who, through no fault of their own, need our support. I am glad that the Labour motion will now receive all-party support tonight. And finally, I say well done to Marcus Rashford.
Apsana Begum (Poplar and Limehouse) (Lab)
I add my comments to those that have already been made in the House today regarding the reports of the Government’s U-turn, and also pay tribute to Marcus Rashford and his powerful testimony of his own experiences of free school meals growing up in a single-parent household. All of this comes after so much campaigning and arguing for something so simple: making sure that children who need food get it. All of this also comes after years of austerity, which has had a devastating impact on ethnic minorities, with around 45% of black, Asian and ethnic minority children now living in poverty.
It is imperative that we join up the dots. The Public Health England report into the disproportionate impact of the covid-19 crisis on certain groups, which has finally been published, recognises that factors such as racism and social inequality may have contributed to increased risks of those in BAME communities catching and dying from the virus. In truth, it has been clear to anyone who has wanted to know that systemic economic inequalities mean that ethnic minority communities are at higher risk of being in poverty and so are particularly disadvantaged by the health crisis that we have endured.
It has now been weeks since the part-censored review, reluctantly commissioned by the Government, finally officially identified major inequalities, including the alarming statistic that Bangladeshi people face around twice the risk of death. Many of us are very concerned that it has taken months for the Government formally to recognise what has been widely noted and commented on and that action still has not been taken, yet decisions and policies are still going ahead without a clear and transparent examination on how they will affect particular groups and without confirmation that the situation for BAME people will not be made worse.
I was astonished to learn that a full regulatory impact assessment had not been prepared for yesterday’s statutory instrument on health regulations, the Health Protection (Coronavirus, Restrictions) (England) (Amendment) (No. 3) Regulations 2020. This is basic stuff. Let me be clear: this is not about what is technically correct according to bureaucratic rules; it is about what is morally just and correct. This is not about the game of power, but rather it is a question of justice.
Will the Secretary of State clarify what assessment his Department has made of the impact of the original decision not to roll out the national voucher scheme over the summer on black, Asian and minority ethnic children and their families and those with other protected characteristics under the Equality Act 2010? Will the Government commit to taking on the message that people across the world are crying out for those in power to understand, which is that, if black lives matter, every policy should be assessed before it is taken forward on how it will impact on different groups. This should be a meaningful and comprehensive process, and it should be made public.
Nadia Whittome (Nottingham East) (Lab)
The idea that children should not go hungry is one that most people would consider an issue of basic morality. I am glad that the Government have now conceded that the free school meals scheme should be extended to cover the summer, but given that the Under-Secretary of State for Education, the hon. Member for Chelmsford (Vicky Ford) was still arguing against this only a few hours ago, it is clear that this is not a moral change of heart, but a result of incredible pressure from campaigners such as Marcus Rashford and the Opposition.
I would like to ask the Minister about one aspect of the policy. There are many children in this country who have committed no crime but the crime of being migrants —an accident of geography—and who therefore have no recourse to public funds. These pupils have been temporarily eligible for free school meals during the pandemic; will the Minister commit to ensuring that that continues, not just this summer, but as a permanent change in policy?
It is telling that the Education Secretary should imply that children need access to nutritious, healthy meals only when they are at school. If it is wrong for children to go hungry, it is always wrong for children to go hungry, not just during a global pandemic and not only while they are at school.
Despite the very welcome U-turn, this Government are by no means let off the hook for their shameful and damning record on child poverty and hunger. In the sixth richest country in the world, there is no excuse for letting a single child go to bed hungry. The fact that 1.3 million children are routinely receiving free school meals shows that something is deeply wrong. We are a wealthy country, but that wealth is not fairly distributed; the wealthiest 10% in our country have about 45% of the wealth. That inequality is only increasing; wages for the majority have been stagnant for the past decade, employment is increasingly insecure and precarious, and we have a standard-of-living slide, all while the rich get richer.
Even though they may be fed this summer, we will still have approximately one third of children living in poverty. The Government typically respond to this by saying that the best route out of poverty is through work, but that is simply a meaningless platitude in light of the fact that most children who live in poverty have at least one parent in work.
The Conservative party is the party of the food bank and zero-hour contracts. The Living Wage Foundation calculates the real living wage—not the Government’s made up living wage—based on what people need to get by. It is set at £9.30 per hour outside London and that means that anyone paid below that is on a poverty wage.
Mike Hill (Hartlepool) (Lab)
The north-east has the highest proportion of children and young people in receipt of free school meals. Indeed, Action for Children recently calculated that 71% of children in the north-east are living in families with no or little savings to see them through the current pandemic.
In Hartlepool, the numbers were significantly high prior to covid and have risen since the lockdown, while the effects of ending furlough and potential job losses have yet to be calculated. According to the End Child Poverty coalition and research by Loughborough University, Hartlepool is the third worst place for child poverty in the north-east, with more than a quarter of children living below the breadline. Child poverty has increased by 7% since 2015 in Hartlepool, and the situation is being exacerbated by covid and the economic effects of the lockdown on families who are struggling to cope.
That has raised real concerns about holiday hunger, so I am pleased that, despite the heavy financial burdens placed on my local authority, it was prepared to step up to the plate well before the Government changed their position about this motion and run its holiday hunger programme as it has done for years, at a cost of between £50,000 and £60,000 per week.
Councils such as Hartlepool have recognised the problem of child poverty for years. It is wrong and needs to be eradicated. The Government need to do more, and that work must start today.
Kate Osborne (Jarrow) (Lab)
Having been brought up in a single-parent household, I imagine I am one of a small number of MPs who received free school meals; I know exactly what it is likely to struggle to make ends meet.
No child should have to go without food, and a child’s concentration, alertness and energy are greatly improved with a nutritious meal inside them. As we are one of the richest countries in the world, we must question why in 2020 families are struggling to put food on the table, heat their homes or clothe their children. No family should have to deal with this, and no parent should have to choose between feeding themselves and feeding their children. Sadly, that is often the choice parents face, and it is exactly what would have happened right across the country had this Government not made yet another U-turn today.
It is a sad fact that one in three children in my constituency are growing up in poverty, and it is shameful that countless families have to endure this painful struggle, day in, day out. I see that struggle at first hand on a daily basis. My inbox regularly contains heartbreaking emails from families forced to rely on food banks to eat and struggling to pay their rent. Staggeringly, food banks have become normalised in society. I remember being outraged when they first started to pop up, as I could not quite believe people were needing to access charitable donations because they did not have enough money to buy food. Now, we all expect that there will be a donation box in the supermarket for food banks that we can donate to. We need to end the normalisation of food banks and to work towards a society where every family have enough money to live on.
The Welsh Government have already announced that they will provide each eligible child with the equivalent of £19.50 a week over the summer, so it would have been deeply heartless for the Government not to fund the estimated £120 million, which will now ensure that children in this country, including 2,605 children in the Jarrow constituency, can eat for the summer holiday period. Not for the first time, the Prime Minister and his Government have found themselves on the wrong side of the argument, and I welcome the fact that they have made yet another U-turn.
This issue is not about politics; it is about doing the right thing. Marcus Rashford, in his efforts to persuade the Government to see sense on this issue, should be applauded, and I am glad the Government have listened to him, to MPs on both sides and to the whole of the country, who have called for this. If the Government can find billions of pounds to support businesses during this pandemic, it is only right that £120 million has been found to ensure that families and children are provided with food this summer.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
If hon. Members can speak for slightly less than three minutes, we might be able to get everybody in. If we are thinking of each other, that is the way to do it. As I have said before, having interventions is not a good idea because it will take away the opportunity from others.
Kerry McCarthy (Bristol East) (Lab)
I congratulate Marcus Rashford on spearheading this campaign. He is an amazing role model, both on the pitch and off it. His speaking out on how his mother struggled to make ends meet and how he would turn up at his friends’ houses in the hope of being fed resonated across the country, and there are far too many other young kids like Marcus out there.
Last year, I was one of the MPs who served on the children’s future food inquiry, and we heard devastating accounts from children, not just about raw and real hunger, but about living on leftovers, scraps or cheap food with little to no nutritional value. It should not take a famous footballer speaking out about his experiences as a child; the Government should have listened to those children back then in April last year and implemented the children’s right to food charter.
Of course I welcome this U-turn, but we need to embed it, so that we do not have to have this argument every time the school holidays come around. This move alone will not be enough. For far too many children, their free school meal is the only decent meal they get, and the under-fives do not even get that.
In Bristol, we will still be running our healthy holidays scheme this year, which is about far more than just providing a meal, but it looks as though we will have to do so without Government support. Feeding Bristol was fortunate enough to be a holiday hunger pilot in 2018, but last year we were not so lucky and we do not know why. We got nothing from the Government, but we raised £100,000 and we did it ourselves, albeit to a more limited degree than we would have liked. In 2020, we again missed out, apparently by just one point, but again we have no idea why. The Mayor of Bristol and I both wrote to the Government asking why some cities and towns were getting six-figure or even seven-figure sums but Bristol was getting nothing. We suggested spreading the money more evenly so that many more schemes could be pump-primed, but we have not had a response.
We know that covid-19 has made many more families financially vulnerable and those who were already vulnerable even more so. I pay a particular tribute to FareShare, which has been fantastic throughout this crisis. Again, let us congratulate Marcus Rashford on raising £20 million for its national effort. In the past week alone, 80 tonnes of food came to Bristol via FareShare South West, but this is not, as the Government would have it, just about this summer and coping with the fallout from the pandemic. People have been attending food banks in record numbers since the economically illiterate, morally bankrupt policy of austerity was adopted a decade ago. The Government have consistently refused to acknowledge the sheer scale of the problem, to engage with those working on the frontline, or to address the underlying causes of food poverty, and it is time that they did.
Carolyn Harris (Swansea East) (Lab)
Holiday hunger is not a new phenomenon, and since the summer of 2017 in Swansea East, I, my team, the Swans and the Ospreys football and rugby clubs, local businesses, community groups, Bidfood and Castell Howell, which are members of the wholesale federation, have provided food for local children—not just in the summer but during the Christmas holidays. I have lost count of the families we have supported, but it is easily in excess of 30,000.
This summer, we thought our lunch club would be able to stand down, as the Welsh Labour Government recognised the issue and introduced a continuation of free school meals throughout the holidays. However, my grand, quiet summer has been interrupted by coronavirus and over the past 12 weeks we have been busy preparing and delivering more than 20,000 meals to vulnerable families across Swansea. Again, that was achieved with the support of Swansea Council, wonderful volunteers, Mecca bingo, and huge food donations from members of the wholesale federation—ironically, one of the few sectors not to have received any Government pandemic support.
The Welsh Labour Government’s early decision to guarantee funding for free school meals throughout the school holidays is testament to their understanding of real-life issues and their ability to react to this real-life issue. We are hearing more and more harrowing stories of parents going without in order to feed their children—not because they are making thoughtless decisions on what to spend their money but because they do not have the money in the first place.
Almost two months ago, the Welsh Labour Government made an announcement about continued funding for free school meals during the summer holidays. I welcome the fact that today the Prime Minister and the Government have finally, after immense pressure, U-turned on their original decision—again, following Wales’s lead—but I question why they did not make the obvious and compassionate decision in the first place, as that would have saved many families a lot of anxiety in recent weeks. Many families were concerned that during the school holidays they would be sending their children to bed with empty bellies. Welsh Labour led the way, and I am proud to be the deputy leader of Welsh Labour. [Hon. Members: “Hear, hear!] Thank you. I wonder: without huge pressure from Labour Members, Conservative Back Benchers and an international football star, and a public outcry, would the Prime Minister ever have reached the right decision and made a U-turn on this policy? That is food for thought, but I am afraid that the jury is out to lunch on the answer.
Daniel Zeichner (Cambridge) (Lab)
For some, the free school meal voucher roll-out scheme has been nothing short of a disaster, and I know of 16 schools in my constituency that have reported problems with the system managed by the private company, Edenred. At a time when they had enough on their plate, head teachers were literally pulling their hair out. School after school told me that the system had crashed, with error messages appearing, some parents receiving vouchers but not others, and the impossibility of having a conversation with Edenred. At the height of the problems, staff at the North Cambridge academy were getting up at 6 o’clock in the morning to try to log on before the system was overwhelmed. At that point, they had been waiting two weeks for vouchers. If it takes the intervention of the local MP to make something happen, something has gone wrong.
To add insult to injury, the vouchers do not work in many city shops. My local food hub told me of the despair of a mum of four children from Chesterton. She put credit on her phone to receive the vouchers, then asked a friend to print them, as she does not have a printer at home. She then walked to her local shop with her children in tow, shopped, queued, and finally reached the checkout, only to be told that the national vouchers were not redeemable in the Co-op. She was inconsolable. All the food had to be put back; she had no way of paying for it. Think how that must feel.
Why not use non-Edenred schemes? After all, stores such as the Co-op have alternative food voucher schemes ready to go. Schools are nervous, especially after Government encouragement to use Edenred meant that schools dumped better functioning schemes for the Government’s preferred provider. There needs to be clarity about the financial support schools will receive if they choose not to use Edenred.
The Government need to stop penalising well-managed schools. Some do have cash in the bank and in their reserves, but it is for a purpose—investing in buildings and books and computers. The Government guidance that schools with a budget surplus in the current financial year cannot reclaim the cost of providing vouchers needs to be rethought.
Some will say that Cambridge is prosperous and, in many ways, it is, but even before the covid crisis, 1,741 children were already eligible for free school meals and that figure is going up. Since April, an additional 265 children have joined their ranks.
We are fortunate to have the Food Poverty Alliance in Cambridge, backed with funding from the Labour city council. Volunteers cook and deliver meals, including to 70 families, at the kitchens at Cambridge Regional College. They cooked 2,000 meals last week. While we are talking football, although Cambridge United has sadly been forced off the pitch, their “Here for U’s” scheme was enough to get me cheering again and I understand that their bread and butter pudding has been a particular hit.
The Government’s U-turn is welcome, but until we get through this crisis, have a real living wage and job security, there will continue to be need. At one time, we had a Government who sought to Make Poverty History. Now we have a Government who all too often seem indifferent to growing hunger. At least they have been shamed into doing one thing right today.
Several hon. Members rose—
Madam Deputy Speaker
I am going to have to reduce the limit to two minutes in order to get everybody in.
Florence Eshalomi (Vauxhall) (Lab/Co-op)
Like so many Members we have heard from today, I was also in receipt of free school meals when I was at school. I remember having to go to reception daily, in the morning, to collect my voucher and hand it over to the dinner ladies. I remember the bullying and the stigma I faced as a child because of that. That was in the late ’80s and early ’90s and it is shocking that we still need free school meals today.
In my constituency of Vauxhall, there are more than 4,000 children on free school meals. It is unimaginable that their families have to choose between putting food on the table and keeping a roof over their heads. I welcome the Government’s U-turn, but the fact that Labour had to table the debate in the first place shows a huge blind spot in the Government when it comes to child poverty.
I would like to highlight the Co-op Group’s announcement that it has taken the decision to extend the free school meals scheme over the summer holidays in all Co-op academies, which means that 6,000 students across 25 schools in the Co-op Academies Trust will continue to receive £20 vouchers every week, which is higher than the £15 provided by the Department for Education.
We all know the financial impact of covid on our families and that will have a big hit over the summer holidays. Will the Government reassure families in Vauxhall and across the country that they understand how important free school meals are and what a difference they will make to those families? I also urge the Government to look not just at the symptoms, but at the causes of child poverty.
Siobhain McDonagh (Mitcham and Morden) (Lab)
I congratulate the Government on agreeing to free school meals over the summer holidays and I congratulate Marcus Rashford on the best goal of his life so far—I can only say that his mum must be so proud of him today—but please do not let anybody think that this is just about food over the summer.
The average free school meals child starts school behind their contemporaries in class. The average free school meal child at year 6 can be up to 18 months behind the other kids in their class. When they start secondary school in year 7, they go backwards from year 6. Yet these children will have spent six months out of school, with 700,000 of them not doing any work— 700,000 of them with no access to the internet and no access to a tablet or a computer to do any work at all. The size of the crisis in our schools is huge.
If we are absolutely honest, many of these children will not be going back to full-time schooling in September and will not get the additional small group classes they need. That is why I am asking everybody in the Chamber today to support our Bill to get every child who is on free school meals access to the internet and access to a device that allows them to do that—to give them a step towards employment in the future and to make sure that their families have access to the same education and the same ledger as everybody else.
Olivia Blake (Sheffield, Hallam) (Lab)
I would like to take a moment to remember Jo Cox, a fellow Yorkshirewoman. She was such an inspiration and stood up against inequality and the loneliness that often accompanies it.
I welcome the Government U-turn on free school meals over the summer. I pay tribute to Marcus Rashford for his leadership over the past few days. Perhaps Government Members could take some lessons from that.
Since the onset of the covid-19 crisis, 1.5 million people have reported going a whole day without food. The use of food banks has soared. Mutual aid groups, food banks and campaigners in my constituency have struggled to provide the food that the people of Sheffield need. Their work and the work of others is heartening, but it is also a travesty that in the sixth richest country in the world it falls to volunteers and the charity sector to ensure that no one is going hungry.
Over the past few years in Sheffield, we have seen a growth in activities for young people that now must involve the provision of food, whether they are holiday hunger projects or term-time clubs. Children are struggling to get the nutrition they need and rely on such projects, as well as free school meals. The demand is high and it is growing. Communities have identified the need, but it is clear that they do not have the resources to prevent hunger in their neighbourhoods. They cannot solve the structural issues of inequality, low pay, insufficient social security, and rising costs in housing, energy and the basics. Solving that requires action and intervention from this place.
The pandemic has not created this crisis, but it has shone a light on the weaknesses that already exist. According the Trussell Trust’s “State of Hunger” report, 8% to 10% of households in recent years have experienced food insecurity, leading to 1.5 million units of emergency food parcels—
Rushanara Ali (Bethnal Green and Bow) (Lab)
At the start of this crisis, Ministers said they would do whatever it takes to get the country through this crisis. The reality is that the Government have been dragged to this kicking and screaming because of the heroic campaigning of charities and the amazing Marcus Rashford. What the crisis shows is that this is a Government who are morally bankrupt. The fact that they even considered starving millions of children in this crisis, the fact that they did not have the instinct to protect those children, and that it took those campaigners and Opposition Members to get them to see sense, shows a moral bankruptcy that beggars belief. I hope that Ministers will reflect on that and learn from this experience.
Two hundred thousand children have had to skip meals during the lockdown. In Tower Hamlets, we face the highest child poverty in the country, with my constituency facing the second highest. My local authority has lost £50 million of income. Some £30 million of that is costs related to covid. That is £30 million of income lost. Local authorities are struggling to make ends meet and protect people.
The Government must take urgent action not just in relation to child poverty and child hunger during the summer, but to deal with the deep-rooted causes. They must, for example, scrap the two-child policy limit and deal with housing costs in cities like London that condemn families to poverty. We need a new settlement post covid to recognise that inequalities are literally killing people. We have seen that with the spectre of high death rates for black, Asian and minority ethnic people, and white disadvantaged people who are twice as likely to die in this crisis than wealthier white people. We need the Government to step up and protect all those who need our help.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
We remember Jo Cox today. She would have been speaking with great passion in this debate.
Since the coronavirus crisis began, St Mary’s in Pontefract has delivered food parcels to help nearly 250 children. Thank you to David Jones, Denise Pallett and all the volunteers. In Castleford, we have been delivering food parcels and kids activity packs, with great leadership from Kath Scott and Saney Ncube. We have talked to families where children are making do with snacks for lunch—something sweet and cheap to eat, because there is no food in the house. Paul Green and the volunteers at Kellingley club have been doing an amazing job supporting families in Knottingley. In Normanton, Michelle Newton, Ash Samuels and the Well Project have been helping families across the town.
Our councillors and volunteers are the best of Britain, and part of the proud tradition in our towns of people rallying round when things are tough. It has also been the best of Britain that we have seen in this phenomenal personal campaign from Marcus Rashford, but also from hundreds of thousands of people across the country joining the campaign to end holiday hunger. Today’s U-turn from the Government is welcome, but we need action all of the time to stop child hunger and poverty, not just when there is a big campaign.
Under the last Labour Government, in the run-up to every Budget—every Budget—we had a big debate on what should be done that year to tackle child poverty and to make progress. We tried to make that pressure permanent 10 years ago by bringing in the Child Poverty Act 2010, which at that time had cross-party support, to keep the pressure up to end child poverty. However, that has been ditched by the Government, and instead we have seen things such as the two-child limit or the five-week wait for universal credit brought in that have caused so much damage. I would urge them to join in that cross-party spirit again to end child hunger and to end child poverty. It is morally wrong that, in the 21st century, any children should go hungry.
Mr Kevan Jones (North Durham) (Lab)
On 27 March, at the daily press conference, the Chancellor of the Duchy of Lancaster said that the coronavirus “does not discriminate”. We know that is not true, with 88% higher mortality rates in deprived communities, and we all see and know in our own constituencies the economic effects that this virus is having in more deprived areas. In my own constituency, 1,570 people have joined the claimant count since March, and that will increase. Their families are made up of hard-working, dedicated individuals who through no fault of their own have found themselves and will find themselves struggling. The hon. Member for Hastings and Rye (Sally-Ann Hart) is not here, but I am sorry, the state does need to intervene in these situations, because these people pay their tax and are proud individuals, and they need our support now.
Listening to Conservative Members today, it is as though an amendment was not on the Order Paper saying that they were going to oppose free school meals over the summer, but it is there. As I challenged the hon. Member for Watford (Dean Russell), if it had been there tonight and things had not changed, they would all have trooped through the Lobby and voted against giving our children free school meals during the summer holidays. In 2020 in the sixth richest country in the world, if we cannot afford to support and feed children, there is something terribly wrong. That is not the society I came into politics to see. It is one that I and, I know, others on the Labour Benches will continue to fight, and we will fight against the injustice that this Government seem to be completely deaf to.
Rachel Hopkins (Luton South) (Lab)
The reliance of many children on free school meals is, sadly, not a new thing, but this is the reality for the 3,231 children across my Luton South constituency. Similarly, holiday hunger is a sustained and severe problem at the heart of many of our communities, and both have been exacerbated by this unprecedented public health crisis. I am glad that, after sustained pressure from Marcus Rashford and the Labour party’s Holidays Without Hunger campaign, the Government have decided to U-turn, do the right thing and extend the free school meal voucher scheme over the summer holidays.
Research by End Child Poverty shows that, before the coronavirus crisis, 46% of children in Luton South were living in relative poverty. As I have said before in this House, many are living in families struggling with in-work poverty due to low pay, insecure work and zero-hours contracts. I am very concerned that the financial hardship inflicted by the coronavirus crisis will cause this figure to increase. If the Government had not conceded to public pressure and extended the free school meal voucher scheme, they would have neglected their responsibility to vulnerable children.
Free school meals provide a staple diet and the nutrition that facilitates a child’s development. Neglecting a child’s development needs can have a tremendous impact on their mental and physical health. In the longer term, adverse childhood experiences—for example, a sustained inability to meet a child’s basic needs, such as being fed—can lead, through no fault of their own, to negative outcomes such as low educational and employment achievements and mental health problems. Today’s U-turn is welcome, and I urge the Government to go further to end child poverty.
Helen Hayes (Dulwich and West Norwood) (Lab)
I pay tribute to Marcus Rashford this afternoon. It is not easy to speak about difficult personal experiences, but by doing so in such a powerful way, he helped to force the Government to act to stop 1.3 million children in England who are eligible for free school meals going hungry over the summer holidays. I also pay tribute to my local councils—Lambeth and Southwark councils—and to the many community organisations that have been working so hard since March to address food insecurity during the pandemic. They show the commitment, care and compassion in our local communities of which I could not be more proud.
While the Government’s U-turn is welcome, we should not be having this debate today, because coronavirus or not, no child should ever go hungry in the UK. Parents do not want to have to rely on a voucher scheme. They want the dignity and freedom to buy healthy, fresh food to nourish their children. Shamefully, childhood hunger and food insecurity are a huge problem in the UK, exacerbated by coronavirus, but a reality for many families, even without the pandemic. It is hard to understand the mindset of a Prime Minister who does not appear to see this as a top priority and who has to be pushed reluctantly into minimal action.
The voucher scheme is welcome and essential, but it is not a solution to food poverty. It is not reaching the thousands of families who fall just outside the income threshold for free school meals, or those who will not claim because of the stigma. We know that many of these families are also on low incomes, with precarious work, facing high housing costs and forced to rely on a social security system that prefers punishment over support.
The Government have a choice: they can keep lurching forward with disorganisation and wrong-headedness, forced to do the right thing only by intense pressure from our communities; or they can start to engage and plan now for a coronavirus recovery that builds back better, addressing structural inequality, low pay, insecure work, the high cost and insecurity of private renting and the ability of our councils to deliver the public services that we all rely on, and they could make sure that no child in the UK ever has to go to bed hungry again.
Sam Tarry (Ilford South) (Lab)
I welcome the Government’s U-turn on this important issue, and it is incredibly disappointing that it has taken a high-profile intervention—a “Match of the Day”-worthy goal—from Marcus Rashford to get us to this point. I think of my constituents in Ilford South, where we have over 4,000 children who claim free school meal vouchers, and, potentially, with 17,500 people on furlough, that figure could rise to a far worse and frightening level.
Unsurprisingly, I have been inundated with emails from concerned constituents in precarious positions. Andrea, with three children, currently has no income whatever due to the covid crisis, her mental health damaged. I will quickly mention one young man—a 10-year-old, Muhammad Ameen, who took the time to write to me from my old primary school, Highlands, in Ilford South. He said that some children whose
“parents are poor, have to suffer hunger in this crisis and are not getting the free school meals they need. I must stress this is for the families who desperately need it.”
I know that we are short on time, so I will finish by saying that it does not often happen that someone who is a West Ham supporter will congratulate and thank Marcus Rashford, a Manchester United player, but by highlighting this, he has held a mirror up to the Government. Thankfully, they have responded and are going to help all those people in my constituency to get through this summer—
Tulip Siddiq (Hampstead and Kilburn) (Lab)
I will start by saying how pleased I am about the U-turn that the Government have made over free school meals, and what an impact it will have on all the children who are facing a food crisis in this pandemic and all the parents who are worried about the long summer months that are coming up over the holidays. We cannot underestimate the impact that this decision will have.
Today’s debate has highlighted how necessary this U-turn was. Forgive me, because I will not be able to mention every single person who has spoken in the debate, but there have been some very powerful speeches from Members on both sides, including the shadow Secretary of State, my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey), who exposed the shocking extent of child poverty in the UK. My hon. Friend the Member for Garston and Halewood (Maria Eagle) shared powerful stories of child poverty from her constituency, and my hon. Friends the Members for Bradford West (Naz Shah), for Poplar and Limehouse (Apsana Begum), for Nottingham East (Nadia Whittome), for Jarrow (Kate Osborne) and for Vauxhall (Florence Eshalomi) talked movingly about their own personal stories when it comes to free school meals.
There have been so many excellent contributions, and I am afraid I cannot go through all of them, but it would be remiss of me not to mention my hon. Friends the Members for Weaver Vale (Mike Amesbury), for South Shields (Mrs Lewell-Buck) and for Washington and Sunderland West (Mrs Hodgson), who have been campaigning on this issue for a very long time now—well before the Government decided to do their U-turn. As for Government Members, I want to congratulate the hon. Member for Rother Valley (Alexander Stafford) on his maiden speech, as well as his new baby.
I want to take this opportunity to thank the brilliant organisations that have been campaigning on food poverty in this crisis and calling on the Government to extend free school meals. No campaign ever happened single-handedly, and I cannot name all of them. I will give a quick mention to School Food Matters, the Child Poverty Action Group, Feeding Britain, the Food Foundation, Sustain, and the Good Law Project—but there are so many more.
If you will indulge me, Madam Deputy Speaker, I would like to thank the Minister for making this U-turn in the knowledge that her big boss in No. 10, Dominic Cummings, previously said that free school meals were a “gimmick”. We know what happens to Ministers who cross him, so I hope that the hon. Lady is in her position next week.
I pay tribute to the schools, councils, food banks, community groups and others who have been doing everything they can to support children during this pandemic. One of the things I want to highlight is that we heard some very chilling statistics in this debate about food insecurity, but behind every chilling statistic is a personal tragedy. I want to speak about a young woman who lives in a council estate not very far from where I live. I met her during the election, when she told me that she has small children, just like I do. She said that every day when she picks up the children from school, she just wishes and prays that one of their friends would invite them to their house for dinner so that when it comes to dinner time, she does not have to tell them that she does not have enough food to feed them. She told me that that makes her feel inadequate as a mother. When I think about free school meals, I have long thought about Rebecca and how much this will benefit her during the summer holidays. Every story like this is a family’s personal tragedy—and that is before we consider the long-term impact on children going without food.
What I find so scary is that in this crisis we will not know the full impact of rising food poverty on children for some time: the child whose growth was stunted because they were underfed, the child whose mental health was damaged by the experience of poverty, or the child whose education was set back because they could not focus on learning due to hunger. The extent of this harm will not be clear for many, many years. We also know that it will disproportionately impact black and minority ethnic communities, the disabled community, and already disadvantaged children from lower socioeconomic backgrounds.
For all those reasons, I heartily welcome the fact that free school meals will be funded over the summer, but I cannot help but question why this decision has come so late. Back in April, the Labour Government in Wales committed to £33 million to fund free school meals over the summer, at a much higher level of support than in England. We heard very passionate speeches from my hon. Friends the Members for Gower (Tonia Antoniazzi) and for Swansea East (Carolyn Harris) highlighting the leadership and clear thinking that the Welsh Labour Government have shown on free school meals. I wish the Government had taken a leaf out of their book.
A win is a win, but the debate should not end here, and I would be grateful if the Minister answered a number of questions about this U-turn. How will she ensure that the administrative problems we have seen with the voucher scheme to date will not be replicated over the summer? Will she set out why the same support has not been offered for universal infant free school meals? Will she commit to continuing with the support from September? How will she ensure that the half a million children who qualify for free school meals but are not accessing the support are properly fed at home? What plans do the Government have to get support to the millions of children who do not qualify for free school meals but are none the less facing food insecurity?
You know that I am a London MP, Madam Deputy Speaker, but when it comes to football, my heart and soul rest at Anfield, so normally I would not be echoing the words of a Manchester United player in the Chamber like this, especially when this is a potentially record-breaking championship season for Liverpool. I would have shown him the red card, but I do not need to consult VAR to see that hungry children are more important than club loyalties. I would like to read out a message that Marcus Rashford has sent where he thanks all the MPs in the Chamber for coming together and making sure that we put our loyalties aside and did what was right for hungry children.
The Parliamentary Under-Secretary of State for Education (Vicky Ford)
I will start by thanking everybody who has spoken in this debate on an incredibly important issue. I would particularly like to thank my hon. Friend the Member for Rother Valley (Alexander Stafford). He talked in his maiden speech about the passion of his constituents, who he knows
“can and will change the world for the better.”
I believe that everybody who gets involved in politics wants to do that—they can and will change the world for the better.
At this incredibly difficult time, we need to ensure that we all do everything we can to get support to those who need it most, and that includes getting support to vulnerable children. It is right that we ask schools to keep their kitchens open where possible or to deliver food parcels to those who would normally get a free school meal. It is right that we provided vouchers for children whose schools were not able to provide food parcels. Never before has a system like that been set up in such a short period. Yes, there were technical problems, but as of last Friday, more than £150 million-worth of vouchers had been redeemed by families and schools. It is also right that we will provide additional funding for a covid summer food fund, so that children who are eligible for free school meals receive a six-week voucher this summer. It is right that we listen.
Ian Paisley (North Antrim) (DUP)
Would it not be better for the Minister to use this opportunity to thank Marcus Rashford for the great campaign he has led and to commit to ensure that this never happens again by putting a line in the Budget papers to ensure that these free school meals are available for the duration of this Government’s lifetime?
Vicky Ford
The hon. Gentleman is right: we must all thank Marcus Rashford for his campaign and his letter, and I will do so.
I want to point out that this is only one piece of a wide network of support that we have ensured is in place for vulnerable children at this time. We have invested in support for adoptive families and foster carers. We have prioritised care leavers and families of children with disabilities. We have supported those who have been excluded from school and kept schools open for those children who need schools to keep them safe. I would like to thank all those who work in schools, the education system and care, our social workers and everyone across the country who works to support vulnerable children.
As many Members have said, getting all children and young people back into school as quickly as possible is a vital next step because of the important role that education plays in all children’s life—especially those children who face disadvantage. It is right that we all thank Marcus Rashford for his letter. I would like to thank him for his letter, and I especially thank him for the work that he has done with FareShare to provide food support. The Government have also invested £16 million in food support through frontline food charities, including FareShare.
Marcus tells a heart-wrenching story of his early childhood. It is right that low-income families should be prioritised for support at a difficult time. He points out in his letter that his experience happened 10 years ago. Since then, the Government have introduced the national living wage, increased wages and reduced taxes for those on the lowest incomes, so that they have more money in their pockets. The lowest-paid working full time could, in real terms, be better off by over £5,000 than they would have been back in 2010.
But we know that this summer is exceptional. It will be a very difficult time for many families. As well as ensuring that vulnerable children are safe at this time and that their learning is supported as much as possible, we have ensured that those who are eligible for free school meals can access food via either local arrangements provided by their schools or our voucher scheme. I thank my hon. Friend the Member for Arundel and South Downs (Andrew Griffith), who gave a shout-out to the breakfast clubs Magic Breakfast and Family Action, which have supported so many.
The hon. Member for Mitcham and Morden (Siobhain McDonagh) raised an important point on the attainment gap—the difference between the educational attainment of those from a more disadvantaged background and that of their peers. The good news is that over the past decade, that attainment gap has narrowed at every single stage of education. But we know that it risks widening now, which is why we are committed to a long-term, sustained programme of catch-up, to close that gap again—and we will always focus on the disadvantaged first.
Let me be clear: giving families a voucher—
Mr Nicholas Brown claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question put and agreed to.
Main Question accordingly put and agreed to.
Resolved,
That this House welcomes the Government’s decision to provide schools with their expected funding to cover benefits-related free school meals including the national voucher scheme over the Easter and May half-term holidays; notes the decision of the Welsh Government to guarantee each eligible child the equivalent of £19.50 a week up until the end of August to cover their meals over the summer holidays; and calls on the Government to continue to directly fund provision of free school meals, including the free school meal voucher scheme for eligible children over the summer holidays to stop children going hungry during this crisis.
Exiting the European Union: Financial Services and Markets
(3 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Madam Deputy Speaker (Dame Rosie Winterton)
I understand it is the will of the House that motions 3 and 4 be taken together. The debate will last up to 90 minutes. When motion 3 has been decided, I will call the Minister to move motion 4 formally. If a Member objects, the motions will be taken separately.
The Economic Secretary to the Treasury (John Glen)
I beg to move,
That the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020, which were laid before this House on 24 March, be approved.
Madam Deputy Speaker (Dame Rosie Winterton)
With this it will be convenient to discuss the following motion:
That the draft Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020, which were laid before this House on 6 May, be approved.
John Glen
I welcome my opposite number, the right hon. Member for Wolverhampton South East (Mr McFadden), to his place. He has a distinguished history of public service and I look forward to a constructive dialogue with him today and on future occasions.
As the House will be aware, the Treasury has been undertaking a significant programme of financial services legislation since 2018, introducing almost 60 statutory instruments under the European Union (Withdrawal) Act 2018. It has been an enormous privilege for me to do the vast majority of those measures. These SIs were made prior to exit day—31 January 2020—and covered all essential legislative changes needed to ensure a coherent and functioning financial services regime at the point of exit, had the UK not entered a transition period.
The European Union (Withdrawal Agreement) Act 2020 received Royal Assent in January this year. The 2020 Act contains a general rule that delays those parts of the SIs that would have come into force immediately before, on or after exit day, so that they instead come into force by reference to the end of the transition period, which we leave at the end of this year. Over the course of this year the Treasury will therefore, where necessary, continue to use powers under the European Union (Withdrawal) Act 2018, as amended by the 2020 Act, to prepare for 1 January 2021. This will involve the Treasury bringing forward a small number of SIs that, in particular, will ensure that recently applicable EU legislation will operate effectively in the UK at the end of the transition period. The SIs before the House today are two such instruments. The approach taken in these SIs is aligned with the general approach established by the EU (Withdrawal) Act 2018, providing continuity by retaining existing legislation at the end of the transition period but amending where necessary to ensure effectiveness in the UK-only context.
I turn to the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020. From now on, I will refer to this instrument as the OTC SI. In preparation for the UK’s withdrawal from the EU on 31 January 2020, Parliament approved several EU exit instruments to ensure that the European market infrastructure regulation would continue to operate effectively in the UK at the point of exit. EMIR was updated on 1 January this year by a regulation known as EMIR 2.2, which now applies in the UK. The OTC SI that we are discussing today address deficiencies in the UK’s post-transition framework arising as a result of that update.
EMIR is Europe’s response to the G20 Pittsburgh commitment in 2009 to regulate over-the-counter derivative markets in the aftermath of the last financial crisis. EMIR mandates the use of central counterparties, known as CCPs, to manage risk between users of derivative products. EMIR has been effective in increasing the safety and transparency of derivative markets, thereby reducing the associated risks that users may face, and UK CCPs play an essential role in reducing systemic risk and ensuring the efficient functioning of global financial markets.
EMIR 2.2 introduced an updated third country or non-EU CCP supervision framework, including an updated recognition regime. This means that EU authorities can have greater oversight over third country CCPs that are systemically important to the EU. Perhaps the most substantial update in EMIR 2.2 is the ability for the European Securities and Markets Authority to tier third country CCPs according to their systemic importance to the EU as part of the recognition process. ESMA will now take on certain supervisory responsibilities for systemic third country CCPs known as tier 2 CCPs.
This OTC SI updates the UK’s recognition framework in line with EMIR 2.2 by transferring ESMA’s new powers to the Bank of England after we leave the transition period. That includes the ability to tier non-UK CCPs as part of the recognition process, and to supervise non-UK CCPs that are systemically important to the UK. The Bank of England has already been given the power to recognise non-UK CCPs wishing to operate in the UK in an earlier SI under the EU (Withdrawal) Act. EMIR 2.2 also empowers the Commission to adopt delegated Acts setting out the details of how the framework will function in practice. This includes how tiering and deference to the rules of home authorities referred to as “comparable compliance” will function. This instrument transfers the power to establish these frameworks to the Bank of England.
Since the Bank already has responsibility for safeguarding financial stability in general, and managing systemic risk in CCPs in particular, this is an appropriate conferral of functions as it allows the Bank to manage the systemic risk posed by some non-UK CCPs in a way that is appropriate for the UK. The statutory instrument therefore transfers the remaining Commission functions—including the power to deploy the so-called location policy—to Her Majesty’s Treasury.
Under EMIR 2.2, ESMA can recommend to the Commission that a third-country CCP that is felt to be substantially systemically important should lose permission to offer some services to EU clearing members, unless those services are offered from inside the EU. This is referred to as the location policy, the inclusion of which in EMIR 2.2 the UK did not support because of concerns that it could lead to market fragmentation and reduce the benefits provided by the global nature of clearing. However, the powers in the European Union (Withdrawal) Act 2018 under which we introduced the SI extend only to the addressing of deficiencies arising from withdrawal. During the passage of that legislation, commitments were made that the powers would not be used to make significant policy changes, so I am not going to deviate from that.
The OTC SI transfers the powers to use the location policy to the Treasury, subject to advice from the Bank of England and appropriate procedural safeguards and transitional provisions. I assure the House that because of the very different nature of the UK’s clearing markets, it is hard to foresee circumstances in which the Bank would appropriate the use of that tool in practice. EMIR 2.2 also makes changes to internally used supervisory and co-operation mechanisms but, as the UK is no longer part of the EU, those provisions are removed by the SI.
Finally, the OTC SI updates the recognition powers set out in the temporary recognition regime, which was established by a previous SI to enable non-UK CCPs to continue their activities in the UK after exit day, while their recognition applications are assessed. This SI updates the recognition requirements in line with the new EMIR 2.2 provisions. The Treasury has worked closely with the Bank of England to prepare the instrument and has also engaged with the financial services industry, as we have done throughout. The draft legislation has been publicly available on the legislation.gov.uk website since 24 February, and the instrument was laid before Parliament on 25 March.
In summary, the OTC SI is necessary to ensure that existing EMIR legislation will continue to function effectively in the UK from the end of the transition period, following the updates made in EMIR 2.2. In particular, it will ensure that the UK has the tools necessary to manage the financial stability risks posed by some of the largest non-UK CCPs.
Let me turn my attention towards the second of tonight’s SIs, the Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020. Although this SI makes amendments to approximately 20 pieces of legislation, the number and nature of the amendments are modest and minor. They act to preserve the effect of recent changes to EU legislation in the UK, and in doing so limit any impact on business that would otherwise arise at the end of the transition period.
Primarily, this SI fixes deficiencies in recently applicable EU legislation, which is congruous with the Treasury’s approach to previous financial services EU exit instruments and the approach required by the European Union (Withdrawal) Act 2018. It also revokes pieces of retained EU law and UK domestic law that it would not be appropriate to keep on the statute book at the end of the transition period.
This SI contains a small number of minor clarifications and corrections to previous financial services EU exit instruments. The House will be aware of the unprecedented scale of the legislative programme that the Treasury has undertaken, which has been carried out with rigorous checking procedures. However, errors are unfortunately made on occasion, and when they arise it is important that they are corrected as soon as possible. This has happened previously, and I will continue to be completely transparent when such shortcomings become apparent.
I note that this SI also includes provisions initially included in the Cross-Border Distribution of Funds, Proxy Advisors, Prospectus and Gibraltar (Amendment) (EU Exit) Regulations 2019, which were laid using the made affirmative procedure in October 2019, when at the time it was necessary to ensure that the SI was in place prior to the previous exit date of 31 October. That SI subsequently ceased to have effect, but it is important that those provisions, which include amendments to the UK’s prospectus regime to ensure it remains operational in a wholly domestic context, are in force before the end of the transition period. Those provisions have therefore been included in this IS.
I would like to say a few words on the amendments that this SI makes to a previous EU exit instrument, the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019, which I shall now refer to as the equivalence SI. The equivalence SI allows the Treasury to make equivalence directions for EEA states during the transition period for specified provisions. Today’s SI adds additional equivalence regimes to the scope of the power for the Treasury to make equivalence directions for EEA states during the transition period. This is through the inclusion of provisions relating to central securities depositories, which are entities that hold financial instruments and trade repositories that collect and maintain records of derivative trades.
This SI also amends the existing drafting on the length of the direction power to tie it to the end of the transition period. This will enable Ministers to make directions during the transition period to come into force at the end of the transition period, granting equivalence to the EEA for those regimes. Finally, this SI clarifies that the Treasury can impose limitations on the application of state-level equivalence decisions in granting equivalence to the EEA—for example, in response to EU conditions placed on the UK. As with the OTC SI, the Treasury has been working closely with the financial services regulators in the drafting of this instrument and has engaged with the financial services industry.
In conclusion, the Government believe that these instruments are necessary to ensure that the UK has a coherent and functioning financial services regulatory regime at the end of this year when we leave the transition period, and I hope that the House will join me in supporting them. I commend the regulations the House.
Mr Pat McFadden (Wolverhampton South East) (Lab)
Like many who have spoken in the Chamber today, on the fourth anniversary of her death, my thoughts are very much with our former colleague Jo Cox and her family.
As we heard from the Minister’s opening statement, these statutory instruments are quite technical in nature. I would like to thank him for his welcome, and to thank him and his officials for providing some briefing on their meaning and effect. Overall, these instruments seek to replicate at national level the regulatory regime for financial services to which we currently subscribe—and which in many cases the UK designed—at EU level. Until the end of the transition period, we will of course continue to follow the EU’s regulatory rulebook. This is about what will happen in January if, as the Government confirmed last week, the end of this year marks the end of the transition period.
As the Minister outlined, the regulations cover areas such as money laundering, supervision, central counterparties, the cross-border distribution of funds and the desire to maintain the pre-Brexit relationship between the UK and Gibraltar on financial services. In most of these cases, they are taking the supervision of the rules governing these areas from EU bodies and transferring them to either the Treasury, the Bank of England or the Financial Conduct Authority.
On the detail, I have a few questions I would like to put to the Minister. On the money laundering provisions, why is the current duty to co-operate with supervisors in other countries being removed and replaced with the weaker power to co-operate if we so choose? In what circumstances would we not want to co-operate to tackle money laundering, which can fund everything from international terrorism to the drugs trade? On cross-border distribution of funds, can the Minister confirm that these statutory instruments enshrine the loss of passporting rights for our financial services that will result from the Government’s decision to withdraw from the single market as well as from the EU itself? On equivalence determinations, can he confirm that, although these SIs create a regime for the UK to make decisions on the regulatory regime in other countries, as yet we have no guarantee that our own regulatory regime will be regarded as equivalent by the rest of the EU?
We can only hope that this exercise in taking back control is a little more convincing than last week’s decision on border checks from the Cabinet Office. After having four years to prepare, the Government dropped their plans for border checks on goods because we simply could not implement them, even though our own goods will be subject to border checks when we export them overseas.
Paragraph 36 of the political declaration, on which the current negotiation is based, states that the UK should have concluded its equivalence assessments by the end of this month. If we are only now legislating to take the powers to do that, can that exercise possibly be completed in just two weeks’ time?
Taken together, these changes and others in similar statutory instruments represent a significant increase in the functions and power of the Treasury, the Bank of England and the Financial Conduct Authority. What accountability arrangements will there be for those bodies in the exercise of their new powers? Alongside the transfer of functions, accountability must surely be enhanced if claims of restoring parliamentary sovereignty are to mean anything in reality.
More broadly, there is an obvious contradiction at the heart of all this. These regulations are intended to ensure continuity for UK financial services at the end of the transition period, yet the Government’s stated intention for withdrawal is to erect new trade barriers between our financial services and the rest of the EU, so even as we replicate at UK level the EU regulations that we played such a big part in designing, we are pursuing a course that will be incapable of replicating the market access that we have at the moment.
That is not my judgment; it is the stated aim of Government policy. It is the equivalent of one of the shops reopening this week and putting lots of new stock in its window but telling a substantial proportion of its previous customers that they are no longer welcome to shop in the store. For all the debate there has been about Brexit, its impact on services has not been debated nearly as much as it should have been.
We are not dealing here with just-in-time supply chains and trucks on ferries; we are dealing with regulations and rules. We are taking the area that makes up 80% of our economy and, in the case of financial services, a sector in which we trade at a substantial surplus with other countries, and inserting new barriers between us and our nearest customers. The fact that the sector is resigned to that and has established alternative bases in Dublin, Luxembourg or wherever does not change the reality of it.
We do not intend to divide the House on these measures, because regulatory continuity is better than not having a regime in place at all, but no amount of duplication can avoid the basic fact that although we can replicate the rules, we cannot replicate the market access to which these rules apply at the moment and for which they were designed in the first place.
Alison Thewliss (Glasgow Central) (SNP)
I welcome the right hon. Member for Wolverhampton South East (Mr McFadden) to his place, and I concur with the comments he made about Jo Cox. Jo’s family are never far from my thoughts in this place, and we do all miss her very much.
As a veteran of many statutory instrument Committees with the Minister, I must say that I have missed them terribly. It has been such a shame not to have been in all those Committees of late, but I suppose what we have in front of us this evening is a smorgasbord of delights—of things that have not gone quite right so far: things that have had to be corrected as things have moved on the EU side and bits, perhaps, that were missed in the shuffle beforehand.
As the Minister said, this is not the first time that corrections have come back before us. It is, I suppose, a symptom of the way the Government have conducted themselves during the whole Brexit shambles that these statutory instruments have come to us with a bunch of corrections and a load of other things squashed into them. It really seems that we are playing a continual game of catch-up with the EU, and even with ourselves, to ensure that the measures the UK has in place meet what the EU has written in our absence. If we want to be part of what the Minister calls a coherent and functioning system—such ambition!—we will have to keep adding on to these rules to meet what the EU has decided. These are decisions that the EU has taken, without us, about things on which it is in its interests to have co-operation. For the Brexiteers in the room, we will continue to be rule-takers in this House if we want to have any say in financial services.
As the right hon. Member for Wolverhampton South East so eloquently said, this instrument is about services and financial services, which make up a significant amount of our economy. They account for a significant number of jobs in my constituency, Edinburgh, Aberdeen and other places in Scotland besides. Those services and financial services will not have the access to the European market that they had before this Government’s reckless Brexit plans, which is very, very upsetting, particularly for Scotland, which did not vote for Brexit. We voted overwhelmingly to remain within the EU and it is deeply regrettable that we are being forced into this situation by the UK Government.
The issues around equivalence and passporting really speak to a situation which is not as good as the one that we had before. The UK Government need to think carefully about how they want to progress, because we will not have equivalence. There are the risks and the balances within equivalence about who decides what is equivalent and then whether that will suddenly stop, and that puts at risk the future of financial services particularly within the UK.
I note that there are some broadly positive things in the regulations. The UK has taken on the benchmarking regulations, adding them to the low-carbon benchmarks—climate transition benchmarks and Paris-aligned benchmarks—that the EU has proposed. It is good that we are picking them up, but all we are really doing is catching up with the EU. The EU has proposed those benchmarks and we are now catching up down the line, rather than being part of forming them in the first place. If the EU continues to develop such benchmarks, and if climate change and green finance continue to be high on the agenda, we will have to change again and think about how we manage to compete if we are not keeping pace.
The regulations mention that they transfer relevant legislative and non-legislative functions from EU bodies to HM Treasury and the Financial Conduct Authority. This speaks to the point mentioned by the right hon. Member for Wolverhampton South East that these powers are not coming to us as parliamentarians and legislators. These are powers that are being hived off to the FCA, the Bank of England and other regulators and they will be responsible, not us here in this House, for keeping checks. Again, for the Brexiteers, that is not taking back control in this House. That is taking things that were drafted by civil servants somewhere else—some bunker in the EU—in Europe and then moving them to a bunker somewhere in London where we will have very little say on them, which is hugely regrettable and, arguably, does not really help the financial services industry.
All of this is about trying to mend or fix something, patching it up and putting tape around it to try to build something coherent and functioning, when it will be less good and less useful. It will be suboptimal, as Ministers are often wont to say, and it will cost us money in the future as well. There are various figures that I could cite, but I will take, as an example, the Bank of England’s analysis, which suggests that the Brexit deal will take as much as 1.25% from GDP relative to the trend before the referendum.
Another warning is that if the Government’s proposed Brexit deal is implemented, GDP in the longer term will be around 4% lower than it would have been had the UK stayed in the EU. That will have a disproportionate impact on places such as Scotland. London may be able to insulate itself, but the further away that we get from London and from where these powers will reside in the Bank of England, the more difficult it will be. For me and my colleagues, the only sensible option is to take the matter back into Scotland’s hands and for Scotland to be an independent country and part of the EU. In that way, our financial services industry would continue to have the access that it has had and we would be where the talent and skills of people of Scotland can be best utilised for the future.
Jim Shannon (Strangford) (DUP)
Before we start, may I say that, on the fourth anniversary of the death of Jo Cox, I associate my party with what has been said and convey to all her family and friends our sincerest thoughts at this present time. She certainly was a wonderful and marvellous voice in this House. Everyone can honestly say from the bottom of their heart that they miss her contributions. Even four years later, that soreness and that sense of missing are still there.
May I say that it is good to see the Minister in his place? There would not be a banking debate where he and I were not involved in some way. I am pleased to see the new shadow Minister, the right hon. Member for Wolverhampton South East (Mr McFadden), in his place, and I wish him all the best in the future as well.
I thank the Minister for bringing this issue forward. Although this measure merely ensures that the protection established under current legislation continues, it gives me the opportunity to highlight the work that must be done for consumers in the financial industry—the Minister will know of that. We are pleased with some of the progress that has been made, but we look for more. He will have listened to me numerous times on the failings of banks, and sometimes on the need for the auditing sector and the financial sector as a whole to do the right thing for the little man. From Lloyds to HBOS, with many in between, it has long been my aim in this House to see the introduction of effective mechanisms to protect those who are not on the level playing field.
The issue of over-the-counter derivates is another area that needs special consideration, and I hope the Minister will respond on it, as we need enhanced protection. An OTC derivative is a financial contract arranged between two counterparties with minimal intermediation or indeed regulation. OTC derivatives do not have standardised terms and they are not listed on asset exchange, so an inherent aspect of them is the lack of formal regulation. Although the regulation offers lip service to that, as with so many other banking aspects it is my belief that more is needed, and many right hon. and hon. Members agree with that view. Hon, Members already know that some derivative products in the past were the basis of a number of problems during the financial crisis in 2008-09, and we now find ourselves in another crisis, perhaps something equal to that time. As the Minister knows, I have recently written to him about the 200 to 300 legacy cases for the Business Banking Resolution Service. I would like him to respond on that or to indicate when I can expect a response on the way forward. If that is possible, I would appreciate it.
This debate is about our position post-Brexit, and therefore Westminster will have control. It is our responsibility, as elected representatives, and the responsibility of the Government and legislators, to ensure that the FCA and other regulatory bodies have the appropriate regulatory powers in the future for consumer protection. I look forward to the Minister’s reply on the BBRS. The legislation is great to continue, but I believe we need more. It is not enough, but it is a giant step in the right direction.
John Glen
It is a pleasure to be able to respond to the points made by the right hon. Member for Wolverhampton South East (Mr McFadden), and the hon. Members for Glasgow Central (Alison Thewliss) and for Strangford (Jim Shannon). The latter made a number of points about the conduct issues associated with banks and his exchanges with me on the BBRS. I am sensitive to the fact that in the context of the loans and interventions the Government have made there are conduct challenges, but I think it would be appropriate for me to address that on a separate occasion. However, I note his correspondence.
The right hon. Gentleman addressed three clear questions to me, one of which was about the money laundering reference and the language. Just because we do not have an obligation, it does not mean to say that we do not have a desire to co-operate. The bottom line is that if there is not a reciprocal obligation on the other side, it would be perverse for us to insert language creating that obligation. As he made clear, we have consistently been leaders in regulations in financial services, in particular, and we would look to continue to press for ever higher standards in that regard.
The right hon. Gentleman’s second point was about the issues of the loss of passporting and the nature of the cross-border dynamics. Clearly, we are working through the equivalence process, which the Government are committed to. We are working closely with the Bank of England, the PRA and the FCA.
The SIs are required to ensure that the UK has a functioning equivalence framework during the transition period, and they are not linked to the ongoing UK-EU negotiations on financial services. I will come to the right hon. Gentleman’s further points and those of the hon. Member for Glasgow Central about the bigger picture at the end.
On the right hon. Gentleman’s third point about equivalence and the ability for us to make decisions, we have just updated what we had on the basis of changes that have happened since we left. EMIR 2.2, which is the location policy that was introduced, was something that we voted against, but we are now obliged to have it because those are the terms of reference that we adopted through the passage of the legislation. As I said in my earlier remarks, however, I think it is improbable that we would use that. We hold most of the systemic CCPs and we would probably not have a need to use that in an offensive way.
The hon. Member for Glasgow Central made some broader points. She pointed out the mistakes that we have made and that this had happened before. During the 60 SIs—she has participated in the vast majority of them—these have been the exceptions. This legislation was laid out in advance. It was available and accessible to everyone. My officials and officials from the regulators have worked very hard, but I concede that these mistakes need to be rectified.
On the sentiments around the notion that we will not achieve the same level of access, having the freedom to set our rules does not mean that we are automatically predetermined and predisposed to divergence. Indeed, across the globe in financial services regulation, we have taken a leadership role at the Basel Committee and in other regulatory environments. I anticipate that that is the posture that we will wish to take in future. Within the EU, when we were members, we had a leadership role in financial services.
The Government are committed to supporting the growth of financial services not only in the City but outside the south-east. The hon. Lady is correct to say that we wish to see more jobs and financial services across the United Kingdom, including in Glasgow and Edinburgh.
I have addressed the substantive points that have been raised. There was a wider discussion about the nature of the financial services negotiation and the wider negotiation, but I do not think that is in scope tonight. I hope that I have conveyed that the instruments are necessary to ensure that the UK has a coherent and functioning financial services regulatory regime at the end of the transition period, and that hon. Members across the House will join me in supporting the regulations. I commend them to the House and I hope that the conversation has been informative.
Question put and agreed to.
Resolved,
That the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020, which were laid before this House on 24 March, be approved.
EXITING THE EUROPEAN UNION (FINANCIAL SERVICES AND MARKETS)
Resolved,
That the draft Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020, which were laid before this House on 6 May, be approved.—(John Glen.)
Public Passenger Transport
(3 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Transport (Rachel Maclean)
I beg to move,
That the draft Public Service Vehicles (Open Data) (England) Regulations 2020, which were laid before this House on 13 May, be approved.
The draft regulations are being made in order to provide new legislation to require bus operators of local bus services across England outside London, including cross-border services, to openly publish data electronically about their services, including timetables, fares and location data.
This is open data that is published electronically. It is publicly discoverable and can be used by those who wish to do so without restrictions on its use and disclosure. Open data has transformed other sectors—for example, rail—with open data feeding customer-facing apps, such as Trainline and National Rail Enquiries, simplifying journey planning and ticket purchase. Bus open data will allow app developers to create applications, products and services for passengers so that they can plan journeys, find best-value tickets and receive real-time service updates. That is absolutely essential if we are to encourage the travelling public to use their local bus services and make the switch to public transport, which is vital to reducing congestion and improving air quality.
Since 2007, Transport for London has made all its bus and transport network data freely available through the London data store. Currently, more than half of these journeys—51%—are in London, with the remaining 49% across the rest of the country. Apps such as Citymapper and Bus Times are together found to be delivering economic benefits of between £90 million and £130 million a year.
Transport for West Midlands has also invested heavily to improve its public transport data in recent years and is one of the few areas to report year-on-year growth— of 7.8 million journeys—against a continuing backdrop of decline in bus passenger journeys elsewhere. Those statistics show that we can change how buses are perceived and attract new customers.
Currently, Citymapper only operates in Birmingham and London, but we need to enable the provision of such apps and services up and down the country. For example, the rules will mean that any operator of a local bus service across England must publish their timetable, fares and location data to the bus open data service before that service comes into operation. The rules will be enforced by the Driver and Vehicle Standards Agency, which will be able to conduct checks to ensure that the operator is complying.
In domestic law, where a local bus service is being operated across England, operators will be legally required to make the information freely available to comply with the Public Service Vehicles (Open Data) (England) Regulations 2020. Punctuality data will also be legally required and local transport authorities will be legally responsible for maintaining data about bus stops and stations.
It is a civil offence for any operator of a service to be in breach of the requirements in the regulations and the regulations will be commenced in a phased manner, with timetables and stop data requirements being enforceable from 31 December 2020. Basic fares and location data will be enforceable from 7 January 2021, with complex fares being added from 7 January 2023. Breaches of the requirements by operators can be enforced under existing provisions in section 155 of the Transport Act 2000. The draft instrument ensures that those operators who breach the new requirements may be faced with financial penalties or the removal of their licence. The fines can be up to £550, and that sum might be multiplied by the number of vehicles operating under all the PSV operator licences held. The policy area of public service vehicles open data is devolved, but Scotland and Wales are currently preparing equivalent legislation.
In summary, the regulations are essential for ensuring that the operators of local bus services are compelled to make essential information freely available to help passengers plan their journeys. The rules are at the heart of improving the public transport experience, digitally transforming the bus sector and the levelling-up agenda. I am sure that Members share my desire to ensure the rules can be fully enforced as soon as possible. I commend the regulations to the House.
Matt Rodda (Reading East) (Lab)
It is a pleasure to respond in this debate on behalf of the Opposition. I am grateful to the Minister for the detailed technical briefing she offered me from the Department. We will not be calling for a vote on these proposals. I will respond to the specific measures and new powers set out in the SI, but I also want to comment on how the proposals help to address the wider issue of how we can improve our bus services, which outside of London and a handful of other areas have faced deep cuts in recent years.
Before I respond, I put on record my support for our bus services and the workforce who have been on the frontline during the coronavirus crisis. I pay tribute to our bus drivers and other transport workers. They are key workers who have kept vital public services running during the most serious and sustained crisis this country has faced since the second world war. The public are immensely proud of our key workers, and I hope the House will agree that it is important that bus workers are recognised as key workers and receive the support that they deserve.
It is also important to remember that a number of bus workers and other transport workers have sadly died during the pandemic. I offer my deepest condolences to their families, and I hope Members from all parts of the House will join me in support of those and other key workers who have paid the ultimate price in our struggle with the coronavirus. I urge the Government to look again at health and safety on bus services and the financial support available for the families of those workers who have lost their lives. That is vital in the coming weeks.
I am pleased that the Government have listened to calls from Labour and the unions for passengers to have to wear masks on public transport. I should say I was one of those passengers today. There is more to do to improve health and safety, such as tackling the risk of infection from drivers having to handle cash on buses and providing improved facilities for hand washing, which I know the Minister’s colleague in the Lords, Baroness Vere, is interested in supporting. I am also pleased that at a time of national crisis, we have been able, as the official Opposition, to work with the Government, trade unions and bus operators to consider these important problems, and I look forward to Ministers coming forward with further urgent improvements to health and safety.
Before turning to the regulations, I will mention the significant economic effects of the crisis on bus operators and workers. We welcome the Government’s financial support for bus services during the coronavirus crisis and as lockdown eases. However, I underline the importance of that being applied fairly. Support needs to be maintained while demand for bus travel returns to normal, which could take some months.
The current funding package is welcome, but it is offered to bus companies on a flat rate per mile, which is then multiplied by the distance of the routes that they travel. That inadvertently favours some rural routes and areas with lower wage costs, while disadvantaging urban or suburban operators, particularly those in areas where housing costs and costs of living are higher. I hope Ministers will look again at that and offer a fair deal to the whole country. Will the Minister meet me and MPs from all parts of the House who have concerns about this important issue? I note that she is nodding, and I am grateful for her support.
It is also important that the Government review the length of time that support is available to reassure operators about the future of their businesses, as we have seen for other sectors of the economy, and to help them to plan for a gradual increase in passenger numbers. I understand that some operators are now experiencing around 20% of normal demand, up from just 10% during the height of the crisis. However, it is unclear how long it will take for passenger numbers to return to normal, and the current funding package ends during the summer. A further guarantee of funding would be welcome for the industry.
Turning to the substance of the regulations, which are intended to help the bus sector, it is positive to see the Government’s interest in our bus services. That has not always been the case in recent years, despite buses being the most common mode of transport for commuters and, indeed, a lifeline for older and vulnerable people. Since 2010, Government funding for bus services has fallen by 45% and hundreds of routes have been lost, largely because of Government cuts to subsidies for socially vital services, as many Members will know. This policy has led to a steep decline in bus use and, I am afraid, increasing isolation, other social problems and, indeed, greater damage to the environment. I should add that things have got so bad that two major bus operators have thought about selling off large parts of their business.
Ian Paisley (North Antrim) (DUP)
Does the hon. Gentleman agree that the best way for the Government to address those matters is urgently to introduce a national bus strategy, which would put in place a hydrogen technology programme that would allow the development of a new bus building programme that would be totally free of a carbon footprint?
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I am anxious that we stick to the substance of the regulations. Matt Rodda.
Matt Rodda
Thank you, Madam Deputy Speaker. I thank the hon. Gentleman for his intervention. I am going to try to cover the environment and other forms of innovation later in my speech.
Ministers are now trying to find ways to address the need to grow bus use, and the regulations address one small aspect of that, which is to allow greater sharing of bus data on timetables, fares, reliability and, indeed, the location of buses in real time. The Department hopes that making more information available to app developers will lead to more information about bus services being made available to the public, which in turn will increase passenger numbers. There are hopes that those measures could lead to a growth of about 2% in bus use, based on the effect of the policy in London.
I would, however, add a note of caution. First, I would ask the Minister to reassure the House that the Government’s intention is not to allow disruptive businesses like Uber to try unfairly to entice passengers away from bus services, which could risk undermining some routes, including those that are a lifeline for older people and many who are vulnerable. I hope that she will address that point when she sums up and offer specific reassurance. Secondly, I urge her to regard the measure as one in a series which, I hope, will support our bus services and allow them to grow, both now and in future.
Going forward, I hope that the Government will offer the same level of interest and support for a series of measures that have been shown to increase bus use and improve services. One of the best known is allowing councils to regulate services, which has been associated with much greater bus use in London, where there is a dramatically different picture of bus patronage. Will the Minister look at that again and allow all councils to explore that option, not just those with elected Mayors?
Another measure that is strongly associated with growing bus use is allowing councils to run their own bus companies, which used to be common in both Labour and Conservative-controlled local authorities. Council-owned companies in my own town of Reading and in Nottingham have experienced strong growth in bus use for many years—something that, outside London, is almost unique in England. Municipal buses offer low fares, frequent services and modern vehicles that are popular in those communities, and I invite the Minister to come to Reading. [Interruption.] I understand, Madam Deputy Speaker, and I will proceed rapidly through the rest of my speech.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I simply want to make sure that the hon. Gentleman is addressing the regulations.
Matt Rodda
I will come back to them. This is part of the wider picture of the need for investment as a whole.
There are a range of other measures that I hope Ministers will reconsider, along with the regulations. For example, that could include more bus lanes and other bus priority measures to ensure more reliable services on busy roads and smarter support for innovation, which the hon. Member for North Antrim (Ian Paisley) mentioned, including electrification of buses. The Government’s current scheme is welcome, but it could be improved, and I look forward to speaking to the Minister about that.
I hope that Ministers will look at the link between transport and new housing, and do more to develop brownfield sites and other ways of bringing housing close to public transport routes, which will increase bus patronage and protect the environment. Allowing more investment and such innovation measures would offer the prospect of significant growth in bus use, leading to real environmental and social benefits, far beyond the potential benefits of the app.
To sum up, we are not calling for a vote on these regulations for the reasons I stated earlier. I thank colleagues across the House for their support for bus workers and bus services. I hope the Minister will respond to the risk that these measures could be misused and that the Government will now carry out a wider review of their support for buses, to allow councils more powers to regulate and to provide better services, which have the potential to allow far greater bus use in the future.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I just want to emphasise again that it is important when looking at regulations that we actually address the regulations, rather than having a wider debate—and I am sure Tim Farron will do just that.
Tim Farron (Westmorland and Lonsdale) (LD)
I am very grateful, Madam Deputy Speaker.
I support the spirit of these regulations. We must have equity of access to public transport across the country, and the collection of data to build an accurate picture of services is an essential part of that. However, I must warn the Minister that she will have a hard task collecting data on bus services in many towns and villages in Cumbria, because on most days there aren’t any, or at least it is so far that it will be a very short job and hardly worth the journey—which, in case I have not already made myself clear, she would not be able to make by bus.
I acknowledge that the Government have gone some way towards recognising the crisis in bus services, such as by laying these regulations, and indeed earlier this year there was an announcement of additional funding and the unveiling of a national bus strategy, of which I am sure this forms a key part. But the new funding turned out to be peanuts, and while having a strategy is definitely better than not having a strategy, it was still a far cry from the claims of the press release and light years off providing the solutions needed in communities like ours, where we would like these regulations to apply in practice.
So, to be clear, the whole of Cumbria received a total of £383,887, which, split roughly six ways between six constituencies, means about £65,000 for my constituency. My constituency could contain geographically every single one of the 73 constituencies in Greater London, and London—where these regulations will definitely apply —sees an annual subsidy to its public transport of around £700 million a year. And we must not forget that our £65,000—just less than a thousandth of 1% of the London subsidy—is just a one-off, and a one-off will not do.
Ministers surely know that research shows that in order for a community to trust a bus service enough to rely on it as part of their regular routines—enough to use it, basically—that service needs to be functioning reliably and affordably for two to three years. I am sure that the data collected as a consequence of this regulation will show that and prove it, but we know it already.
So this short-term puddle of cash does not even wet the feet of the problem. We will find a way of spending it wisely, and we are not ungrateful, but as we dare to hope for a time beyond the covid crisis, people in my communities want to believe that we have not sacrificed so much, endured such hardship and suffered such shattering loss just to go back to how things were beforehand.
The mission must be to build back better, and that must include a refusal to leave communities behind. Rural, more isolated communities such as ours in Cumbria are at risk. Those communities are also often older, and while the majority of people, even in their 80s and beyond, will make some use of the technology we are talking about here, a higher proportion than in other age groups will not, and they are the people I am most concerned about in terms of the application of these regulations.
The average age of the population in South Lakeland is 10 years above the national average. It cannot be right that we forget the generation that has borne the brunt of this virus, yet we will do that if we acquiesce over the isolation that so many of them endure. Many I know have found themselves alone and disconnected in their later years, with the loss of bus services leaving them stranded in places that are utterly beautiful but utterly isolated. Many in these towns and villages rely on buses for the basic tasks of daily life—shopping, going to the doctors, making appointments, seeing friends or getting to work. Buses, when they exist, provide those people with the ability to look after themselves, be independent, protect their physical and mental health, and stave off the loneliness that isolation can bring. Technology can help to underpin that, but only if there is a service that it can be underpinned by.
There is no doubt that more of us have become acquainted with isolation over the last few months, but what is someone who lives in a small village and is unable to drive supposed to do if their one transport link is removed? At the same time, they witness the closure of accessible services as a consequence of the technology that is available in other parts of the economy. With few neighbours and fewer local services, the loss of buses constitutes the loss of connection, which risks leaving many more people even more isolated and vulnerable.
Building back better must mean that we learn from the improvement in air quality and the reduction in greenhouse gas emissions throughout this time, and public transport is key to preventing a return to pre-covid carbon emissions. Bus services will be central to that, as part of an integrated public transport system. That is why I continue to urge the Minister to double the capacity of the Lakes line by introducing a passing loop, as well as electrifying the line to significantly reduce its carbon footprint.
Many of us are excited for a time when lockdown has eased and we are able to see friends and family and visit the shops without unnecessary restrictions and caution. But the Government must recognise that the end of the lockdown will not bring that relief to everyone. In fact, for many isolated people in Cumbria, the official lockdown has not looked very different from the growing isolation that they have suffered due to a lack of services and transport links. In the 10 years between 2008 and 2018, the north-west lost 888 separate, distinct services, and that does not include the services we have lost in the last couple of years. We have not taken this lying down. We would love those services to be traced by an app and part of a technological solution, but as I say, there is no point having the technological solution if there is no bus service to underpin it.
It is not only the elderly in our communities who suffer from reduced bus services. Young people’s access to public transport is also under threat. Free school transport is provided for young people up to sixth-form age, but after that, the support is not available. It makes no sense for the Government to demand that young people carry on in education until 18 and then deny them the ability to afford to do so—a generation that clearly is technologically competent and able to make use of the apps we are talking about. In places like Sedbergh and Coniston, it is often impossible to gain access to sixth-form provision at schools or colleges by public transport. That is why, alongside these regulations, there needs to be a statutory responsibility for local authorities to guarantee home-to-school transport for 16 to 18-year-old students, in the same way there is for under-16s.
There must also be buses available to deliver that transport in the first place. In many of our towns and villages, if the Minister did agree to subsidise sixth-form bus travel alongside this technological innovation, there just are not any services to be subsidised. That has been emphasised during the covid crisis, as many families with free school meal vouchers have not been able to use them because the vouchers are not for the local supermarket in their town—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. The hon. Gentleman is going way off the scope of the regulations. If we are discussing regulations, that is what we are discussing. We cannot not have a general speech about everything that is happening in his constituency, as important as that is. This debate is about the regulations, and I urge him to return to them ASAP.
Tim Farron
I will do so instantly. I make the point, though, that the whole point of having the technology that is rightly rolled out through this statutory instrument is that it should apply to services that exist, not imaginary ones that we wish existed. My community is suffering under covid like anywhere else, but the hospitality and tourism industry is vital to us. We are the second biggest visitor destination after London, and yet our public transport infrastructure means that this instrument may as well not exist for many of the communities that I represent. While I support the regulations and will not oppose them, I want to send the Government the message that they should ensure that there are sufficient services in rural communities like mine, so that these applications actually have some application in a county like Cumbria.
Madam Deputy Speaker
I call the Minister, and I ask her to address the points raised about the regulations.
Rachel Maclean
Thank you, Madam Deputy Speaker, and I am delighted to abide by your guidance.
First, I very much thank the shadow Minister, the hon. Member for Reading East (Matt Rodda), for his support for the regulations. I associate myself wholeheartedly with his comments thanking all our transport workers and sending our sincere condolences to all the families he spoke of. I assure him that the Government take health and safety on the public transport system incredibly seriously. I remind him that we provided £397 million at the beginning of the crisis to ensure that bus services continued to operate, with a further £254 million as the crisis continued. I would be delighted to meet him to discuss more of these issues either here or in Reading, and I thank him for his kind invitation.
I want to respond specifically to the point the hon. Gentleman made about taxi operators. The purpose of these regulations is to provide better services for people, enabling them to plan their journeys from end to end, and enabling people who rely on technology or who rely on public transport as a lifeline to use public transport better. We believe that that will have the benefit, as we have already seen in London and Birmingham, of driving up the use of buses and enabling people to benefit from better fares and better flexibility. It is part of a modern transport system, and we believe it will be of great benefit to passengers and bus operators. It definitely is not the case that we expect it to entice people away. In fact, I draw his attention to our transport decarbonisation plan, which we released a few short weeks ago, expressly setting out our intention to support a shift to active travel and public transport.
That brings me on to the hon. Member for Westmorland and Lonsdale (Tim Farron). I congratulate him on expressing all his concerns and getting them all on the record. I can assure him that they have all been heard in the right quarters. I would like to mention to him that we have provided £220 million to improve rural bus services for constituencies such as his, and this Government are committed to buses. We have started the Parliament with a £5 billion commitment to buses, including funding for an all-electric bus town and many other innovations to improve public transport up and down this country, as well as more money for cycling and walking. I believe that we are absolutely backing the bus industry and going into the future with a dynamic and modern bus industry.
On that note, I thank all Members of the House for their consideration of the regulations. I am certain that, through them, we will ensure the sustainability of the bus industry, helping it to thrive and survive in a new digital era.
Question put and agreed to.
Business without Debate
Jim Shannon (Strangford) (DUP)
On a point of order, Madam Deputy Speaker. How can we, as individuals in this House and members of the Democratic Unionist party, ensure that right hon. and hon. Members are aware of the poll that took place in Northern Ireland 10 days ago indicating that 74% of the people are opposed to abortion, and of the decision by the Assembly to oppose it as well, which is very important when it comes to voting tomorrow?
Madam Deputy Speaker (Dame Rosie Winterton)
I thank the hon. Gentleman for that point of order, or I think I thank him, because it is not really a point of order, as he has just done what he wanted to do. He speaks very frequently, so I feel confident that he will find an opportunity to make his points, possibly many times.
I will now suspend the House for just under three minutes before we move on to the next business.
Petitions
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
Tens—probably hundreds—of thousands of jobs are under threat in aviation. That might not be the case if the Government were to keep their own promise or follow international examples of sector support. Indeed, I have heard tonight that 310 jobs at Menzies Aviation are under threat—160 of them at Glasgow airport in my constituency. This Government have a funny way of showing support. On Sunday a Home Office source said:
“It is no surprise that the airline industry are focusing on their bottom line over public safety. The British public already have a dim view of the aviation sector but putting profit over people's lives is a new low even for them.”
I think it is safe to say that the aviation sector is not feeling the love right now.
One part of the aviation sector that is absolutely not feeling the love from anyone is British Airways. Its horrendous firing and rehiring plans for tens of thousands of loyal workers drove me to present the Employment (Dismissal and Re-employment) Bill to protect all workers from facing these horrendous practices. Incidentally, that Bill has had support from every party in this House, and I ask the Government to adopt it.
The petition states:
The Petition of the residents of the constituency of Paisley and Renfrewshire North,
Declares that many workers in the airline industry are currently under threat of being dismissed from their posts and then being rehired on lesser terms and conditions and salary; notes that most other European countries have legislation in place to prevent such mistreatment and to protect workers from management abuse and threats, benefitting both employees and the wider economy; notes the volume of correspondence being received by Members’ offices regarding reports of this practice at British Airways; and notes that the Employment (Dismissal and Re-Employment) Bill, which aims to protect workers from management abuse, has already been presented in the House.
The petitioners therefore request that the House of Commons urge the Government to bring forward legislation to prevent firing and re-hiring practices and protect workers from management abuse.
And the petitioners remain etc.
[P002578]
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
In the five years since my election to this place, very little has elicited a stronger constituent reaction than the actions of Dominic Cummings in driving to Durham to self-isolate. In fact, one of the few things to rival it was the Prime Minister’s anaemic, craven and wholly inadequate response to the whole affair; the Prime Minister clearly has an issue telling truth to power. We should be in no doubt that Mr Cummings broke the rules. With regard to his infamous dynamic eyesight test, I have not spoken to anyone, including a good number of Conservatives, who bought the “Going out for a drive to local beauty spots with my entire family in tow to test my eyesight” line. In fact, I think it would be better for him to confirm that this was not true, as the alternative—that the Prime Minister’s most senior adviser decided that this was an appropriate action—speaks to the quality of advice that the Prime Minister is in receipt of. At a time when many of our constituents could not even travel to say their final goodbyes to loved ones, the actions of Mr Cummings, and those of the Government in justifying them, are indefensible.
The petition states:
The Petition of the residents of the constituency of Paisley and Renfrewshire North,
Declares that the conduct of the Prime Minister’s Chief Advisor, Mr Dominic Cummings, driving 260 miles to Durham during lockdown for childcare reasons when he and his wife were displaying symptoms of COVID-19, was against the UK Government advice to “Stay at Home, Protect the NHS, Save Lives”; further declares that the consistent support from the Prime Minister and members of the Cabinet for Mr Cummings’ actions have undermined the UK Government’s own public health messaging.
The petitioners therefore request that the House of Commons urge the Government to conduct an inquiry into the conduct of the Prime Minister’s Chief Advisor, and whether his continued employment is beneficial to addressing the challenges posed by the COVID-19 pandemic.
And the petitioners remain, etc.
[P002579]
Transport in Carshalton and Wallington
(3 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Elliot Colburn (Carshalton and Wallington) (Con)
I thank you, Madam Deputy Speaker, and the Speaker’s Office for granting this Adjournment debate to discuss transport issues in Carshalton and Wallington. Along with St Helier Hospital, education and, more recently, issues relating to coronavirus, transport remains one of the most common issues that appear in my postbag. It is also something that affects me as someone who commutes to this place every day.
Because my constituency sits within a London borough, the borough of Sutton, there is an assumption that we must be well covered by public transport, but the statistics tell a very different story. Sutton has an average public transport accessibility level—PTAL—of just 2, with the majority of Carshalton and Wallington ranking at 2, 1 or even zero in some places. The borough is ranked 29th out the 32 London boroughs and the City of London for connectivity and is the only borough in London that does not have access to an underground, Overground or Crossrail station. We are also not on the map for Crossrail 2. The only reason we are not dead last for connectivity is that technically we have access to a tram within our borders, but I will talk more about that later.
Notwithstanding the ability to walk, cycle or drive, this situation means that Carshalton and Wallington residents have a choice between limited bus and National Rail services when travelling by public transport. One might argue that this reflects the borough’s contribution towards the Mayor’s council tax precepts, which stands at 28th out of the 32 London boroughs, but this argument immediately falls down because the remaining four boroughs have received higher funding and have greater connectivity than Sutton.
This poor level of access to transport cannot continue. As the population of Sutton continues to grow, our ability to have economic growth, access services and play our part in tackling the climate crisis is severely stunted without better transport connections. Carshalton and Wallington is in a London borough, and that borough is the eighth most economically active in London. It is time we had investment in our transport networks that reflected those realities and allowed us to reach our full potential.
I will turn first to rail connectivity. My constituency is home to Carshalton, Wallington, Hackbridge and Carshalton Beeches stations, providing northbound services to central London and southbound services to Sutton, Epsom and beyond. Of course, reliability is always an issue raised by Members, and it is no different for me. I will be working constructively with Southern and Thameslink, the rail operating companies that serve my constituency, to ensure that improvements continue to be made. I would also be grateful if the Minister could comment on the work the Government are doing to ensure greater reliability on our rail network.
One of the primary issues for my constituents, however, is rail frequency. Prior to lockdown, peak services would be full by the time they reached our local stations, meaning an uncomfortable or even delayed journey for many and pushing some to reconsider using the rail network or even their employment in order to avoid it. Having met with Govia Thameslink Railway and Network Rail since being elected, I am clear that there are two primary issues preventing additional services from being run on our lines. The first is something I know many colleagues have raised in the House: infrastructure on the railway. Often it is so outdated that it prevents trains from being turned around as quickly as they are on the London Underground, for example, which would allow additional time and space for more trains to be put on the line. I would be grateful if the Minister could comment on updating our rail infrastructure, including things such as digital signalling, electrification and joint command centres between rail operating companies and Network Rail.
Nevertheless, it appears that congestion is the real barrier to running additional services. Many, if not most, of my services run through Selhurst junction, which is currently massively congested, and Network Rail has just launched a consultation on its plans for what it calls the Croydon bottleneck scheme. It is designed primarily to unlock congestion on the Brighton main line but would have the knock-on effect of allowing more frequent services to run through my constituency. I am encouraging constituents to take part to demonstrate the huge support there is for putting on additional services once that is unlocked. Could the Minister comment on whether the Government support the Croydon bottleneck project?
There are things that can be done in the here and now, however, to help commuters once the lockdown measures are eased. First, there is safety. The gap between the train and the platform at Hackbridge and Carshalton Beeches in particular is so high that even the use of ramps is not particularly safe. I have raised this with GTR and Network Rail, and I hope to see the platforms heightened, at least in places, to make it safer to board and depart from trains. Secondly, there is accessibility. The southbound platform at Carshalton Beeches does not have step-free access, so I have submitted a bid in order to help to secure funding to deliver that. I hope that that will be favourably looked on by the Department.
Finally, there is the issue of the platforms themselves, with the platform at Hackbridge, for example, able to accommodate only seven cars. If there could be an extension to allow it to accommodate 10 cars, which it currently runs at peak services, that would reduce congestion on the concourse. These changes, plus a commitment to investment in infrastructure and the Croydon bottleneck project, will help to unlock many of the transport issues of my constituents.
Apart from trains, buses are the only other public transport option for my constituents. It is fair to say that, as we heard in the previous statutory instrument debate, compared with other parts of the country, Carshalton and Wallington does have okay bus services, but they are certainly not perfect. Again, access is an issue for some, particularly those living in Clockhouse and the more rural parts of Carshalton Beeches. It is possible to get around the borough fairly easily by the bus services that operate there. The introduction of the Go Sutton bus, which Transport for London operated on a trial basis as an Uber-style on-demand bus service travelling to more or less every part of the borough, was very welcome. I hope the Minister would agree that TfL should seek to reinstate this service as soon as possible. It is currently suspended due to the coronavirus pandemic.
There are also a number of bus services that go to and from Croydon, but a limited number that go outside the borough to any other destinations such as Merton, Wandsworth or Kingston. There are also very few services that travel southwards outside the Greater London Authority area and into Surrey, with which I share a border. I will say more about this problem later. As Carshalton and Wallington grows, connecting us up to new destinations by bus, as well as increasing the frequency of some routes and making busier services double-decker, would help to connect Sutton with its surrounding areas and make it easier to travel within the borough as well.
However, improvements in the rail and bus networks are only part of the solution, and in order to reach our full potential we need new transport options. Of all the potential options, perhaps none has been discussed for so long as a Sutton extension of the London Tramlink. The long and convoluted history of the Tramlink could be an Adjournment debate in itself, so I will not bore the Minister with too much back story, particularly as discussions about this started as early as 2002, only two years after the Croydon Tramlink was launched. However, I do want to draw to his attention the fact that sadly, if anything demonstrates that the current Mayor of London seems to forget that Sutton exists as a London borough, it is the Croydon Tramlink. When he was a Transport Minister in this place, he said:
“I am not sure what the Mayor’s priorities are, but they are not the Croydon Tramlink”.—[Official Report, 28 January 2010; Vol. 504, c. 939.]
How fitting that 10 years on, the same could be said of him.
In a London Assembly report released last year, it was shown that Sutton came dead last for investment from City Hall out of all the London boroughs. Just £16 million has been spent in the borough since the Mayor was elected in 2016, compared with, for example, £2.1 billion of investment for Newham. The previous Labour Mayor of London showed that he was not particularly interested in outer London, and unfortunately the current Mayor seems to be following in his footsteps. Funding was set aside by the previous Conservative Mayor to help to deliver this project, which equated to £100 million. Unfortunately, the current Mayor redistributed that funding. After lobbying from our excellent London Assembly Member, Steve O’Connell, the Mayor has agreed to set aside a smaller figure of £70 million to put towards the project. Sutton Council and Merton Council have also set aside some moneys for it. However, the overall projected cost of delivering the Sutton extension to the Tramlink has been rising considerably since it was first mooted. Perhaps if the Mayor had not driven down TfL’s finances to such a state, particularly in allowing Crossrail to get out of control, we would not be in this position.
As I said at the beginning of my remarks, technically my constituency has two tram stops on the route. However, these are in the far north-east corner of my constituency on the border with Croydon and Merton. They are behind an industrial estate and serve a very, very small number of residents who live just outside that area. The next residential streets are more than a 30-minute walk away, and they are much closer to other transport options. Extending the tram to Sutton would therefore do wonders for the local economy but also connect Carshalton and Wallington residents up with new destinations.
TfL has now completed a consultation, agreed the route, and agreed, indeed, to go with the tram rather than the alternative bus rapid transit option, but we are now at a standstill. The project is ready to move on to the next stage of official designs and to go into the planning system. Even the Mayor himself has said that he estimates that the first services could be in place in the next few years if there was no delay, but without any additional funding this project will not go anywhere. Local, regional and national Government need to come together on this issue to ensure that the consultation is not allowed to collect dust, become too expensive and ultimately be consigned to the dustbin of history, so can the Minister give me any view on how the Government see the Sutton extension of the Croydon Tramlink?
As we work towards that extension, I hope the House will indulge me if I throw another possibility into the mix. Hackbridge is an important part of my constituency that is currently experiencing considerable growth. The New Mill Quarter development will bring 805 new homes and well over 1,000 new residents to the area, and Hackbridge definitely needs additional transport capacity to be able to cope. Currently, many residents go to Mitcham Junction, which is just one stop up the train line from Hackbridge, to intercept the tram. I wonder whether there is an argument for TfL doing exploratory work and extending the tram down the Network Rail line, perhaps running a single track alongside the Network Rail route, to provide tram services to Hackbridge. I hope that the Minister would agree that is at least worth TfL’s taking a look at such a project.
Next, I wish to draw attention to another potential extension that I believe would benefit Carshalton and Wallington residents: extending the London Overground service to Sutton, via Waddon, Wallington and West Croydon—an idea backed by Neil Garratt, our excellent candidate for the London Assembly. The London Overground could directly connect local residents to destinations that they cannot currently reach without making more than one change. It is my understanding that Sutton was originally mooted as the end point for the London Overground service, but it was decided that it would end at West Croydon instead because the service would be too popular with Sutton residents and therefore too busy by the time it got to Croydon. I hope the Minister agrees that that is a nonsensical argument, because surely that only demonstrates the need for such a service and how much capacity could increase on the line.
Luckily, there is an existing rail line between Sutton and West Croydon, so to make the change, all that would have to happen is that the trains would quite simply have to keep on going and not stop. Of course, I realise that things are never quite as simple as that, and there would be difficulties with congestion and the potential timetable changes needed to deliver it, but I hope that the Minister agrees that the absence of the need for a large infrastructure project to see the idea through to completion would mean that it would be relatively easy to deliver, so would be worth the work to deliver it.
Finally, I wish to touch on the issue of roads and pavements, because all too often in conversations about transport, roads and pavements are left out. As a borough with one of the highest car ownership rates in London, more than a quarter of journeys are done on foot but more than half are done by car, according to the 2011 census, so conversations about roads and pavements are incredibly important for residents of Carshalton and Wallington. They are also important because just as many—if not more—residents commute south into Surrey by car as commute north into the city by train.
When I talked about buses, I mentioned the difficulties of travelling south, and I wish to outline a problem which I believe many outer-London boroughs suffer: working across the Greater London Authority boundary. The border between the GLA and Surrey County Council is much firmer and more cumbersome than those between the London boroughs, and understandably so for many reasons. However, that presents difficulties when talking about transport, because in essence TfL can look only north and Surrey has no jurisdiction in the area at all. The road network between Sutton and Surrey therefore needs to be strong to allow traffic to flow more easily without causing congestion. Action must also be taken to tackle potholes, and I am grateful for the Government’s pothole funding, which has drastically increased the amount of money that Sutton Council has to repair our roads.
It is also important to make sure that our roads and pavements are safe for other road users, particularly pedestrians and cyclists. Again, I thank the Government for the funding to introduce new walking and cycling spaces. I am just sorry that the incompetent Lib Dem council in Sutton did not see fit to work collaboratively to discuss the proposals, despite other councils managing to do so.
The new spaces must be safe and effective; I worry that sometimes cycling routes can be seen as a box-ticking exercise, with a few yards put here and there across boroughs that do not connect up and ultimately lead to nowhere. Any such measures must, though, strike a balance with other road users, such as cars, to ensure that there is no congestion on our roads. As we work towards a greener future, in which safer roads will play an incredibly important part. it is vital to offer incentives to walk or cycle and, indeed, to use electric vehicles. I would be grateful if the Minister could say a little about how the Government are investing in safer streets.
In bringing my remarks to a close, I would just observe that transport is incredibly important for many reasons. It not only connects us but enables us to drive economic growth and it will play a massive part in tackling the climate emergency. Carshalton and Wallington has been left growing without the investment to match it and without reaping much reward from being a London borough. As one of the worst, if not the worst, connected borough in London, it is no longer acceptable to not get our fair share of transport investment. Some changes may take years, but there are those that could be achieved very quickly indeed. I hope the Minister will agree that work should advance on those as soon as possible. We need to unlock the Croydon bottleneck to allow more trains to run through the area and we need to make better use of bus services to connect with surrounding boroughs. The question mark over the tram needs erasing and replacing with a completion date. The London Overground needs to be extended to connect commuters to new destinations, and our roads and pavements must be safe and well maintained for all users.
The Minister of State, Department for Transport (Chris Heaton-Harris)
I congratulate my hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) on securing this debate on transport in his constituency, and on his enlightening, constructive and extremely wide-ranging speech this evening. As a new Member of Parliament, he has a long list of things that he wants to achieve for his constituents. I very much hope to spend some time guiding him down the right routes this evening, because I think he can achieve a number of his ambitions over his hopefully very long tenure in the seat.
I listened very carefully to my hon. Friend’s representations about transport services in Carshalton and Wallington and I will try to address most of them. He represents a fantastic constituency in a borough where I spent my formative political years campaigning. I have very fond memories of those campaigns across the constituencies of my hon. Friend and his neighbour, my hon. Friend the Member for Sutton and Cheam (Paul Scully). Some of my earliest political friendships were formed in and around my hon. Friend’s constituency: Richard and Lesley Barber; Peter Geiringer, a former councillor—
Chris Heaton-Harris
A current councillor. He has been around a fair bit in his time, campaigning on these sorts of issues. It is really good to be able to have this joyous trip down memory lane and address the content of my hon. Friend’s excellent speech.
My hon. Friend talked about the tramlink extension that he would like to see—the Sutton link. As he said, transport in London is devolved to the Mayor of London and delivered by Transport for London, so this matter is not actually within my portfolio. However, my hon. Friend has registered the importance of that extension to his constituents and his very, very strong ambitions in this area. He also talked about various bus routes. Some are currently paused because of the covid crisis, but fortunately many are still going. I know that TfL is listening to this debate tonight and I will ensure that they reply directly to the points he made that are within its auspices.
On rail—as the rail Minister, I can actually make some fairly solid suggestions—I can inform my hon. Friend that the Government’s priority is for the country’s trains to run on time and to drive growth across the country by giving local leaders a greater say in the running of their railway. That is why we are investing record levels in rail funding—the biggest rail modernisation programme for over a century. In fact, we are spending £48 billion over what is called, in the jargon, control period 6, which runs from 2019 to 2024, to improve rail services for passengers and freight customers, while maintaining current high levels of safety and improving reliability.
My hon. Friend mentioned the Brighton main line upgrade programme—or, as we like to call it in the trade, the BMUP. My Department and I recognise the need to upgrade reliability, because we need to improve capacity on the line. It faces major performance challenges due to operational bottlenecks that currently prohibit additional capacity. In view of that, we have now committed over £50 million to improve the services on Brighton main line and it is connecting lines, which, if the upgrade scheme goes ahead, will benefit commuters in the region, including my hon. Friend’s constituents. Network Rail is currently working on the development of the Brighton main line upgrade programme, in which the main element would be a rebuild of the main line itself through central Croydon, comprising additional tracks, platforms and flyovers to deconflict train movements. A small number of supporting schemes elsewhere on the route are also included in the programme, one of which, the Wallington 12-car turnback, is very important to my hon. Friend. That element of the programme is to assist with the construction staging of Croydon, to facilitate a more frequent service between West Croydon and Wallington in his constituency, to improve performance by decongesting the constrained West Croydon track layout, and to aid Overground growth.
Network Rail is undertaking design work as well as land acquisition and extensive engagement on the Brighton main line upgrade programme, as my hon. Friend mentioned, and his constituents should absolutely get involved in the ongoing consultations. The outline business case is due with the Department next month, and in the subsequent weeks and months a decision will be made on whether to progress and fund the next stage of the rail network enhancements pipeline to the final business case stage—jargon for a very important gateway to investment.
The Department is currently considering whether Wallington, alongside some smaller Brighton main line upgrade programme schemes, should become independent of the Brighton main line upgrade programme in order to complete enabling work quickly. Should that be funded, the work in Wallington is scheduled to be delivered in the next three years.
My hon. Friend talked about Govia Thameslink Railway. In December 2018, the Department announced that GTR would contribute £15 million towards tangible improvements for passengers in reaction to the service disruption following the May 2018 timetable changes, which many hundreds of his constituents will have written to a former Rail Minister to complain about. GTR managed the engagement of passenger groups and stakeholders to determine what improvement schemes the programme would fund. The three-month stakeholder engagement programme ended on 31 July last year, and more than 4,000 responses were received to the surveys.
From that, funding for the following shortlisted schemes will be delivered in my hon. Friend’s constituency. At Carshalton Beeches, there will be toilet and waiting room refurbishments and cycle parking facilities—extremely important cycle parking facilities; I am also the Minister with responsibility for cycling. In Carshalton, there will be a new toilet floor, repainting of the waiting rooms, additional platform seating, cycle parking facilities —he might spot a theme—landscaping and new signage. At Hackbridge, there will be additional platform seating, a canopy over the ticket vending machine—that is actually unbelievably important for many of his constituents—and a new platform waiting shelter and signage. At Wallington, there will be a new platform waiting shelter and additional platform seating.
We expect the work on those schemes to commence in the next couple of months. Those are all stations I used when I lived in and around this area of London. I am not sure they have had much of a refresh since I moved out, so I am pleased that they are getting one now.
My hon. Friend will also be pleased to hear that GTR’s operational performance has improved in the past 12 months. Its current public performance measure—the percentage of trains that arrive within five minutes of their scheduled time—has improved by two percentage points to 85.6%, and its on-time performance has also improved. Performance has also improved more specifically in my hon. Friend’s constituency. These figures take into account Southern and Thameslink services. During the rail periods in the current pandemic, PPMs have improved even further; they are running at or around 96%, in delivery of a service that has allowed key workers to get to where they need to be—delivered to those places, actually, by key workers in the rail industry—in the last 12 or 13 weeks.
A further theme of my hon. Friend’s speech was that of accessibility. Delivering a transport system that is truly accessible to all is of huge importance to the Government, and of personal importance to me. An accessible transport network is central to the Government’s wider ambition to build a society that works for all. Many stations date from a time when the needs of disabled customers were simply not considered, and the situation at Carshalton Beeches that my hon. Friend describes is unfortunately far from unique. As he knows, the station was not selected for the last round of access for all funding. That was chiefly because the programme was amazingly heavily oversubscribed and there were many other nominated stations within the London area with higher footfall. I know that that was, and is, disappointing to my hon. Friend, who has actively lobbied me on many occasions about this. I hope he continues to do so in the future, but I would like to assure him that I take improving access seriously.
In 2018, the Government published an inclusive transport strategy setting out what we were doing to improve access across all transport modes, and we will continue to seek further opportunities and funding to make more improvements. Where we can, I am pushing my Department to do more, and more quickly. In addition, wherever infrastructure work is undertaken at a station by the industry, it must also comply with the relevant accessibility standards. My hon. Friend might therefore wish to contact Network Rail—I know that he already has, but it might be worth a further conversation—to see if any work is planned that might trigger these requirements. In the meantime, if a person cannot use the station, they can book alternative transport, which the industry is obliged to provide at no additional cost.
I shall conclude by thanking my hon. Friend for securing this debate. As I am sure he appreciates, rail plays a very important part in people’s lives across the country, and especially in his constituency. As I say, I used to commute from stations around there in my time. Today, he has brought up a huge, wide, diverse range of issues. I want to reassure the House that the Government are investing record levels in rail funding, in buses, in cycling and in a whole host of other areas including pothole filling, in order to deliver the best transport infrastructure we possibly can, and the biggest rail modernisation programme for over a century. As I mentioned earlier, we have committed more than £50 million to improving services on the Brighton main line and its connecting lines. That is an upgrade that will absolutely improve the lot of commuters across the region, including those in my hon. Friend’s constituency.
Question put and agreed to.
Finance Bill (Seventh sitting)
Tuesday 16th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Finance Act 2020 View all Finance Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 16 June 2020 - (16 Jun 2020)
The Committee divided: - Ayes: 7 / Noes: 10 - Question accordingly negatived.
The Chair
Good morning, everyone. As you are aware, social distancing guidelines are in place, so I remind all Members to sit only in marked seats. Tea and coffee are not permitted in Committee Rooms. Will all Members please ensure that mobile phones are turned off and switched to silent mode during Committee meetings? The Hansard reporters will be grateful if Members email any electronic copies of their speaking notes to hansardnotes@parliament.uk.
We now continue line-by-line scrutiny of the Bill.
Clause 72
Excluded property etc
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss clause 73 stand part. I call the Minister, Kemi Badenoch. [Interruption.] Sorry—Jesse Norman.
The Financial Secretary to the Treasury (Jesse Norman)
Thank you, Mr Rosindell. My hon. Friend and I are sharing the duties on the Front Bench today, and it is I who rises to speak to clauses 72 and 73. The clauses make changes to ensure that additions of assets made by UK domiciled or deemed-domiciled individuals to trusts made when they were non-domiciled cannot be treated as excluded property. As that explanation indicates, it is a somewhat technical measure, which means that such additions are within the scope of inheritance tax.
The clauses have been introduced following a decision by the Court of Appeal. To give some background, the inheritance tax treatment of trusts depends on the domicile status of the person setting up the trust when it was made, known as the settlor, and the location of the assets. If the settlor is UK domiciled, inheritance tax is chargeable on their worldwide assets. By contrast, non-domiciled individuals do not pay inheritance tax on assets in trusts situated outside the UK.
The long-established position of Her Majesty’s Revenue and Customs has been that a settlement is made when a trust is created, and that a settlement is also made when assets are added to that trust. That means that assets would be within the scope of inheritance tax if they were added to a trust by an individual who is currently UK domiciled, even if the trust was set up when the same individual was non-UK domiciled. The Court of Appeal decision created uncertainty by ruling that a settlement was made only when assets were first added to the trust. That ruling meant that the domicile of the settlor for later additions to the trust would not matter. In turn, all subsequent settlements of assets into the trust would not be liable for inheritance tax in the UK. The measure was announced in the autumn Budget 2018, and stakeholders have had nearly two years’ notice of the change.
In July 2019, the draft legislation was published, which provided an opportunity to give feedback to Her Majesty’s Revenue and Customs. HMRC received feedback from a range of bodies including the Chartered Institute of Taxation, the Society of Trust and Estate Practitioners, the Institute of Chartered Accountants in England and Wales, the Tax Faculty and PricewaterhouseCoopers by the deadline for responses. HMRC then made a number of amendments based on the feedback provided, and stakeholders have since provided further feedback regarding the legislation.
Together, the measures will confirm that additions of non-UK assets by UK domiciled or deemed-domiciled individuals to trusts are chargeable for inheritance tax, even when the trust was originally set up while that individual was non-domiciled. The measures will also ensure that transfers between trusts made by a UK-domiciled individual are chargeable for inheritance tax. That will affect UK-domiciled or deemed-domiciled individuals who created an offshore trust when they were previously non-UK domiciled and have subsequently made additions of assets to that trust.
Although the measure will apply only to a small number of individuals, the tax saving for them could have been significant, and there have been claims for tax repayments as a result of the case. The clauses will ensure that the legislation is applied as intended and all tax is collected as expected. The changes introduced by the clauses will add clarity and remove any doubt from the legislation by confirming HMRC’s published and widely accepted views. I commend the clauses to the Committee.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
It is a pleasure to see you back in the Chair, Mr Rosindell. We regard the measure as a welcome imposition to provide for a fairer tax system. HMRC figures indicate that the number of individuals who live in the UK but pay no tax on their offshore income has fallen, with the number of UK-based individuals with non-domiciled tax status falling by 13% on the previous year. HMRC believes that that is explained by individuals switching to domiciled status and other individuals leaving the UK tax system. Thus the clauses reflect that particular change. However, there are some issues reported by stakeholders.
Responding to clauses 72 and 73, the Chartered Institute of Taxation states that among its members transfers between trusts are most commonly undertaken for family or related reasons, and without any intention to avoid inheritance tax or to circumvent the excluded property rules. It argues that the main thrust of the legislation should be to limit additions by the settlor after they become deemed or actually UK domiciled.
The institute expresses concern about some scenarios in which property could inadvertently be brought into the scope of inheritance tax because a change is made to a trust, not an addition of assets, that could be treated as a resettlement, or trustees make a transfer between two settlements, both set up when the settlor was non-domiciled. In neither case is inheritance tax avoidance being attempted. There are some situations where trustees, not the settlor, are involved in transferring between two settlements, both set up when the settler is foreign domiciled, or when the second is set up by the trustees of the first. We believe that there should be no loss of excluded property status because of the changing status of the settlor. I would be interested to hear the Minister’s assessment of those concerns.
Secondly, both the Institute of Chartered Accountants in England and Wales and the London Society of Chartered Accountants were critical of the potential for retrospection. The former argued that if clause 72 is
“to be treated as always having been in force, this will result in unexpected IHT charges arising as a result of past events.”
The institute says:
“Given that the clause is not countering avoidance but is changing long-standing rules that are familiar to trustees and are clearly stated in the existing law…new legislation on this point should not affect events that happened earlier than the measure is enacted, ie Royal Assent.”
Similarly, the London Society of Chartered Accountants believes that this
“clause changes the IHT status of trusts to which assets are added. This change will have effect from the time that the trust was set up, so is retrospective. However, as the clause is not an anti-avoidance measure but is just a change to the law, retrospection is not appropriate and the clause therefore does not follow Parliamentary convention.”
I understand that these comments presume that the individuals in question do not seek to avoid tax when transferring assets between trusts, but I would be grateful if the Minister responded to these concerns.
Last, I heard the Minister’s comments, but the Institute of Chartered Accountants in England and Wales has raised the lack of a consultation period or of any follow-up, despite being led to believe that that would happen after a meeting with HMRC in November 2018. It reported that
“trustees of offshore trusts are unlikely to have considered these changes in the necessary detail”
and had concerns that there would be
“insufficient time for trustees to take advice to help them understand the full implications and…whether they want to take any action to unwind structures.”
In working with the intention of the measures the Government have introduced, I would be grateful if the Minister responded to those concerns and addressed the lack of a consultation period.
Jesse Norman
I am grateful to the hon. Lady for her questions and for her support on this technical but important measure.
The hon. Lady asks about unanticipated negative effects. I am happy to put on the record that HMRC has given reassurance that it will adopt a cautious approach if there is a case in which a taxpayer may accidently taint a trust that contains a mixture of excluded and non-excluded property. Hopefully, that will address many of the concerns about unexpected consequences that she touched on.
The hon. Lady asks whether this measure is retrospective. As she will be aware, we do not believe that it is retrospective. The key point is that HMRC’s application of the legislation, and therefore the legal position, was widely accepted in practice before the Court of Appeal decision put that position in doubt. The effect of it is going to be that individuals have been liable to the tax owed in the spirit of the legislation. Formally, clause 72 is not retrospective because it does not create any new changes pre-Royal Assent, but we recognise the concern that is raised. It is true that in some cases there may be what I would describe retroactable, and not retrospective, effects. That is precisely because HMRC and the Government are seeking to restore what might be referred to as the position as it had always been understood previously. That is the intended effect of the legislation.
The hon. Lady asks whether there should have been more consultation. As I outlined in my speech, the Government have had this in the public domain for a considerable period and discussed it, with plenty of occasion for people to conform their tax affairs to what is, after all, only a reaffirmation of existing tax law through legislation. There is also the counterpart problem, which the hon. Lady will understand: if the clause is not introduced now, it may allow opportunities for individuals to avoid paying inheritance tax on assets they put into trust or on properties transferred between trusts. I am sure she would not wish to abet or support those opportunities and that she would wish, overall, to join us in protecting revenue and providing certainty to taxpayers.
Question put and agreed to.
Clause 72 accordingly ordered to stand part of the Bill.
Clause 73 ordered to stand part of the Bill.
Clause 74
Relief for payments to victims of persecution during Second World War era
Question proposed, That the clause stand part of the Bill.
Jesse Norman
This is a small measure, but a very important one. The clause exempts compensation payments received under the Kindertransport fund from an inheritance tax liability. In late 2018, the German Government agreed to provide compensation payments for child survivors of the Kindertransport. As you will know, Mr Rosindell, the Kindertransport was an organised rescue effort for Jewish children, who were transported unaccompanied from Germany to escape persecution from the Nazi regime. I must say, it is one of the most shining examples of effective humanitarian action in Germany’s history—and in our history—in a very difficult time.
The Kindertransport fund, launched in January 2019, awarding one-off payments of €2,500 to survivors is subject to specified criteria as set out by the German Government. The measure will ensure that Kindertransport payments are not subject to inheritance tax. Changes made by clause 74 will be backdated to take effect so that no inheritance tax is paid on payments from the scheme from its opening date on 1 January 2019.
The clause provides reassurance to the original survivors of the Kindertransport that any payment made in connection with or under this compensation scheme will not be subject to IHT. While no amount of money could ever remove the suffering those children and their families experienced, the Government remain committed to supporting survivors of Nazi persecution. I trust that all agree that it is fundamental that the clause stand part of the Bill.
Bridget Phillipson
The Opposition welcome the provision. As the Minister says, it is a very important measure. Exempting from inheritance tax compensation payments made to the survivors of the Kindertransport is a just measure for those who had to face the devastating experience of being torn from their families as children in order to escape persecution. The House of Commons Library states that around 100,000 children were brought to the UK under the Kindertransport scheme, but of course many of those survivors have since passed away. It is only right that in the spirit of the Kindertransport fund all survivors receive their compensation payment in its fullest form and that that remains the case if the compensation is inherited.
According to the claims conference, to be eligible for payment survivors have to have been under 21 when the Kindertransport took place, between November 1938 and September 1939. However, the UK set an age limit of 17 for those transported. The oldest would therefore be born around 1921 or 1922, suggesting that they would be nearly 100 if they were alive today. The average age of the children who were transported was nine, so many would be in their mid-nineties today. Given those figures, we know that many people claiming compensation from the compensation fund will be survivors’ inheritors, so it is welcome that the payment is not subject to inheritance tax. However, I gently urge the Government to consider the issues that child refugees face today, and I urge Ministers to show the same level of commitment and dedication today that our country demonstrated in the past.
The Kindertransport survivor and incredible campaigner Lord Dubs worked tirelessly to protect child refugees following our withdrawal from the European Union, but the Government’s amendment of clause 37 watered down the UK’s commitment to protect unaccompanied child refugees in Europe who seek to reunite with their families in the UK. I hope that the Government will review their approach to child refugees and take seriously their commitment to protect child refugees fleeing violence and persecution in our present, just as they have taken seriously compensating child refugees of the past. Meaningful dedication to supporting child refugees requires both.
Jesse Norman
I thank the hon. Lady for her comments. She spoke very well about the Kindertransport scheme. As the Committee knows, the Government stand by our position on child refugees, and this country has a proud record in that area.
Question put and agreed to.
Clause 74 accordingly ordered to stand part of the Bill.
Clause 75
Stamp duty: transfers of unlisted securities and connected persons
Question proposed, That the clause stand part of the Bill.
Jesse Norman
In the spirit of proper scrutiny of legislation, we should chew carefully on clauses 75 and 76. They are quite technical clauses, which address the use of contrived arrangements involving the transfer of unlisted securities to connected companies for an artificially low consideration in order to minimise stamp duty and stamp duty reserve tax liability on company reorganisations.
In the Finance Act 2019, the Government introduced a targeted market value rule to prevent the artificial reduction of the stamp tax due when listed shares are transferred to a connected company. That was introduced with immediate effect to prevent forestalling. The Government consulted on extending the rule to unlisted shares, to ensure that we fully understood the potential effect of the change on small businesses. That is why draft legislation is narrowly targeted only at companies that enter into contrived arrangements that are used to minimise stamp tax on reorganisations.
The Finance Bill 2020 therefore extends the market value rule to the transfer of unlisted shares to connected companies. This form of avoidance seeks to exploit the way stamp duty and stamp duty reserve tax are currently charged: on the payment given as consideration, rather than on the value of what is received. Some taxpayers have been using contrived arrangements that reduce the value of the consideration paid when they transfer unlisted shares to a company with which they are connected as part of a company reorganisation.
The changes made by clauses 75 and 76 will mean that when unlisted shares are transferred to a company and the person transferring the shares is connected with the company, the tax charge is based on the value of the consideration for the transfer or the market value of the shares transferred, whichever is higher. The new rule will apply only when there is an issue with shares by way of consideration, narrowly targeting the measures to the circumstances where contrived arrangements are used to minimise the share of the tax on the transfer of unlisted shares. The measures will have effect for stamp duty in relation to instruments executed on or after Royal Assent of this Bill, and for stamp duty reserve tax in relation to agreements to transfer made on or after Royal Assent.
Clauses 75 and 76 prevent the artificial reduction of the stamp tax due on share acquisitions when unlisted shares are transferred to connected companies. It is expected to raise £25 million over the scorecard, and I commend the clauses to the Committee.
Bridget Phillipson
The Opposition welcome the measures implemented by these clauses to minimise the scope of continuing avoidance of stamp duties by extending the stamp duty and stamp duty reserve tax market value rule to the transfer of unlisted securities to connected companies. However, I raise a point regarding the impact of the clauses.
HMRC’s impact assessment of the policy notes that there will be a negligible impact on 250 to 350 businesses in the first year, disproportionately affecting small and microbusinesses. It estimates that the arrangements are most likely to affect private companies with a small number of stakeholders, such as owner-manager businesses, with an average value of £2.5 million. These may include family businesses, many of which we understand to be struggling in the face of the current pandemic. What assessment has the Minister made of this, and who is really the intended target of these clauses?
The Chartered Institute of Taxation expressed concern that unintended consequences could arise from clause 76 due to significant additional costs that are disproportionate to the tax at stake in many cases. It goes on to say that this
“may in some situations prevent commercially advantageous transactions, with no avoidance motive, from going ahead. The…vague description of policy rationale and the contrived arrangements being targeted has prevented stakeholders from assisting in designing a targeted rule so as to reduce the unintended consequences.”
Similarly, legal firm Cleary Gottlieb notes that
“the new rule is not limited to cases of stamp duty or SDRT avoidance, and it should not be assumed that transactions driven entirely by commercial considerations will fall outside its scope.”
I will be grateful if the Minister explains how the Government will seek to minimise unintended consequences of this measure being the targeting of businesses that are not seeking to avoid stamp duties.
Respondents to the consultation suggested that it would be preferable to introduce a targeted anti-avoidance rule into the legislation, or to extend the general anti-abuse rule or the disclosure of tax avoidance scheme provisions. What consideration have the Government given to inserting a targeted anti-avoidance rule into the legislation?
Last, the Chartered Institute of Taxation points out that, in relation to clause 77, there are a number of circumstances in which a shareholding of 25%—required for this exception to section 77A of the Finance Act 1986 to apply—will be an excessive hurdle, reasoning that it is not uncommon for a company to be owned equally by five or six entrepreneurs or a family group. It suggests that a requirement that the relevant shareholding is at least 10% would be more appropriate to cover a wide range of commercial scenarios. I will grateful if the Minister will address those concerns.
Jesse Norman
I am very grateful to the hon. Lady for the questions she raises. Let me take them in order.
On whether these measures will affect most small businesses or organisations, as the hon. Lady highlights, a relatively small number of organisations will be affected. The measures were subject to consultation, and interestingly the respondents were satisfied that there would be little impact on commercial activity as the measures were suitably targeted, and expressed some pleasure that the concerns they raised during the policy consultation about the impact of a more wide-ranging measure had been heard. This is, of itself, a tightly focused measure. It falls—where it falls—on a relatively small number of organisations, as I said.
However, it is important to pick out the logic of what I think the hon. Lady is saying. We all recognise the importance of combating the pandemic. She will be aware that the Government have spent many tens of billions of pounds on supporting businesses, families and jobs during this process. This measure is about something else: avoid a form of tax avoidance, or rather heading off a form of tax avoidance; curbing and preventing it. I do not think people’s concerns about the pandemic should be allowed to obtrude on that.
The hon. Lady asked a question about unintended effects. Our analysis is that precisely because of the targeting that was noted during the consultation phase, unexpected effects, while they can never be ruled out, should be limited and minimal. It is also important to say that there will be a modest additional administrative burden that will decline over time as people become accustomed to the new rules.
The hon. Lady asked whether it would be better to address this with a more targeted anti-avoidance rule, but this is quite a targeted anti-avoidance rule. It picks out particular forms and is restricted to company reorganisations of a certain kind, and it builds on the existing approach for listed shares. I therefore think that it addresses her concerns.
Question put and agreed to.
Clause 75 accordingly ordered to stand part of the Bill.
Clause 76 ordered to stand part of the Bill.
Clause 77
Stamp duty: acquisition of target company’s share capital
Question proposed, That the clause stand part of the Bill.
Jesse Norman
Clause 77 prevents a double stamp duty charge from arising on some company reorganisations, and follows on from clauses 75 and 76. During the consultation on extending the market value rule to unlisted securities, it was put to the Government that a double charge could arise on a type of company reorganisation known as a capital reduction partition demerger. We are very heavily in the long grass of tax intricacy. Such a demerger is where shares in a company are cancelled and shareholders are compensated with shares in a new company, rather than with cash. A corporate group may pursue this strategy where, for commercial reasons, it wants to split a group and ensure that the companies in that group are held separately by the original shareholders.
Currently, taxpayers who follow the rules can incur two stamp duty charges on such demergers, while other taxpayers use contrived arrangements to avoid paying any stamp duty on the same reorganisation. This clause, together with clause 75, ensures that one charge arises on most capital reduction partition demergers by more tightly targeting existing anti-avoidance provisions related to company reorganisations.
Stamp duty is a transaction tax. When a company is split using a demerger arrangement, there are a number of steps, two of which are potentially subject to stamp duty unless a relief applies. Usually relief applies on one step only, so that there is just one charge on the overall transaction. In some demergers, known as capital reduction partition demergers, relief is unavailable on both steps due to anti-avoidance provisions. Clause 77 will prevent a stamp duty double charge from arising, so that only one charge will arise on most capital reduction partition demergers. It does this by better targeting the existing anti-avoidance provisions. The measure applies to stamp duty instruments that are executed on or after Royal Assent.
Clause 77 works together with clause 75 to ensure that one charge will apply on most capital reduction partition demergers. This increases fairness and consistency. I therefore commend the clause to the Committee.
Bridget Phillipson
I raised these points in an earlier debate, but I will do so again so that the Minister can respond.
On clause 77, the Chartered Institute of Taxation points out that there are a number of circumstances in which a shareholding of 25%, which is required for the exception to section 77A of the Financial Act 1986 to apply, will be an excessive hurdle. Its reasoning is that it is not uncommon for a company to be owned equally by five or six entrepreneurs or a family group. It suggests that a requirement that the relevant shareholding be at least 10% would be more appropriate to cover a wide range of commercial scenarios. I would be grateful to hear the Minister’s response on that issue.
Jesse Norman
The hon. Lady raises a very specific circumstance. It would be appropriate for me to write to her about the specifics of the decision about percentages, rather than try to go through the argument here.
The discussion has already been had between HMRC and stakeholders, and therefore it has to some extent already been addressed through the consultation process, but I am happy to revisit the issue.
Question put and agreed to.
Clause 77 accordingly ordered to stand part of the Bill.
Clause 78
Call-off stock arrangements
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss new clause 13—Call-off stock arrangements: sectoral review of impact—
‘(1) The Chancellor of the Exchequer must make an assessment of the impact of section 78 on the sectors listed in (2) below and lay a report of that assessment before the House of Commons within six months of the passing of this Act.
(2) The sectors to be assessed under (1) are—
(a) leisure,
(b) retail,
(c) hospitality,
(d) tourism,
(e) financial services,
(f) business services,
(g) health/life/medical services,
(h) haulage/logistics,
(i) aviation,
(j) transport,
(k) professional sport,
(l) oil and gas,
(m) universities, and
(n) fairs.”
This new clause would require the Government to report on the effect of Clause 78 on a number of business sectors.—(Alison Thewliss.)
Jesse Norman
Clause 78 simplifies the rules for accounting for VAT on goods moving from the UK to member states of the EU or vice versa in advance of goods being “called off”, as it is known, for delivery. This is known as “call-off stock”. These changes represent a simplification for businesses that use call-off stock arrangements and provide common rules across the EU. They apply to goods removed from or to the UK from 1 January 2020, and will apply for the remainder of the UK’s transition period with the EU. We expect the changes to have a negligible effect on businesses that adopt them.
The clause transcribes EU call-off stock law—new article 17A to the principal VAT directive—into UK legislation. It sets out the conditions for the rules to apply and provides sellers with statutory obligations to adhere to strict record keeping and reporting requirements. These changes are an administrative easement; the primary benefit is to UK businesses that will no longer have to register and account for VAT in the customer’s country, and vice versa. However, the quid pro quo is additional reporting requirements as well as EU regulations, which have direct effect, that set out new record keeping requirements, as I have indicated.
There is no obligation on a business to restructure transactions so as to meet the conditions and fall within the new rules. We expect that they would use the simplification only because they might derive a benefit for their business. Businesses that do not meet the conditions and so do not fall within the new rules should continue with the current VAT accounting mechanisms for EU cross-border transactions.
The Government published the draft legislation and guidance on the operation of the rules in December. The legislation was laid before the House in the Finance Bill at Budget earlier this year. A resolution under the Provisional Collection of Taxes Act 1968 means that the legislation currently has effect.
Call-off stock are goods that are bulk-shipped by a supplier across a border to a warehouse from where they will be supplied, or called off, as the customer requires. Different EU member states previously had different VAT accounting rules for call-off stock. Some required the seller of the goods to register and account for VAT in the country where the goods were to be called off. The UK avoided the need for the overseas supplier to register for VAT here. We allowed the customer to account for the VAT when the goods first arrived and in advance of being called off. The measure implements the changes adopted by ECOFIN on 4 December 2018, which were designed to simplify the rules and make them more consistent within the single market.
In normal circumstances the new rules, like the existing UK rules, do not require the seller to register and account for VAT in the country where the goods are called off. The new rules delay accounting for VAT until the goods are called off. To avoid VAT fraud, suppliers are required to report the initial movement of the goods to their tax authority, and both the supplier and the customer are required to keep additional records of the stock. When the goods are called off, normal VAT accounting and reporting procedures will apply and the customer will account for the acquisition of VAT. The Government had some concerns over the potential burden on business of keeping the new records required under the new rules and pushed for the right of business to continue using the existing rules if they so wished. A business is not required to arrange its affairs such that the new rules must be used. A supplier and their customer can agree to continue to use the existing UK rules for goods called off in the UK.
HMRC has produced guidance reflecting the introduction of the changes, and the measure is expected to be revenue neutral. It constitutes a simplification for UK businesses. The measure updates UK law to take account of the approach in the EU. It simplifies the VAT rules for call-off stock transactions and avoids the requirement for the supplier to register in the destination state.
New clause 13 would require the Government to conduct a review on the impact of the new call-off stock rules on a variety of different sectors within six months of the Bill receiving Royal Assent. The new legislation provides a simplification for businesses that choose to meet the conditions for it to apply. With that in mind, we expect it would have a negligible impact on businesses. I can inform the Committee that recent figures show that fewer than 200 UK businesses have reported that they are using the new rules, and we are not aware of any being in the sectors mentioned in the amendment. I therefore ask the Committee to reject the amendment and commend the clause to the Committee.
Alison Thewliss (Glasgow Central) (SNP)
It is a pleasure to see you in the Chair, Mr Rosindell. I take what the Minister says about the measure affecting relatively few businesses at the moment, but as this develops, that might not remain the case. There is a certain irony in the EU providing mechanisms for simplifying and harmonising these rules and trading across the EU—people moving their goods around the place—when the UK stands to come out of the EU and lose some of those benefits for businesses in all our constituencies.
There is an irony as well that the Government have decided to adopt these new rules. I am sure the Brexiteers in the room are no less keen on being rule takers, but that seems to be what the Government are doing in this case. We want to see as much harmonisation and simplification for businesses, because that is to their benefit. That is why we think it is important to stay in the EU in the first place.
Figures from the Scottish Government suggest that Scottish GDP could be 1.1% lower after two years, on the current cumulative loss of economic activity from leaving the EU, and up to £3 billion over those two years, on top of the devastating effects of the coronavirus outbreak. There will be an impact without having a free trade deal or an extension, at least for Scotland’s agriculture, fisheries and manufacturing sectors.
We want to see a comprehensive assessment of how all the sectors listed in the amendment will be affected—leisure, retail, hospitality, tourism, financial services, business services, health, life and medical services, logistics, aviation, transport, professional sport, oil and gas, universities—because they could all be affected by this clause. It would be wise for the Government to look at the impact of what they are proposing. It is always wise for the Government to look at the impact of their proposals on anything, I suppose, and we encourage them to do that.
Because the measure is retrospective, will the Minister say what notifications have gone out to business that may be affected and what guidance has been given? He said that companies can opt to use these rules or not. How does that work, and how does the guidance ensure that people know what they have to carry out, whether they decide to use the rules or not? It sounds quite confusing from what the Minister said. Finally, because he did not make it clear, will he say what happens to these measures after the transition period?
Wes Streeting (Ilford North) (Lab)
Let me begin by picking up on a point made by the Member for Glasgow Central about the provenance of clause 78. As we heard from the Financial Secretary, the clause transposes into UK law an EU directive that provides for simplified VAT treatment of call-off stock.
To begin, it is tempting to make the same point, and I know that repetition is not a novelty. Let me put it this way: it is very welcome to hear from the Treasury that divergence from EU rules and regulations is not considered by the Government to be an end in and of itself. I was curious last night, as I walked past the Annunciator in the Tea Room, to see the right hon. Member for Wokingham (John Redwood) making a lengthy speech on a fairly straightforward statutory instrument on electricity. I reviewed his speech this morning in Hansard, because it piqued my curiosity, and I received in passing from my hon. Friend the Member for Hove (Peter Kyle) a precis of the thrust of the right hon. Gentleman’s argument. It seems that a number of Conservative Members consider divergence from EU rules and regulations to be an aim in and of itself. Regardless of the merits of the case and the merits of continued co-operation, it is clear that, for a section of the House, there is a virtue in divergence.
I am glad that the Treasury does not share that view, although of course the Treasury looks at the numbers. We may not have had an impassioned exposition from the Financial Secretary of the arguments in favour of this particular alignment with EU rules and regulations, but what we did hear was a very clear argument from Her Majesty’s Treasury that, even having left the European Union, there are still benefits to be found for UK businesses from continued alignment, co-operation, simplification, axing bureaucracy and making things simpler.
I hope that that common-sense approach to our future relationship with the European Union prevails. As much as those of us who campaigned in a different direction in the referendum accept the result and the outcome, and accept that this is a settled political question, it is in all our interests and in our national interest that we maintain a future relationship with the European Union that is based on co-operation, where that is in the interest of our own country.
I turn to the specifics of clause 78. The Financial Secretary’s speech seemed to me to address some of the concerns expressed by businesses and chartered tax advisers, but I will raise them for the sake of clarity. Writing in Taxation, Angela Lang-Horgan, a German and British chartered tax adviser and lawyer, said:
“If businesses have continued to operate under the old simplification rule after 31 December 2019, VAT returns must be corrected once the new legislation is in place. This will add additional confusion to the situation. So far, HMRC has not indicated whether it would apply a soft-landing period. There is no transition period either because under EU law the UK was obliged to introduce the changes from the beginning of this year.”
Could I get some clarity from the Financial Secretary on those points? Will HMRC provide a soft landing period for the implementation of the new rules, or is a soft landing period not even necessary? If I understood him correctly—I may have misunderstood, in which case he will clarify—it seems that there is a degree of flexibility and choice on the part of businesses over whether to adopt this approach. Some clarity in direct response to the concern expressed by Angela Lang-Horgan would be welcome.
What efforts have the UK Government made to communicate with affected businesses in anticipation of the rules, which are effectively already in place? It is worth saying, although it is a mild digression from clause 78, that concern has been expressed—particularly by colleagues in the shadow Business team—that the Government are not communicating with businesses in a timely way with respect to changes in Government policy and their impact on businesses. I think that for some time there has been a cultural problem in government of not giving businesses long enough to anticipate and adjust to new rules; I wonder whether in this case that communication has been a bit more proactive.
The explanatory notes state that
“businesses could structure transactions to remain outside the scope of the new rules if businesses found them onerous.”
What proportion of businesses are expected to exercise that discretionary power?
Jesse Norman
I am grateful to hon. Members for their comments. The hon. Member for Glasgow Central regards it as an irony that the Government are bringing forward this rule. I would not describe it as an irony; it is a simplification for those companies that wish to use it, and it is optional. Some companies will prefer the current arrangements as more settled and simpler, while others may not—I do not think that there is anything more to it than that. So far, 200 companies have already taken it up; of course, we cannot say in advance how many may have chosen to do so by the end of the transition period, but it is a relatively small number of companies, as I have indicated.
Alison Thewliss
Can the Financial Secretary tell us how many companies are using the previous rules?
Jesse Norman
I certainly do not know the number of companies operating under the previous rules, but I would be happy to drop the hon. Lady a letter with any number that HMRC may have that can be publicly disclosed. The point is that there is a relatively small number of companies; they have seen this coming and it is an optional advantage for them. In reply to the point raised by the hon. Member for Ilford North, it applies only during the transition period, which will end at the end of this year.
We will be leaving the transition period on 1 January, which is not only stated by Government but is commonly understood. That goes to the question of divergence, which was raised by the hon. Member for Ilford North. We are bound by EU law while we are in the transition period. The Government certainly do not have any interest in divergence for the sake of divergence; the Government have an interest in the ability to set our own law, including our own tax law, as we as a sovereign nation see fit. That might or might not involve divergence, but this measure will not apply after the transition period.
The hon. Member for Ilford North also raises an important question about whether there is enough time for business to accommodate rules. I cannot comment on behalf of other Departments, but it certainly is a concern that has been raised in relation to the creation of tax law. Wherever possible, the Government try to abide by rules that we introduced after 2010 in order to have a more effective tax process. As he knows, it involves several stages and periods of consultation. We are coming up to an L day for legislation to be considered for the 2020 Budget, for the autumn Budget—if there is one—and for a Finance Bill next year. There is an orderly process, but I take his point about the importance of ensuring that it is as orderly and well structured as possible.
Question put and agreed to.
Clause 78 accordingly ordered to stand part of the Bill.
Clause 79
Post-duty point dilution of wine or made-wine
Stephen Flynn (Aberdeen South) (SNP)
I beg to move amendment 10, in clause 79, page 67, line 25, at end insert—
‘(3) The Chancellor of the Exchequer must review the expected effects on public health of the changes made to the Alcoholic Liquor Duties Act 1979 by this Section and lay a report of that review before the House of Commons within one year of the passing of this Act.”
This amendment would require the Government to review the impact of the proposed changes to alcohol liquor duties on public health.
It is a pleasure to serve under your chairmanship, Mr Rosindell. The amendment is quite simple and would require the Government to review the impact of alcohol duties on public health. It should come as no surprise, given that the SNP has long called for duty to reflect content, but we do not have the powers in Scotland to do that. Instead, we have to rely once again on the Westminster system in that regard. That is a real pity, because where we have powers in Scotland in relation to public health and alcohol, we have made great strides. For instance, we have seen the banning of irresponsible promotions and the lowering of the drink-drive limit. We ended multi-buy discounts, something that was certainly contentious at the time. As a young student, I was not overjoyed about the fact that I could not buy three crates of Tennent’s for £20. None the less, it was an important measure that no doubt changed the behaviour of many people, including myself at that time.
Of course, we have seen the overwhelming success of minimum unit pricing in Scotland. That was, again, an extremely contentious measure at the time, whereby we placed a 50p-per-unit charge on units of alcohol. The cumulative effect of all those measures has seen something that we all wanted to see in Scotland, where we have a difficult relationship with alcohol—one that was challenging to confirm but that we needed to confirm. We saw off-duty sales fall by 3.6% in the first year since minimum unit pricing was introduced. In England and Wales during the same period, off-duty sales increased by 3.2%. That is a very telling figure.
When I first came to Parliament, one of the very first debates that I took part in was in Westminster Hall. I cannot remember which hon. Member secured the debate, but it was about alcohol duty. I think the purpose of the debate was to galvanise hon. Members to stop the Government increasing alcohol duty and, hopefully, to reduce it. There was extreme passion in that Chamber and there were a lot of hon. Members present—more than are often seen debating any given matter in the main Chamber. There was a lot of passion about pints, but we cannot be passionate about pints without also having passion for public health and the consequences of the decisions being made. The stark reality is that the two are inextricably linked, and the UK Government need to be mindful of that fact. Supporting the amendment would be a good, positive first step on that journey to a more sensible approach that takes into account public health.
Alison Thewliss
Does my hon. Friend agree that the minimum unit pricing introduced in Scotland had the effect of removing from our shelves some of the most harmful drinks, including the high-strength industrial ciders that cause so much harm to so many people in our communities?
Stephen Flynn
Absolutely. My hon. Friend makes an excellent point. We did not have to walk far to find a shop in Scotland that sold ciders. White Lightning is incredibly strong. Often, individuals would buy it early in the morning, and by the afternoon the remnants were across our city. We were able to stop that, and that was important because it was having an impact on every single person who lived and worked there. This amendment gives the Government the opportunity to make sensible strides in recognition of the fact that public health and alcohol are inextricably linked.
Wes Streeting
I shall begin by addressing the SNP’s amendment 10. It is important to look carefully at the relationship between alcohol taxation and public health. We have seen in other areas of taxation, notably the sugar tax, the huge impact that decisions taken by the Treasury can have on public health and public health outcomes. It is long past time for us to look seriously and sensibly at whether more can be done to reduce the impact of alcohol and alcoholism on people’s lives and communities.
Turning to clause 79, I have had the opportunity to do a much deeper dive into some of the issues, not least because of the determined efforts of my hon. Friend the Member for Chesterfield (Mr Perkins). Anyone who has ever been lobbied by him will know that when it comes to standing up for his constituents and for businesses in his constituency, there is no more determined, stubborn and irrefutable representation than that which he provides. He has raised serious concerns about the impact of the clause on businesses in his constituency. I shall outline some of those concerns, in the hope that Ministers will consider their bearing on Government policy.
We understand perfectly what the Government are trying to achieve with clause 79. The clause amends the Alcoholic Liquor Duties Act 1979, to introduce sanctions for post duty point dilution of wine or made-wine, which, if carried out before the duty point, would have resulted in a higher amount of duty being payable. That change has, in effect, already come into force and we are legislating for it this morning. The change is perfectly understandable. It is designed to bring more revenue into the Treasury that would otherwise be, and is being, lost. I understand the Government’s position that post duty point dilution carries significant legal and revenue risk for the Exchequer.
The Wine and Spirit Trade Association is against the legislation, claiming it would put hundreds of jobs at risk and place more pressure on the industry. Recently, thanks to the initiative of my hon. Friend the Member for Chesterfield, I had the opportunity to speak to Global Brands, a business based in his constituency that makes VK and Hooch, among other products. We know that covid-19 is having a huge impact on the licensed trade industry and on alcohol sales in particular, affecting not only pubs but the producers of wines, spirits and other beverages. Global Brands is concerned that, because of the financial burden placed on its business by the clause, combined with the impact of covid-19, it expects to make 50% of its workforce redundant, putting 200 jobs at risk as a result of this change. If I can characterise our discussions in this way, it would be accurate to say that Global Brands accepts that this change is inevitable, and that the Treasury has a settled view on it, but it hopes that the Treasury might consider a 12-month delay in implementation—from April 2020 to April 2021—arguing that this would give it time to recover from the covid-19 shock, leaving it better able to absorb the change.
Global Brands makes other arguments that the Treasury may want to take into account. In particular, Global Brands sells what were commonly known as alcopops, a low alcohol by volume product—typically around 4% ABV. It is concerned that the impact of the change will be that, ironically, its low alcohol product would be taxed higher per unit of alcohol than much higher strength products, which flies in the face of the Government’s stated policy of discouraging high-strength alcohol and its impact on public health.
It is also worth highlighting that the Government have already announced their intention to conduct a wider review of alcohol taxation. I wonder whether it makes sense, from the point of view of business resilience and of giving companies such as Global Brands more time to cope with the covid-19 shock before absorbing this change, for the Treasury to consider this delay alongside the range of other issues that it will consider as part of its wider review of alcohol taxation. We might have been minded to table an amendment to probe the 12-month delay, but we were advised that such an amendment would not be in scope because the foundation resolution is clear about the date on which this change takes effect.
That is another reason why—I gently make this point again to Ministers—we feel strongly about the way in which the Treasury has restricted the scope of amendments and the debate by not introducing an amendment of the law resolution, as has been the case historically. As well as denying Opposition Members the opportunity to table broad, sweeping, political amendments to the Finance Bill, that also has practical implications. I impress on Ministers and the usual channels the need to reconsider that for future Finance Bills.
Finally, when my hon. Friend the Member for Chesterfield and I spoke to Global Brands just the other week, I was particularly impressed not just by the jobs and economic activity it provides in Chesterfield, but at the fact that its wider supply chain is virtually entirely British. Its ingredients, packaging and labelling are all derived from a British supply chain. I do wonder whether the Treasury has really thought through the timing of the change, the impact that it will have on businesses such as Global Brands, and where it might position such businesses in relation to their international competitors that are not providing jobs in this country and do not have a supply chain rooted here.
Given the unemployment statistics out today, we know that structural unemployment will become one of the biggest political issues and economic challenges in our country. Structural unemployment in Britain will become a feature of our life in a way that, frankly, it was not 10 years ago, in the wake of the financial crisis, and has not been for decades. The Government must do everything they can to protect jobs, which is why we have called today for them to come forward not just with fiscal measures in July, but a full-on, jobs-first Budget—because we are worried about the impact of covid-19 on unemployment.
The representations on clause 79 from Global Brands and from my hon. Friend the Member for Chesterfield remind us of the risk of the unintended consequences of Government policy. Given the impact on jobs and the supply chain and the fact that the Treasury is in any case preparing to undertake a review of alcohol taxation, I wonder whether the call for the Government to delay the measure by 12 months is not eminently reasonable—and whether they might come forward with their own change to the Bill on Report.
The Exchequer Secretary to the Treasury (Kemi Badenoch)
Clause 79 makes changes to alcohol duty legislation to introduce prohibitive sanctions for anyone who dilutes wine or made-wine once that product has passed a duty point. It will ensure fairness by providing equity of treatment across the drinks industry and will tackle future revenue risks for the Exchequer.
Post duty point dilution is a practice that enables wine and made-wine producers to reduce the excise duty that they pay by diluting the product after duty has been paid. Because the dilution increases the volume of wine and made-wine for sale, with no additional duty being paid, less duty is paid than would otherwise be due. UK legislation does not expressly prevent post duty point dilution for wine and made-wine, although it is prohibited for all other alcohol products. The practice gives certain wine or made-wine producers a tax advantage over those who produce other categories of alcohol, of which dilution is not permitted, and over others in their own sector who cannot make use of the practice.
Clause 79 will introduce new prohibitive sanctions for anyone who dilutes wine or made-wine once that product has passed a duty point on or after 1 April 2020. Introducing new sanctions to prevent the practice will maintain the principle that excise duty is calculated only on a finished product when it is released from production premises or on import. It will ensure fairness by providing equity of treatment across the drinks industry and will tackle future revenue risks for the Exchequer.
A review of the practice was launched at autumn Budget 2017, during which HMRC engaged extensively with industry and gathered a large amount of evidence to inform a decision. At Budget 2018, the Government announced the findings of the review and their intention to stop the practice being used for wine and made-wine, as is already the case for other types of alcohol. However, the Government also announced that that would not take effect until April 2020. That has given those businesses affected almost three years to prepare for the change, allowing them time to reformulate or diversify into the production of new lines.
Amendment 10 would require the Chancellor to review the public health effects of the post duty point dilution sanctions. When making changes to the alcohol duty system, the Government take into account a wide range of factors, including economic inequalities and health impacts. The new sanctions follow an extensive review by HMRC in 2017. Draft legislation was published in July 2019, alongside which a tax information and impact note was published on the gov.uk website, detailing the various factors that the Government have considered. The amendment is therefore unnecessary, as the Government have already published our assessment of the effect on public health. For the convenience of the Committee, I will reiterate that assessment. The Government expect that
“wine or made-wine may become slightly more expensive…there may be a positive health impact with less wine being consumed. However, this benefit may be offset if any increase in price leads to consumers switching to higher strength products.”
Alison Thewliss
I am sure the Minister has seen the graph that sets pence per unit against alcohol by volume. To say that it looks as though it was drawn by a child with a crayon is being generous to children with crayons. Will she consider a wider review of the duty per unit of alcohol by product type, because at the moment it makes absolutely no sense?
Kemi Badenoch
I thank the hon. Lady for her intervention. I am not quite sure which chart she is referring to, and I do not accept her comments. We must remember that the purpose of the clause is primarily to close a tax loophole.
Wes Streeting
I understand what the Minister says about closing a loophole and about the time that businesses have been given to prepare for the change, but does she not think that the impact of covid-19 has a bearing here? Given the representations that are being made about the impact of the double whammy, would she at least go away and consider the merits of a 12-month delay, and write to me and my hon. Friend the Member for Chesterfield to set out her thinking once she has had a chance to do that?
Kemi Badenoch
I thank the hon. Gentleman for that question. That is something that I have considered. I have had representations from the hon. Member for Chesterfield, Global Brands and other Members of Parliament, and I will take into account the points made by the hon. Member for Ilford North made in his speech.
On job losses, the announcement was made with enough time for people to prepare. We may not have been aware of covid, but postponing implementation any further would mean that the companies that adapted to the announcement about prohibiting post duty point dilution would be disadvantaged compared with companies that have not prepared since the announcement. We do not believe that that is fair.
On the point about the low alcohol value and moving the measure to stronger products, that is something that we have factored in. We will have a wider alcohol duty review—the hon. Gentleman referenced that. The Treasury has considered all those things, and we still do not feel that they are appropriate.
Wes Streeting
I am grateful to the Minister for being generous in giving way again. She will be pleased to hear that I will not labour the previous point.
As part of the Treasury’s review, will the Minister take into account the case for minimum unit pricing for alcohol? We have already heard the positive case from Scotland, and there is an active campaign for it. It would be useful for all of us involved in policy making if the Treasury review looked at the merits and the arguments against so that Parliament can make informed decisions.
Kemi Badenoch
The Government are monitoring the emerging evidence from the introduction of minimum unit pricing in Scotland and, recently, Wales, and we have addressed public health concerns in the duty system. For example, in February 2019, duty rates on white ciders were increased to tackle consumption. We must remember that the UK operates a single excise regime, so it is not possible to devolve duty rates. It is worth noting that many of the problems that have been raised are actually caused by EU rules, according to officials. I can write to the hon. Gentleman and other Members who want further clarification on that point.
Felicity Buchan (Kensington) (Con)
Does my hon. Friend agree that, although this is a very interesting debate, we are here to talk about taxation, not public health policy on alcohol?
Kemi Badenoch
I completely agree. I hope I have given enough answers to address the point raised by the amendment. We have already carried out an assessment on public health grounds, but this is tax legislation. I therefore ask that amendment 10 be withdrawn.
Clause 79 introduces a new sanction to prevent a practice that is currently available only in the wine and made-wine sectors and is used by only a small number of producers. Prevention of the practice by the use of prohibitive sanctions will address inequity of treatment across the alcohol industry and will create a level playing field so that alcohol products can compete more fairly in the marketplace. I therefore commend the clause to the Committee.
Question put, That the amendment be made.
Stephen Flynn
I beg to move amendment 11, in clause 80, page 68, line 5, at end insert—
“(3) The Chancellor of the Exchequer must review the expected effects on public health of the changes made to the TPDA 1979 by this Section and lay a report of that review before the House of Commons within one year of the passing of this Act.”
This amendment would require the Government to review the expected impact of the revised rates of duty on tobacco products on public health.
This amendment is in part very similar to the previous amendment, but it addresses tobacco duty, not alcohol duty. We want to review the impact of tobacco rates on public health. I take exception to the suggestions made in the previous debate that taxation and public health are not inextricably linked. The hon. Member for Ilford North said that we need a joined-up approach in the Treasury and across all sectors so that we can see the impact of taxation on other aspects of life. That certainly applies to tobacco as much as it does to alcohol duty.
Much like alcohol duty, tobacco duty is reserved to the UK Government. Again, that is deeply frustrating to those of us in Scotland, because it is the desire of the Scottish Government and the SNP to have a tobacco-free generation in Scotland by 2034. Obviously, tobacco rates will play a role in that, but that is not necessarily stopping us entirely and we are still making positive efforts to get there. The raft of different measures put in place by the Scottish Government include the 2020 ban on smoking near hospitals. There is also the regulation of electronic cigarettes and MVP devices, which will be an interesting and hot topic of debate in the coming years. A new national brand, Quit Your Way, was launched in 2018 and is being promoted on behalf of the stop smoking service. A Scottish ministerial working group on tobacco control is helping develop policy to reduce the impact of tobacco on Scotland’s health and to manage the register of tobacco and nicotine vapour product retailers.
That is all in addition to the Scottish Government’s previous efforts, including making prisons smoke free in November 2018, banning tobacco advertising in 2002, and banning smoking in enclosed public spaces in 2006, which is something that we all remember only too well. There are certainly many establishments in Scotland—I am sure the same is true in England—where one can still get the waft of the cigarettes that used to be smoked on those premises. A great deal of good has been and will be done, but ultimately the key lever of power lies, again, with the UK Government. That being the case, it is vital that consideration is once again given to public health and to the impact on it of decisions taken by the UK Government. I therefore suggest that the Government agree to the amendment, because it will be in their interests and in the interests of people across the United Kingdom.
Wes Streeting
If the hon. Member for Kensington does not think that there should be a relationship between public health and taxation, I am afraid she is really going to hate what I have to say on clause 80 and the Scottish National party amendment. For the same reason as before, I think there is a real case for looking at these issues in a joined-up way, and ensuring that our public health objectives are reinforced by the Treasury.
In its January 2020 Budget submission, the UK Centre for Tobacco and Alcohol Studies, in partnership with Action on Smoking and Health, recommended that the minimum excise tax should be updated annually to ensure that the minimum tax for tobacco products is the rate due for products sold at the weighted average price. In the light of those representations, I wonder whether the Government will consider the advice of public health experts, and what consideration they have given to committing to updating the MET on an annual basis from the date of the passing of this legislation.
As the all-party parliamentary group on smoking and health has noted, the covid-19 crisis means that reducing tobacco-related health inequalities should be a priority, now and in the longer term, to improve population health and resilience to any future disease outbreaks. Differences in smoking prevalence and smoking-related diseases are an important factor in the differences in morbidity and mortality from covid-19. If we are not going to think seriously about some of these public health challenges in the middle of a public health crisis, when will we, frankly?
There has also been a rise during lockdown in people’s exposure to second-hand smoke in the home. Households with children are twice as likely to report second-hand smoke in the home. We have already heard about the Scottish Government’s determination in that respect, but the Government’s prevention Green Paper set the target of the UK being smoke-free by 2030, which is defined as a prevalence of 5% or less. If we are going to do that, we really have to commit to doing it and make changes across the board to support that important goal, which we across the House share.
The argument that public health and taxation are not intertwined does not hold water. It is not fashionable to be nice about George Osborne in today’s Conservative party—it is even less fashionable in the Labour party, but I already have a cross to bear in my own party—and his sugar tax was hugely controversial when it was introduced. I do not mind saying that as I sat watching the announcement in the Budget I was a big cynic, not least because I am generally in favour, as a point of principle, of progressive taxation. I worry about any new charges or levies that have flat implications for people and households with different levels of income.
Taxation by its nature ought to be progressive wherever possible, but the sugar tax has been shown, over the fullness of time, to have had a really positive impact on sugar consumption in this country. The evidence shows that a public health epidemic, which I think is what obesity is, particularly affects those from the poorest backgrounds. The same is probably true of smoking and its health consequences not just for smokers, but for the people—particularly children—who breathe the smoke around them.
The all-party parliamentary group on smoking and health, ASH, the British Heart Foundation, Cancer Research UK, the Royal College of Physicians and many others are calling on the Government to adopt their road map to a smoke-free 2030. That would include the creation of a smoke-free 2030 fund, into which tobacco manufacturers would be legally required to give funds to finance the action needed to achieve the smoke-free 2030 goal.
What consideration have the Government given to the road map to a smoke-free 2030 and, in particular, the proposal that there should be some kind of levy on tobacco manufacturers? In the same way as the sugar tax was hypothecated to tackle obesity, what consideration have the Government given to introducing a hypothecated levy to take action to eliminate smoking?
Kemi Badenoch
Clause 80 increases the duty charge on all tobacco products by RPI inflation plus 2% in line with the tobacco duty escalator. In addition, the duty on hand-rolling tobacco will rise by an additional 4% to 6% above RPI inflation this year.
Smoking rates in the UK are falling, but they are still too high. Around 14% of adults are smokers. We have ambitious plans to reduce that still further, as set out by the Department of Health and Social Care in its tobacco control plan. That includes a commitment to continue the policy of maintaining high duty rates for tobacco products to improve public health. The UK has comprehensive tobacco control legislation, which is the envy of the world. However, smoking is still the single largest cause of preventable illness and premature death in the UK. It accounts for around 100,000 deaths per year and kills about half of all long-term users. According to Action on Smoking and Health, smoking costs society almost £14 billion per year, including £2 billion in costs to the NHS of treating disease caused by smoking.
At the Budget, my right hon. Friend the Chancellor announced that the Government were committed to maintaining the tobacco duty escalator until the end of the Parliament. The clause therefore specifies that the duty charged on all tobacco products will rise by 2% above RPI inflation. In addition, duty on hand-rolling tobacco will rise by an additional 4% to 6% above RPI inflation this year. The clause also specifies that for the minimum excise tax—the minimum amount of duty to be paid on a pack of cigarettes—the specific duty component will rise in line with cigarette duty.
The new tobacco duty rates will be treated as taking effect from 6 pm on the day they were announced: 11 March 2020. Recognising the potential interactions between tobacco duty rates and the illicit market, the Government announced at the Budget that they would publish a consultation on proposals for strengthened penalties for tobacco tax evasion as part of the track and trace system, including a £10,000 fixed penalty and a sliding scale for repeat offenders. In addition, the Government will strengthen the resources of trading standards and HMRC to help to combat the illicit tobacco trade, including the creation of a UK-wide HMRC intelligence-sharing hub. I hope the hon. Member for Ilford North will support that. I believe I have addressed quite a number of the points that he has raised.
I turn to amendment 11, which is designed to place a statutory requirement on my right hon. Friend the Chancellor to review the public health effects of changes to tobacco duty. The Chancellor assesses the impact of all potential changes in his Budget considerations every year. The tax information and impact note published alongside the Budget announcement sets out the Government’s assessment of the expected impacts. The Government are committed to improving public health by reducing smoking prevalence, and we co-ordinate these efforts through the tobacco control delivery plan 2017 to 2022, which also provides the framework for robust and ongoing policy evaluation. Accordingly, we review our duty rates at each fiscal event to ensure that they continue to meet our two objectives of protecting public health and raising revenue for vital public services.
I hope that reassures the Committee, and I ask Members to reject the amendment. The clause will continue our tried and tested policy of using high duty rates on tobacco products to make tobacco less affordable and continue the reduction in smoking prevalence, thus reducing the burden that smoking places on our public services.
On the point about a tobacco levy, I believe the Government laid out their position on introducing a levy in 2015. We do not believe a levy is an effective way to raise revenue or protect public health.
Amendment 11 negatived.
Clause 80 ordered to stand part of the Bill.
Clause 81
Rates for light passenger or light goods vehicles, motorcycles etc
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
Clause 81 makes changes to uprate the RPI vehicle excise duty rates for cars, vans and motorcycles with effect from 1 April 2020. VED is paid on vehicle ownership, and rates depend on the vehicle type and first registration date. The Government have uprated vehicle excise duty for cars, vans and motorcycles with inflation every year since 2010, which means rates have remained unchanged in real terms during this time. As announced in the 2018 Budget, all vehicle excise duty revenues will be used specifically for the national roads fund from this year, to provide certainty for road investment.
The changes made by clause 81 will uprate vehicle excise duty for cars, vans and motorcycles by RPI for the 10th successive year. As a result, the rates are unchanged in real terms since 2010, and that comes on top of the Government’s decision to freeze fuel duty rates for the ninth successive year. By April 2021, this will have saved the average car driver £1,200 in comparison with the pre-2010 escalator.
From April 2017, a reformed VED system was introduced that strengthened the environmental incentive when cars are first purchased, with all cars paying a standard rate in subsequent years. The standard rate will increase by only £5, the flat rate for vans will increase by £5 and the rate for motorcyclists will increase by no more than £2. These changes will ensure that the Government continue to support motorists with the cost of living, and that the vehicle excise duty system continues to incentivise the purchase of lower emission vehicles.
Felicity Buchan
Does my hon. Friend agree that as the economy comes out of the dislocation of coronavirus, we need to build a greener and cleaner economy? Incentivising the use of low-carbon cars is part of that, and clearly we cannot do so just through the tax system; we also need a structure of electric charging points. I am glad to say that my borough is one of the top boroughs in the country in that regard. As we look to build a greener economy, I commend this clause and the related clauses.
Kemi Badenoch
I thank my hon. Friend for her intervention, and I agree with her.
Wes Streeting
Following a previous theme, we support this approach to incentivising the use of greener and more environmentally friendly vehicles. It shows how decisions taken at the Treasury can support the public policy aims of other Departments and promote positive consumer change. Clearly, we have to do a lot more to ensure that people are using environmentally friendly vehicles, which produce fewer emissions and have a less detrimental impact on air quality and the wider environment than other vehicles do. I, in common with many stakeholders, welcome the reduced rate applied to alternatively fuelled light passenger vehicles, including hybrids and those powered by bioethanol and liquid petroleum gas.
Kemi Badenoch
I think that is a point we can all agree on. The Government are doing a lot to encourage the uptake of low emission and zero emission vehicles. As I mentioned earlier, the reformed VED system was introduced in 2017 for new cars. To elaborate, on first registration the owners of zero emission models pay nothing, while those of the most polluting pay more than £2,000. In subsequent years, most cars move to a standard rate, which is currently set at £145. The exceptions are electric cars, which attract a zero rate, and hybrids, which receive a £10 discount.
In the Budget, the Government announced a number of further steps to reduce zero emission vehicle costs, including exempting zero emission cars from the vehicle excise duty expensive car supplement; extending low company car tax rates for 2024-25, as we discussed earlier; and extending the plug-in grant scheme for zero emission cars and ultra-low emission vans, taxis and motorcycles until 2022-22.
Question put and agreed to.
Clause 81 accordingly ordered to stand part of the Bill.
Clause 82
Applicable CO2 emissions figure determined using WLTP values
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
Clause 82 makes changes that ensure that CO2 emissions figures for vehicle excise duty will be based on the world harmonized light-duty vehicles test procedure—WLTP—for all new cars registered from 1 April 2020. Until 1 April 2020, the owners of new cars were liable to pay VED based on CO2 emissions figures provided under the new European driving cycle test procedure, which is otherwise known as the NEDC. That test underestimates real-world driving emissions by up to 40%. In the 2018 Budget, it was announced that from April 2020, VED would be based on WLTP, which closely reflects real-world driving emissions. Consequently, vehicle excise duty liabilities for new cars purchased from April 2020 may change.
In the 2018 Budget, the Government announced a review of the impacts of WLTP on vehicle taxes. In July 2019, the Government announced that as mitigation to help the industry manage the transition to WLTP, company car tax rates would be temporarily reduced, and that the Government would publish a call for evidence on vehicle excise duty. Draft legislation for the Finance Bill was published on L day 2019 to switch on WLTP from April 2020 and to implement the new CCT rates.
Clause 82 confirms that CO2 emissions figures for vehicle excise duty will be based on WLTP for all new cars registered from 1 April 2020, and that all cars registered before 1 April 2020 will continue to use existing NEDC CO2 values for VED purposes. As WLTP is more representative of real-world driving conditions, this measure ensures that VED is based on a more robust regime for measuring CO2 emissions. It will also allow motorists to make more informed purchasing decisions when considering the CO2 impact of their new car.
Wes Streeting
I do not think that we need to dwell too long on this, but it is worth exploring a few points that were made during the Government’s consultation and to test some stakeholders’ arguments. Assertions are sometimes made, but it is important to revisit the arguments and see whether they stand up to the scrutiny of evidence. It will be interesting to hear the Treasury’s view on that.
There was a concern that the WLTP charging rates could lead to distortion ahead of April 2020, because consumers might bring forward purchasing decisions to avoid potential tax increases on new cars. Given that April 2020 has passed, it would be interesting to know whether such distortion has actually occurred. What assessment has the Treasury made of that?
On the environmental impact, some respondents stressed that company cars were more environmentally friendly than private cars. The argument goes that it is important to keep people in that market by adjusting company car taxation to reflect the lower impact. What analysis has the Treasury done of that claim? Does the Treasury think that that is a valid argument, or simply an assertion?
Finally, some concern was raised that under WLTP values, there could be an above-average increase in the reported CO2 emissions of cars with smaller engines, whereas cars with higher CO2 emissions would not be affected by the change to the same extent. How much does that argument hold water with the Minister?
Kemi Badenoch
On the question of why we are treating cars registered before 6 April 2020 differently and whether that would create a distortion, the WLTP testing standards were introduced in 2017 and EU legislation required manufacturers to record the CO2 emissions for both regimes. We have not sought to change the tax treatment of existing cars; we aim to encourage people who purchase new cars to choose low-CO2-emitting models.
On the analysis that the hon. Gentleman asks for, it is probably too soon to tell. The impact is linear, and we published some findings in July 2019 when we set rates. I can have that information provided to him, and I can write to him on that point. I do not have the full answers for the analyses that he is asking for.
Question put and agreed to.
Clause 82 accordingly ordered to stand part of the Bill.
Clause 83
Electric vehicles: extension of exemption
Kemi Badenoch
Clause 83 makes changes to exempt all zero-emission cars from the vehicle excise duty supplement that applies to cars with a list price exceeding £40,000 from 1 April 2020. The background is that the Government use vehicle taxes, including vehicle excise duty, to encourage the take-up of cars with low carbon dioxide emissions to help to meet our legally binding climate change targets. Vehicle excise duty incentives help to reduce the cost of zero-emission cars, which is one of the most significant barriers to uptake. From April 2017, on first registration, zero-emission cars paid no vehicle excise duty, while the most polluting cars paid more than £2,000. In subsequent years, while most cars move to a standard rate—£150 in 2020-21—electric vehicles attract a zero rate. Previously, however, all vehicles with a list price exceeding £40,000, including electric vehicles, paid a vehicle excise duty supplement of £325 in 2020-21 from years two to six following registration.
Under the changes made by clause 83, from 1 April 2020, all zero-emission light passenger vehicles registered from 1 April 2017 until 31 March 2025 will be exempt from the vehicle excise duty expensive car supplement. That will reduce vehicle excise duty liability for almost a third of zero-emission cars by an estimated £1,625. This demonstrates that the Government will continue to incentivise the uptake of zero-emission cars through the 2020s. The measure will incentivise uptake by reducing tax liabilities and aid the Government in achieving net zero. I therefore commend the clause to the Committee.
Wes Streeting
Clause 83 is obviously a welcome measure; we have heard from industry representatives that removing the VED surcharge for electric vehicles will encourage uptake. The RAC’s head of policy, Nicholas Lyes, states:
“Our research suggests that cost is one of the biggest barriers for drivers who want to switch to an electric vehicle and the steps taken”
by the Government
“will provide clarity and certainty for both consumers and manufacturers.”
I wonder whether the Government are looking at what more they can do to reduce the cost burden for people switching to electric vehicles. People make choices all the time about the purchase of new vehicles, and price sensitivity is one of the biggest aspects of that. If someone uses their car every day for regular journeys—to commute to and from work, for example—and has access to charging points at home, at work or in the vicinity, switching to an electric vehicle will make a real difference. It can be cost-effective as well as an environmentally friendly choice, particularly in the light of the clause.
However, for lots of people who do not commute regularly but have a family car for use at weekends and perhaps over the summer holidays, the financial choice is not always as straightforward. Although the environmental factors may be compelling and people might want to switch to an electric vehicle, the financial barrier is still too high. I wonder what more the Government can do, through industry support or other means, to further incentivise the switch to electric vehicles, as it would make a real difference.
On infrastructure, it is important that more is done to ensure that electric vehicle charging points are readily available for use—that is really an issue for the Department for Transport and local authorities, but at some point they will come knocking at the Treasury’s door. The Minister is smiling; I am sure that she is very familiar with that experience. I wonder how favourably she is looking on those arguments, because although progress is being made to expand electric charging points—the Mayor of London cares strongly about the issue, and I discussed it recently with the Mayor of Greater Manchester, Andy Burnham—much more progress can still be made in all parts of the country, so Treasury support would be very welcome.
Kemi Badenoch
The hon. Gentleman makes a point that we hear again and again about the cost of low emission vehicles. These changes are part of a wider package of tax and spend incentives—I have mentioned company car tax rates and the plug-in car grant.
On the question of what more we can do, the best mechanism is the call for evidence that the Government published at the Budget, which includes how vehicle excise duty can further incentivise the uptake of zero-emission cars. That is probably the best way for the industry and Parliament to suggest what more we can do to make low emission vehicles more affordable.
The hon. Gentleman is right that we get asked a lot about infrastructure and what more we can do to provide charge points. We understand that access to high-quality, convenient charging infrastructure is critical if drivers are to make the switch to electric vehicles confidently. That was why, at the Budget, we announced £500 million over the next five years to support the roll-out of a fast charging network for electric vehicles, ensuring that drivers will never be more than 30 miles from a rapid charging station.
Question put and agreed to.
Clause 83 accordingly ordered to stand part of the Bill.
Clause 84
Motor caravans
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
Clause 84 reduces vehicle excise duty liability for new motorhomes to support British motorhome manufacturers and UK holidaymakers. From 12 March 2020, most new motorhomes pay a flat rate of VED at £270 annually. To ensure that, in the future, motorhome vehicle excise duty liabilities reflect environmental impact and to incentivise the development and uptake of lower emission motorhomes, from 1 April 2021, motorhome VED liabilities will be aligned with graduated van vehicle excise duty.
From September 2019, EU regulatory changes have required motorhomes to record carbon dioxide emissions on the vehicle type approval document. Previously, the majority of motorhomes attracted a flat rate of £265, but from September 2019, due to their high emissions, new motorhomes saw a significant increase in their first-year vehicle excise duty liabilities. Motorhome dealerships and the main industry body, the National Caravan Council, expressed concern about the changes. The sector argued that, as motorhomes are generally derived from vans, their VED liability should be aligned with vans, rather than passenger vehicles.
The changes made by clause 84 mean that, from 12 March 2020, new motorhomes are more closely aligned with vans for VED purposes. Manufacturers are no longer required to provide a CO2 emissions figure when they register the vehicle with the Driver and Vehicle Licensing Agency. As a result, all new motorhomes will move to a flat rate of vehicle excise duty. Most new motorhome vehicles will be included in the private light goods vehicle tax class, with the minority that weigh more than 3,500 kg included in the private heavy goods class. As a result, new motorhomes’ first-year VED liabilities will be reduced by up to £1,905. The change will affect owners of motorhomes first registered from 12 March 2020. There are typically about 15,000 motorhomes registered in the UK annually.
The change will reduce new motorhome vehicle excise duty liabilities, and better align them with vans, rather than passenger vehicles. It will support British motorhome manufacturers and holidaymakers using motorhomes throughout the UK. I therefore commend the clause to the Committee.
Wes Streeting
This debate is particularly timely, given last night’s Adjournment debate, which was led by my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy), who told the House that Hull is the capital of caravan manufacturing. Along with my hon. Friends the Members for Kingston upon Hull North (Dame Diana Johnson) and for Kingston upon Hull East (Karl Turner), she has been a doughty champion of the industry. That industry has been particularly hard hit by covid-19 because it relies so much on the leisure and tourism industry, which is still effectively shut down. Industry bodies and users were looking for this change, so I am happy to indicate that we support the clause.
Miriam Cates (Penistone and Stocksbridge) (Con)
I welcome the measure. The Moto-Trek manufacturer in my constituency makes exclusive hand-built motorhomes, so I know that the clause is very much welcomed by the industry. It certainly makes sense to tax motorhomes as vans, since they are mostly built on van chassis and do not do many miles, although they do, of course, emit carbon dioxide. It is right that we incentivise the manufacture of low emission vehicles, but motorhome users are very much committed to UK holidays and do not fly as a result, which is very positive for the environment. As we come out of covid, it is really important that we do everything that we can for UK manufacturers, for UK motorhome vehicle sales and, of course, for tourism. I therefore very much welcome the clause.
Question put and agreed to.
Clause 84 accordingly ordered to stand part of the Bill.
Clause 85
Exemption in respect of medical courier vehicles
Alison Thewliss
I beg to move amendment 12, in clause 85, page 72, line 33, after “supplies” insert “, including human breastmilk”.
This amendment would ensure that vehicles carrying human breastmilk would benefit from the exemption from Vehicle Excise Duty.
I am delighted to continue my personal journey to ensure that breastfeeding is mentioned in every possible place in this House. I am chair of the all-party group on infant feeding and inequalities, so I declare that interest up front.
The measure I seek to add to the Bill would cost the Government very little, if anything at all, but would send a very strong signal that the Government support and recognise breast milk banks across the UK. Sub-paragraph 2(b) of proposed new paragraph 6A to schedule 2 to the Vehicle Excise and Registration Act 1994 refers to
“medicines and other medical supplies”.
I am not quite sure whether that would capture breast milk. I seek clarification from the Minister on that, because I do not think it is clear enough, which was why I tabled the amendment.
Human breast milk banks exist across the UK. Some do not exist quite to the size and scale that we would like, so the amendment would help to encourage them that there is Government support for what they are doing. I mention the Human Milk Foundation, the Northwest Human Milk Bank, Hearts Milk Bank and Milk Bank Scotland, which is based in Glasgow and the one that I know best. Having spoken to Debbie Barnett, its donor milk bank co-ordinator, I know that Milk Bank Scotland does not have its own vehicles at the moment, but relies on the Glasgow Children’s Hospital Charity volunteers, who transport the milk, after picking it up from donors, and take it out to those who need it. Having its own vehicles would be something for a future point, but the amendment would certainly support the milk bank, and others across the UK, in doing that.
Like blood, breast milk has to be properly processed, and there are procedures in place for doing so. Like blood, it needs special carriage to take it from donors to the milk banks for processing, and back out again. The National Institute for Health and Care Excellence guideline 93 on donor breast milk banks says that, when transporting milk to the milk bank, critical conditions for transport include
“temperature and time limit, to ensure that donor milk remains frozen during transport.”
The guideline also states that donor milk should be transported
“in secure, tamper-evident containers and packaging”
and that a range of procedures are in place for achieving that.
In chapter 33 of its guide to the quality and safety of tissues and cells for human application, on the distribution of and transport conditions for human milk, the European directorate for the quality of medicines states:
“During transport, milk should remain frozen and dry ice may be used for this purpose.
The use of validated, easily cleaned, insulated transport containers is recommended.
The transport procedure should be validated, and the temperature of the transport container monitored during transportation.”
All those measures are relatively similar to how blood and other blood products are transported around the UK, and would fit quite well with the medical courier vehicles exemption set out in the Bill. Many of these organisations are charities, and they would very much appreciate support in moving milk around the country.
I appeal to the Government to accept the amendment, which is uncontentious—and indisputable, really. Doing so would send a good signal that the UK Government support milk banks, the people across the UK who wish to use them, and the science behind them. They are particularly important in supporting premature babies in their earliest days. The World Health Organisation recently indicated the significance of breast milk during coronavirus, and that women should be supported whenever possible to feed their babies with human breast milk. Covid-19 is not present in breast milk, and the milk is therefore of huge benefit in supporting babies in their earliest days. I encourage Ministers to take on the amendment, if they can take on anything at all, and to show support for milk banks across the UK.
Kemi Badenoch
Amendment 12 would extend the exemption so that it applied to people carrying human breast milk. I do not think that any of us would disagree with that, but clause 85 already covers the transportation of human breast milk. The purpose-built vehicles used by medical courier charities, which are exempted from VED by the measure, transport not just blood, but a wide range of medical products, including X-rays, MRI scans, plasma and human breast milk.
The inclusion of the amendment in the Bill would make things more difficult. Its wording is quite vague, it does not clearly define the vehicles that it is trying to capture, and it would create the risk of abuse. We believe that the matter is already covered by clause 85. Although the Government fully support the sentiment of the amendment, as breast milk is already captured under the clause, I ask the Committee to reject the it.
Alison Thewliss
I would like to press the amendment to a vote, to add to the clarity of the clause.
Amendment 12 negatived.
Clause 85 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(David Rutley.)
Domestic Abuse Bill (Ninth sitting)
Tuesday 16th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Domestic Abuse Bill 2019-21 View all Domestic Abuse Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 16 June 2020 - (16 Jun 2020)
The Chair
I will not go through all the information that I gave at the beginning of last week’s sittings, but I will just remind everyone to switch their mobiles to silent mode. Also, can you ensure that your speaking notes are sent to hansardnotes@parliament.uk, for the assistance of the Hansard writers? We begin this morning’s sitting with clause 66 and Government amendment 40.
Peter Kyle (Hove) (Lab)
On a point of order, Ms Buck. I know that it is unusual to do this, but I think it is quite important, so I am very grateful. Last week, the head of policy and advocacy for the Children’s Commissioner’s Office wrote to me to explain that she had been wrongly quoted during the previous debates. I do not seek at all to reopen any of the debates of the past, but I do think that this is an important message. If I may, I will read out the three relevant paragraphs. The message states:
“Dear Mr Kyle
I am writing to you and the clerks of the Domestic Abuse Bill Committee to correct the account of a comment I made to the Pre-Legislative Scrutiny Committee for the Domestic Abuse Bill.
When I gave evidence to the Committee I commented that the Children’s Commissioner does not have to send draft copies of our reports or annual reports to the Secretary of State for Education for review. I was making the argument that I felt the same independence should be given to the new Domestic Abuse Commissioner.
Unfortunately my comment was recorded as saying that the Children’s Commissioner did have…‘to send draft reports to the Secretary of State for Education before publication, and that the Secretary of State had to approve its annual strategic plan’, and I did not spot this mistake in the transcript at the time. I am writing to clarify this point although the argument you were making during the debate still stands—that this independence is something to be welcomed.
I don’t know if it is possible for the clerks to amend the report of the pre-legislative scrutiny committee to reflect this error but I wanted to alert you both…as soon as I was made aware of this.
Yours sincerely
Emily Frith
Head of Policy and Advocacy
Children’s Commissioner’s Office”.
I just wanted to set the record straight, not to reopen the previous debate.
The Chair
Thank you, Mr Kyle. That has now been placed on the record, and I hope that it will satisfy everyone.
Clause 66
Power of Secretary of State to issue guidance about domestic abuse, etc
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
I beg to move amendment 40, in clause 66, page 49, line 36, after “64” insert
“, (Homelessness: victims of domestic abuse)”.
This amendment is consequential on amendment NC16.
The Chair
With this it will be convenient to discuss the following:
Government amendments 41 and 42.
Government new clause 16—Homelessness: victims of domestic abuse.
New clause 13—Homelessness and domestic abuse—
“(1) Part 7 of the Housing Act 1996 (Homelessness: England) is amended in accordance with subsections (2) to (5).
(2) In section 177(1) and (1A) (whether it is reasonable to continue to occupy accommodation) for each instance of “violence” substitute “abuse”.
(3) After section 177(1A) insert—
“(1B) In this Act, ”abuse” means—
(a) physical or sexual abuse;
(b) violent or threatening behaviour;
(c) controlling or coercive behaviour;
(d) economic abuse (within the meaning of section 1(4) of the Domestic Abuse Act 2020);
(e) psychological, emotional or other abuse.”
(4) At the end of section 189(1) (priority need for accommodation), insert—
“(e) a person who—
(i) is homeless as a result of being subject to domestic abuse, or
(ii) resides or might reasonably be expected to reside with a person who falls within sub-paragraph (i) and is not the abuser.“
(5) In section 198 (referral of case to another local housing authority):
(a) In sub-section (2)(c) for “violence” substitute “abuse”;
(b) In sub-section (2ZA)(b) for “violence” substitute “abuse”;
(c) In sub-section (2A) for “violence (other than domestic violence)” substitute “abuse (other than domestic abuse)”;
(d) In sub-section (3) for “violence” substitute “abuse”.
(6) Article 6 of the Homelessness (Priority Need for Accommodation) (England) Order 2002, SI 2002/2051, is amended in accordance with subsection (7).
(7) In Article 6,
(a) after “reason of violence” insert “(other than domestic abuse)”;
(b) after “threats of violence” insert “(other than domestic abuse)”.”
This new clause amends Part 7 Housing Act 1996, concerning local housing authorities’ duties to homeless applicants, for England. It updates the definition of “domestic violence” to that of “domestic abuse” and removes the requirement that a person who is homeless as a result of domestic abuse must also be vulnerable in order to have a priority need.
Victoria Atkins
It is a pleasure to serve under your chairmanship, Ms Buck. I am pleased today to be able to bring forward new clause 16, which will amend the Housing Act 1996 to give those who are homeless as a result of being a victim of domestic abuse priority need for accommodation secured by the local authority. The Government believe that it is vital that domestic abuse victims who are homeless or at risk of homelessness are supported to find an accommodation solution that meets their needs and reflects their individual circumstances.
In April 2018 the Homelessness Reduction Act 2017 came into force. That Act, for the first time, puts prevention at the heart of the local authority response to homelessness, irrespective of whether those seeking support are a family or an individual on his or her own, and notwithstanding what has put them at risk. That means that all households that are homeless or at risk of homelessness should be provided with an offer of support from their local authority to find appropriate accommodation.
Since the 2017 Act was implemented, more than 200,000 households have had their homelessness successfully prevented or relieved. However, for those who need more support, it is right that the local authority should have a duty to house them immediately and secure accommodation for them. Under homelessness legislation, a person who is pregnant, has dependent children or is vulnerable as a result of having to leave accommodation because of domestic abuse, already has priority need for accommodation.
However, the Government are now going further. Through new clause 16, the Government will automatically give domestic abuse victims priority need for accommodation. That change will mean that consideration of vulnerability will no longer be required for domestic abuse victims to be entitled to accommodation secured by the local authority. If the authority is already satisfied that an applicant is homeless as a result of being a victim of domestic abuse, that victim and their family should not need to go through an additional layer of scrutiny to identify whether they are entitled to be accommodated by the local authority. The amendments to the Housing Act will help ensure that victims do not remain with their abuser for fear of not having a roof over their head. Alongside the announcement made in the spring Budget to extend exemption from the shared accommodation rate to victims of domestic abuse, that should support victims to move into a place of their own where they can feel safe and secure.
New clause 13, tabled by the hon. Member for Bermondsey and Old Southwark, who is not here today, would have the same effect as the Government’s new clause 16. The one difference is that the hon. Gentleman’s new clause would also extend priority need status to other persons residing in the same household as a victim of domestic abuse. I want to assure the Committee that such provision is not needed. Where an applicant has priority need, the Housing Act already requires local authorities to provide accommodation that is “suitable” for the household. There is therefore no need for each member of the household to have priority need. Amendments 40 to 42 are consequential on new clause 16.
Alex Davies-Jones (Pontypridd) (Lab)
Diolch yn fawr, Ms Buck. It is my pleasure to speak to new clause 13, which outlines the need for more stringent housing support for those fleeing domestic abuse in their current households. Colleagues may recall—I certainly will not forget it, and will be dining out on it for a while—that last week the Minister kindly coronated me as the princess of Wales. I was most flattered by the proclamation and make no apologies for speaking up for people across Wales. I plan to use my new-found royal status to ensure that the voices of Welsh victims of domestic abuse are heard and protected in the Bill.
We all know that with great royal power comes great responsibility. I will be using my voice today to focus on themes that are relevant across the board in England. It is clear that domestic abuse has no boundaries; it does not care what nation you are from or what language you speak. It is imperative that we ensure that collaborative working between both nations covered by the Bill can continue if we are to strengthen the spirit of the Union.
I am delighted to speak to new clause 13. I pay tribute to the hard work of my colleague the hon. Member for Bermondsey and Old Southwark for prioritising the housing needs of survivors of domestic abuse. Sadly, he is unable to join us today, and I know that all Committee members wish him well.
The Government’s change of heart following the brilliant campaign by the all-party parliamentary group for ending homelessness is a welcome step, and these changes will undoubtedly save lives. The campaign was supported by MPs across the House, and a number of organisations in the domestic abuse sector were involved. I hope that colleagues will afford me the opportunity to list the organisations that played a vital role and that are standing together against domestic violence: Crisis, Women’s Aid, Refuge, the Domestic Abuse Housing Alliance, St Mungo’s, Surviving Economic Abuse, Shelter, Homeless Link, Depaul, Centrepoint, Hestia, Changing Lives, the Chartered Institute of Housing, The Connection at St Martin-in-the-Fields, and Latin American Women’s Aid.
It is clear that in England there is a gap in the support offered to those fleeing domestic abuse. These are very real people who are making the brave and bold decision to flee from an unsafe household. We must remember that, because it can be easy to lose sight of that as we sit in this place and discuss the technicalities of the Bill. They should be our priority, but the current system is failing them.
Research by the APPG last year showed that nearly 2,000 households fleeing domestic abuse each year in England are not provided with a safe home, because they are not considered to be in priority need for housing. Colleagues may be aware that during the APPG’s inquiry into domestic abuse and homelessness in 2017, there was clear evidence that local authorities in England were consistently failing to provide people fleeing domestic abuse with the help they need.
I was particularly concerned to read about the vulnerability test being used as a gatekeeper tool by local councils across England. I am pleased that we will now be able to reverse that trend and provide those who are fleeing domestic abuse with a real opportunity to rebuild their lives, yet the amendment still does not go far enough. Despite initial informal commitments from the Ministry of Housing, Communities and Local Government to adopt the APPG’s amendment word for word, there are now some key differences in the final amendment, which could undoubtedly lead to some domestic abuse victims in England who require housing support falling through the cracks.
The APPG’s amendment would ensure that anyone in a household who applies for homelessness assistance in England due to domestic abuse would qualify for automatic priority need and have a legal right to a safe, permanent home. It is extremely disappointing that the wording of the Government’s amendment means that survivors would be required to physically make the application for homelessness assistance themselves in order to receive automatic priority need. Both the domestic abuse and homelessness sectors have expressed concern that the Government’s amendment fails to guarantee adequate protection to survivors of domestic abuse.
Colleagues will be aware that a note from the APPG, containing more information, was circulated to Committee members recently. I am aware that the hon. Member for Harrow East (Bob Blackman), in his capacity as co-chair of the APPG, recently wrote to Ministers and received a reply indicating that the Government do not intend to change their position on this. The Government response states:
“Allowing a member of the household to make the application could allow a perpetrator to manipulate the situation and frame themselves as the ‘new partner’, using the victim to obtain accommodation for their own gain and allow the abuse to continue.”
However, the domestic abuse sector does not agree.
The APPG’s amendment makes it clear that priority need status for settled housing can be guaranteed regardless of whether the homelessness application is made directly by someone in the household who is experiencing domestic abuse. In comparison, the Government’s amendment would not allow for other members of the household to make the application. So many examples spring to mind of where domestic abuse victims could slip through the cracks under the terms of the Government’s amendment, such as children who have had to flee an abusive situation with their mother.
Specifically, this is relevant in a context where only the mother has been abused but the children are not able to reside with their mother, perhaps due to parental addiction or the children being adults. Similarly, if a mother and her children were facing abuse by an adult child against one or more siblings who are under 16, but not against the mother, they would not be entitled to seek urgent support. I hope colleagues will forgive my listing the technicalities of those situations, but they are very real and present in all the communities that each of us represents and serves.
Allowing a member of another household to make an application for homelessness assistance on behalf of an individual who is the victim of domestic abuse is a vital safeguarding mechanism for those fleeing abuse. The strength it takes to flee an abusive household is undeniable, but it will not always be safe or suitable for victims of abuse to make an application for assistance in person. In many cases it will be too dangerous for them to leave their home until they know that they have somewhere safe to seek refuge, or there could be logistical issues, such as where a victim is receiving hospital treatment. For other groups of people considered to be in automatic priority need for settled housing in England, it is already the case that someone else in the household is able to make the application—for example, if a woman is pregnant, their partner is able to make an application on their behalf. The same principle must be extended to people who are fleeing domestic abuse.
Having spent some time discussing the provisions needed in England, I will turn my attention back to my home nation of Wales, to highlight the impact that the truly groundbreaking Violence against Women, Domestic Abuse and Sexual Violence (Wales) Act 2015 has had. In Wales, the Labour Government have implemented legislation that puts a duty on the devolved public sector to prevent, protect and support. This has increased understanding and built referral routes to specialist support, allowing local authorities to work alongside and in conjunction with those specialists in order to ensure rapid support for those who need it. After a decade of funding cuts to local authorities across the UK, it is clear that those local authorities are under pressure, particularly when it comes to the housing crisis that we see up and down the country. I urge the Government to reconsider and allow more flexibility for domestic abuse victims who are seeking urgent housing support.
Finally, I hope that colleagues will indulge me as I use some key case studies to highlight the importance of a more accessible system for applying for homelessness assistance. At Women’s Aid, one service user said:
“After a year of fallout, I was still homeless and on my backside—it felt like I was worse off for going through ‘the system’.”
A key worker from Solace Women’s Aid—a fantastic charity based in the constituency of my hon. Friend the Member for Bermondsey and Old Southwark—said:
“A lot of women I work with have a secure tenancy. They really don’t want to leave the secure tenancy. But then often they might not have a lot of choice… some women will prefer to…take massive risks…than leave it.”
One case highlighted by Crisis was that of Danielle, who was made homeless when her relationship ended, after her neighbour called the police following a two-day beating. Despite visible bruising and a letter from her partner admitting the abuse, she was told by the council that she needed to provide further evidence of her vulnerability, and that she was not a priority. So she ended up homeless and sofa-surfing for more than two years.
An anonymous survivor said that he had escaped a three-year abusive relationship where, on occasion, his partner had locked him in a room for five days and beaten him so severely that he was confined to a wheelchair. When he approached the council, he was refused help with finding a safe home, which left him with no option but to sofa-surf for several months. Eventually, a charity that supports victims of domestic abuse helped him to deal with the council, and he is now socially housed.
It is clear from those testimonies that we have an opportunity to change the course of people’s lives and affect their ability to regain their independence following a period of domestic abuse. It is not unreasonable to allow for a more flexible system to ensure that victims can get access to the housing support they need. That additional power would improve people’s ability to flee, and could be hugely powerful as a lifeline for those in need. The new clause is well written, with substantive detail. I ask that the people I have talked about be made a priority.
Victoria Atkins
I thank the hon. Lady for her comments. In the spirit of the Bill, and of the Committee, let us welcome the fact that we are making changes in the area in question. It is fantastic that new clause 16 has been tabled.
There is a sliver of disagreement between the Government and the hon. Members for Pontypridd and for Bermondsey and Old Southwark, on the role of other people in the household. We have heard a great deal—just in the Committee Room, let alone in our experiences outside it—of the manipulative nature of some perpetrators and their ability to seize an opportunity against their victim, use it for their own ends and do incredible damage to the victim. Also, the children are often victims. Victims of domestic abuse may be vulnerable and at risk of such manipulation—of being controlled by the perpetrator, whether that is a partner in an intimate relationship, as described in clauses 1 and 2, or indeed a family member. It was against that backdrop that we drafted the clauses.
Our primary concern, on the sliver of disagreement between us, is that an abusive partner could apply for new housing under the approach suggested by the hon. Lady, to the detriment of the victim and the gain and advantage of the perpetrator. Clearly no one wants that.
I take the point about the need to ensure that the system is sensitive to the needs of victims. Indeed, I am pleased that my hon. Friend the Member for Harrow East, who has led the campaign with the hon. Member for Bermondsey and Old Southwark, wrote to my hon. Friend the Under-Secretary of State for Housing, Communities and Local Government, the Member for Thornbury and Yate (Luke Hall), who responded on 10 June. In the course of the correspondence and conversations, the hon. Lady’s concerns were clearly canvassed as well. My hon. Friend the Under-Secretary told my hon. Friend the Member for Harrow East that there is already the flexibility in the system to take care of cases where someone has difficulty making their own application, whether that is because they are in a hospital bed or because they are in a refuge that they cannot leave.
The homelessness code of guidance covers such circumstances. Paragraphs 11.13 to 11.16 make it clear that where a face-to-face appointment does not meet the applicant’s needs, assessments can be completed on the telephone or internet, or with the assistance of a partner agency. As for the case studies that the hon. Lady raised, I very much hope that, under new clause 16, Women’s Aid and the other fantastic organisations that we all support would be able to help the victims who could not make applications face to face because of their circumstances.
The hon. Lady raised the issue of secure tenancies. Again, that is addressed in the Bill, in clause 65. Our slight disagreement, as I have said, is on the point about a perpetrator’s ability to manipulate.
We want victims to have full control and ownership of their homelessness application and the accommodation offer from the local authority. That is what new clause 16 manages to achieve.
Jess Phillips (Birmingham, Yardley) (Lab)
The Minister used the term “all victims”. Does the new clause cover those victims who are working in this country but have no recourse to public funds?
Victoria Atkins
We will come to debate that set of circumstances tomorrow. In terms of homeless applicants, including victims of domestic abuse, we are dealing with this within the confines of the regulations as they apply at the moment.
Amendment 40 agreed to.
Jess Phillips
I beg to move amendment 55, in clause 66, page 49, line 42, after “children” insert “;
(c) the support employers should provide to victims of domestic abuse, including through the provisions of paid leave.”
This amendment would ensure that employers are provided with guidance about the support they should provide to victims of domestic abuse, including provision of paid leave.
I did not do this last week, but I just want to say a massive thank you to the people in the Public Bill Office. The amount of work that has gone into these amendments might be clear from the number of times that I stand on my feet. It is important to thank the people who sit in the background doing all that work, having an argy-bargy with all of us as we try to table amendments. They are a godsend, so I want to say a massive thank you to them.
This amendment goes back to the Committee’s conversations last week about workplaces. In part, the Government’s announcement of a review of domestic abuse in the workplace potentially covers what this amendment seeks to do. It did not exist when I tabled the amendment.
This amendment is about workplace guidance, which would ensure not only that a victim is supported, but that secondary benefits are offered to other employees, who would be indirectly affected by the abuse happening at their workplace. Without guidance, we expect employers just to know what to do. In many cases, which I spoke of last week, they have considered terminating employment in order to protect their business and their employees, removing the only lifeline that a victim might have. Often, when we try to change things in the workplace—certainly in relation to an equalities framework—the argument we get back is, “This will be too onerous on big and small business.” Over the past couple of years, however, I have seen that businesses are truly interested in trying to do something about this.
I was called to one of those fancy things where lots of businesses sit around a table in a fancy building. It was so fancy that I saw Anna Wintour from Vogue in the lift—she was exactly as Members might imagine. Businesses from all over the country came to listen to me talk about what they might be able to do to help domestic violence victims in their workplaces. Various companies, such as Lloyds and Vodafone, have offered two weeks’ full pay to victims of domestic abuse.
Studies by those organisations—EY, for example, has done a specific study, such is the nature of its business—show that although that right was appreciated and used when needed, no employee had taken the full two weeks off as part of their paid employment. Those organisations are trying to be proactive. We have to make sure that that is available for everybody.
During my work on sexual harassment at work, I was often on the phone to fancy people in Los Angeles who ran the Time’s Up campaign. I constantly used to say, “We mustn’t forget about Brenda in Asda. We mustn’t forget that the person we are talking about is actually a woman called Brenda in Asda.” The same applies to the amendment, which seeks an element of paid leave as well as guidance for employers who want to do more than simply step forward and be the goodies and go to fancy lobby lunches to talk about these issues. We have to truly seek to change that.
The Government have suggested that they are going to hold a consultation and review what exactly that will mean. I have absolutely no doubt about what the findings will be. They will be the same as those reached over a number of years by different groups, including the all-party parliamentary group on domestic violence and abuse, working alongside the Employers’ Initiative on Domestic Abuse and the TUC. An unusual group of people have been working on this for a while. There are rabble-rousing union stewards working alongside some of the poshest organisations I have ever worked with. Those meetings are always a delight. We have taken evidence from New Zealand, for example, where that right already applies.
I will not press the amendment to a vote. It was tabled before the Government announced any sort of action in this area. It is merely a probing amendment, given that businesses have told us that they would not find onerous.
Victoria Atkins
The amendment brings us to the role that employers can and should play in supporting employees who are victims of domestic abuse. The Government expect all employers to show compassion when faced with cases of domestic abuse. It is important that the Government help employers to support victims. We recognise the excellent work of organisations that provide guidance to help employers to do more. The Employers’ Initiative on Domestic Abuse, for example, does great work and has increased the services that it can provide employers during covid-19, because it recognised its ability to send messages through its network of support. We very much support and applaud that sort of work.
Public Health England, in partnership with Business in the Community, which is a business-led membership organisation, provides an online domestic abuse toolkit, including advice on developing a workplace policy and guidance on practical workplace support. Although not specifically designated for victims of domestic abuse, some existing employment rights can help to support victims who face particular circumstances. For example, statutory sick pay may be available where the employee is suffering from physical injury or psychological harm. The right to request flexible working may also help in circumstances where working patterns or locations need to change. We committed in our manifesto to taking that further and consulting on making flexible working the default. In addition to the statutory right, many employers offer compassionate leave or special leave to their employees to enable them to take time to deal with a wide range of circumstances. That leave is agreed between the employer and the employee, either as a contractual entitlement or on a discretionary basis.
We accept, however, that that framework of rights may not work for every circumstance faced by victims of domestic abuse. There may be more that the Government can do to help employers better support those who are experiencing abuse. That is why the Department for Business, Energy and Industrial Strategy last week launched a review of support in the workplace for victims of domestic abuse. I always like to give the end date of such consultations so that colleagues are nudged into responding if at all possible: the end date is 9 September 2020. I ask colleagues to please submit their views and those of their networks of contacts, charities and businesses.
The review invites contributions from stakeholders, covering the practical circumstances that arise in relation to domestic abuse and work, best practice by employers, and where there is scope for the Government to do more to help employers protect victims of domestic abuse. We will also host events to build the evidence base further, before publishing the findings and an action plan by the end of the year. Our view is that the Government review provides the right framework for identifying how the Government can best help employers to support victims of domestic abuse. It creates a firm basis on which to make progress.
I am pleased that the hon. Member for Birmingham, Yardley has indicated that this is a probing amendment, so I invite her to withdraw it.
Jess Phillips
I thank the Minister. If anyone in this room were faced with an employee—and I have been in this situation a number of times—going through a court case, I cannot imagine that anybody, no matter whether they were working here or elsewhere, would expect that person not to be paid or even to be paid statutory sick pay for that period. However, that is the reality for the vast majority of people. Victims of domestic abuse need access to a specific sort of leave. That would change the culture in an organisation, and including information about it in the big pack that people receive on their first day would be a real sign that they could speak to their boss about it.
Asking for sick leave or compassionate leave because you have been raped is completely different from doing so because your mother has died. It is much easier for someone to ask their boss for leave because a relative has died than to do so because they might have been raped the night before. If someone’s house was broken into, they would ring their boss in the morning and say, “My house has been broken into. I can’t come in today because the police are coming.” That is a different conversation from, “My husband beat me up last night. I’m sorry I can’t come in, but the police are coming over.” It is not the same. We need to change the culture from the top down, to make sure there is a marker that shows people that if they have to go to court—which can take weeks and weeks—and if they need to flee, something can be done.
The Minister mentioned different guidance. The TUC says that its guidance on domestic abuse is the most downloaded piece of guidance ever from its website. Let us hope that culture is changing and that the review mentioned by the Minister shows real courage on what needs to change in the workplace. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Christine Jardine (Edinburgh West) (LD)
I beg to move amendment 47, in clause 66, page 49, line 42, at end insert—
“(2A) The Secretary of State must issue separate statutory guidance on domestic abuse that also constitutes teenage relationship abuse and such guidance must address how to ensure there are—
(a) sufficient levels of local authority service provision for both victims and perpetrators of teenage relationship abuse,
(b) child safeguarding referral pathways for both victims and perpetrators of teenage relationship abuse.
(2B) The guidance in subsection (2A) must be published within three months of the Act receiving Royal Assent and must be reviewed bi-annually.
(2C) For the purposes of subsection (2A), teenage relationship abuse is defined as any incident or pattern of incidents of controlling, coercive, threatening behaviour, violence or abuse, which can encompass, but is not limited to psychological, physical, sexual, economic and emotional abuse, including through the use of technology, between those aged 18 or under who are, or have been in a romantic relationships regardless of gender or sexual orientation.”
This amendment would place a duty on the Secretary of State to publish separate statutory guidance on teenage relationship abuse. The statutory guidance would cover not just victims of teenage domestic abuse but extend to those who perpetrate abuse within their own teenage relationships.
This cross-party amendment addresses teenage relationship abuse. It would place a duty on the Secretary of State to issue separate statutory guidance on how to support teenagers who either experience or may display abusive behaviour in their relationships. To be clear, the amendment does not advocate lowering the age limit for domestic abuse or criminalising anyone. We have to acknowledge that domestic abuse is not like a driving licence or a coming of age, because we know that it does happen to people before they turn 16. The amendment acknowledges that teenage abuse is a reality, and calls for the production of separate statutory guidance and recognition that young people, whether victims or perpetrators, need special referral pathways and service provisions that are appropriate for them and for their age.
Liz Saville Roberts
I am sure that the hon. Lady will greet the fact that this amendment would align English and Welsh legislation with safeguarding procedure in Wales, which presently acknowledges peer-on-peer abuse. That consistency of approach would be advantageous in enabling better service support to follow on from it.
Christine Jardine
I thank the hon. Lady for that excellent and very well-made point. If the Bill is to be as successful as everybody wants it to be, this amendment provides an opportunity to take early action to support and encourage young people away from a path that could lead to an abusive or an abused life. It is also very much in the spirit of much of the evidence we heard during our first sitting and much of what we have said in this room about recognising the impact that domestic abuse has on young people and the need to protect them from it throughout their lives.
The Bill in its current form defines domestic abuse as taking place between two persons above the age of 16—as I have said, we can recognise that people do not miraculously change when they are 16—and yet the evidence shows that to define it in those terms is to miss out vulnerable, troubled and an abused section of our young people who are unseen, unheard and, as a result, unsupported.
Victoria Atkins
I thank the hon. Lady for her powerful speech and for setting out the case for the amendment.
We know that domestic abuse in teenage relationships has the potential to shape adult lives. We know that it can be severe and can have many consequences outside the two people in the relationship. We are clear that the impact of domestic abuse on young people, including those in abusive relationships, exists and that we need to ensure that agencies are aware of it and of how to identify and respond to it.
The Bill’s definition states that behaviour is domestic abuse if parties are aged 16 or over. I note that that was supported by the Joint Committee and, indeed, by the evidence we heard from Lucy Hadley of Women’s Aid and Andrea Simon of the End Violence against Women Coalition at the evidence session of this Bill Committee. We are of the view that having a minimum age of 16 years does not deny that younger children are not impacted or affected by domestic abuse, including in their own relationships.
I have no doubt that the amendment is well intentioned. However, having established that minimum age as the threshold in the definition of domestic abuse, it follows that any statutory guidance issued under clause 66 of the Bill, which relies on the definition in clause 1, cannot and should not as a matter of law, address abuse between people who are aged under 16.
That is not to say that the guidance issued under clause 66, which addresses abuse between older teenagers, cannot have wider application. There are other sources of guidance for younger age groups. We intend to publish a draft of the guidance ahead of Report and, in preparing that draft, we have worked with the children’s sector, among others, to include the impacts of abuse in older teenage relationships within the guidance. Clearly, we will continue to work with the children’s sector to ensure that the guidance is as effective, thorough and accessible as it can be before it is formally issued ahead of the provisions in clauses 1 and 2 coming into force.
Nickie Aiken (Cities of London and Westminster) (Con)
As the Minister knows, I have concerns about this—I spoke to her when in listening mode. At the evidence session two weeks ago, for me the powerful evidence was from the Local Government Association spokesperson, the leader of Blackpool Council, whom I questioned specifically. He said that he felt that under-16s were dealt with under the Children Act. Does my hon. Friend agree that there are other ways of dealing with the matter?
Victoria Atkins
I thank my hon. Friend for her contributions, her canvassing of views sympathetic to the situations faced by teenagers under 16, and her work on that. She is right to point out the evidence of Councillor Simon Blackburn. He is an experienced councillor and also, in a previous life, was an experienced social worker. He contributes on behalf of the Local Government Association in all sorts of forums on which he and I sit—not just on domestic abuse, but on other areas of vulnerability.
I appreciate that it sounds rather lawyerly to focus on the age range, but we are careful not to tamper inadvertently, albeit with good intentions, with the strong safeguarding mechanisms in the Children Act. That is why we are not able to accept the amendment to the guidance, given that the guidance is based on the definition in clauses 1 and 2. However, other forms of information are available and as of September relationships education will be introduced for all primary pupils, and relationships and sex education will be introduced for all secondary school pupils. That education, particularly for primary schools, will cover the characteristics of healthy relationships, and will help children to model the behaviours with knowledge and understanding, and cover what healthy relationships look like. Of course, as children grow up and mature, the education will grow and develop alongside them, to help them as they are setting out on those new relationships.
In addition, the important inter-agency safeguarding and welfare document produced by the Department for Education called “Working together to safeguard children” sets out what professionals and organisations need to do to safeguard children, including those who may be vulnerable to abuse or exploitation from outside their families. It sets out various scenarios, including whether wider environmental factors are present in a child’s life and are a threat to their safety and/or welfare.
Finally, of course, the courts and other agencies should also take into account relevant youth justice guidelines when responding to cases of teenage relationship abuse, avoiding the unnecessary criminalisation of young people, and helping to identify appropriate interventions to address behaviours that might constitute or lead to abuse. As I have said, I appreciate the intentions underlying the amendment, but I return to the point that the age limit was on careful reflection set at 16 in the definition, and so the statutory guidance must flow from that.
Christine Jardine
Having heard the Minister’s comments, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Christine Jardine
I beg to move amendment 84, in clause 66, page 49, line 42, at end insert—
‘(2A) The Secretary of State must issue guidance under this section which takes account of evidence about the relationship between domestic abuse and offences involving hostility based on sex.
(2B) In preparing guidance under subsection (2A) the Secretary of State must require the chief officer of police of any police force to provide information relating to—
(a) the number of relevant crimes reported to the police force; and
(b) the number of relevant crimes reported to the police force which, in the opinion of the chief officer of police, have also involved domestic abuse.
(2C) In this section—
“chief officer of police” and “police force” have the same meaning as in section 64 of this Act;
“domestic abuse” has the same meaning as in section 1 of this Act;
“relevant crime” means a reported crime in which—
(a) the victim or any other person perceived the alleged offender, at the time of or immediately before or after the offence, to demonstrate hostility or prejudice based on sex,
(b) the victim or any other person perceived the crime to be motivated (wholly or partly) by hostility or prejudice towards persons who are of a particular sex, or
(c) the victim or any other person perceived the crime to follow a course of conduct pursued by the alleged offender towards the victim that was motivated by hostility based on sex;
“sex” has the same meaning as in section 11 of the Equality Act 2010.’
This is another cross-party amendment. Misogyny is the soil in which violence against women and girls grows. That was said by Sophie Maskell of the Nottingham women’s centre, but it is a sentiment that sums up much of what the Bill is about. The amendment is an attempt to attack the problem at its root. It would do two things. First, by requiring all police forces to record misogyny as a hate crime it would allow us to assess how it influences domestic abuse and begin to understand the nature of violence against women and girls. That way, we might begin to overcome it, not pick up the pieces. Protecting survivors, making sure support systems are in place and constantly looking for improvements are all important, but understanding the roots of the problem and attacking it there is crucial. If we understand the nature and motivations of violence against women and girls, we can begin to prevent it in the first place.
This approach is already proving successful in Nottinghamshire, and has the support of many women’s charities including Refuge, Women’s Aid, Plan International, Southall Black Sisters, Citizens UK, Tell MAMA, Hope not Hate, the Jo Cox Foundation and more. The Law Commission is about to launch a consultation on the issue, but that is no reason not to start to record data, monitor incidents and get a full picture of where and how violence against women happens, so we can influence its prosecution and understand the role misogyny plays in it.
Liz Saville Roberts
Given that this is a landmark piece of legislation, I am sure that many Members present share my concern about the fact that we are failing to ratify the Istanbul convention with it. Surely we should be taking the chance to do so through this amendment, as well as a measure we will be discussing tomorrow.
Christine Jardine
I thank the right hon. Lady, and absolutely agree. We have a number of opportunities in this Committee to ratify the convention through this Bill. It is an international women’s rights treaty that this country signed, yet it is one of a handful of countries that still has not taken the steps the convention demands. Recognising misogyny as a hate crime would go some way towards achieving the goals of the treaty.
I will step back for a minute to explain why we should record misogyny as a hate crime, and what exactly I mean by a hate crime. Hate crime is defined as criminal behaviour where the perpetrator is motivated by hostility, or demonstrates hostility, towards a protected characteristic of the victim. Intimidation, verbal abuse, intimidating threats, harassment, assault, bullying and damaging property are all covered. Hate crime law is rooted in a need to protect people who are targeted because of their identity, and is defined as
“Any criminal offence which is perceived by the victim or any other person, to be motivated by hostility or prejudice, based on”
a protected characteristic. Currently, those characteristics are defined as disability, transgender status, race, religion and sexual orientation under the relevant sections of the Crime and Disorder Act 1998 and the Criminal Justice Act 2003, and allow prosecutors to apply for an uplift in sentencing.
Where does misogyny fit into that and affect it? Women and girls from a black, Asian and minority ethnic background often experience hate crimes based on multiple characteristics, and if we do not take misogyny into account, we do not truly get an intersectional understanding of the crime. Sex was the motivation for more than half of the hate crimes women reported last year; age was the second most common, followed by race. Some women may be victims of a hate crime because of their ethnicity or religion, and also because they are women. Some 42% of BAME women aged 14 to 21 reported unwanted sexual attention at least once a month. Many women and girls with intellectual disabilities are also disproportionately subjected to street harassment and sexually based violence, for the dual reason that they are disabled and that they are women. Our laws have to protect them equally, and they cannot do so effectively while misogyny is a blind spot.
I have a personal theory. I suspect that all the women in this room are like me, and have always rejected the idea that they are not equal. That is how we come to be here: we do not accept the premise that we are not equal. I grew up in a household with three daughters, and had no reason to believe that we were not equal to anyone else. I have often had the opposite problem, actually. My confidence was taken for aggression that was not appropriate in a woman, because women are not aggressive, apparently. I remember once when the BBC was tackling sexual harassment problems among staff, it launched an assertiveness programme for women. I asked my boss if I could do this assertiveness programme. I could not understand why my colleagues all laughed when I came out. They asked, “How did it go?” I told them that when I asked, “Gordon, is it alright if I do this assertiveness programme?”, he said, “I wouldn’t dare say no.”
Many of us cannot understand how women come to be the victims of misogyny unless it actually happens to us. Although we might think that we are equal, we have all witnessed misogyny everywhere and been the victim of it. We might cope with it, but we have been the victim of it. Harassment and abusive behaviour are often linked to misogyny, which comes from deep-rooted contempt for women and the understanding that we should behave in a certain way, and the belief that if we do not do so, it is acceptable to slap us or abuse us.
I am sure we do not need a reminder, but if we did, Friday’s front page of a national tabloid newspaper reminded us all quite firmly: contempt for women, an in-built hatred, misogyny that says it is okay to slap us, bully us or harass us in the street because we are women.
Julie Marson (Hertford and Stortford) (Con)
Misogyny is obviously appalling. A lot of us have experienced it. Does she agree that a consultation is really important, because it is a really complex area? Some of my experience and some research into abusive men has shown that a lot of them have borderline anti-social personality traits. They certainly have hostility, but a lot of it comes from things like lack of problem-solving skills, childhood abuse and personality traits, which need to be factored in.
Christine Jardine
I agree that consultation is necessary, but I see that as making the point. Consultation is necessary and we need the data to be able to figure out how much of it is due to borderline personality problems and social background, and how much of it is misogyny. We can only do that by having the police gather the data.
Where misogyny has been identified as a hate crime by police forces, it has helped the way that they address the causes and consequences of violence against women and girls. The proposal in this amendment is not theoretical. Police forces around the country are already doing this, showing the positive impact it can have. In 2016, Nottinghamshire police were the first. Their proposals have gone some way to allowing the Nottinghamshire authorities to see exactly where there are problems and how to deal with them. For four years, women and girls there have been able to report crimes that they regard as hate crimes and misogynistic.
This amendment has, as I said, wide support from women’s groups. Let us not wait for the Law Commission before we start working on it. If misogyny is the soil in which domestic abuse flourishes, we have the opportunity with this Bill to root it out, not just to pick up the pieces. We have to support victims and survivors, and we have to encourage perpetrators away from the crime. But if we can identify the different causes of abuse, we can tackle the cause and begin to reduce and eliminate domestic abuse.
Victoria Atkins
The Government are clear that all hate crime is completely unacceptable and has no place in British society. That is why we have tasked the Law Commission to review current hate crime legislation. By way of background, I should say that the Law Commission was asked to review both the adequacy and parity of protection offered by the law relating to hate crime and to make recommendations for its reform.
The review began in March last year, since when the Law Commission has tried to meet as many people as possible who have an interest in this area of law; it has organised events across England and Wales to gather views. Specifically, the Law Commission has been tasked with considering the current range of offences and aggravating factors in sentencing, and with making recommendations on the most appropriate models to ensure that the criminal law provides consistent and effective protection from conduct motivated by hatred towards protected groups or characteristics. The review will also take account of the existing range of protected characteristics, identify any gaps in the scope of the protection currently offered under the law, and make recommendations to promote a consistent approach.
The Law Commission aims to publish its consultation, as the hon. Lady said, as soon as it can, and I again encourage all hon. Members to respond to it. Given that this work by the Law Commission is under way, we do not believe that the time is right for specific guidance to be issued on this matter. Our preference is to await the outcome of the Law Commission’s review before deciding what reforms or other measures, including guidance, are necessary. However, I point out that in clause 66(3) we do put the gendered nature of this crime in the Bill. It states:
“Any guidance issued under this section must, so far as relevant, take account of the fact that the majority of victims of domestic abuse in England and Wales are female.”
And of course the guidance itself will reflect that.
The hon. Lady raised the Istanbul convention. We are making good progress on our path towards ratification. We publish an annual report on progress, with the last one published in October 2019. Provisions in the Bill and other legislation before the Northern Ireland Assembly will ensure that UK law is compliant with the requirements of the convention in relation to extraterritorial jurisdiction and psychological violence, so we are on our way. I very much hope that on that basis the hon. Lady will feel able to withdraw her amendment.
Christine Jardine
Following the Minister’s comments, there is just one reservation remaining. If misogyny is a hate crime, we can gather the data. Does the Minister accept or appreciate that perhaps we could start doing that before the Law Commission has reported?
Victoria Atkins
The Law Commission, in all its reviews, is incredibly thorough and of course independent. How long it takes is, I have to say as a Minister, sometimes a little bit frustrating, but that is because it is so thorough, so I cannot criticise the commission for that. I would prefer the commission to do its work so that we have a consistent body of evidence that I hope will enable the Government to draw conclusions as to the adequacy of the existing arrangements, and take steps from there.
Liz Saville Roberts
I wonder by which instrument the hon. Member for Edinburgh West and I might seek to ask the Government whether they will be implementing any recommendations from the Law Commission.
Victoria Atkins
I confess that I had not given thought to that particular detail. Far be it from me to suggest to ingenious Back Benchers how they can hold the Government to account. As I have said, we have the Law Commission review under way, and when the commission has reported, we will, of course, in due course publish our response to that review.
Christine Jardine
Having heard the Minister’s comments, I am happy to beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 66, as amended, ordered to stand part of the Bill.
Clause 67
Power of Secretary of State to make consequential amendments
Amendment made: 41, in clause 67, page 50, line 27, after “64” insert “, (Homelessness: victims of domestic abuse)”.—(Victoria Atkins.)
This amendment is consequential on amendment NC16.
Clause 67, as amended, ordered to stand part of the Bill.
Victoria Atkins
Understandably, questions have been asked about the territorial extent of the Bill, so I think it right to explain it. This is a standard clause setting out the territorial extent of the provisions in the Bill, the majority of which apply to England and Wales, or to England only. Following discussions with the Scottish Government and the Northern Ireland Department of Justice, the Bill also includes some limited provisions that apply to Scotland and Northern Ireland.
Part 6 of the Bill extends the extraterritorial reach of the criminal courts in each of England and Wales, Scotland and Northern Ireland, to cover further violent and sexual offences. The provisions are a necessary precursor to enable the United Kingdom as a whole to ratify the Istanbul convention, as they will ensure that the law in each part of the UK meets the requirements of article 44.
Question put and agreed to.
Clause 71, as amended, accordingly ordered to stand part of the Bill.
Clause 72 ordered to stand part of the Bill.
Clause 73
Short title
Question proposed, That the clause stand part of the Bill.
Victoria Atkins
I would like to speak to this, as I have a sense of mischief today. The clause provides for the short title of the Bill.
Question put and agreed to.
Clause 73 accordingly ordered to stand part of the Bill.
New Clause 15
Consequential amendments of the Sentencing Code
‘(1) The Sentencing Code is amended as follows.
(2) In section 80 (order for conditional discharge), in subsection (3), at the end insert—
“(f) section36(6) (breach of domestic abuse protection order).”
(3) In Chapter 6 of Part 11 (other behaviour orders), before section 379 (but after the heading “Other orders”) insert—
“378A Domestic abuse protection orders
(none) See Part 3 of the Domestic Abuse Act 2020 (and in particular section 28(3) of that Act) for the power of a court to make a domestic abuse protection order when dealing with an offender for an offence.”” .—(Alex Chalk.)
This New Clause makes two consequential amendments to the Sentencing Code as a result of Part 3 of the Bill. The first adds a reference to clause 36(6) to the list of cases where an order for conditional discharge is not available. The second inserts a signpost to Part 3 of the Bill into Part 11 of the Sentencing Code, which deals with behaviour orders.
Brought up, read the First and Second time, and added to the Bill.
New Clause 16
Homelessness: victims of domestic abuse
‘(1) Part 7 of the Housing Act 1996 (homelessness: England) is amended as follows.
(2) In section 177 (whether it is reasonable to continue to occupy accommodation)—
(a) in subsection (1), for “domestic violence or other violence” substitute “violence or domestic abuse”;
(b) for subsection (1A) substitute—
“(1A) For this purpose—
(a) “domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2020;
(b) “violence” means—
(i) violence from another person; or
(ii) threats of violence from another person which are likely to be carried out.”
(3) Omit section 178 (meaning of associated person).
(4) In section 179 (duty of local housing authority in England to provide advisory services), in subsection (5)—
(a) for the definition of “domestic abuse” substitute—
““domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2020;”;
(b) omit the definition of “financial abuse”.
(5) In section 189 (priority need for accommodation)—
(a) in subsection (1), after paragraph (d) insert—
“(e) a person who is homeless as a result of that person being a victim of domestic abuse.”;
(b) after subsection (4) insert—
“(5) In this section “domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2020.”
(6) In section 198 (referral of case to another local housing authority)—
(a) in subsection (2), in paragraph (c), for “domestic violence” substitute “domestic abuse”;
(b) in subsection (2ZA), in paragraph (b), for “domestic violence” substitute “domestic abuse”;
(c) in subsection (2A), in paragraph (a), for “domestic violence” substitute “violence that is domestic abuse”;
(d) for subsection (3) substitute—
“(3) For the purposes of subsections (2), (2ZA) and (2A)—
(a) “domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2020;
(b) “violence” means—
(i) violence from another person; or
(ii) threats of violence from another person which are likely to be carried out.”
(7) In section 218 (index of defined expressions: Part 7), in the table, omit the entry relating to section 178.
(8) In article 6 of the Homelessness (Priority Need for Accommodation) (England) Order 2002 (S.I. 2002/2051) (vulnerability: fleeing violence or threats of violence)—
(a) the existing text becomes paragraph (1);
(b) after that paragraph insert—
“(2) For the purposes of this article—
(a) “violence” does not include violence that is domestic abuse;
(b) “domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2020.”
(9) In consequence of the repeal made by subsection (3), omit the following provisions—
(a) in Schedule 8 to the Civil Partnership Act 2004, paragraph 61;
(b) in Schedule 3 to the Adoption and Children Act 2002, paragraphs 89 to 92.” .—(Victoria Atkins.)
This New Clause makes two key changes to Part 7 of the Housing Act 1996 in relation to homelessness in England. First, it amends section 189 to give homeless victims of domestic abuse priority need for accommodation. Second, it amends Part 7 to change references to “domestic violence” to references to “domestic abuse” within the meaning of clause 1 of the Bill.
Brought up, read the First and Second time, and added to the Bill.
New Clause 4
No defence for consent to death
‘(1) If a person (“A”) wounds, assaults or asphyxiates another person (“B”) to whom they are personally connected as defined in section 2 of this Act causing death, it is not a defence to a prosecution that B consented to the infliction of injury.
(2) Subsection (1) applies whether or not the death occurred in the course of a sadomasochistic encounter.”—(Jess Phillips.)
This new clause would prevent consent of the victim from being used as a defence to a prosecution in domestic homicides.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 5—No defence for consent to injury—
‘(1) If a person (“A”) wounds, assaults or asphyxiates another person (“B”) to whom they are personally connected as defined in section 2 of this Act causing actual bodily harm or more serious injury, it is not a defence to a prosecution that B consented to the infliction of injury or asphyxiation.
(2) Subsection (1) applies whether or not the actual bodily harm, non-fatal strangulation, or more serious injury occurred in the course of a sadomasochistic encounter.”
This new clause would prevent consent of the victim from being used as a defence to a prosecution in cases of domestic abuse which result in serious injury.
New clause 6—Consent of Director of Public Prosecutions—
In any homicide case in which all or any of the injuries involved in the death, whether or not they are the proximate cause of it, were inflicted in the course of domestic abuse, the Crown Prosecution Service may not without the consent of the Director of Public Prosecutions, in respect of the death—
(a) charge a person with manslaughter or any other offence less than the charge of murder, or
(b) accept a plea of guilty to manslaughter or any other lesser offence.”
This new clause would require the consent of the Director of Public Prosecutions if, in any homicide case in which any of the injuries were inflicted in the course of domestic abuse, the charge (or the plea to be accepted) is of anything less than murder.
New clause 7—Director of Public Prosecutions consultation with victim’s family in domestic homicides—
‘(1) Before deciding whether or not to give consent to charging a person with manslaughter or any other offence less than the charge of murder in an offence of homicide in which domestic abuse was involved, the Director of Public Prosecutions must consult the immediate family of the deceased.
(2) The Lord Chancellor must make arrangements, including the provision of a grant, to enable the immediate family to access legal advice prior to being consulted by the Director of Public Prosecutions under sub-section (1).”
This new clause would require the Director of Public Prosecutions to consult the immediate family of the victim before charging less than murder in a domestic homicide and provide the family with legal advice so they can understand the legal background.
New clause 10—Prohibition of reference to sexual history of the deceased in domestic homicide trials—
If at a trial a person is charged with an offence of homicide in which domestic abuse was involved, then—
(a) no evidence may be adduced, and
(b) no question may be asked in cross-examination, by or on behalf of any accused at the trial,
about any sexual behaviour of the deceased.”
This new clause will prevent the victim’s previous sexual history being used as evidence to prove consent to violence in a domestic homicide case. This draws on the legislative measures in the Youth Justice and Criminal Evidence Act 1999 to prevent rape defendants raking up or inventing complainants’ previous sexual history.
New clause 11—Anonymity for victims in domestic homicides—
‘(1) Where a person (“A”) has been accused of a domestic homicide offence and where the person (“B”) against whom the offence is alleged to have been committed has died in the course of sexual activity, no matter likely to lead members of the public to identify a person as B shall be included in any publication.
(2) The matters relating to a person in relation to which the restrictions imposed by subsection (1) applies (if their inclusion in any publication is likely to have the result mentioned in that subsection) include in particular—
(a) the person’s name,
(b) the person’s address,
(c) the identity of any school or other educational establishment attended by the person,
(d) the identity of any place of work,
(e) any still or moving picture of the person.
(3) If, at the commencement of the trial, any of the matters in subsection (2) have already appeared in any publication, the judge at the trial may direct that no further reference to any of these matters may be included in any publication.
(4) If any matter is included in a publication in contravention of this section, the following persons shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale—
(a) where the publication is a newspaper or periodical, any proprietor, any editor and any publisher of the newspaper or periodical;
(b) where the publication is a relevant programme—
(i) anybody corporate engaged in providing the programme service in which the programme is included; and
(ii) any person having functions in relation to the programme corresponding to those of an editor of a newspaper;
(c) in the case of any other publication, any person publishing it.
(5) For the purposes of this section— “domestic homicide offence” means an offence of murder or manslaughter which has involved domestic abuse; a “publication” includes any speech, writing, relevant programme, social media posting or other communication in whatever form, which is addressed to the public at large or any section of the public (and for this purpose every relevant programme shall be taken to be so addressed), but does not include an indictment or other document prepared for use in particular legal proceedings.”
This new clause will provide the victim of a domestic homicide with public anonymity.
New clause 14—Anonymity of domestic abuse survivors in criminal proceedings—
‘(1) Where an allegation has been made that a relevant offence has been committed against a person, no matter relating to that person shall during that person’s lifetime be included in any publication if it is likely to lead members of the public to identify that person as the survivor.
(2) Where a person is accused of a relevant offence, no matter likely to lead members of the public to identify the person against whom the offence is alleged to have been committed as the survivor shall during the survivor’s lifetime be included in any publication.
(3) This section does not apply in relation to a person by virtue of subsection (1) at any time after a person has been accused of the offence.
(4) The matters relating to a survivor in relation to which the restrictions imposed by subsection (1) or (2) apply (if their inclusion in any publication is likely to have the result mentioned in that subsection) include—
(a) the survivor’s name;
(b) the survivor’s address;
(c) the identity of any school or other educational establishment the survivor attended;
(d) the identity of any place where the survivor worked;
(e) any still or moving pictures of the survivor; and
(f) any other matter that might lead to the identification of the survivor.
(5) At the commencement of a trial at which a person is charged with a relevant offence, the judge may issue a direction for lifting the restrictions only following an application by or on behalf of the survivor.
(6) Any matter that is included in a publication in contravention of this section must be deleted from that publication and no further reference to the matter may be made in any publication.
(7) If any matter is included in a publication in contravention of this section, the following persons shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale—where the publication is a newspaper or periodical, any proprietor, any editor and any publisher of the newspaper or periodical;
(a) where the publication is a newspaper or periodical, any proprietor, any editor and any publisher of the newspaper or periodical;
(b) where the publication is a relevant programme—
(i) any body corporate or Scottish partnership engaged in providing the programme service in which the programme is included; and
(ii) any person having functions in relation to the programme corresponding to those of an editor of a newspaper;
(c) in the case of any other publication, any person publishing it.
(8) For the purposes of the section—
“publication” means any material published online or in physical form as any well as any speech, writing, website, online news outlet, social media posting, relevant programme or other communication in whatever form which is addressed to the public at large or any section of the public.
a “relevant offence” means any offence where it is alleged by the survivor that the behaviour of the accused amounted to domestic abuse.
“survivor” means the person against whom the offence is alleged to have been committed.”
This new clause provides lifetime press anonymity for survivors of domestic abuse, and reflects similar protections for survivors of sexual assault enshrined in the Sexual Offences (Amendment) Act 1992. It prevents identifiable details from be published online or in print, and creates a new offence for breaching this anonymity.
Jess Phillips
I rise to speak not with my own voice, but with those of my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) and the hon. Member for Wyre Forest (Mark Garnier). I am better at doing one of those voices than I am the other, but I shall try to do justice to both.
The short term for this subject—given that we are debating short titles—is the “rough sex defence”. Other such terms are “Strangled to death in kinky sex romp,” “Woman shot in the vagina in a sex game gone wrong,” and, “Accused killed barmaid during kinky sex session.” Over the last few years, any one of us might have seen this type of headline. They are salacious, tacky and often used as clickbait. We all know that sex sells, but these headlines trivialise what is actually occurring. Women are being murdered and the men who killed them are exploiting a loophole in the law. The “rough sex defence”, as it has become known, is when a woman is killed in what the perpetrator defends as consensual violence. That means that, if your partner left you with 40 separate injuries, dreadful blunt force injuries to your head, a fractured eye socket and vaginal arterial bleeding, but explained that you had consented to such acts and that your death was simply a sex game gone wrong, there is a good chance that your murderer will end up with a lesser charge or a lighter sentence, or your death may not even be investigated.
The horrific injuries I just described were inflicted on Natalie Connolly. Her killer, John Broadhurst, left her to die at the bottom of the stairs, in a pool of her blood. She died of internal bleeding from 40 injuries that he inflicted on her body. He claimed that she insisted on rough sex, so it was her fault, not his. His lurid descriptions of what she insisted he do to her were unchallengeable. Not only did Mr Broadhurst kill Natalie, but he was able to entirely shape the narrative around her death, as she was not there to speak for herself.
That is why I support new clauses 10, 11 and 14. Currently, if a man assaults a woman during sex but falls short of killing her, she is in a much stronger position. She can tell the court that she did not consent, and the law gives her anonymity as a victim of a sex offence. The law bans him from using her previous sexual history in evidence of his defence, although that does not always work. But if he goes the whole way and kills her, she cannot give evidence, she has no anonymity, and his version of her previous sexual history is splashed all over the papers and compounds the grief of her relatives. This is a double injustice: not only does the man kill her, but he drags her name through the mud.
I cannot imagine the hurt and trauma of families who have already lost a daughter, sister, aunt or mother to have to hear the man who killed her describing luridly what he alleges about her sexual proclivities. Of course, she is not there to speak for herself; he kills her and then he defines her. We cannot allow that to continue to happen. We have the opportunity here to make these amendments, so that no victim is posthumously defined by their murderer.
Natalie’s case rightly caused widespread outrage, as her killer escaped a murder charge and was convicted only of manslaughter. He was sentenced to just three and a half years. We cannot have violence against woman and girls continually undercharged. Three and a half years! It is unfathomable.
New clause 6 would require consent from the Director of Public Prosecutions to charge anything less than murder in a domestic homicide. The rough sex defence has proved to be a powerful argument in court and has led to prosecutors backing down from a murder charge in favour of manslaughter, believing that they will stand a better chance of securing a conviction. New clause 7 would require the Director of Public Prosecutions to consult the immediate family of the deceased before deciding whether to give such consent and to provide them with adequate legal advice so that they can understand the legal background. Natalie’s grieving family said that they were not adequately supported in understanding why the charge was being dropped from murder to manslaughter, and what that would mean for the sentence.
We Can’t Consent To This found 67 recent cases of people in the UK who were killed during so-called sex games gone wrong; 60 of them were female. Following the deaths of those 60 women and girls there were 37 murder convictions, but in three of those cases, the deaths were treated as non-suspicious results of sex games until other evidence emerged—respectively, a confession to a friend, dismemberment of two other women, and a further review by a pathologist. They were not investigated as murder or even violent acts until, in one of those instances, the perpetrator had dismembered two other women. Seventeen cases resulted in manslaughter charges, with sentences of three years and upwards; five were subject to no charge, or found not guilty; and one case has yet to come to trial. In nearly half the cases, a murder conviction was not secured.
In the past five years, 18 women and girls have been killed in claimed consensual violent sexual activity. In 10 cases, the man was convicted of their murder; in six cases, the conviction was for manslaughter, and in one, there was no conviction. In one further case, there was a murder conviction only when the victim’s husband confessed to the crime; police had treated her violent death as non-suspicious. One woman’s death has yet to come to court. No one can consent to his or her own death, and it is time this defence was made no longer available.
Fay Jones (Brecon and Radnorshire) (Con)
The hon. Lady is making an extremely powerful speech. There are far too many cases to name them all, but I wanted to pay tribute to my colleague and hon. Friend the Member for Newbury (Laura Farris), who spoke so movingly about this issue on Second Reading when she mentioned the cases of Laura Huteson and Anna Banks. I feel that both their names ought to be on the record.
Jess Phillips
I could not agree more, and thank the hon. Lady for her intervention. Any opportunity to get women’s names on the record, especially those who have died, is absolutely fine with me.
New clause 5 arises from similar considerations, stating that where serious harm has occurred during sex because of the behaviour of one person, consent does not exist. We Can’t Consent To This found 115 cases of women who had been injured in non-fatal assaults that those accused said they had consented to. Examples of the non-fatal injuries that were claimed to be due to consensual sex include: being slashed in the back with a knife; two black eyes; being strangled; being punched in the stomach; being held against a wall and slashed with a knife, causing permanent disfigurement; being electrocuted with mains electricity; and a woman being throttled with a shoelace by a man she had met for sex—in that case, the strangulation was so severe that some of her brain cells died when the blood flow was interrupted.
In one case brought to the attention of my right hon. and learned Friend the Member for Camberwell and Peckham this year by a solicitor, prosecutors declined to pursue charges against a man accused of sexual assault because of fears he would claim it was consensual sexual behaviour. In deciding not to proceed, the CPS prosecutor said in a letter to the complainant,
“A prosecution could follow in relation to this offence, but the courts have shown an interest in changing the law so that the suspect could say that you consented to these assaults. This would be difficult to disprove,”
for reasons set out earlier in the letter.
“If I prosecuted this offence it is likely to lead to lengthy legal proceedings in which the background to the case would have to be visited as far as the sexual practices that led to and accompanied the infliction of the injuries. In my opinion it is not in the public interest to pursue this charge”
in isolation.
We Can’t Consent To This, the campaign group, has found evidence of 67 cases in the past 10 years. That defence should never have been open to those defendants.
Christine Jardine
It is a world of difference, but talking about this sort of consent, I find my mind is thrown back 20 or 30 years to the original arguments about rape and consent. Does the hon. Lady share my disappointment that we have not moved on?
Jess Phillips
I absolutely share the hon. Lady’s frustrations. The truth of the matter is that we are talking about specific cases where this defence could easily be leaned on, and we are trying to shut those loopholes. There are only really three defences in a rape case. One is mistaken identity: it was not the accused, but someone completely different. Another is that it just did not happen, full stop—luckily, science has moved quicker than social science. The final one is that she or he consented. That is usually the one that is leaned on, because, unfortunately, it is much more difficult to prove than it is to rape.
Pre-existing case law, R v. Brown, makes it clear that a person cannot consent to injury or death during sex. However, in 45% of cases where a man kills a woman during sex and claims she consented to it, this defence works. We cannot let that continue.
If a man can convince police, prosecutors, coroners, a judge or even a jury that the woman was injured during a consensual act, he may see the following outcomes: he is believed; police do not investigate it as a crime or no charges are sought by prosecutors; prosecutors opt to pursue a manslaughter charge, ensuring a far shorter sentence than for a murder charge; mitigation in sentencing due to no intention to kill. Extreme sexual and sadistic violence is not treated as an aggravating factor in sentencing because it is accepted on his say so that she consented to it. All those outcomes are entirely acceptable today.
Peter Kyle
There are many aspects of the cases that my hon. Friend is outlining that are extraordinarily disturbing and painful to understand. There is another one: the impact on the victim’s family. For them to sit there, coping with the death of their loved one, and then to hear that their loved one consented to these kinds of brutalising factors must cause pain beyond comprehension. Should we not remember the victims in all of this?
Jess Phillips
Absolutely. Even just from a personal perspective, the idea of my parents having to listen to conversations about me having sex at all is a harrowing thought, but we are talking about people who have lost their loved one having to listen to such things. The point about anonymity is made in rape cases, but there is no similar level of anonymity in this instance for a bereaved mother, father, brothers and sisters having to hear about vicious abuse, while somebody takes to the stand to say that the victim wanted it and loved it.
I have seen cases that would make most people’s toes curl, but I have to say that I have been deeply affected by this case. I have become a bit of an old hand at some things, but the Connolly case is so harrowing that I cannot imagine how her family have coped with it.
The law should be clear to all: a person cannot consent to serious injury or death. But the case law is not up to the task. When a woman is dead, she cannot speak for herself. Any man charged with killing a woman, or a current or former partner, should simply say, “She wanted it.” This is why we must change the law and urge the Government to accept these amendments.
Peter Kyle
I rise to say a few words about new clause 14. It seeks to grant anonymity in the press to survivors of domestic abuse, should they request it. In recent days, the front page of one of our national newspapers covered an instance of domestic abuse in really quite grim terms. It failed to point out the consequences of it, and did not report any remorse whatsoever. That kind of most insensitive reporting still makes its way on to the front page of papers.
We know the counter-case, too. In the wake of the Leveson inquiry, we know that these issues are sensitive. We must be fully aware of the need for the press to do their job in as unencumbered a way as possible. The Independent Press Standards Organisation, the largest independent regulator of the newspaper and magazine industry in the UK, has no guidance whatever for journalists on how to report domestic abuse cases. There is only a short blog, which suggests that journalists heed to how domestic abuse charities would like cases reported locally. The industry has acknowledged the issues relating to the reporting of domestic abuse, but no action whatever has been taken.
It is clear that the Government and Parliament need to speak, and we need to guide the industry through legislation. The issue has become so pronounced because stories are published in which victims and survivors of domestic abuse are named, as well as family members and children. When these stories make their way on to websites, which is where the majority of people read news these days, victims have no anonymity. Underneath the story, there is a plethora of people discussing and naming people, saying, “I heard this”, or “I heard that she was that”; the irony is that they are all anonymous. They are benefiting from an anonymity that the victims do not have. These issues are cast in a new light in the modern era, whereas regulations are distinctly old-fashioned.
Journalists are struggling on how to deal with the issue. I recognise that, and have spoken to many of them. It is not wholly the responsibility of the press, because when it comes to other crimes and their survivors, it is set out in law how journalists are to respond. The keystone piece of legislation providing anonymity is the Sexual Offences (Amendment) Act 1992, which gives survivors of sexual assault the right to press anonymity, and lays out the circumstances in which that right can be waived.
The Government have already shown support for the spirit of the new clause in legislation for survivors of other crimes such as the Serious Crimes Act 2015, which grants anonymity to and protection for alleged victims of female genital mutilation. In section 2 of the Modern Slavery Act 2015, victims of any human trafficking offence are granted anonymity. The Government are willing to grant anonymity to certain types of people, and it is striking that a person has the right to anonymity if they are the victim of sexual violence, but not if that sexual violence occurs within a relationship and in a home. These proceedings cast that anonymity in a new light. The new clause would provide similar restrictions on how the press could report on survivors of domestic abuse, so that it would not be left to individual publications to make that decision. In today’s hyper-competitive media world, where there are shrinking readerships and a move to online news, the issue is more important than ever.
The domestic abuse charity RISE in my constituency has been vocal about the need for this change. It reports that if the survivors they care for are named in the press, they are less likely to report domestic abuse in the first place. One service user provided testimony about the impact on their life of being named in the press:
“My daughter had to be informed by the school after the article named me as all the parents at school were aware, as well as the children because it was all over social media. It made me feel that I was still being controlled, I felt vulnerable and exposed. I feel so much hurt for my little girl, she didn’t need to know, the impact on her is huge, she is hypervigilant and gets very scared on the bus if someone is on their phone as she believes they are filming her. I never want another child to go through what my child went through.”
Another said:
“None of my family knew, neither did my employer. I felt a lot of shame and then seeing my name in the article and the awful comments made below the article were dreadful, there was racial abuse online. I felt sad, ashamed, embarrassed and violated. Something that took a lot of courage for me to report and everyone got to know about it. Even now I find myself googling my name for fear of it popping up again. There is an added layer of shame when I already had enough to process with regard to being abused.”
The Government have shown, through the development and scrutiny of the Bill, that they want it to stand the test of time. I believe that, as we move forward, the press becomes more competitive; there are more online opportunities to name and discuss people, and to tread over the line—particularly when someone in the public eye is subject to domestic abuse and the opportunity for media to make money from using that name becomes overwhelming. Some journalists might feel some shame about it, but for some it might be a choice between making money or income, and protecting a victim. I do not think that individual journalists should be put in that position.
We have an opportunity now to equalise the law and extend the protection of the anonymity given in cases of violent sexual crimes that occur outside the home, so that it is also given when crimes occur inside the home.
Alex Davies-Jones
Diolch, Ms Buck. I will be brief. I do not want to repeat the powerful words of my hon. Friend the Member for Birmingham, Yardley, but it is important to make the point that previous sexual behaviour is not, and should never be, taken as evidence of consent to a particular encounter. Neither should experience of or interest in any particular act be used to suggest that it is possible for someone to consent to their own murder, as has been the case in the past.
My hon. Friend the Member for Hove said that the media are complicit in sexualising and sensationalising horrific acts of violence and causing huge further trauma to the families of victims. Those victims—mainly women—and their families need anonymity.
A BBC study in 2019 found that more than a third of UK women under the age of 40 had experienced unwanted slapping, choking or gagging during consensual sex. Of the women who experienced those acts, 20% said they had been left upset or frightened. It is vital that women’s voices should no longer be silenced.
The Parliamentary Under-Secretary of State for Justice (Alex Chalk)
It is once again a pleasure to serve under your chairmanship, Ms Buck. I thank colleagues for those helpful and powerful contributions. I want to begin my remarks by echoing a point that was made: we should not be shy in this place about making observations that are sometimes uncomfortable.
It seems to me a fact that there is a worrying and increasing normalisation of acts that are not just degrading but dangerous. Because we live in a liberal, open, tolerant society we of course do not want to step into the bedroom. We do not want to intrude into people’s private affairs, but when what they do leads to someone’s death we should not have any compunction about taking the steps necessary, first to ensure that people are safe, secondly to ensure that justice is done, and thirdly to send a message: if someone wants to behave in that way, when the consequences come to pass, on their head be it.
I am grateful to the Opposition Front-Bench spokespersons for making the case for the new clauses. Before addressing those in detail, I pay tribute, as others have, to my hon. Friend the Member for Wyre Forest, who is the constituency MP of Natalie Connolly and her family, and to the right hon. and learned Member for Camberwell and Peckham. They have run a formidable campaign and have engaged closely and constructively with the Government. I pay tribute to them for that.
Peter Kyle
The Minister is making a good point. As he knows, the opportunity to amend legislation does not come up often, and we often do not get the chance to amend the perfect piece of legislation. Using all his wit, experience and erudition, he is able to find the failings in the new clause, but a principle is at stake. If he is saying that this is not the ideal piece of legislation or method to achieve those aims, will he spend a bit of time telling us what is, whether he will back it and whether he will make it happen swiftly?
Alex Chalk
I invite the hon. Gentleman to listen carefully to what I say in due course, and I hope that he will not be unhappy—
Alex Chalk
Disappointed—thank you. Do you want to make the speech?
The concern with the new clauses, among other things, is that they do not necessarily replicate the dictum in Brown. To those who are not familiar with this, a case more than 20 years ago, Crown v. Brown, laid down some case law—a point adverted to by the hon. Member for Birmingham, Yardley—that we recognise needs to be clarified. The point that I will develop in due course, which I think will find favour with the hon. Member for Hove, is that that is precisely what we intend to do. The concern is that these new clauses, for the reasons I have indicated—I will not go into any detail on new clause 5, because it is a similar point that I would seek to make—limit the application of the principles in Brown to offences that occur in a domestic abuse situation. I heard the hon. Member for Birmingham, Yardley say sotto voce, “Isn’t a Tinder date an intimate personal relationship?”. The reality is—I speak as someone who has defended as well as prosecuted—that the job of a defence advocate is to find whatever wiggle room there is in the law. Our job here is to close that down.
As I have indicated, the prosecution would have to show also that this activity was either not consensual, or was consensual and also amounted to domestic abuse. Again, defence counsel will be seeking to ask, “Is this really domestic abuse in circumstances where it is consensual?”. You can immediately see the arguments that would be made in court. The key is for us to close that down and give practitioners—but, more importantly, people—absolute clarity about what is and what is not acceptable. As I said at the outset, we need to ensure that any change made is clear, and does not inadvertently create loopholes or uncertainties in the law.
I invite the hon. Member for Hove to accept that despite the difficulties, we have been anxiously and actively considering for some considerable time how we can best ensure greater clarity in the law. We aim to set out the Government’s approach in time for Report.
Peter Kyle
On behalf of the Opposition Front Bench, I thank the Minister for his comments and the considered way he made them. We particularly thank him for the timeframe he outlined. Making a statement before Report is incredibly important; we need to move swiftly. The Minister knows better than anyone that if the same thing happened to one other person in the coming weeks, it would be an absolute travesty, so we need to make sure that these loopholes are dealt with quickly.
Alex Chalk
I hear what the hon. Gentleman has said, and I leave it where it stands. I understand and I agree. I turn to new clauses 6 and 7. Those who have argued passionately in respect of the so-called rough sex defence will acknowledge that perhaps this point is contingent on that. There are also real practical difficulties with new clauses 6 and 7. Let me develop them briefly.
New clause 6 requires the personal consent of the personal Director of Public Prosecutions where a charge or plea less than murder, for example manslaughter, is applied or accepted in cases of domestic homicide. That sounds unobjectionable. It would be perfectly sensible if the DPP was readily able or had the capacity to give that kind of personal consent. However, there are practical problems with it. Let me set out the context. A statutory requirement of this nature is, and should be, extremely rare. It should only be imposed where a prosecution touches on sensitive issues of public policy, not simply sensitive issues, which are legion in the criminal justice system. The only recent example of this consent function applies to offences under the Bribery Act 2010, and last year, a Select Committee undertaking post-legislative review of the 2010 Act recommended that the requirement for personal DPP consent be reconsidered.
We have to acknowledge that the Crown Prosecution Service handles a high volume of serious and complex casework nationwide, and it is important that prosecutors have the confidence to take their own legal decisions. Introducing requirements for personal DPP consent could serve to undermine or frustrate this approach. It would also, I am bound to say, potentially sit uneasily alongside other very difficult decisions that prosecutors have to make. Suppose, for example, in the context of a terrorist prosecution, that because of the way the evidence emerged, or because of new lines of enquiry, a decision was made to take the defendant off the indictment in respect of a bomb plot, but the prosecution said, “We are going to continue to prosecute him in respect of possession of materials that might be of assistance to a person planning an act of terrorism.” These are immensely difficult and sensitive decisions. However, there is neither the capacity nor the wherewithal for the DPP to make those personal decisions all the time.
It is sad to note that there is a high volume of cases involving domestic homicide, as the hon. Member for Birmingham, Yardley well understands. It means that charging decisions need to be made urgently, and sometimes at a speed, where no personal DPP involvement is possible.
These considerations apply equally to cases in which a lesser plea may be accepted. If pleas are offered in court, prosecutors are required to make a decision in an incredibly short period of time after speaking with the victim’s family, and the DPP could not be involved in that level of decision making. I invite the Committee to consider the circumstances, supposing it is in court: because of the way that the evidence has come out, there is the consideration of whether a lesser plea should be accepted. The hon. Lady pointed out that this does not always happen, but if the family have been properly consulted, it is no kindness to that family to say, ‘Do you know what? We’re not going to make a decision on this, which would let you begin to heal and put this behind you. We’re going to put this off for two or three weeks while the DPP has to consider it.’ Court proceedings will be suspended awkwardly, and the poor family will be left hanging.
Forgive me for stating the obvious, but it bears emphasising that the real remedy is for good prosecutors––the overwhelming majority are good and do their duty with diligence, conspicuous ability and conscientiousness– –to liaise with the family in a compassionate and inclusive way. I understand the desire for additional scrutiny in such significant and sensitive cases, but I assure the Committee that the Crown Prosecution Service already has systems in place to check and challenge decision making in these circumstances. Internal CPS policies require that chief crown prosecutors are notified of any and all homicide cases. It is likely as well that domestic homicides would be subject to a case management panel with a lead lawyer and either the deputy chief crown prosecutor or the chief crown prosecutor, so there is senior oversight.
The point that I really want to underscore is that because cases of domestic homicide inevitably have a lasting and dreadful impact on victims’ families, people deserve support and compassion, particularly as criminal proceedings can be upsetting and difficult to follow. Procedures are in place to ensure that is given. Where there is an allegation of murder, the police very often appoint a family liaison officer as a matter of course to assist with the process. I speak as someone who has prosecuted several murder cases. The role that liaison officers play is absolutely fantastic. Otherwise, the poor family turn up in court with no idea what an indictment is, wondering “What on earth is this examination-in-chief stuff? What is this plea and trial preparation hearing?”. The liaison officer role is invaluable, and needs to be supported by prosecutors speaking to family members, as they increasingly do.
Jess Phillips
Like the hon. Gentleman, I have been involved in a number of murder cases, and he is right that family liaison officers are worth their weight in gold. Does he think that there needs to be a more formalised link between the prosecutor and the family liaison officer—a referral pathway, or standard of practice that had to be met in each case? It could help us work towards having a less patchy approach if we had a formalised target.
Alex Chalk
There are, in fact, formal arrangements in both spheres. Family liaison officers have to operate within certain guidance, and in my experience, by and large, they do so extremely well. At the risk of stating the obvious, it comes down to the calibre, kindness and empathy of the individual. In my experience, they are very good at their job and play an invaluable role.
As for the prosecution, as little as 20 years ago, there used to be almost a benign disdain for witnesses. Prosecutors simply did not engage with them. That does not happen now; they meet witnesses and family members before the trial begins. Very often, they will speak to them at the end of the day to explain what has happened. The relationship between prosecutors and family liaison officers tends to dovetail extremely effectively. I do not think that there is a need for further guidance. The key is to ensure that both parts of the criminal justice system—the police and the prosecution—do their job. In my experience, people are increasingly extremely conscientious in that regard. That is important, because people’s sense of whether they have got justice will often depend on the conversations they have at the end of the day, when the matter has been explained to them.
Peter Kyle
I have never heard a journalist wanting the rule that prevents reporting from naming victims of sexual violence overturned. Has the Minister?
Alex Chalk
What I can say, from my experience in court, is that it is not unusual for the press to seek to overturn reporting restrictions where they are imposed at the discretion of the court, so although the hon. Gentleman may be right that in fact there is not a particular drumbeat in respect of sexual offences, I hope that the Committee will not be gulled into thinking that the press do not very often seek to overturn reporting restrictions that are imposed. The arguments that are made are, “Why should we be having secret justice?”, and so on. Those arguments are very often dispatched by the court; they are considered not to be valid, and then they are sometimes taken on appeal and so on. The only point that I am seeking to make is that we must be careful in this area and strike a balance, so that we do not find ourselves bringing the law into disrepute.
Christine Jardine
As a journalist and as someone who has taught law for journalists, I point out that although we might challenge discretionary interdicts and super-interdicts—I cannot remember what they are called in England—the principle of defending the anonymity of victims of sexual assault, sexual crimes, is never challenged in court. The only challenge is to discretionary non-identification where a public interest case can be made for that being overthrown. I find it difficult to believe that the press would actually want victims of domestic abuse named in the papers, unless there was some outlandish public interest.
Alex Chalk
The hon. Lady is absolutely right that of course it is not open to a journalist to seek to displace the reporting restrictions that have been imposed by force of statute. I was seeking to make the point, which I do not think she disagrees with, that it is not uncommon for the press to suggest that a court, in imposing reporting restrictions in an individual case, has overreached itself, gone beyond the bounds, and misapplied the balance. Sometimes, by the way, those applications are upheld at first instance or on appeal.
There is a judgment to make, and we have to recognise that there is a particular public interest, when the allegation is of sexual violence, in taking the step of exceptional interference. That justification exists in relation to sexual offences. However, we have to take great care before extending it further, not least because—of course, domestic violence and domestic abuse are incredibly serious, for all the reasons that we have expressed—women, and it is usually women, can be victims of all sorts of other offences. Then it becomes a question of how far we go—where do we draw the line? That is something that requires careful thought.
I apologise to members of the Committee for taking so long to explain the Government’s position on the new clauses. As I have sought to explain, we fully understand the anguish and hurt felt by the family of Natalie Connolly and many others, and, as lawmakers, we will and should do what we can to minimise such anguish on the part of bereaved families in the future. For the reasons that I have set out, the Government cannot support a number of the new clauses, but as I have indicated before, we expect to set out the Government’s approach in respect of the rough sex issue in time for Report. In those circumstances, I respectfully invite the hon. Member for Birmingham, Yardley to withdraw the new clause.
Jess Phillips
I will withdraw the new clause. I am very pleased to hear that there is an intention to deal with the matter on Report, and I speak entirely for the hon. Member for Wyre Forest and my right hon. and learned Friend the Member for Camberwell and Peckham in that regard. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Immigration and Social Security Co-ordination (EU Withdrawal) Bill (Fifth sitting)
Tuesday 16th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 View all Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 16 June 2020 - (16 Jun 2020)
The Committee divided: - Ayes: 8 / Noes: 5 - Question accordingly agreed to.
The Committee divided: - Ayes: 2 / Noes: 14 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Chair
Obviously, we will maintain social distancing. Like last week, the Hansard reporters would be grateful if Members sent copies of their speeches to hansardnotes @parliament.uk. We will continue line-by-line consideration of the Bill—the selection list is available in the room.
Clause 5
Power to modify retained direct EU legislation relating to social security co-ordination
Question proposed, That the clause stand part of the Bill.
The Parliamentary Under-Secretary of State for the Home Department (Kevin Foster)
It is a pleasure to serve under your chairmanship, Sir Edward. Given the nature of the clause, I will spend a few minutes outlining its impact to the Committee. The clause and associated schedules 2 and 3 provide an essential legislative framework to ensure that the Government can make changes to our social security system when the transition period ends, alongside the launch of the future immigration system. The provisions will enable the Government to amend the retained European Union social security co-ordination rules and to deliver policy changes from the end of the transition period.
The clause provides a power to the Secretary of State, the Treasury or, where appropriate, a devolved authority to modify the social security co-ordination regulations. Those EU regulations provide for social security co-ordination across the European economic area, and will be incorporated into domestic law by the European Union (Withdrawal) Act 2018 at the end of the transition period. Clause 5(4) gives the Government the ability to make necessary consequential changes to other primary legislation and other retained EU law to ensure that the changes given effect by the main power are appropriately reflected. That power may be used, for example, to address technical matters, inoperabilities or inconsistencies. Schedule 2 sets out the power of the devolved authorities under clause 5.
This social security co-ordination clause confers powers on Scottish Ministers and the relevant Northern Ireland Department to amend the limited elements of the social security co-ordination regulations that fall within devolved competence. It is important that we provide the devolved Administrations with the powers that they need to amend the aspects of the regulations for which they are responsible, just as it is right for the UK Government to have the powers for the laws that affect the UK as a whole. The powers are equivalent to those conferred on UK Ministers and will allow the devolved Administrations to respond to the UK’s withdrawal from the EU in areas of devolved competence, either to keep parity with Westminster or to deviate in line with their own policies.
Without the powers in the Bill, the devolved Administrations would need to bring forward their own parallel legislation to give them equivalent powers to amend the retained EU social security co-ordination regulations in areas of devolved competence. Before the Bill was introduced, letters were sent to the devolved Administrations to seek legislative consent in principle, in line with the Sewel convention.
Schedule 3 provides further detail on the form that regulations will take under the clause, whether as statutory instruments, statutory rules or Scottish statutory instruments. The schedule provides that the use of the power is subject to the affirmative procedure. It also gives clarity on the procedures that the devolved Administrations will need to follow. Paragraph 5 permits other regulations, subject to the negative procedure, to be included in an instrument made under the clause.
Without the clause and associated schedules 2 and 3, the Government and relevant devolved authorities will have only the power contained in the 2018 Act to fix deficiencies in the retained system of social security co-ordination, restricting our ability to make changes. I reassure the Committee that the power in the clause will not be exercised to remove or reduce commitments made either in relation to individuals within the scope of the withdrawal agreement, for as long as they remain in the scope of that agreement, or in relation to British and Irish nationals moving between the UK and Ireland.
We are currently in negotiations with the EU about possible new reciprocal arrangements on social security co-ordination, of the kind that the UK has with countries outside the EU. The clause will enable the UK to respond to a variety of outcomes in those negotiations, including when no agreement is achieved by the end of the transition period. The clause will be necessary to deliver policy changes to the retained regime that will cover individuals who fall outside the scope of the withdrawal agreement, to reflect the reality of our new relationship with the European Union.
The Government have been clear that there will be changes to future social security co-ordination arrangements, including, as announced at Budget 2020, stopping the export of child benefit. The social security co-ordination powers in the Bill will enable the Government to deliver on that commitment and to respond to the outcome of negotiations with the EU to deliver changes from the end of the transition period. I therefore beg to move that clause 5 stands part of the Bill and that schedules 2 and 3 are agreed to.
Kate Green (Stretford and Urmston) (Lab)
Good morning, Sir Edward. It is a pleasure once again to serve under your chairmanship. Social security arrangements set out in EU regulation 883 of 2004 and elsewhere are currently directly applicable in the UK. They cover the co-ordination of social security, healthcare and pension provision for people who are publicly insured who move from one EU state to another.
The regulations ensure that individuals who move to another EEA are covered by the social security legislation of only one country at a time and are, therefore, liable only to make contributions in one country; that a person has the rights and obligations of the member state where they are covered; that periods of insurance, employment or residence in other member states can be taken into account when determining a person’s eligibility for benefits; and that a person can receive benefits that they are entitled to from one member state, even if they are resident in another.
The co-ordination regulations cover only those social security benefits that provide cover against certain categories of social risk, such as sickness, maternity, paternity, unemployment and old age. Some non-contributory benefits fall within the regulations but cannot be exported, and benefits that are social and medical assistance are not covered at all. Universal credit, for example, is excluded.
As we heard from Jeremy Morgan of British in Europe in his oral evidence to the Committee last week, most UK nationals resident in the EU are of working age. It is important to note that the number of people claiming the working-age benefits that are covered by the regulations—jobseeker’s allowance or employment and support allowance—has declined sharply since the introduction of universal credit. We might therefore expect social security co-ordination arrangements to apply to a declining number of working-age adults. The regulations will, however, still be of importance for a sizeable number of individuals, and not least for pensioners.
The co-ordination regulations also confer a right on those with a European health insurance card to access medically necessary state-provided healthcare during a temporary state in another EEA state. The home member state is normally required to reimburse the host country for the cost of the treatment. Under the European Union (Withdrawal Agreement) Act 2020, protection of healthcare entitlements is linked to entitlement to cash benefits.
Clause 5(1) provides an appropriate authority with the power to modify the co-ordination regulations by secondary legislation. The power is very broad, placing no limits on the modifications that appropriate authorities are able to make to the co-ordination regulations. By virtue of subsection (3), the power explicitly
“includes power—
(a) to make different provision for different categories of person to whom they apply…
(b) otherwise to make different provision for different purposes;
(c) to make supplementary…consequential, transitional, transitory or saving provision;
(d) to provide for a person to exercise a discretion in dealing with any matter.”
The power is further enhanced by subsection (4), which provides for the ability to amend or repeal
“primary legislation passed before, or in the same Session as, this Act”
and other retained direct EU legislation.
Since the UK left the EU at the end of January this year, the relevant EU regulations pertaining to social security, pensions and healthcare have been retained in UK law by section 3 of the European Union (Withdrawal) Act 2018. I accept that the Government need to be able to amend co-ordination regulations to remedy deficiencies in them resulting from the UK’s exit from the EU, but the 2018 Act already contains a power in section 8 to modify direct retained EU law. Indeed, the Government have already exercised this power for four of the co-ordination regulations. Any changes that do not fall within the scope of the power in section 8 of the 2018 Act must necessarily, therefore, not relate to any ability for the law to operate efficiently or to remedy defects, but be intended to achieve wider policy objectives. I think the Minister acknowledged as much in his opening comments.
I was, however, surprised that the Minister said that only the European Union (Withdrawal) Act 2018 provided such powers. My reading of the legislation is that the Secretary of State has further powers as regards social security, healthcare and pension rights for those who are protected by the withdrawal agreement under the European Union (Withdrawal Agreement) Act 2020. Section 5 of that Act inserts new section 7A into the 2018 Act so as to secure withdrawal agreement rights in domestic law, and that protection is buttressed by section 13 of the 2020 Act, which confers a power to make regulations in respect of social security co-ordination rights protected by the withdrawal agreement. Given the powers that already exist under the European Union (Withdrawal) Act and the European Union (Withdrawal Agreement) Act, as well as the fact that those powers have already been used by the Government, why does the Minister feel they are inadequate?
Paragraph 30 of the delegated powers memorandum is instructive. It states that the Government want to use the power in clause 5 to
“respond flexibly to the outcome of negotiations on the future framework and make changes to the retained social security co-ordination rules.”
Mr Robert Goodwill (Scarborough and Whitby) (Con)
Does the hon. Lady agree that, given the proliferation of judicial reviews and the test cases that often come forward, it is better to adopt a belt-and-braces approach so that we underline the Government’s intention in both the Bill and the withdrawal Act?
Kate Green
The issue is the mission creep and scope creep involved in using secondary legislation to amend primary legislation and retained EU rights, particularly a mission creep that now encompasses the ability to make significant policy changes.
As we heard in oral evidence from our witnesses last week, it is important to recognise the considerable importance of policy and legislation in relation to social security co-ordination. It is vital to labour mobility, and to protect the rights of EEA nationals who come to live in the UK and UK nationals who go to live in EEA member states. Policy in this area has the potential to impact the lives of millions, affecting their right to receive benefits to which they are entitled through national insurance contributions over periods of residency, and which they have a legitimate expectation that they will receive. Changes to policy in these important areas should, I submit, be given effect in primary legislation.
In response to the evidence that the Committee took from British in Europe last week, the Minister said that the Secretary of State could not make regulations that would breach an international treaty, and he offered some reassurances this morning to those who fall within the scope of the withdrawal agreement. However, as British in Europe pointed out last week, the powers in clause 5 mean that Parliament will not be able to properly scrutinise regulations that might breach our international treaty obligations—if not deliberately, then inadvertently.
The Minister also referred to the need to be able to reflect the ongoing negotiations with the European Union, and we heard from Adrian Berry of the Immigration Law Practitioners Association last week about the UK’s draft social security treaty, which is an annex to the Government’s proposed future trade agreement. Mr Berry highlighted the Government’s intention to continue the protection of the European health insurance card scheme for short-term travel and the uprating of old-age pensions, but noted that disability pensions and healthcare attached to pension rights are missing from the draft treaty. He also highlighted the limitations of the new EHIC, which would require those with long-term health needs to get prior authorisation from the UK Government, and that there would be no S2 cover, which enables people to obtain healthcare in the EU that they cannot get on the NHS in the UK. Will the Minister put on the record whether such changes could be introduced using clause 5, and can he confirm which classes of person they can be applied to?
The Government have argued that the use of the powers in clause 5 will be subject to parliamentary scrutiny, through the use of the affirmative procedure. Will the Social Security Advisory Committee have a role in scrutinising regulations introduced under this measure? Does he not in fact accept that changes in this important area require full debate and scrutiny in Parliament, and that the principles of any future policy should be set out in primary legislation?
Finally, clause 5(5) states that EU-derived rights cease to apply if they are “inconsistent” with any regulation made under the section, but the Government are under no obligation to specify where and when such inconsistencies arise. This creates considerable uncertainty for individuals who are affected, for their advisers, and indeed for politicians and the wider public. As we discussed last week on clause 4, such an approach is inimical to good lawmaking. The Government should spell out which parts of retained EU law might be affected by these provisions, and I hope that the Minister will do so in his response.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
It is a pleasure to serve under your chairmanship again, Sir Edward.
I am grateful to the Minister and to the hon. Member for Stretford and Urmston for setting out the nature of these regulations in quite some detail, and also for explaining why they are hugely significant for a large number of people.
We acknowledge that there is a need for the appropriate authorities to have some powers in this area, but those powers should be focused on making technical fixes rather than providing carte blanche. The powers in the clause are hugely broad. In fact, they are basically without any limit, either in terms of scope or time, and it is worth reflecting on what exactly clause 5(1) says:
“An appropriate authority may by regulations modify the retained direct EU legislation mentioned in subsection (2).”
There is no constraining test at all.
As Adrian Berry argued when he gave evidence last Tuesday, all these clauses should at least have the test of being “appropriate”, if not being “necessary”, as a qualification. Opposition MPs have been championing the “necessary” test, but the Government have always preferred the test of appropriateness. However, even that is absent from the clause. On paper, therefore, we are creating powers to make inappropriate regulations, which seems quite an unusual concept. More than ever, we need reassurance on what exactly the intended use of these regulations is, and we will look carefully at what the Minister said about that this morning.
I also want to raise an issue on schedule 2, which the Minister also referred to. Schedule 2 sets out who can make use of the powers in clause 5, and I want to flag up an issue in relation to devolution that needs to be addressed. It was flagged up by the Scottish Parliament’s Delegated Powers and Law Reform Committee last year in relation to the predecessor Bill. The Committee reported on that Bill precisely because there are implications for some devolved competences around social security.
There are three routes by which the clause’s powers could be used in relation to devolved social security competence. First, Scottish Ministers could exercise these powers, sometimes with the requirement to consult UK Ministers, if that were required where a different route was used to achieve the same means. The Committee found those powers acceptable.
There is also a route for joint exercise of the powers, which would be considered where a change is so significant that it would be appropriate for joint exercise and scrutiny. Again, while the Committee sought some clarity on precisely when that route would be used, it supported the idea in principle.
Thirdly, however, there is the route of UK Ministers acting alone, by laying regulations in the UK Parliament that could still relate to devolved competence. The Committee’s report says:
“The Committee emphasises that as a matter of principle the Scottish Parliament should have the opportunity to scrutinise the exercise of legislative powers”
by the Executive. However, it notes that the Scottish Parliament has no formal role in relation to the scrutiny of secondary legislation passed by UK Ministers acting alone.
The Committee went on to note that there was silence in relation to the circumstances in which it would be appropriate for UK Ministers to exercise powers in relation to devolved social security acting on their own. It noted that there was nothing on the face of the Bill requiring UK Ministers to seek the consent of Scottish Ministers prior to the exercise of the powers in that way by relevant UK Ministers or the Treasury. It repeated the view that it had provided in relation to the Bill that went on to become the European Union (Withdrawal) Act—that UK Ministers should be able to legislate in devolved areas only with the consent of the devolved Administration, also advocating for a role for the Scottish Parliament in that process.
Kevin Foster
I thank hon. Members for their contributions. On the powers under clause 5, the Government have been given clear advice that they are necessary, particularly when we look at the ongoing negotiations. There are two parties to the negotiations, and the purpose of having a wider scope is to reflect whatever the outcome of the negotiations is. Hopefully, we will quickly be able to implement an agreement, in the same way that we have an agreement with Ireland bilaterally in terms of the co-ordination of social security, given the unique position of Irish citizens in the UK and UK citizens in Ireland, who are considered settled from day one. That is where we are.
One of the examples Opposition Members gave was of those protected by the withdrawal agreement. It is worth noting that this measure looks towards those who arrive after the end of the transition period and starts to look towards changes there, rather than at those who specifically have their rights protected by the withdrawal agreement.
In terms of the scope and whether the powers would be used in a devolved area, the UK Government continue to respect the devolution settlement. We are in discussions —officials certainly are, and I and my colleague in the Department for Work and Pensions wrote to the relevant Scottish Minister last week to set out where we are. We hope to have a legislative consent motion from the Scottish Parliament, but we have also set out what the position is if we do not get an LCM—for the Committee’s benefit, the Government would amend the Bill on Report to remove the powers in relation to devolved matters in Scotland.
Fundamentally, the clause is intended to ensure that we can implement powers and make the changes necessary, as outlined, to deliver the specific policy changes that we made clear in our manifesto, particularly around the export of child benefit, and also to ensure that we do not end up in a bizarre position where the UK is trying unilaterally to implement what is meant to be a reciprocal system, should we not be able to get a further agreement or if we have an agreement but are not able quickly and promptly to implement it.
Again, I would point out that using the affirmative procedure means that both Houses of Parliament will scrutinise any regulations and will have the opportunity to block them if they felt they were inappropriate. To be clear, if a Minister made wholly inappropriate regulations, such matters in secondary legislation, unlike primary legislation, can be reviewed in the courts as well.
It is therefore right that we stick with the clause as it is, certainly to ensure that we can implement whatever the outcome of the agreement is, including if we need to look at putting in place a system that reflects the fact that there has not been a further agreement.
Stuart C. McDonald
I just want to clarify whether the Minister would at least consider putting in a requirement that, before UK Ministers exercise these powers in relation to devolved competencies, they would consult Scottish Ministers. A cross-party Scottish Parliament Committee made that recommendation this time last year. It is surely at least worthy of consideration before Report.
Kevin Foster
To be clear, we will continue with our position of respecting devolution in areas of social security, hence the respect we have shown to the Scottish Government by consulting them about the Bill. We have also set out the Government’s position, were there not a legislative consent motion from the Scottish Parliament, in the letter we sent last week to the relevant Scottish Ministers. Obviously, separate discussions are going on with the Executive in Northern Ireland.
This is the right process. Parliament still has the appropriate ability to scrutinise how the powers are used and, if it wishes, may block the use of those powers under the affirmative procedure. This is about ensuring clear certainty that we can deliver whatever we can agree with the European Union on, we hope, a continuation of a reciprocal arrangement, which we cannot do if we do not have the powers in the clause. In other areas, powers are more restricted.
These are wide powers, but that reflects the wide range of outcomes that are still possible in the next six months. It is right to have a functioning and effective social security system and co-ordination of it. That is why the Government have brought the power forward in this Bill, as in the previous one. We maintain that the clause and the attached schedules are appropriate to the Bill.
Kate Green
Does the Minister anticipate, in the event of an agreement and treaty before the end of this year, a further piece of primary legislation to give effect to that? If so, would it not be possible at least to encompass the principles agreed into that primary legislation?
Kevin Foster
A lot would depend on the nature of the agreement. If it is part of a wider treaty, we may well see further legislation. However, our understanding is that if we can achieve agreement on this area, we would look to implement it rapidly through regulation, which is why the power is in the Bill. Our priority would be to avoid a situation where something is agreed of benefit to both UK citizens going to live in the European Union and EEA citizens coming to live here, with which we and the European Union are happy, but we are unable to provide that benefit because we are still going through a parliamentary process to implement it. That is why we believe the clause to be appropriate. It allows us to react to circumstances as necessary.
Question put, That the clause stand part of the Bill.
Stuart C. McDonald
I beg to move amendment 17, in clause 7, page 5, line 13, at end insert—
“(1A) Section 1 and Schedule 1 of this Act do not extend to Scotland.”
The Chair
With this it will be convenient to discuss new clause 33—Differentiated immigration policies: review—
“(1) The Secretary of State must publish and lay before Parliament a report on the implementation of a system of differentiated immigration rules for people whose right of free movement is ended by section 1 and schedule 1 of this Act within six months of the passing of this Act.
(2) The review in subsection (1) must consider the following—
(a) whether Scottish Ministers, Welsh Ministers, and the Northern Ireland Executive should be able to nominate a specified number of EEA and Swiss nationals for leave to enter or remain each year;
(b) the requirements that could be attached to the exercise of any such power including that the person lives and, where appropriate, works in Scotland, Wales or Northern Ireland and such other conditions as the Secretary of State believes necessary;
(c) the means by which the Secretary of State could retain the power to refuse to grant leave to enter or remain on the grounds that such a grant would—
(i) not be in the public interest, or
(ii) not be in the interests of national security
(d) how the number of eligible individuals allowed to enter or remain each year under such a scheme could be agreed annually by Scottish Ministers, Welsh Ministers and the Northern Ireland Executive and the Secretary of State;
(e) whether Scottish Ministers, Welsh Ministers, and the Northern Ireland Executive should be able to issue Scottish, Welsh and Northern Irish Immigration Rules, as appropriate, setting out the criteria by which they will select eligible individuals for nomination, including salary thresholds and financial eligibility.
(3) As part of the review in subsection (1), the Secretary of State must consult—
(a) the Scottish Government;
(b) the Welsh Government;
(c) the Northern Ireland Executive; and
(d) individuals, businesses, and other organisations in the devolved nations.”
Stuart C. McDonald
Clause 7 sets out the extent of the Bill, so here we come to how it impacts Scotland and the other devolved nations. Amendment 17 would disapply provisions ending free movement to Scotland. The new clause simply calls for the Government to consult on, and to review, establishing a differentiated set of immigration rules focused on Scotland, Northern Ireland and Wales, and lists a set of issues that we want the UK Government to consult upon. The Government would then report and lay that report before Parliament. There is little here that is too onerous. It is a perfectly reasonable request of the UK Government.
We heard plenty of concern about the implications of the Bill during evidence last Tuesday. It is fair to say that that concern is felt acutely in Scotland and Northern Ireland, but also in Wales and some regions of England. Scotland needs in-migration, and free movement of people has been a significant benefit to that country. The Government’s own risk assessments indicate a huge impact on the number of EEA workers who would qualify under the proposed new salary and skills requirements of the new regime. That is before we take into account the visa fees and the red tape, which I regard as ludicrous, that businesses will be bound up in. That has profound implications for Scotland’s economy, demographics, public finances and devolved public services.
Scotland’s economy relies significantly on small and medium-sized enterprises, which, as we heard last Tuesday, will find the tier 2 system very difficult. Small tourism or food and drink businesses, for example, that have regularly relied on the EU labour market are finding it well-nigh impossible to fill posts domestically. Instead of being able to interview a Portuguese food-processing worker or a Polish hotel worker, there is a significant chance that they will not be able to employ them at all. If they are able to employ them somehow, processes will be very different indeed.
The worker will have to seek entry clearance from their home country, so recruitment practice will have to change. Business will have to shell out for a sponsor licence and possibly on legal advice on how to do all that. The worker will have to pay visa fees plus upfront NHS health surcharges, not just for the main applicant but for the whole family. A skills charge will also be levied. As we heard last week, that could take the costs to the applicant to many thousands of pounds.
Mr Goodwill
I understand the point the hon. Gentleman is trying to make, but would it not attract more people to stay and work in Scotland if it was not the highest-taxed part of the United Kingdom?
Stuart C. McDonald
That is factually not true, so that is the end to that point. If the right hon. Gentleman is referring to the changes to the rate of income tax that we have made in recent years, there is no evidence that they have made a blind bit of difference. In fact, there are more people in Scotland paying less income tax, and that is before taking into account council tax and various other matters, so that point does not arise at all.
It seems that a huge proportion of the burden of all these fees falls to be paid by the individual worker. Realistically, however, why would a Portuguese food-processing worker or a Polish hotel worker pay £10,000 for the privilege of working in Scotland when they face no charge to work anywhere else in the European Union? The lower income tax that we pay in Scotland would be attractive, but it does not outweigh the £10,000-plus they would have to pay just to turn up.
Scotland has become a country of regular net in-migration, largely thanks to the free movement of people. But for in-migration, our population would have again been in decline since 2015—something that is projected into the future, with more deaths than births. Ending free movement risks pushing Scotland back to a future of population decline. Like other countries, our population of older people is increasing. That is not unique to us, but unlike other countries, in the UK in particular, our working-age population will rise only fractionally in the years ahead, according to various projections.
That brings us to the issue of public finances and devolved public services. There has been a welcome devolution of tax-raising powers in recent years, to which the right hon. Member for Scarborough and Whitby referred. However, with those tax powers now in place, the problem is that we are suddenly seeing the tax base shrunk by immigration policies. That has a direct impact on income tax receipts and also on the economic growth and tax revenue that companies’ VAT.
Douglas Ross (Moray) (Con)
Another report that is publicly available is the SNP’s White Paper ahead of the 2014 independence referendum in Scotland. Will the hon. Gentleman outline the proposals for immigration in that policy?
Stuart C. McDonald
I have no problem in outlining the paper. This point was got up on Twitter, as if it was a gotcha for the SNP. In that White Paper we advocated a points-based immigration system for those coming from outside the EEA, but we also advocated for the free movement of people. [Interruption.] The Minister looks as if I have been caught in some sort of trap. I am perfectly happy to support a points-based system for Scotland for people coming from outside the EEA. That is not a problem at all. But there are points-based systems and there are points-based systems. [Interruption.] People are chuckling away as if I am talking nonsense, but the Canadian points-based system is significantly different from the points-based system in Australia. The system proposed by the UK Government is barely a points system, and if hon. Members speak to anyone who knows the first thing about immigration law policy, they will say that there is barely a resemblance. Despite all the rhetoric, there is a tiny resemblance between what the UK Government are proposing and what the Australian points-based system is proposing.
On the issue of flexibility and regionality, the Australian points system includes some variation to take account of the different needs of different provinces. If the Australian points-based system is so wonderful, why has it not been replicated in any meaningful sense by the UK Government, including in respect of regional flexibility? Yes, the 2014 White Paper did refer to a points-based system for people from outside the EU—one that would be tailored for Scotland’s circumstances, not one that is completely inappropriate for it.
Ian Robinson and Fragomen, leading international practitioners, looked at the example of Canada, Australia, Switzerland and New Zealand and put forward a whole host of possible options. As they said last week, one of those options would be simply to allow the free movement rules to continue to apply in Scotland. If a hotel in the highlands of Perthshire is recruiting, it can continue to recruit from the EEA just as it does now.
However, there is a huge range of possibilities, from more radical suggestions, such as retaining free movement, all the way down to tailoring the points-based system to suit Scotland’s needs. That brings me to a very modest suggestion that I am bound to bring up; it is a suggestion from my hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) that I think he may have raised directly with the Minister. It is simply to ensure that points are awarded in this system for Gaelic language skills as well as for English.
This is not just about Scotland, however. The challenges in Northern Ireland will also be unbelievably acute and perhaps even more so, given the land border that it shares with a country not only where businesses benefit from free movement of people, but that runs a completely independent immigration system, tailored to meet its own needs, while still being part of the common travel area. Business in Northern Ireland may face thousands of pounds in immigration fees just to try to attract the very same people who, a few miles down the road, could take up the position totally free of cost and bureaucracy. Merely saying that this system will work for all of the UK does nothing to address that problem.
Even if the Government do not want to properly engage in debate and discussion with SNP MPs or Ministers in the Scottish Government, I urge the Minister to listen to and engage with other voices who are speaking out on this issue. Businesses, business groups, think-tanks, civic society, universities and public sector organisations are all hugely concerned about it. The Minister just needs to do a Google search for commentary in Scotland and Northern Ireland in particular on their response to the Government’s most recent proposals.
Mr Goodwill
Is the hon. Gentleman aware that figures released only this morning show that the unemployment rate in Scotland is now the highest in the United Kingdom, at 4.6%, compared with a UK rate of 3%? That means that unemployment has risen by 30,000 to 127,000. Does he not think that those are the sort of people we should be getting into jobs in Scotland and that we should not be looking to the EEA to provide the people?
Stuart C. McDonald
The economic impact of coronavirus is of course a tragedy, and every lost job is an absolute tragedy as well. Yes, of course we will focus our efforts on ensuring that people are back in work as soon as we can do that, but we cannot design our immigration system for the next decades based on this calamity. If the only reason Conservative Members can come up with to support this system being implemented in Scotland is that we are going through a pandemic, that is pretty farcical, given that these proposals have been in existence for the last few months, so no, I do not accept that it is any reason for shying away from the points that I am making. The system will cause huge long-term damage to Scotland’s economy and Scotland’s public finances. It is not just me saying that; a whole host of organisations have real concerns.
Again, I am not expecting the Government to do a 180-degree U-turn today, but I do want at least some recognition that there are genuine issues that require more than just our being told that this system will somehow work for Scotland, Northern Ireland or any other devolved nation.
Brendan O’Hara (Argyll and Bute) (SNP)
It is a pleasure to serve under your chairmanship again, Sir Edward. Although the United Kingdom’s population is projected to rise by about 15%, it is reckoned that the population of our rural areas, including my own constituency of Argyll and Bute, will fall by as much as 8%. The situation is absolutely unsustainable because, despite Argyll and Bute being an exceptionally beautiful part of the world, we have an ageing and non-economically active population and our young people leave to spend their economically productive years outside Argyll and Bute.
To give credit to the council and to the Scottish Government, they are doing what they can to make Argyll and Bute a place that young people do not feel that they have to leave before coming back to retire—many of them do—but before that long-term goal reaches fruition, a cornerstone of Argyll and Bute Council’s plan for economic regeneration was predicated on continuing access to EU nationals and attracting them into the area. Regrettably, and through no fault of our own, that option has been taken from them; and the UK Government, having taken that option from them, now have a responsibility to provide a solution that will help those areas suffering from depopulation to recover. It is becoming increasingly clear that a major part of that would be the introduction of a regional immigration policy similar to that which works in Canada, Australia, Switzerland and other countries, and one that reflects the different needs of different parts of the country. There is no reason, other than political will, why that cannot happen here.
Douglas Ross
Does the hon. Gentleman therefore suggest that if we had an independent Scotland, with its own immigration system, there would be a regional variation between Argyll and Bute and Edinburgh?
Brendan O’Hara
Ultimately, that would be a decision for any incoming Scottish Government to make.
Brendan O'Hara
Personally, I think that the greater devolution of power, as widely as possible across any nation state, is an exceptionally good thing. Anything that can attract people to come, live, work, invest and raise families in our rural communities must be looked at and broadly welcomed. It was broadly welcomed in the recent Migration Advisory Committee report, which said:
“The current migration system is not very effective in dealing with the particular problems remote communities experience. If these problems are to be addressed something more bespoke for these areas is needed…The only way to address this question in the UK context would be to pilot a scheme that facilitated migration to these areas, then monitor what happens over several years and evaluate the outcomes.”
As my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East said, that idea was welcomed by the right hon. Member for Bromsgrove in a ministerial answer on 23 July 2019, where he accepted the need for the development of a pilot scheme. To date, there has been very little movement and we fear that there has been backtracking by the UK Government about what they plan to do next about setting it up.
The Minister knows that the Scottish Government stand ready to work with him to design and develop a solution that is tailored to meet Scotland’s needs. I can tell him that if the MAC is willing to provide the advice, and the Scottish Government is minded to follow that advice, then Argyll and Bute is prepared to put it itself forward as a pilot area for such a scheme. I spoke yesterday to the chief executive of Argyll and Bute Council, Pippa Milne, who confirmed that the council would be happy to work with the UK Government and the MAC to see how a bespoke regional immigration system would work in practice. Will the Minister act on the MAC recommendation, which was supported by the former Home Secretary, and help Scotland to fight the curse of depopulation?
Holly Lynch (Halifax) (Lab)
It is a pleasure to serve under your chairmanship once again, Sir Edward. I will briefly outline our position on amendment 17 and new clause 33. We are entirely sympathetic to amendment 17 for the reasons that have just been outlined, seeking to protect Scotland from the impact of this hard stop on free movement without a plan for mitigating the effects on key sectors. On more rural areas, our focus will continue to be on finding a solution for the whole of the UK rather than just Scotland. We understand that the Scottish National party has not given up on its aspiration of independence for Scotland, but I am afraid that that is where our parties diverge. To have an immigration system for Scotland that is different from that of the rest of the UK without that broader sense of a more regional approach affecting every area of the UK would open a raft of further questions around the management of that system and the means of enforcing it geographically. We say this in the spirit of loving Scotland and wanting it to stay and prosper as part of the United Kingdom. On that basis, we cannot support amendment 17.
We welcome the approach behind new clause 33 in principle, but again feel that it misses the opportunity to consult with the English regions as part of the process. Richard Burge of the London chamber of commerce said in last week’s evidence session that the MAC was slow and unwieldy. He said that it needs
“to involve business much more directly and that, it is hoped, will enable it to be much more responsive”.––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 12, Q18.]
Frustration with the MAC and a genuine and well-founded scepticism that, without radical reform, we would not be able to respond in anything like realtime to emerging workforce issues and skill shortages was a recurring theme in the evidence session and has been throughout our engagement with stakeholders ahead of the Committee. With this in mind, we are inclined to agree that one way of making immigration rules and shortage occupation lists more responsive would be to grant the devolved Administrations a greater say.
As I have already said, however, the glaring omission in new clause 33 is that it does not propose to consider the needs of the English regions in quite the same way. As a Yorkshire Member, it would be remiss of me not to reflect on the fact that the population of Yorkshire is comparable to, or greater than, those of the devolved nations. We hope that a report of the kind outlined in new clause 33 might take into account our needs and those of other regions, alongside those of the devolved Administrations. As a party, we will be looking to review the MAC and the shortage occupation list process in their entirety, shaping our own proposals for transformation in due course. On that basis, we broadly support new clause 33, but we will be shaping our own proposals in the coming months.
Kevin Foster
I am grateful to the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East and his hon. Friends for tabling the amendment and new clause. Having said that, there was a certain predictability about them given the SNP’s aim of separating our United Kingdom and wish for borders to be created across this island.
I turn to some of the more specific points. I have had direct contact with the hon. Member for Na h-Eileanan an Iar. He is very passionate about the Gaelic language and the role it plays in contemporary life. I have also had representations from Ministers and Members in Wales about the strong role that the Welsh language plays in our culture today, enriching our Union as a whole. Certainly, we will see what we can do to incorporate Welsh, Irish and Gaelic into our migration system. It is probably worth noting that the vast majority of fluent speakers of those three languages are either citizens of the United Kingdom or the Republic of Ireland, and therefore effectively not subject to migration control; they have rights to live and work within the United Kingdom and settle in any part of it they choose.
It was interesting to hear the comments of the hon. Member for Halifax, my Labour shadow, about how separate systems would be enforced. Like me, she does not want to see an economic version of Hadrian’s Wall between England and Scotland, although I recognise that others on the Committee perhaps do.
We are looking at how to make the Migration Advisory Committee’s role responsive and how it can choose some of its own reports—we will come on to that when we discuss some of the new clauses. The issue is not purely about a commission. I am thinking particularly about how the MAC can send out a more regular drumbeat of reviews, and commentary on reviews, for the shortage occupation list. That should fit in with our wider labour market policies rather than being considered apart from our skills and training policies. I hope we can find some sensible consensus on that.
The MAC has launched its call for evidence for the shortage occupation list and the advice that it is going to give Ministers about the new points-based system. I hope people will engage with that; there is certainly good strong engagement from many businesses. It would be good to see the Scottish Government promote the idea that businesses in Scotland should be getting involved and positively engage in the process—not least given that the MAC has indicated its intention for there to be shortage occupation lists for each of the four nations of the United Kingdom. It will probably not be a great surprise if many of those are very similar, given the similar types of skill shortages across the United Kingdom.
I was interested to hear the comments from the hon. Member for Argyll and Bute, in particular the idea that we could start having immigration policy for individual council areas. That is interesting. It is worth saying that the MAC suggestion was about remote areas. We both went to see the first HM naval base on the Clyde, in his constituency; as he knows, he is not exactly remote from the vibrant heart of culture and economy that is Glasgow—that is rather different from the concept of, let us say, eastern and western Australia in terms of distance.
I will be very clear: a range of powers is available to the Scottish Government. If the same pull factors that created the challenges today still exist, this look into the migration system is not going to provide a solution. With other Members from Scotland, including my hon. Friend the Member for Moray, we have looked at the fact that there is a determined drive—luckily, the Scottish Government have the powers around economic development—to create those strong opportunities in communities. Ultimately, if we create a migration opportunity but the pull factors are still there and have not been addressed, the situation will become a revolving door. That is why we have to look at those core issues first —why people are moving out—and not just look to a migration system as a magic bullet for those problems.
Brendan O'Hara
At the risk of giving a geography lesson, I point out that when the Minister visited Argyll and Bute he visited the easternmost tip of the constituency, nearest to Glasgow. The constituency spreads over 7,500 sq km, has 26 remote island communities and is not part of the vibrant central belt hub. That is why it and many other areas of the highlands and islands of Scotland need a bespoke solution. The problems we face in Argyll and Bute are not those that many large conurbations in the United Kingdom face. There is a need to recognise that.
Kevin Foster
Perhaps the point has been made, then, that this is not about having an immigration system based on a council area, but about having one for an area smaller than that of a council. I think that that would lead to confusion, with multiple areas.
There are many issues across large stretches of the highlands, and also rural parts of the rest of the United Kingdom. The fact that there are challenges in ensuring that younger people in particular have opportunities, and options to stay, is a facet of the issue that is not unique to parts of Scotland. However, if we do not deal with the core issues, most of which fall under the remit of the devolved Administration in Edinburgh, those pull factors will still exist, and the migration system is not a magic cure for them.
Stuart C. McDonald
It is a question of having strategies in place to address the challenges, but I want to pin the Minister down on the question of the remote areas pilot. That is a recommendation from the MAC. Can the Minister say categorically that this morning he is ditching it, and that there will not now be a remote areas pilot scheme? That would be really bad news.
Kevin Foster
We made it clear in the policy statement that we put out in February that we were not planning a remote areas pilot. Again, the thing that we must focus on is that many of the pull factors exist. It is within the competence of the Scottish Government to deal with those issues, and to create something and tackle them.
I have seen how Members of Parliament in the north-east of Scotland, including my hon. Friend the Member for Moray and my hon. Friend the Under-Secretary of State for Scotland, the Member for Banff and Buchan (David Duguid), are pushing for the creation of those economic opportunities that they want in parts of rural Scotland. Perhaps the one hope that we have on this point is that there is a Scottish Parliament election coming next year. I hope that there will be a more business-focused, opportunity-based Administration in Edinburgh, which will be focused on developing Scotland, not separating it.
Douglas Ross
I agree wholeheartedly with the Minister’s point about the number of factors that are within the remit of the Scottish Parliament and on which the Scottish National party Government of Scotland have failed.
We have heard from SNP Members that they want their own immigration system. Indeed, the hon. Member for Argyll and Bute said that they would design and tailor one. Does the Minister share my concern that we heard similar reassurances from the SNP Scottish Government about social security—yet they had to tell the UK Government that they could not take those powers because they could not implement the changes quickly enough in Scotland?
Kevin Foster
My hon. Friend, as always, hits the nail straight on the head with his arguments. Yes, we had many demands for devolution of policy, but then the Scottish Government did not want to take them up. Suddenly there was a new group of Unionists wanting the United Kingdom Government to deal with something in Scotland.
Stuart C. McDonald
Will the Minister do us the favour of explaining how his immigration policies will make the challenges easier rather than harder for Scotland?
Kevin Foster
The first thing that our immigration policy will do is provide a points-based system on a global basis, based on RQF3 and on having a shortage occupation list. Businesses in Scotland can recruit globally on that basis. Also, we can look at the first reform, which we have already carried out—a route that I was pleased to launch in Glasgow. I have seen it at first hand—the best talent being brought into our universities, and particularly into the University of Glasgow. Under that system, on a global basis, teams can be recruited to tackle and research some of the most challenging questions that mankind faces. On the occasion in question the issue was tackling malaria, and the huge impact of that.
Those are the sorts of benefits we want: high value and high skill—the attractions are there. It is a vision for Scotland, whose natural beauty is second to none, based on skills and the attractiveness of a high-skill, high-value economy—not on saying that the main thing Scotland’s economy needs is the ability to put more people on the minimum wage on a global basis.
Stuart C. McDonald
The Minister mentions his visit to Glasgow all the time. While he was there, did he speak with Universities Scotland, which is among the organisations that has spoken out in favour of a differentiated system? This is not just coming from the SNP. The Minister has also spoken about the benefits of his new system, but his own risk assessment says that it will cause levels of immigration to Scotland to fall. How is that in Scotland’s interests?
Kevin Foster
We engage strongly with partners, particularly our high-compliance Scottish universities that are sponsors of tier 4 visas. We very much welcome the contributions they make, as well as those that they make as part of wider groups, such as the Russell Group, that operate on a UK-wide basis.
There are two visions, I suppose. There is one that my hon. Friend the Member for Moray and his colleagues from Scotland bring us: a high-productivity, high-value Scotland, an attractive place to live with a thriving economy, recruiting on a global basis. Then there is the Scotland that the Scottish National party brings us; the only reason someone would go there would be to pay low wages or recruit at, or near, the minimum wage on a global basis. That, to me, is not a particularly inspiring vision.
Many of the powers to deal with the pull factors that lead to depopulation in rural areas are already in the hands of the Edinburgh Administration. As with so many other things—this has been touched on in relation to social security—it is time to see the Scottish National party getting on with the job of governance, rather than the job of grieving or looking to separate the United Kingdom.
The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East will not be surprised to hear that the Government’s position has been made very clear on this issue, but I will briefly set it out again. Immigration and related matters, such as the free movement of persons from the EU, are reserved matters, and the immigration aspects of the Bill will therefore apply to the whole United Kingdom. The Government are delivering an immigration system that takes into account the needs of the whole of our United Kingdom and works for the whole of it, not for the political needs of those whose goal is its separation.
We do not believe that it would be sensible, desirable or workable to apply different immigration systems in different parts of the United Kingdom, and the independent Migration Advisory Committee has repeatedly advised that the labour markets of the different nations of the United Kingdom are not sufficiently different to warrant different policies. That was an independent report—the type that people seem to want, but then do not seem to want to listen to.
Kevin Foster
No, I have given way many times. As we heard in the evidence sessions, the simplistic argument saying that Scotland is different from England for political reasons ignores the variation within Scotland itself, given the strength of the economy in Edinburgh compared with the economies of more rural areas.
I do not propose to address new clause 33 in detail; as I say, we have seen the MAC’s conclusions on this issue. The Government’s objection is one of principle: immigration is, and will remain, a reserved matter. We will introduce an immigration system that works for the whole of our country and all the nations that make up our United Kingdom by respecting the democratically expressed view of the people in the December 2019 general election and the 2014 vote of the Scottish people, which rejected separation. Both Alex Salmond and Nicola Sturgeon used the phrase “once in a lifetime” or “once in a generation” about that vote; now, only six years later, we see how short a generation has become. Free movement will end on 31 December, and we will introduce a points-based immigration system that ensures we can attract the best talent from around the world to Scotland, based on the skills and attributes they have, not where their passport comes from.
It will come as no surprise that SNP Members and I will have to agree to differ, as we regularly do on issues that relate to the constitutional future of Scotland. I obviously hope that the hon. Members for Cumbernauld, Kilsyth and Kirkintilloch East and for Argyll and Bute and the hon. and learned Member for Edinburgh South West will withdraw their amendments—although I have a sneaky feeling that they may not—and I particularly hope that others on this Committee who have also voiced their opposition to separatist politics will join the Government in opposing these amendments if they are put to a vote.
Stuart C. McDonald
I sort of thank the Minister for at least making a contribution, but I have to say that, having shadowed about six or seven immigration Ministers for five years, I think that is probably the most regrettable speech I have heard from any of them at any time; the second most regrettable was the one the Minister made during the Opposition day debate a few months ago. It might play well with some MPs in this place, but I watched the faces of some Scottish Conservative MPs that night, and they were not impressed.
The Minister is speaking not just to the SNP, but to business groups and public service organisations—a whole host of concerned organisations in Scotland. He might get away with it in this Committee, but he cannot really get away with dismissing their concerns as “nationalist nonsense” or “separatist rubbish”. These are very serious people with very serious concerns about the implications of his Government’s migration system for Scotland. It seems to be not so much a case of, “We hope it will be all right on the night”, but one of, “We don’t care—stuff you!”
Stuart C. McDonald
I beg to move amendment 11, in clause 8, page 5, line 41, leave out subsection (5) and insert—
‘(5) This Part of the Act shall not come into effect until a Minister of the Crown has laid a report before each House of Parliament setting out the impact of this Act on faith communities in the UK.
(6) A report under subsection (5) must consider in particular the ability of members and representatives of faith communities from the EEA and Switzerland to enter the UK for purposes related to their faith.
(7) A Minister of the Crown must, not later than six months after the report has been laid before Parliament, make a motion in the House of Commons in relation to the report.
(8) In this section,
“faith communities” means a group of individuals united by a clear structure and system of religious or spiritual beliefs.”
This amendment requires the government to report to Parliament on the implications of this Bill for faith communities, including the ability of members of faith communities to come to the UK for reasons connected with their faith.
Some 18 months or so ago, the then Minister of State for Immigration issued a written statement announcing changes to immigration rules. Apparently, those changes were to ensure that ministers of religion could no longer apply for a tier 5 religious worker visa; instead, they would have to apply for a tier 2 minister of religion visa. As I understand it, that was done because of a fear at the Home Office that people were coming in under the tier 5 visa route and leading worship while not having the level of English that the Home Office decided would be necessary to perform such a function. The explanatory memorandum said:
“The Immigration Rules currently permit Tier 5 Religious Workers to fill roles which ‘may include preaching, pastoral work and non-pastoral work’. This allows a migrant to come to the UK and fill a role as a Minister of Religion without demonstrating an ability to speak English.”
For some reason, the Home Office also decided to introduce a cooling-off period. The explanatory memorandum said:
“The ‘cooling off’ period will ensure Tier 5 Religious workers and Charity Workers spend a minimum of 12 months outside the UK before returning in either category. This will prevent migrants from applying for consecutive visas, thereby using the routes to live in the UK for extended periods, so as to reflect the temporary purpose of the routes better.”
I have been in discussions with representatives of the Catholic Bishops’ Conference about migration to both Scotland and England. They tell me that most Catholic dioceses previously used tier 5 religious worker visas for priests to come here on supply placements while parish priests were away for short periods because of sickness, training or annual leave. Those supply placements were essential, as they allow Catholics to continue attending mass while keeping parish activities running smoothly. That allows the parish to continue to function while the parish priest is off through illness, going on a retreat or accompanying parish groups on outings, or even just taking a holiday.
A supply placement priest will lead the celebration of holy mass, including the celebration of the sacrament of marriage. He will lead funerals, including supporting bereaved family members, and visit the sick and elderly of the local community. In an age when social isolation and loneliness are increasing, the parish is a place where people can gather as a community to support one another and engage in friendship. It is not just about worship, but about the community hub that the church provides by offering spiritual and practical help and supporting the sick, the elderly, the needy and the vulnerable.
Mr Goodwill
In my own constituency there is a Coptic Christian community; it is a closed order, so they do not preach. The system already works very well for non-EEA residents. Is the hon. Gentleman suggesting that, if we do not extend the scheme to the EEA, there will be barriers for people coming to the UK in the way that he describes?
Stuart C. McDonald
I will come to that point in a minute. In short, the point made to me by the Catholic Church and other faith groups—we had a debate on this issue in Westminster Hall around the time of the changes—is that, actually, the system for non-EEA nationals used to work but does not work now, precisely because of the changes that the Home Office made 18 months or so ago.
The system is much more expensive now, and it is beyond most parishes’ ability to pay the fees for ministers to come in and lead worship. If they come in under tier 5, which is the much cheaper option, they are no longer allowed to lead worship or whatever else. They can perform a range of functions, but not the ones that are really needed, including leading worship.
The issue is already a problem now and it will be made infinitely worse, because at the moment parishes can still rely on priests or other leaders coming from the EEA. They do not have to pay for the expensive tier 2 visa; they can just come in under the free movement of people. When free movement comes to an end, the same regime will apply and parishes will have to pay all sorts of fees, even to have priests come in from France, Italy, Poland or wherever else. They are not looking forward to that prospect at all.
As I was saying, visiting clergy not only allow the local community to continue to function, but benefit and enrich the whole community, as the community gains from cultural exchange and from sharing the knowledge and experience of priests from other parts of the world. They educate new communities about life in their country, and they open up avenues for local parishes to support communities in need. What was most surprising about the changes was that, as far as the SNP was aware, there had been no problems with visas for the Catholic Church or any of the other faith organisations that made use of the tier 5 route. The new requirement introduced in 2019 for anyone preaching to use tier 2 minister of religion visas has instead more than doubled the costs incurred by parishes arranging supply cover. For some parishes that is unsustainable, compromising people’s opportunity to practise their faith.
Furthermore, they point out that seminaries conducting formation in English are not necessarily recognised by the Home Office as meeting the English requirement under the tier 2 route, meaning that many priests educated to postgraduate level in English are nevertheless required to take a language test, with the extra logistical and cost implications. The new arrangements more than double the costs, making supply cover essentially unaffordable. I have heard directly from religious leaders in my constituency that that is the impact of those arrangements. Unless reforms are made, the situation will be worsened by the end of free movement, as I said in response to the intervention from the right hon. Member for Scarborough and Whitby (Robert Goodwill). I simply ask the Government to engage with faith communities about the challenges that this is causing them to face, and to see if we might be able to come to a solution that makes these sorts of arrangements continue to function in the years ahead.
Brendan O'Hara
As my hon. Friend said, the tier 5 religious visas were operating perfectly smoothly for the many Churches and religious organisations that relied on them until these unexpected changes were made. Catholic parishes throughout the UK—including my own in the Archdiocese of Glasgow—regularly used these visas as routes for priests to come to the UK on supply placements.
The changes that came into force in January are already causing something of a headache for a whole host of religious organisations that require clergy to visit to cover for periods of illness, holiday, religious retreat, or when priests or other clergy are away on pilgrimage. This is a time of a crisis in vocation, clergy are becoming increasingly elderly, and more and more parishes and dioceses are turning to priests from outside the UK to cover such absences, sicknesses and holidays, so it beggars belief that the measure would have been introduced in this way.
It is important that the Minister realises that the tasks of a parish do not stop when the existing or resident priest falls ill, or goes on a well-earned holiday or retreat. As pointed out by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East, the church is more than just a place of worship, it is also a community hub providing both spiritual and practical support to the sick, elderly and vulnerable, as demonstrated by the great work of a number of organisations including the Society of Saint Vincent de Paul. The Bishops’ Conference of Scotland has been clear in saying that much of the positive work done in and around Catholic parishes which engenders that sense of community is being seriously undermined and compromised by these changes. The Home Office has to understand and recognise the benefits of allowing priests from other parts of the world to come in on a tier 5 visa. They enrich the whole community. It is a cultural exchange, it is a share of knowledge, a share of experience by priests and clergy from other parts of the world.
It is not just the Catholic church. Indeed, the Church of Scotland is on record as saying that it opposes the measure. Many of us are confused as to why these changes were deemed necessary. What grave issue has arisen that needed to be addressed in such a draconian fashion? The Scottish bishops said that for years they had sponsored priests through the tier 5 process, and they are completely unaware of any abuse of the system whatever. For years, priests came here, they worked and preached in Scotland and across the UK, and then returned home. Indeed, 25 years ago this summer at St Helen’s church in Shawlands in Glasgow, Father Stephens from Malawi was the celebrant who married me and my wife, rather successfully I am happy to report. But the question remains: why did this have to happen? What was the motivation behind it? Can the Government not see the harm they are doing to our religious communities, and can they not act to stop it?
Finally, exactly a year ago in a debate on that in Westminster Hall, my hon. Friend the Member for Glasgow North (Patrick Grady) invited UK Ministers to meet the Bishops’ Conference of Scotland. Did Ministers take up that invitation? Did that meeting ever take place and, if it did, what was discussed and what outcomes were agreed? If it never took place, why not?
Kate Green
I support the sentiments expressed by the hon. Members for Argyle and Bute and for Cumbernauld, Kilsyth and Kirkintilloch East. There have been considerable benefits to our faith communities from their ability to take advantage of freedom of movement and welcome EEA nationals into their communities. Faith communities, especially Churches of all denominations, have congregations with many EEA nationals among their membership and they are also often individuals who act as pastors, counsellors, youth workers and musicians.
As we have heard, many faith organisations have needed EEA nationals to cover short-term or sometimes longer-term appointments into leadership positions. That is especially true in areas where it has been hard to recruit. Free movement has also allowed faith communities some flexibility in terms of shared mission work, with UK nationals working overseas, undertaking mission trips, musicians performing in Europe at faith-based events or running camps and youth conferences. Faith communities have been able to bring EEA speakers and volunteers to help communities and to run events without the associated costs and rules around visitor visas and the tier system.
There will be a number of consequences for those communities as a result of the loss of free movement. First, while many faith groups have been effective in pointing their members to the EU settlement scheme where that is relevant, uncertainty remains about the scheme, what it means for families, for continuity of residence and for faith communities who are trying to keep people in their communities.
Faith communities looking to employ or to bring in volunteers from the EEA will now have to navigate the tier system, as they would for non-EEA nationals. As we heard, that brings complexity. With the greatest of respect to the right hon. Member for Scarborough and Whitby, I do not think it is the case that all faith communities have found that an easy system to navigate or to get the relevant approvals. There are also significant additional costs for sponsorship licences and visas. Indeed, it will not be cheap, especially when we include the additional NHS surcharge. A religious worker will be able to stay for up to two years. The cost for a one-year visa before administration costs is around £244, plus the NHS surcharge of £624, added to that the sponsorship licence fee and associated costs. On top of that, the community will have to fund any dependant costs and may also be providing the cost of flights, accommodation and training for the religious workers, and sometimes a small stipend. For smaller faith communities, that starts to become a very significant expense.
Many faith communities that rely on overseas workers tend to be found in the poorer parts of the UK. Poorer communities and poorer congregations are part of a poorer overall landscape and so the faith organisation itself will be less well resourced. It cannot draw on a wealthy congregation. That has a particular impact on smaller denominations and diaspora Churches, which will find that the loss of free movement will mean that poorer communities, who could benefit most from additional pastoral support, will feel the impact the harshest.
Proof of savings is difficult for some orders, which have vows of poverty, making it difficult for individuals to prove they can sustain themselves even if the order will cover all their living arrangements. If a person is needed quickly to cover a gap—the hon. Members for Argyle and Bute and for Cumbernauld, Kilsyth and Kirkintilloch East talked about the potential absence of a priest for a range of personal reasons—the procedure will now mean that there will be delay in bringing in that cover. I am not talking here about roles that fall short of being a full minister of religion, but there are roles that will still involve some level of religious duty. For example, there continues to be uncertainty about those coming in to work with children, and about pastoral work and preaching, and an understanding of the definitions of what those roles encompass, which is a particular issue with some particular faiths of particular traditions.
There is also a concern, as I have said, among faith communities that bring in musicians who may be self-employed and who may work in multiple settings. As the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East pointed out, seminaries that conduct formation in English are not necessarily regarded as meeting the English language requirement.
I hope the whole Committee will agree about the benefits of facilitating religious workers to come in to support our faith communities. In that spirit, I will ask the Minister a number of questions. What assessment have the Government made of the level of upscaling needed in the Home Office to process additional sponsorship licences for the purposes of ministers of religion or religious workers, or charity workers and faith communities, due to the removal of free movement?
Echoing the hon. Member for Argyll and Bute, what conversations are the Home Office having with faith groups regarding preparation for the immigration system that will affect them post-December? What help will be provided with regard to navigating sponsorship licences and understanding the costs that faith communities will have to meet?
At times, non-EEA nationals who have wanted to come to the UK for a short-term conference or to speak at an event have been denied visas; I have seen that in my own constituency. What assurance can the Minister give to faith communities that EEA nationals entering the UK for a conference or event for short-term study will not be restricted from doing so, and that appropriate decision-making will take place?
Will the Minister commit to reviewing the definitions of “minister of religion” and “religious worker”, and actively consult a wide variety of denominations and faith communities? What will the Home Office do to improve faith literacy among decision makers? I have to say that the asylum system has not given me much confidence that religious literacy in decision-making is where it needs to be.
What assessment have the Government made of the impact on creatives, such as musicians used by faith communities? Will they still be able to come to the UK? Will those in a different visa route be able to transfer if they take on a role in a faith community? For example, could someone who has arrived in the UK as a student transfer routes if they become a religious worker? Will it be possible for individuals to come to the UK as volunteers in faith communities and, if so, what restrictions will be applied to their activities? What discussions have the Government had with faith communities about their responsibility to carry out right-to-work checks?
This is an important issue for an important element of all our communities. I do not think the Government intend the impact of the removal of free movement to harm the operation of our faith communities, but the changes will cause real difficulties across a range of faiths, and particularly in those communities that most need the support that visiting religious workers can provide. I hope the Minister will be able to reassure the Committee.
Kevin Foster
I genuinely thank the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East for tabling this amendment. He always speaks with real passion, even when we disagree, as we did in the last debate, and his comments on this amendment have been no exception. We can perhaps be slightly more consensual now, even if the Government do not agree with the amendment.
I will deal briefly with a couple of points that have just been raised. First, in relation to decisions that would be taken on visitor visas for EEA nationals visiting faith groups, we have already made it very clear that EEA nationals will be non-visa nationals. Therefore, those looking to make visits to the United Kingdom would not be required to apply for a visa. They would be able to come through the e-gates and their visiting experience would be very similar, for example, to that of a New Zealander, a Canadian or a Japanese citizen at the moment, who can come through the e-gates and be granted visit leave. In a moment, I will come on to speak in a little more detail about the range of activities that a visitor can perform.
As a constituency MP, I have similarly sometimes been involved in decisions about faith communities, particularly a couple of years ago, when there needed to be some representations about how the income of Paignton parish church was considered, and whether a medieval church was an established organisation. I was only too happy to vouch that a church built in the 13th century is an established organisation, and that it was not set up for an immigration purpose, for pretty obvious reasons. I am genuinely always happy to hear representations from particular communities about that, as I did in that instance as a constituency MP.
We published the impact assessment for the Bill. I am clear that a lot of the Churches’ right-to-work checks will be the same as now anyway, because they have to do that for EEA citizens and UK nationals. When there is a right-to-work check, every one of us should be asked to present evidence that shows our right to work, as with right-to-rent checks; I recently had to show my passport to comply with those requirements, and rightly so. We are clear that there should be no discrimination there; those checks should be applied irrespective.
On the other points made, similarly, many faith communities, and certainly the larger faith communities present in the United Kingdom, are already sponsors. Much of that will transfer into the new system, so in many ways the experience of non-EEA nationals—non-visa nationals, to be absolutely clear—will be transferred over with the various concessions and opportunities, such as pay, performance, engagement and other items.
On the specific point made by the hon. Member for Argyll and Bute, I do not have officials’ or my predecessors’ diaries to hand, in terms of meetings, but as I met other faith communities at the invitation of Members of Parliament, I am certainly more than happy to meet the Scottish Catholic bishops representatives and to engage and have a conversation with them. They are a key partner. I certainly recognise the valuable social role that many Catholic churches play in communities across the United Kingdom. I am always happy to have a conversation about some of the definitions, particularly around visitor, tier 5 and tier 2. Some things, as I will come on to in a minute, will actually be covered by our visitor provisions, as well as under tier 5. Again, I am happy to have a conversation with them on those points.
I am genuinely grateful to the SNP for initiating this debate, because it gives me the opportunity to put on the record how the Government value the role faith communities play in this country, and more importantly, the contribution that many people who have migrated here have made and are making to the functioning and wellbeing of our faith communities. Faith communities enhance our national life, and they are stronger because people from around the world come and contribute to every aspect of their work, not least in bringing their skills to leadership in communities across the UK, hence why, in our future points-based immigration system, there will continue to be routes for those connected with faith and religion to come to the UK. Within the current immigration system, there are two routes specially designed for them, and this will continue in the future, to assist with consistency.
As referred to already, the tier 2 route for ministers of religion—effectively a skilled worker route—is for religious leaders such as priests, imams and rabbis, as well as missionaries and members of religious orders, taking employment or a role in a faith-based community. They can come for up to three years initially, which they can extend to six years, and they may qualify for settlement—indefinite leave to remain—after five years. Again, those who receive indefinite leave to remain are then exempted from the immigration health surcharge and will also have a permanent unlimited status within the United Kingdom.
Additionally, we have the tier 5 religious workers’ route. It should be clear to the Committee that this was designed with a very different purpose in mind. It permits stays of up to two years and caters for those wishing to undertake supportive, largely non-pastoral roles. In common with all tier 5 categories, as it is temporary at core, there is no English language requirement.
That last point is crucial. As I indicated, we welcome faith leaders from around the world, and in many communities regular conversations and events bring faith communities together in opposition to those who wish to sow the seeds of division between them. It is therefore right that those who want to lead a faith community, which involves both preaching and helping the faith community to interact with the wider community in their leadership role, should have a proper command of English to enable this—especially the valuable inter-faith work that goes on in so many communities.
I think of what happens locally in Torbay, and of the type of exchanges facilitated in the midlands, particularly by Coventry cathedral, given its background in different faiths. Those exchanges really cannot be facilitated if there is not a good command of a working language within the local community.
Mr Goodwill
Will the Minister pay tribute to John Sentamu, the recently retired Archbishop of York, who came from Uganda during the time of Idi Amin and has made a fantastic contribution to religious and general life in our country?
Kevin Foster
I am only too happy to do so and to put the Government’s thanks to him on the record. He provided an inspiration and a ministry that will be remembered for a very long time, and he broke the mould of what people expect from someone in such a senior position in the Anglican communion. Such contributions are very welcome and we want them to continue. We want to see that sort of person, particularly from the worldwide Anglican communion, as well as from the See of Rome—we have seen some amazing people come and be part of that community here in the United Kingdom. It is well worth paying tribute to such an example of someone who has achieved amazing things and revealed what he saw as God’s purpose for him as Archbishop of York. I am sure that we all wish him a very long retirement—not from holy orders, of course, which are a calling for life, but from his duties as archbishop.
I have heard the concerns expressed today about those who come to the UK for a very short term to provide cover while the incumbent minister is on holiday. It is worth pointing out our visitor rules, which will extend to EEA nationals as they currently extend to non-visa nationals, as I indicated earlier. In the immigration rules, the list of permitted activities specifically states that visitors may
“preach or do pastoral work.”
That allows many faith communities to hear inspiring preachers or hear about their faith’s work in other countries, especially in support of overseas aid and development work. Visitors are permitted to lead services on an ad hoc basis, which may provide a solution for communities that wish to invite visiting clergy to cover short-term absences, although they may not be paid for it—in many religious communities, that would not necessarily be a bar to providing a period of short-term cover.
It is worth my reminding the Committee that we have confirmed that EU citizens, who are the focus of the Bill, and EEA citizens more widely can continue to come to the UK as visitors without a visa, without prior approval, and use e-gates, where available, on arrival in the United Kingdom.
I hope that the SNP will consider its position on amendment 11. I say gently that we all need to reflect on whether it is appropriate to have faith communities led by those without a command of English adequate for the task—not least at a time when we need to come together more, not be separated by barriers of language. I therefore believe that the review that the amendment would put in place is not necessary. I invite the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East to withdraw the amendment, but I am always more than happy to discuss further how we can ensure that our faith communities are supported and that there is clarity on the three routes that I have outlined for ministers and those involved in faith communities to come to the United Kingdom and play the role that many have done in an inspiring way over many years.
Stuart C. McDonald
I am grateful to my hon. Friend the Member for Argyll and Bute and the hon. Member for Stretford and Urmston for their detailed contributions to the debate, and to the Minister for his response. We are back in much more convivial and consensual territory, and I much prefer it; I feel much more comfortable there. I am particularly grateful for the Minister’s offer to meet the Bishops’ Conference, which I am sure will be very welcome. This debate has helped us clarify how close we are to making sure the system works for all interested parties.
I scribbled down the fact that the Minister highlighted two routes, but of course there are three. Tier 2 is much more about the longer term, and affects ministers who want to come and settle, and the tier 5 route is not for people who will lead worship. Then there is the visitor category, but, as the Minister said, it does not allow for payment to be made, and the organisations that I have spoken to say that if somebody is here for a couple of months, there are challenges if they cannot offer to pay.
We are close, but those three routes do not quite resolve the difficulties that we have highlighted. If the Minister is able to engage with the bishops’ conferences and other religious organisations, we may be able to tweak one of the three existing routes or come up with another one. It is probably better to fix the three than to come up with a fourth. I hope we will find a resolution, and I am glad that the Minister is engaging positively. For that reason, I see no reason to press for a vote, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
I have to be entirely neutral, of course, but it would be nice if the Government allowed us to have our religious services again, as has happened in the rest of Europe.
Clause 8 ordered to stand part of the Bill.
Clause 9 ordered to stand part of the Bill.
New Clause 9
Report on the impact to EEA and Swiss nationals
“(1) This Act shall not come into effect until a Minister of the Crown has laid a report before each House of Parliament setting out the impact of the Act on EEA and Swiss nationals in the UK.
(2) A report under subsection (1) must consider—
(a) the impact on EEA and Swiss nationals of having no recourse to public funds under Immigration Rules;
(b) the impact of NHS charging for EEA and Swiss nationals;
(c) the impact of granting citizenship to all EEA and Swiss health and social care workers working in the UK during the Covid-19 pandemic;
(d) the impact of amending the Immigration and Nationality (Fees) Regulations 2018 to remove all fees for applications, processes and services for EEA and Swiss nationals; and
(e) the merits of the devolution of powers over immigration from the EEA area and Switzerland to (i) Senedd Cymru; (ii) the Scottish Parliament; and (iii) the Northern Ireland Assembly.
(3) A Minister of the Crown must, not later than six months after the report has been laid before Parliament, make a motion in the House of Commons in relation to the report.
(4) In this section, ‘health and social care workers’ includes doctors, nurses, midwives, paramedics, social workers, care workers, and other frontline health and social care staff required to maintain the UK’s health and social care sector.”—(Stuart C. McDonald.)
This new clause would ensure that before this Act coming into force, Parliament would have a chance to discuss how EEA and Swiss nationals will be affected by its provisions, including no recourse to public funds conditions, NHS charging, the possibility of granting British citizenship to non-British health and social care workers, removing citizenship application fees and the potential devolution of immigration policy of EEA and Swiss nationals to Wales, Scotland and Northern Ireland.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 10—Extension of registration for EU Settlement Scheme—
“(1) The EU Settlement Scheme deadline shall be extended by a period of six months unless a motion not to extend the deadline is debated and approved by both Houses of Parliament.
(2) Any motion not to extend, referred to in subsection (1), must be debated and approved no later than three months before the deadline.
(3) In this section, ‘the EU Settlement Scheme Deadline’ means the deadline for applying for settled or pre-settled status under the Immigration Rules.”
This new clause would ensure the EU settlement scheme was not closed to new applications until Parliament has approved its closure.
New clause 11—Application after the EU Settlement Scheme deadline—
“(1) An application to the EU Settlement Scheme after the EU settlement scheme deadline must still be decided in accordance with appendix EU of the Immigration Rules, unless reasons of public policy, public security, or public health apply in accordance with Regulation 27 of the Immigration (European Economic Area) Regulations 2016 (as they have effect at the date of application or as they had effect immediately before they were revoked).
(2) In this section—
‘an application to the EU Settlement Scheme’ means an application for pre-settled or settled status under appendix EU of the Immigration Rules;
‘the EU Settlement Scheme Deadline’ means the deadline for applying for settled or pre-settled status under appendix EU of the Immigration Rules.”
This new clause would ensure that late applications to the EU settlement scheme will still be considered, unless reasons of public policy, public security or public health apply.
New clause 25—Report on status of EEA and Swiss nationals after the transition—
“(1) This Act shall not come into effect until a Minister of the Crown has laid a report before each House of Parliament setting out the impact of the Act on EEA and Swiss nationals in the UK.
(2) A report under subsection (1) must clarify the position of EEA and Swiss nationals in the UK during the period between the end of the transition period and the deadline for applying to the EU Settlement Scheme.
(3) A report under subsection (1) must include, but not be limited to, what rights EEA and Swiss nationals resident in the UK on 31 December 2020 have to—
(a) work in the UK;
(b) use the NHS for free;
(c) enrol in education or continue studying;
(d) access public funds such as benefits and pensions; and
(e) travel in and out of the UK.”
This new clause would require Government to provide clarity on the rights of EU nationals in the EU in the grace period between the end of the transition period, and the closure of the EU Settlement Scheme.
Stuart C. McDonald
With new clause 9, which stands principally in the names of my hon. Friends in Plaid Cymru, we turn to the central matter of the Bill: what will happen to EEA and Swiss nationals who are already here? The new clause simply calls on the Government to report on what the implications for EEA and Swiss nationals will be. That includes reporting on the impact of no recourse to public funds, NHS charging, the granting of citizenship to all EEA and Swiss health and social care workers working in the UK during covid-19, and certain fees. It also includes—we will probably not discuss this in great detail—the merits of the devolution of powers over immigration from the EEA and Switzerland to different parts of the United Kingdom. Those are all perfectly reasonable requests.
I want to focus on new clauses 10 and 11, which bring us back to the settlement scheme. We touched on that on Thursday, when Opposition Members made the case for a declaratory system, meaning that people would have their rights automatically enshrined in law. It would still apply to the settlement scheme so that they could prove their status and navigate employment, social security and other rights. I regret that the Government and the Committee rejected that proposal, but I have taken that on the chin and moved on. However, that puts the Government under a greater obligation to spell out what should happen to eligible individuals who do not apply for the settlement scheme by 30 June 2021. I have tried on a huge number of occasions to get them to reveal what work they have done to estimate how many people might not apply, even in broad-brush terms, and how they would respond.
As we heard in evidence, it is blindingly obvious that, even with all the good work that is going on, the Government will struggle to get above 90% of the target population. Getting above 90% would be a great success, given the international comparison. If the Government fall just 5%, 6% or 7% short of the target, hundreds of thousands of people will suddenly be without status and will lose any right to be in this country on 1 July 2021. By all accounts, this is a huge issue and we need to push the Home Office further to set out how it will address it. So far, all we have been told is that it will take a reasonable approach. That is fine, but it is not enough. We need much more detail, and new clauses 10 and 11 are designed to push the Government on that.
Mr Goodwill
Does the hon. Gentleman share my concern that extending the deadline by six months would encourage those who have been putting it off to put it off for another six months?
Stuart C. McDonald
Not really. People still have every incentive to apply for the scheme. On 1 July next year the deadline will have passed. People might put it off for six months, but I would far rather that than subject tens and probably hundreds of thousands of people to not having any rights at all. It is much the lesser of two evils. As I say, there are different ways in which we can do this. New clause 11 would allow people to apply after the deadline. I will turn to that in a moment. I want to set out exactly what new clauses 10 and 11 are designed to do.
New clause 10 would ensure that the EU settlement scheme was not closed to new applications until Parliament had approved its closure. We want to see what the plans are and scrutinise how the situation will be handled. Until we are satisfied, we will keep extending the scheme in order to protect people from the loss of their rights and from the hostile environment and the threat of removal. Why on earth should MPs give the Home Office a blank cheque to deal with this as it pleases? We will have that debate and the right hon. Member for Scarborough and Whitby can make his point that it will lead to a delay in people making applications, but I am firmly of the view that that is much the lesser of two evils.
On the closure of the settlement scheme, people who have not applied for a status will have no legal basis to remain in the UK after the grace period, no matter how long they have lived in the UK. They will be liable to removal and will face the hostile environment. After the grace period, a huge group of people will still not have applied. No similar scheme has ever reached 100% of its target audience. New clause 11 would bring back control of the situation to Parliament and allow us to be fully informed as to where the settlement scheme has got and what the Government’s plans are for dealing with this huge issue before we sign off on closure of the scheme. It is a modest proposal, but hugely important.
New clause 11 would ensure that late applications to the EU settlement scheme would still be considered unless reasons of public policy, public security or public health apply. In tabling the new clause, we are asking the Minister who he thinks does not deserve a second chance after 30 June next year. Who does not deserve the reasonable response that he has spoken about in the past? Under the new clause, applications made after the deadline could be ignored for restricted reasons relating to public policy, public security or public health. However, we want to know who, on top of that, the Minister thinks should be deprived of their rights and the ability to remedy the situation in which they find themselves. People will be unable to live in this country and they will be liable to removal. We need to know much more about the grounds on which people will be able to make a late application. What are the reasonable grounds that the Home Office will accept? They have yet to be defined. As far as we can tell, they will comprise only a very narrow list of exemptions, including, for example, for those with a physical or mental incapacity, and for children whose parents have failed to apply on their behalf.
As I have said many times, the deadline will be missed by many people for good reasons beyond those that I have just outlined. People will simply not be aware of the need to apply, and people with pre-settled status might forget to reapply for full settled status. I have set out a million times why people will not understand that the settlement scheme applies to them. Rules on nationality and immigration status in this country are hugely complicated. There will undoubtedly be people from all walks of life who think that they are British citizens and who already have a right of residence in this country. They will not appreciate that, in fact, they need to apply to the scheme. The consequences of making such a mistake can be dreadful. If we simply leave the Bill as it is, people will lose the right to be in this country and will be removed and subject to the hostile environment. Alternatively, we could at least leave open to them the option of being able to apply to the scheme after the deadline has passed. They would still have every incentive to apply, because they would need to evidence the rights that they access through the settled status process.
I ask the Government to look positively on these new clauses, and at the very least to provide much more information and assurance about how they are going to approach this issue. Up to this point, there has been barely a flicker of recognition that this is something that needs to be addressed, but we are talking about tens, possibly hundreds, of thousands of people being left in an appalling situation.
Holly Lynch
I believe that it is appropriate to speak to new clause 25 as part of this grouping. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East has already explained his commitment to and passion for new clauses 10 and 11. Our new clause 25 is not dissimilar to new clause 9. New clause 25 is tabled in the name of my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), who is the shadow Home Secretary, and myself and my hon. Friends.
New clause 25 focuses on the need to put to bed some of the anxieties of those who will not have had their status confirmed by the time the transition period ends at the end of this year. When free movement ends, eligible EEA and Swiss nationals will still have until the end of the grace period to apply for status through the EU settlement scheme, which does not close until the end June 2021. With this in mind, all the conversations we have had with those European citizens who have either applied or are planning on applying to the settlement scheme have centred on what their status will be between the end of free movement and their status being granted, which could happen up until the end of June 2021 and, in some cases, beyond that.
The new clause asks the Government to put together a report on the status and rights of people during that window and to lay it before both Houses for consideration. We are calling on the Government to recognise the genuine sense of vulnerability felt by people who may fall into that category and to provide some assurance, in a report to Parliament, guaranteeing that those people, who are eligible, will have a lawful status and not be disadvantaged during those six months.
I asked Luke Piper, immigration lawyer and head of policy at the3million, about this issue in last week’s evidence session. It is a top priority for him and his group. He told the Committee:
“The Bill brings freedom of movement to an end at the end of this year, but it is not clear what legal status people will have between the end of the transition period, which is at the end of the year, and the end of June—the end of the grace period. There has been no clarity about, or understanding of, what legal rights people will have. We have simply been told that certain checks, such as on the right to work, will not be undertaken, but it is not clear to us or our members how people will be distinguished, both in practice and in law.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 61, Q125.]
EU citizens in the UK have already endured a lot of uncertainty about their futures and are now also facing insecurity on their lawful status. The suggestion that employers or landlords should not be checking to confirm their personal status during this grace period seems to be an approach fraught with potential problems. I am keen to hear what engagement Ministers have with employers and landlords on this issue, and how any suspension of the hostile environment will be managed. Last December, the3million commissioned a survey on EU citizens’ experience of the settlement scheme. It was the largest survey of its kind and indicated that they are already facing barriers, with 10.9% of respondents saying they have already been asked for proof of settled status, even though it is not yet a requirement.
Although this new clause focuses on the rights of those who apply after the transition ends and who get their status before the EUSS deadline, there will presumably then be a group of particularly vulnerable people who apply before the deadline ends but who do not get their status until after the end of June 2021. What happens, for example, if they apply on 20 June 2021, which is before the deadline, but do not get confirmation of their status until 20 July, which is after the end the transition period and the closure of the EUSS? What are the rights and status of that cohort of people?
Although the numbers coming through are good, we know that lots of people are still yet to apply. As we have heard, we will never know exactly how many people are in that category. We will never know whether there is going to be a surge towards the end of the scheme, which will make this a bigger problem than many of us would like. When asked about the numbers and types of people who will struggle to apply on time, Luke Piper said:
“Much as with the number of people due to apply for the scheme, we do not know. We have no idea of the exact number of EU citizens who need to apply under the EU settlement scheme, so we will not have an understanding of the number of people who miss the deadline.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 62, Q126.]
Coronavirus has resulted in dedicated Home Office phone lines being closed, an inability to receive hard copies of documentation and specialist support services being stopped, impacting on the progress being made. The BMA has said that some doctors working tirelessly on the frontline may be in that cohort of people who have to leave things until next year, simply because they will be working flat out for the foreseeable future. After the transition period comes to an end, thousands of people might not have confirmation of their status.
Recent research by the3million on young Europeans living in London made some concerning findings. The focus group was the first time that some participants had heard about the EU settlement scheme, and a majority had not applied to it, despite being viewed as an easy to reach group because of their education and digital literacy. The new clause’s proposed report on that group’s rights between the end of the transition period and the EU exit deadline would be of great assistance in clarifying the status and rights of those harder-to-reach groups. It would also assist in getting them to submit their applications towards the end of the scheme.
It is important to note that, after the deadline, the EU settlement scheme will not close in practice, because people with pre-settled status will need to apply for settled status, and it will also be used by people will be joining family members in the UK after the deadline. Moreover, we will still be processing those applications that arrive on time but that will have to wait until the other side of the deadline for a decision to be issued.
Inevitably, the problem is the hostile environment and the long, dark shadow of the Windrush scandal. The fear brought about by the absence of a clear framework of rights and migration status for EEA and Swiss nationals between September 2020 and June 2021 is all too real. We therefore ask the Government to provide clarity on the rights of EU nationals in the UK during the grace period. EU citizens who have contributed and given so much to our society and country deserve to have security and confidence in their status.
Mr Goodwill
I very much sympathise with what the hon. Member for Halifax has just said. There is real concern that EEA nationals who have been working here, contributing not least to our health service, may find themselves missing the deadline. However, I do not agree that the way to address that is through new clause 10, as I made clear to the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East. Some like myself would always wait until the deadline before submitting an essay or article. By extending the period by six months, we might well just encourage people to put off the chore—as they see it—of applying.
I ask the Minister to reassure us that, as we approach the deadline, the Government will engage in a communications exercise and advertising campaign, particularly in some of the main EU languages, so that people are aware of the deadline and can submit their applications in good time for them to be processed.
Kate Green
That is an important point, in particular in relation to those communities, such as the Roma community, that have been hard to reach with information about the scheme. The Government have made some funding available for community organisations to reach such communities, but it would be extremely welcome to follow the suggestion that a particular push be made to communicate with those more remote communities as the deadline approaches
Mr Goodwill
The hon. Lady is absolutely right. Indeed, while many EU migrants have made a real effort to integrate and to speak English in their homes, encouraging their children to speak English, others have not assimilated as well and are still speaking their native language, as is their right. It is important that we communicate in those languages.
Perhaps we should also look at how we communicate through schools, because the children of some families who have come from the EU speak very good English, although their parents struggle with it. The children’s secondary schools may be another good way to get through to such families. I hope that the Minister will pick up that point and reassure us that the Government will be making the effort to communicate with the general population, to ensure that we can help our work mates and so on.
Domestic Abuse Bill (Tenth sitting)
Tuesday 16th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Domestic Abuse Bill 2019-21 View all Domestic Abuse Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 16 June 2020 - (16 Jun 2020)
Jess Phillips (Birmingham, Yardley) (Lab)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 9—Offence of non-fatal strangulation in domestic abuse context—
A person (A) commits an offence if that person unlawfully strangles, suffocates or asphyxiates another person (B) to whom they are personally connected as defined in Section 2 of this Act, where the strangulation, suffocation or asphyxiation does not result in B’s death.”
This new clause will create a new offence of non-fatal strangulation in domestic abuse offences.
Jess Phillips
I apologise at the outset, because the new clause contains rather technical legalese and quite graphic language. The purpose of the new clauses is to correct the inadequate way in which the law is applied in practice on the ground. Currently, we do not criminalise behaviour that was not already criminal—obviously, it is already a crime to strangle somebody; I can confirm that in case anyone was worried that it is not. The new clauses address a systemic problem that is highly gendered, as I will demonstrate, and if the Bill presents a once-in-a-generation opportunity to make a law work for domestic abuse victims and survivors, this can make a real contribution.
It is worth mentioning that exactly the same debate has taken place in the United States, Australia and New Zealand, all of which—most recently New Zealand, in 2018—have introduced specific laws on non-fatal strangulation. I will discuss that in more detail later. Before speaking to the new clauses in greater detail, it is important to establish that what I am talking about is completely distinct from the rough sex defence dealt with in new clauses 4 and 5, which also include asphyxiation. I am talking about strangulation in the context of physical domestic violence rather than strangulation during sex. New clauses 4 and 5 deal with consent issues relating to injuries inflicted during sex. There is of course some overlap, which I will address briefly at the end of my speech.
Strangulation and asphyxiation are the second most common method of killing in female homicides after stabbing. Some 29% of female homicides in 2018— 43 women—were killed by that method, compared with only 3% of male homicides. However, the important thing to note about non-fatal strangulation is that it is generally not a failed homicide attempt, but a tool used to exert power and control and to instil fear within an abusive relationship. That has been explored in academic literature and in detailed interviews with survivors. Strangulation sends the message, “If you do not comply, this is how easily I can kill you.” Researchers have observed that many abusers strangle not to kil, but to show that they can kill, using strangulation as a tool of coercion, often accompanied by death threats. The result is compliance and passivity by the victim in the relationship in the longer term. It is worth noting that I have very rarely come across a victim of domestic violence who has not been strangled as part of their abuse.
It is widely recognised that non-fatal strangulation and asphyxiation, such as suffocation with a pillow, are a common feature of domestic abuse and a well known risk indicator. The standard risk assessment tool used by police and domestic abuse services, which is called the DASH—domestic abuse, stalking and harassment—checklist, includes a question about attempts to strangle, choke, suffocate or drown the victim. The questions in the DASH checklist were identified through extensive research on factors associated with serious domestic violence and homicide. Researchers found that a history of strangulation presents an eightfold increase in the risk of death.
Although there can often be a lack of visible injury, it is important to recognise the very serious medical consequences of strangulation, which are not immediately visible. Many of the medical effects would come as a surprise to most members of the public, including survivors of domestic abuse, who may not realise the true dangers. Strangulation or suffocation result in the blocking the flow of oxygen to the brain by preventing the person from breathing, and the flow of blood if the neck is physically constricted. Loss of consciousness can occur in 10 to 15 seconds and a lack of oxygen to the brain results in mild brain damage. Studies show that between 8.9% and 39% of those who are strangled lose consciousness.
Although there may be little or no visible injury, numerous long-term medical effects of strangulation are reported, many of them neurological problems. They include a fractured trachea or larynx, internal bleeding, dizziness, nausea, tinnitus, ear-bleeding, raspy voice, neurological injuries such as facial or eyelid droop, loss of memory, and even stroke several minutes later as a result of blood clots; there is also increased risk of miscarriage. In addition to the longer term physical impacts, reports describe strangulation as extremely painful, and the inability to breathe is obviously very frightening. It is described in one report as “primal fear”. Anybody who has not been able to breathe, for whatever reason, understands that fear and the control over you that it will have.
Not surprisingly, strangulation has been found to result in long-term mental health impacts. Post-traumatic stress disorder is closely linked to experiencing fear of imminent death. Four studies report the victim’s sense of existential threat—a firm conviction that they were going to die. Recent research included interviews with 204 woman attending an NHS sexual assault referral centre in Manchester who reported that they had been strangled. In response to open questions about how they felt, a high proportion stated that they thought they were going to die. Of those 204 women, 86, or 42%, had been assaulted by a partner or ex-partner. The others had been sexually assaulted by someone with whom they were not in a relationship, such as a first date, an acquaintance or a stranger. A survey of 13 studies of delayed psychological outcomes identifies depression, anxiety, suicidal ideation, nightmares, PTSD, dissociation and the exacerbation of existing mental health difficulties. Obviously, many of the women experiencing non-fatal strangulation were also experiencing other forms of domestic abuse, but the clear message is that strangulation certainly contributes to the psychological trauma.
Reports on prevalence of strangulation within intimate partner violence describes a hidden epidemic. A range of studies indicates that though the lifetime incidence of strangulation is between 3% and 9.7% in the adult population, that rises to 50% and 68% for victims of recurrent domestic abuse. Two studies of intimate partner violence and sexual assault where medical examinations took place found that strangulation was involved in 20% to 23% of cases respectively. Those figures vary, but one message is clear: non-fatal strangulation is widespread and a common feature of domestic abuse, not some kind of aberration.
Reports from frontline domestic abuse workers in England and Wales demonstrate a number of issues. There is a chronic undercharging and a failure by both police and prosecutors to appreciate the severity of non-fatal strangulation. That was also found in comparative studies in the United States and New Zealand. The seriousness of strangulation as a domestic abuse risk indicator is often missed. A separate category of offence would emphasise the importance of non-fatal strangulation when risk assessments are carried out by the police.
Strangulation is generally prosecuted as an assault. There may be a red mark or no physical signs at all, even after a serious assault, and the lack of observable injuries often means that offenders’ conduct is minimised, so that they are charged with common assault rather than with actual bodily harm. As Members will no doubt be aware, common assault is a summary offence, which can only be tried in the magistrates court, whereas ABH is a more serious either-way offence, which can be tried either in the magistrates or the in Crown court. All summary offences must be charged within six months—and that puts further pressure on a victim in this circumstance to deal with the issue in a certain time frame.
The Crown Prosecution Service guidance for prosecutors on offences against the person states that, when deciding whether to charge with common assault or ABH,
“Whilst the level of charge will usually be indicated by the injuries sustained, ABH may be appropriate”,
where the circumstances in which the assault took place are more serious, such as repeated threats or assaults on the same complainant, or significant violence—for example,
“by strangulation or repeated or prolonged ducking in a bath, particularly where it results in momentary unconsciousness”.
I added my own emphasis, by the way—that is not the emphasis in the CPS guidance. The guidance therefore indicates that non-fatal strangulation and suffocation offences would result in a charge of ABH rather than of common assault. However, that is not what happens in practice in a great many cases.
The Centre for Women’s Justice carries out training for local domestic abuse services around England and Wales. Over the past two years they have trained more than 32 organisations at 24 training days in London, the midlands, the north-east and north-west of England, the north and south of Wales, and the south-east. Their training includes the CPS guidance I have quoted. They state that in most if not all training sessions, domestic abuse support workers report that where cases involving strangulation are charged, this is generally as common assault. They say that they hear this consistently from support workers across the country, and therefore believe this to be a systemic issue rather than local, isolated failings.
They also interviewed the deputy district judge in the magistrates court who sits as a recorder in the Crown court and who reported that undercharging of strangulation incidents appears to be extremely common. She stated that a significant number of domestic abuse cases before the magistrates court that include some element of non-fatal strangulation are charged as a summary offence of common assault, instead of the more appropriate offence of ABH. This information is obviously anecdotal, but may not come as much of a surprise to those who work on domestic abuse cases within the criminal justice system. Undercharging has been identified as a problem in the US, Australia and New Zealand. It is an inherent problem, given that strangulation often results in no visible injuries or just a red mark, and police officers are usually focused on the severity of physical injuries when they deal with assault cases. It is a very unusual type of assault, in that serious violence does not result in the level of injury that can be seen and measured easily.
There is currently no distinct offence of non-fatal strangulation or asphyxiation. Section 21 of the Offences Against the Person Act 1861 contains an offence of attempting to choke, suffocate or strangle in order to commit an indictable offence. Therefore, this only applies when the strangulation is done in order to commit some other serious offence. For example, the Centre for Women’s Justice was told of a case in which a woman was raped and then strangled; she was told by the CPS that the section 21 offence could have been used if he had strangled her before he had raped her, as a pattern in order to rape her, but that this offence could not be used because the rape and strangulation took place in the wrong order. This is obviously ridiculous. The 2015 Law Commission report on the Offences Against the Person Act concluded that this offence was needlessly specific and should be abolished.
It is usually difficult to prove intent for an offence of attempted murder; as noted earlier, the intention is often to frighten and coerce rather than to kill, so a charge of attempted murder is not an option. Therefore, assault is generally the only option for the prosecution, either common assault or ABH.
In a very large number of cases of strangulation, suspects are not charged at all because the six-month deadline for summary offences such as common assault charges has passed. That time limit does not apply to either-way offences. When strangulation is treated as common assault rather than ABH, cases are closed by the police because the deadline has passed without referral to the CPS. If it were dealt with as an either-way offence, that would not be done, and those cases would be sent to the CPS. Police have the power to charge summary offences without a charging decision from the CPS under the director’s guidance on charging. We do not know whether in practice officers obtain input from the CPS in most of these cases.
Frontline support workers report that police officers tend to focus primarily on physical injuries when assessing domestic abuse situations. Strangulation and asphyxiation leave minimal injury, and are therefore easily dismissed as minor and relatively inoffensive. Even when cases are referred to the CPS, prosecutors are also responsible for undercharging and for undercharged cases proceeding to trial. A new offence of non-fatal strangulation must be an either-way offence rather than a summary offence, both to reflect the severity of the conduct involved and to remove time restrictions. That offence could be included in the Bill, along with a maximum sentence, if new clause 9 were added.
There are numerous side effects flowing from undercharging strangulation as common assault. Not only does the offence charged fail to reflect the gravity of the offending behaviour, but the sentencing options and potential for a custodial sentence are limited due to the initial charging decision. In addition, a summary offence deprives the victim and the defendant of the potential to benefit from the greater resources and attention devoted to the Crown court prosecution. Because the accused has an automatic right of appeal following a summary trial in the magistrates court, the victim may have to undergo the trauma of giving evidence a second time in the Crown court. That automatic right of appeal does not exist in the Crown court.
The Parliamentary Under-Secretary of State for Justice (Alex Chalk)
May I begin by thanking the hon. Member for Birmingham, Yardley for a characteristically forceful argument? At the start, I acknowledge this: non-fatal strangulation is a wicked crime and deeply unpleasant. It is unpleasant for the reasons the hon. Lady set out: it is calculated to degrade and to terrify, and in the course of doing so to ensure that the victim has that profound sense that this could be it—their time could be up. That is why it is such a cruel, offensive and unpleasant crime. I also say by way of preliminary remarks that I am aware of the Centre for Women’s Justice campaign for this new offence of non-fatal strangulation. I wish to put on record my gratitude for their written evidence to the Committee.
I understand the concerns that have prompted the new clauses and I will address them directly. Before doing so, I want to say a little about the existing provisions in the law. In fairness, the hon. Lady did refer to them but there are a couple of points that would assist the Committee if they were teased out a little further.
Several offences can already cover non-fatal strangulation and they range in seriousness from common assault, also known as battery—my hon. Friend the Member for Hertford and Stortford, a magistrate, will know that well—to attempted murder. Within that spectrum, there remain a number of other offences referred to by the hon. Member for Birmingham, Yardley. Strangulation could also be part of a pattern of behaviour amounting to an offence of controlling or coercive behaviour; I shall come back to that in a moment. There is also assault occasioning actual bodily harm, grievous bodily harm, or section 20 assault, and grievous bodily harm with intent, or section 18 assault.
I want to step back for a moment to consider a non-domestic context, just to make some of this clear. For the sake of argument, suppose there is a queue outside a nightclub and somebody wishes to queue barge. He steps in and decides to grab the victim by the throat, throttle them and push them up against the wall. As the hon. Member for Birmingham, Yardley indicated, if that left no marks but the complainant was prepared to make a complaint to the police in the normal way, it is likely that would be charged as a battery. She is right that the charge would have to be laid within six months. It would be heard before the magistrates court—again, she is absolutely right—and would carry a custodial penalty. Even if no mark is left, that assault—it could be a punch on the nose but it could also be strangulation—would be covered in that way.
It is worth emphasising that, if that throttling or that strangulation was carried out in a more extreme way such as to leave marks, it is likely that would cross the threshold of harm which is more than merely transient or trifling. That might sound like rather archaic language, but that is the threshold for ABH. Why is that important? Assault occasioning actual bodily harm is not limited to being tried in the magistrates court; it can be tried on indictment in front of judge and jury and there the sentencing power is a full five years’ custody.
The reason I mention that is because if there is one advantage that has come from these things, it means people are much better able now to gather evidence than they were in the past. It used to be the case that you had to go down to the police station, the force medical examiner had to photograph you and so on. Now, people can get those photographs at the time. The mere fact that two, three, four or five hours later those marks may have gone matters not a jot. If the individual can show that the assault occasioned actual bodily harm, that can lead to trial on indictment and a very serious penalty.
To continue with my example of what happens in the nightclub queue, if the throttling went further and it led to some of the dreadful injuries the hon. Lady referred to—a fractured larynx, tinnitus, neurological injury leading to droop or PTSD—although it is a matter for the independent prosecutor, it is likely that would be charged as grievous bodily harm. If it is grievous bodily harm with intent, because all the surrounding circumstances indicated that that was intended given the harm done, the maximum penalty for that is life imprisonment, and that is an indictable-only matter.
That is the law as it exists at present, and the same legal principles apply in a domestic context as apply in the non-intimate context of a fight in a pub queue. The hon. Member for Birmingham, Yardley made the point: “Well, that’s all terribly interesting, but what about elsewhere in the world?” It is important, while we are mindful of our peers, particularly those in the common law jurisdictions, that we got ahead of the game to a considerable extent with section 76 of the Serious Crime Act 2015. It is worth taking a moment to consider what that ground-breaking piece of legislation introduced—the coercive control stuff.
We are guilty in this place of sometimes saying, “Right, we’ve passed this. Move on. What’s the next exciting and shiny piece of legislation we can pass?” Section 76 is of enormous import in terms of providing prosecutors—I will come to the hon. Lady’s point in due course about whether prosecutors are doing the right thing—with the tools that they need to protect victims. Section 76 says that if the defendant
“repeatedly or continuously engages in behaviour towards another…that is controlling or coercive”,
at a time when the perpetrator and the victim are personally connected, and the behaviour has a serious effect on the victim and the defendant
“knows or ought to know that the behaviour will have a serious effect”
on the victim, that is a criminal offence, punishable by up to five years’ imprisonment.
I wish to dwell on that for a moment, because behaviour is said to have a serious effect within the meaning of that section. It can be proved in two ways. First, if it causes the victim to fear on at least two occasions that violence will be used, or it causes the victim serious alarm or distress, which has a substantial adverse effect on their day-to-day activities. I mention that point because if, as the hon. Lady says, and I am absolutely prepared to accept it, more often than not in an intimate context this is part of a pattern of behaviour—all too often an escalating pattern of behaviour—the tools exist, should the prosecuting authorities seek to use them, to seek the conviction, punishment and disgrace of the perpetrator.
The question then arises of whether police and prosecutors are using the levers available to them. That is a really important point, and it is the central message that I take from the hon. Lady’s speech, which was effectively saying: “I recognise that there are a whole load of statutory provisions here, but why don’t we create a new statutory provision to really focus minds and ensure that this appalling behaviour is prosecuted?” I understand that argument, but we have to ensure that we do not, in that sensible endeavour, risk confusion in the law.
I will say one final thing about the current state of play within the law. There is, as the hon. Lady indicated, a specific offence under section 21 of the Offences Against the Person Act 1861, which makes it an offence to
“attempt to choke, suffocate, or strangle any other person, or…to choke, suffocate, or strangle”
a person in an attempt to render that person
“insensible, unconscious, or incapable of resistance”
with intent to commit an indictable offence. Typically, that is strangling someone in order to rob them, to steal or whatever it may be. I am aware that there can be some evidential difficulties in prosecuting a section 21 offence, particularly if there is no evidence, or insufficient evidence, of injuries, such as reddening and minor bruising to the skin. However, that sits in a wider context of the legislation that exists. There are other options for prosecutors to fill the gap.
There is a risk too, I respectfully suggest, that creating a new offence could limit the circumstances covered, and create additional evidential burdens when compared with existing offences. In other words, we would potentially have a situation where we created a new offence, and prosecutors said, “Hang on—this look a bit like strangulation to me, so we need to look at this new offence. Do we have all the mental elements—the mens rea and the actus reus of the offence—and can we make them out? If not, we shouldn’t charge,” instead of saying, “Hang on—there are a whole load of offences that we could properly charge: common assault, assault occasioning actual bodily harm, and grievous bodily harm with intent. They might have existed for 150 years, but they do the job.”
The key issue, going back to the point that the hon. Lady raised, is whether police and prosecutors are recognising this as a serious matter, and I will come on to that briefly in a moment. Before I do, though, I wish to say something on the clause as drafted. It is always worth going back to the text. New clause 8 says:
“A person (A) commits an offence if that person unlawfully strangles, suffocates or asphyxiates another person (B), where the strangulation, suffocation or asphyxiation does not result in B’s death.”
Sometimes what is important is what is not said, as opposed to what is said. That on its own, if it suddenly came into law, would be deficient, because it says nothing about whether the offence is triable either way, is indictable only or is summary only. It does not say what the sentence would be. It would be sitting there in splendid isolation. That is not a criticism, but as it is presently drafted, that would be a problem. As I say, that is not a criticism, it is just an observation that we certainly could never pass it in its current form.
Jess Phillips
I once again stand here as the right hon. and learned Member for Camberwell and Peckham and the Member for Wyre Forest. I merely speak to the new clauses, although with considerable support from myself behind them. I believe they will wish to discuss them potentially more on Report and so I will withdraw from pushing them to a vote today. I have merely probed in preparation for that. All I would say is that what is happening currently is not working. Whose responsibility that is, is potentially of no mind to the general public. They think that we, in this building, should be sorting it out, but we are not currently assessing properly the marker of strangulation when it comes to homicide. The risk element of what is occurring in every one of our constituencies—how it can be used in a way to stop homicide rather than just being the obvious path towards it—is on all of us as policy makers who have to try to break that link. I am sure this probing will not go away any time soon. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 12
Register for domestic abuse
“(1) The Secretary of State must arrange for the creation of a register containing the name, home address and national insurance number of any person (P) convicted of an offence that constitutes domestic abuse as defined in section 1 of this Act.
(2) Each police force in England and Wales shall be responsible for ensuring that the register is kept to date with all relevant offences committed in the police force’s area.
(3) Each police force in England and Wales shall be responsible for ensuring that P notifies relevant police forces within 14 days if they commence a new sexual or romantic relationship.
(4) A failure to notify the police in the circumstances set out in subsection (3) shall be an offence liable on conviction to a term of imprisonment not exceeding 12 months.
(5) The relevant police force shall have the right to inform any person involved in a relationship with P of P’s convictions for an offence that amounts to domestic abuse as defined in section 1 of this Act.”—(Liz Saville Roberts.)
This new clause would require that any person convicted of any offence that amounts to domestic abuse as defined in clause 1 must have their details recorded on a domestic abuse register to ensure that all the perpetrator’s subsequent partners have full access to information regarding their domestic abuse offences.
Brought up, and read the First time.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 49—Monitoring of serial domestic abuse and stalking offenders under MAPPA—
“(1) The Criminal Justice Act 2003 is amended as follows.
(2) In section 325 (Arrangements for assessing etc risk posed by certain offenders)—
(a) In subsection (1), after ““relevant sexual or violent offender” has the meaning given by section 327” insert ““relevant serial domestic abuse or stalking offender” has the meaning given in section 327ZA;”
(b) In subsection (2)(a), after “offenders” insert “(aa) relevant serial domestic abuse or stalking offenders,”
(3) After section 327 (Section 325: interpretation) insert—
“327ZA Section 325: interpretation of relevant serial domestic abuse or stalking offender
(1) For the purposes of section 325—
(a) a person is a “relevant serial domestic abuse or stalking offender” if the offender has been convicted more than once for an offence which is—
(i) a domestic abuse offence, or
(ii) a stalking offence
(b) “domestic abuse offence” means an offence where it is alleged that the behaviour of the accused amounted to domestic abuse within the meaning defined in Section 1 of this Act
(c) “stalking offence” means an offence contrary to section 2A or section 4A of the Protection from Harassment Act 1997.”
This new clause amends the Criminal Justice Act 2003, which provides for the establishment of Multi-Agency Public Protection Arrangements (“MAPPA”), to make arrangements for serial domestic abuse or stalking offenders to be registered on VISOR and be subjected to supervision, monitoring and management through MAPPA.
Liz Saville Roberts
The new clause calls for the creation of a domestic abuse register to ensure that greater and more consistent protection is provided for potential victims of domestic abuse from individuals who have a track record of abusive behaviour in relationships and whose potential for repeat violent actions warrants the threat of intervention.
A domestic abuse register would provide the vehicle for a shift in focus away from reacting to domestic abuse towards a more preventive approach. We know that repeat offending by perpetrators with violent and controlling histories of abuse is common. A 2016 report published by a Cardiff University professor of criminology states:
“Research demonstrates that the majority of male domestic abuse perpetrators are repeat offenders, with English research producing a figure of 83% within a six-year period.”
Data provided by the Metropolitan police to the London Assembly for its domestic abuse report showed that in the year up to September 2019, there were over 13,600 repeat victims of domestic abuse, and 21% of cases discussed at multi-agency risk assessment conferences in London in 2018 were repeat cases. This sobering fact warrants being addressed clearly in the Bill.
The domestic violence disclosure scheme, or Clare’s law, mentioned in a previous sitting, has been in place since March 2014. It is named after Clare Wood, who was murdered by her ex-boyfriend 11 years ago. It enables preventive action to be taken to protect potential victims of domestic abuse, but its use has been widely questioned by many domestic abuse charities such as Refuge. There are two elements to Clare’s law: the right to ask, which allows individuals or their families to seek further information about a partner’s past; and the right to know, in which the police offer to make a disclosure to an individual who they believe might be at risk through their relationship.
The Government’s 2019 review of the domestic violence disclosure scheme showed that only 55% of 7,252 right-to-know applications, and 40% of 6,196 right-to-ask applications, resulted in disclosures. Those are low percentages, and they give rise to the question: why are so many victims unwilling or unable to engage with the police? The same report revealed that seven out of 43 police forces made no right-to-ask applications in that year. That is problematic. Many abusers evade justice because the onus is on the individual to be suspicious about their new partner’s history. There is an implicit risk that if an individual is told that their partner has no record of domestic abuse, they might be reassured about trusting their partner, but it might be that their crimes were simply not recorded—in other words, that nothing was disclosed on asking.
Individuals with a history of coercive and abusive behaviour towards partners will seek out partners with whom they can repeat such behaviour. To speak plainly, it is predictable that their new partners will often not be people who will consider Clare’s law relevant to their immediate situation. Earlier, we referred to the fact that in a new relationship, people will not be receptive to asking whether their partner will do them harm, or to their mother asking that question of the police. They may very well not be receptive to the police knocking on their door to tell them this information. Although evidently Clare’s law is excellent in and of itself, it warrants our questioning its effectiveness. I am very interested in hearing what the Minister has to say about new clause 12, and about how they are considering how Clare’s law will work in future.
I hope all of us would endeavour to promote shifting the onus away from the victim to the perpetrator. That is precisely why a domestic abuse register is needed. New clause 12 demands that domestic abusers sign a register. This would ensure the wellbeing of victims, and place the responsibility on the offender—as they are on the register, they are of course a proven offender—and on the agencies that are meant to prevent abuse and protect victims from it.
The creation of a domestic abuse register would mean that perpetrators were monitored in the same way as sex offenders, paedophiles and violent offenders, which would allow the police to provide greater protection for victims via a similar process to that used in respect of the violent or sex offender register and the multi-agency public protection arrangements. New clause 49, which I support, proposes monitoring serial domestic abuse and stalking offenders via a register managed by MAPPA. However, importantly, senior police sources who gave evidence to the London Assembly raised concerns about the emphasis that the current register places on sex offenders over violent offenders. Before we shift more on to that mechanism, its effectiveness needs to be reviewed, because we could be looking to use mechanisms that are not proving effective. The point is echoed by the London Assembly, which agrees that a register could vastly improve the way that police officers are able to proactively track and manage the risks presented by the most dangerous perpetrators.
While it is, of course, welcome that the Bill strengthens existing powers with the introduction of domestic abuse protection notices and domestic abuse protection orders, which will give greater protection to victims, the onus remains on the victims, rather than the perpetrator or the authorities. A domestic abuse register would address that. It is not only political institutions, domestic abuse charities and campaigners that are calling for a domestic abuse register, but the very people who are affected by domestic abuse.
In closing, I will give one example. The mother of 17-year-old Jayden Parkinson called for such a register to be kept, in order to track the activities of domestic abuse offenders after her daughter’s former boyfriend, Ben Blakeley, brutally murdered her a day after she told him that she was expecting his first child. It emerged after her death that Blakeley was a serial abuser and had exhibited violent and controlling behaviour towards most of his girlfriends in the past, even pushing one of his former girlfriends down the stairs when she was seven months pregnant.
The case of Jayden Parkinson made it clear that the effective management of domestic abuse calls for a shift to greater proactive risk management. A domestic abuse register would place the onus on the most dangerous domestic abuse offenders to register with the police and to maintain up-to-date details, such as address and relationship status. I know that one of the police’s concerns is capacity—the numbers involved here. Surely, however, with a register and with the facilities enabled by technology, we would be able to reduce much of the pressure on the police in that respect. That would allow police forces to assess the threat posed by offenders in their communities and put in place the required level of proactive policing, or a lower level of monitoring through existing partnership arrangements.
Finally, there is a critical point to make. I referred to the London Assembly and the work being done by the Met, but that has only been done within some of the boroughs covered by the Met. We want a consistency of approach across England, across Wales, and across police forces, and, at the least, I would appreciate a comment from the Minister about a review of how consistency and the shifting of the onus on to the perpetrator and away from the victim can be managed consistently, across all forces and across England and Wales.
Alex Davies-Jones (Pontypridd) (Lab)
Diolch, Ms Buck. I will speak to new clause 49, if that is appropriate now, because it is grouped with the amendment.
Domestic abuse and stalking are the only crimes where a serial abuser is not proactively identified and managed. I take this opportunity to pay tribute to the fantastic work of Laura Richards and others, for all their hard work, and their blood, sweat and tears, on new clause 49.
Hollie Gazzard was stalked and murdered by Asher Maslin. He had been involved in 24 previous violent offences: three against Hollie; 12 against an ex-partner; three against his mother; and four against others. Why was Hollie left at risk?
Kerri McAuley was stalked and murdered by Joe Storey. He broke every bone in her face. When she left him, he bombarded her with 177 calls. He had many convictions for abusing many women since the age of 14. Two women had also taken out restraining orders against him. Why were the risks not joined up?
Linzi Ashton was raped, strangled and murdered by Michael Cope. He had strangled two previous partners, but his repeated pattern of abuse towards women was not joined up. Why not?
Justene Reece took her own life. Nicholas Allen coercively controlled Justene and he stalked her relentlessly when she left him. Justene ran out of fight. Allen had been convicted for assault and harassment of other women. However, none of those offences were joined up. He was charged with coercive control, stalking and manslaughter after Justene died. Why?
We are currently in the middle of a global health pandemic, but we are also in the midst of another pandemic: the murder of women. These murders do not happen in a vacuum; these murders do not happen in slow motion. They drip, drip, drip over time on an escalating continuum. Since the lockdown began, 33 women and four children have been brutally murdered.
These offenders are not first-time offenders; no one starts with murder as their index offence. Currently, police rely on victims to report crimes and often it is the victims who are forced to modify and change their behaviour; they flee their homes and they disappear themselves in order to stay safe. This incident-led approach to patterned crimes such as domestic abuse and stalking must be stopped. Women are paying with their lives. It is clear that we need a cultural shift, through law, to ensure that the perpetrator is the focus, and that they must change their behaviour and take responsibility. Serial offenders should be the ones who are tracked, supervised and managed, not the victims.
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
I thank the right hon. Member for Dwyfor Meirionnydd and the hon. Member for Pontypridd for speaking to the new clauses.
We agree with the underlying objective behind new clause 12. It is of course vital to have the right systems and processes in place to identify and manage serial perpetrators of domestic abuse, and it is unacceptable that a domestic abuse perpetrator—particularly a known convicted offender—should be able to go on to abuse further victims. We therefore recognise the need for robust management of those dangerous offenders. However, we consider that the outcome can be achieved more effectively and, importantly, more safely through other means. As for new clause 49, we consider that existing legislation already provides for the management of the serial domestic abuse and stalking offenders we are concerned about.
Deputy Chief Constable Louisa Rolfe, the National Police Chiefs’ Council lead on domestic abuse, was clear in her oral evidence to the previous Public Bill Committee in October that better use of established police systems is the best way to grip dangerous individuals. She referred to the Bichard inquiry following the tragic deaths in Soham of Holly Wells and Jessica Chapman, which recommended that information about dangerous perpetrators should not be dispersed over multiple different systems. Her testimony was persuasive, and highlighted the fact that a new, separate register would introduce
“unnecessary complexity cost and, most importantly, risk.”—[Official Report, Domestic Abuse Public Bill Committee, 29 October 2010; c. 27, Q48.]
Furthermore, several witnesses at an oral evidence sitting of this Committee also questioned whether the creation of a new bespoke register was the right way forward. Suzanne Jacob made reference to the recommendations of the Bichard enquiry and Ellie Butt pointed to the vital importance of multi-agency working to manage the risk posed by perpetrators. In addition, Dame Vera Baird advised:
“It is probably better to think in terms of an institution that is already present…than it is to invent another separate way of recording the fact that they are a perpetrator.”—[Official Report, Domestic Abuse Public Bill Committee, 4 June 2020; c. 65, Q157.]
As the Committee will be aware, and as witnesses at the oral evidence sitting highlighted, the police already have systems in place for recording and sharing information about domestic abuse perpetrators. Offenders who have been convicted of stalking or domestic abuse-related offences are captured on the police national computer and, where appropriate, they will also be recorded on the ViSOR dangerous persons database, which enables information to be shared across relevant criminal justice agencies.
Section 327 of the Criminal Justice Act 2003 already allows for those domestic abuse and stalking offenders who are assessed as posing a risk of serious harm to the public to be actively risk-managed under MAPPA. Individuals who commit offences listed in schedule 15 to the 2003 Act and who are sentenced to 12 months or more are automatically eligible for management under MAPPA category 2 when on licence. Those offences include domestic abuse-related offences such as threats to kill, actual and grievous bodily harm, and attempted strangulation, as well as stalking offences under the Protection from Harassment Act 1997. When their licence ends, offenders can be managed under MAPPA category 3 if they are assessed as posing a risk of serious harm to the public. There is also discretion for other convicted domestic abusers who are assessed as posing a risk of serious harm to be managed under MAPPA category 3. Indeed, operational guidance makes it clear that this should be actively considered in every case.
The Government do, however, recognise the need to strengthen the use of current systems. Work is already under way to review the functionality of the violent and sex offender register, and the College of Policing has issued a set of principles for police forces on the identification, assessment and management of serial or potentially dangerous domestic abuse and stalking perpetrators. Work in this area will be supported by the provision of £10 million in funding for perpetrator interventions, which was announced in the Budget, to promote a better response to perpetrators across all agencies that come into contact with them.
The Bill also provides the police with an additional tool to help improve management of the risk posed by domestic abuse perpetrators. The police will be able to apply for a new DAPO that requires perpetrators who are subject to an order to notify the police of their name and address, and of any changes to this information. That will help the police to monitor the perpetrator’s whereabouts and the risk they pose to the victim. The Bill also includes the power for a DAPO to impose further additional notification requirements, to be specified in regulations that the court may consider on a case-by-case basis. The DAPO provisions include an express power to enable courts to use electronic monitoring or tagging on perpetrators to monitor their compliance with the requirements of the DAPO.
The aim of new clause 12 is to provide police with a statutory power to disclose information about a perpetrator’s offending history to their partner. However, Clare’s law already facilitates that. The domestic violence disclosure scheme relies on the police’s existing common-law powers, which are fit for purpose. The right-to-know element of the scheme provides a system through which the police can reach out proactively and disclose information to a person’s partner or ex-partner about that person’s violent or abusive offending history in order to prevent harm. As we have already debated, clause 64 places guidance for the police on Clare’s law on a statutory footing, which will help to improve awareness and consistent operation of the scheme across all forces.
I am very keen to emphasise—this is a concern that the right hon. Member for Dwyfor Meirionnydd has set out—that the burden should not be solely on victims. It is right that a victim can apply for a DAPO or can apply under the right-to-ask scheme, but the police can—indeed, are expected to—take the initiative in appropriate cases to apply for a DAPO or proactively make a disclosure under the right-to-know element of the domestic violence disclosure scheme, as I have just outlined. Given the views of the witnesses from whom we heard in oral evidence to this Committee and its predecessor, and the ongoing work to improve the systems and the MAPPA arrangements that I have set out, I hope hon. Members are reassured, and that the right hon. Lady will feel able to withdraw the new clause.
Liz Saville Roberts
I thank the Minister for her detailed response. This is a probing amendment, which I am happy to withdraw. The only thing that I want to say comes from the London Assembly, and from cross-border issues arising within the boroughs of the Met. Dauntless Plus, which deals with 600 or so of the most dangerous repeat offenders in London, reaches 1% of repeat offenders. Present arrangements seem not to be achieving what I am sure we would all wish them to achieve. I hope the Minister will keep a close eye on their effectiveness in future. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 17
Local Welfare Provision schemes
“(1) Every local authority in England must deliver a Local Welfare Provision scheme which provides financial assistance to victims of domestic abuse
(2) The Secretary of State must issue guidance on the nature and scope of Local Welfare Provision schemes and review this biannually in consultation with the Domestic Abuse Commissioner and other such individuals and agencies he deems appropriate.
(3) The Chancellor of the Exchequer must provide local authorities with additional funding designated for Local Welfare Provision, to increase per year with inflation.
(4) For the purposes of this subsection “domestic abuse” is defined in section 1 of the Domestic Abuse Act 2020.”—(Christine Jardine.)
This new clause would allow victims of domestic abuse to access a local welfare assistance scheme in any locality across England.
Brought up, and read the First time.
Christine Jardine (Edinburgh West) (LD)
I beg to move, That the clause be read a Second time.
I would like to apologise to the Committee in advance: as luck would have it, for the first time in two years of printing things too small for me to read, I do not have my glasses with me. Bear with me and I will do my best.
Christine Jardine
No, that is not what they say. I would like to speak to this cross-party new clause tabled in my name, which would ensure that emergency financial support was available to victims and survivors of domestic abuse across England, in the form of effective local welfare provision. It is supported by the crisis and destitution sector, from the Children’s Society to the Trussell Trust, as well as financial experts, including the Lloyds Bank Foundation for England and Wales, Smallwood Trust and Surviving Economic Abuse.
The Bill, for the first time, acknowledges economic abuse, which creates economic instability and often prevents women in particular from being able to leave an abusive situation, as they lack the financial resources to do so. Defining economic abuse is just the first step. It must be possible to enable those who find themselves in that situation to militate against this form of abuse. The Committee must look at whether we can provide a welfare safety net for all survivors that empowers them.
Local welfare assistance schemes often offer financial assistance to applicants in emergencies. At their best, this type of crisis support works in partnership with other organisations and provides a kind of wrap-around holistic support that other types of welfare cannot, but they are underfunded and underused, and consequently get forgotten.
Without question, cuts to local authority services and changes in the social security system have disproportionately impacted women. That social security system should act as a financial safety net for survivors of domestic abuse, but it does not. Too many survivors are still having to take out payday loans and rely on food banks or, if they are lucky, grants from charities.
Research from Women’s Aid recently found that a third of survivors who left their abusive partner had to take out credit to do so. Smallwood Trust estimates that 70% of their applications for financial assistance are received from women who are fleeing, or have fled, domestic abuse. Given that the Trussell Trust’s most recent food bank figures found an 89% rise in need since the same time last year, with 107% more children needing support, there can be no question but that the welfare safety net for our most vulnerable has gaping holes in it.
Before the creation of local welfare provision, the discretionary social fund, run from the Department for Work and Pensions, was often seen as an essential form of financial support for victims of domestic abuse. Community care grants were often used to enable survivors to establish a new home after a period in refuge accommodation. Since responsibility for those grants has shifted to hard-pressed local authorities, which do not have any statutory obligations to provide this form of support, getting them has become a postcode lottery.
The Children’s Society found that one in seven local authority areas in England now has no local welfare support provided by the council, and that in too many other areas, local welfare provision is far too difficult to access. Some 60% of local authorities had put in place stipulations about routes that had to be taken first before applying for local welfare assistance, including borrowing from friends or family, taking up a commercial loan or using a food bank. That is not acceptable.
Even when a local authority does provide an assistance scheme, Smallwood Trust has suggested that access is often dependent on what time of year one applies for help, and whether the pot is already empty. Analysis of council spending on local welfare provision by the Children’s Society found that in 2018-19, local authorities spent only £41 million on local welfare assistance schemes, out of a possible funding allocation of £129 million for local welfare provision. At their best, those schemes can offer assistance where universal credit cannot. They can be a further source of support while survivors wait for their first universal credit payment, or they can support those not on universal credit who need emergency support, perhaps to buy a new fridge, or a bed for their child, in their new home away from abuse. During the pandemic, some local authorities are even using creative methods to offer emergency financial assistance to vulnerable applicants with no recourse to public funds.
Victoria Atkins
Local welfare and assistance is important to meet the needs of the most vulnerable people in our communities. That is why, in 2013, the national social fund crisis loans and community care grants were abolished and local authorities were empowered, with maximum flexibility, to deliver services as they saw fit, according to local needs. The hon. Member for Edinburgh West will agree, I hope, that local authorities are best placed to determine what support is required for the most vulnerable in their area, given their expertise in the local communities that they serve. That was set out by the then Work and Pensions Secretary in 2014, when he found that local authorities delivered support more effectively than was the case under the social fund, as help was targeted at those who needed it most and joined up with wider social care.
I assure the hon. Member that we fund local authorities to deliver such important duties. In 2016, just over £129 million was included for local welfare provision schemes as a notional allocation within the English local government financial settlement. That allocation was increased to £131.7 million in 2020-21. In response to the coronavirus, we have also announced £3.2 billion of un-ring-fenced funding for local government to meet additional pressures arising from the pandemic and continue to deliver frontline services.
The hon. Member rightly focused on the overall economic situation of the victim. We included economic abuse in clause 1 because we accept that it is not just about bank accounts or money in the purse; it can take many forms. Similarly, the economic situation of the victim includes not just payments that she may be receiving by way of benefits, wages or salary, but her overall situation. That is why the statutory duty for tier 1 local authorities in England to provide support to victims of domestic abuse and their children in safe accommodation is part of the picture. Local welfare assistance schemes enable support in such circumstances, such as support for victims of abuse in women’s refuges to become established in the community. The work that the domestic abuse commissioner will undertake to explore in depth the provision of community-based support is part of the economic picture as well.
A principle that I think we all share and are working towards is that we all want victims and survivors to be able to stay in their homes with their children—if anyone has to leave, it should be the perpetrator. That is what we are trying to get to, but of course I appreciate that there will be situations in which that is not possible, and we are attempting to address that through the Bill.
We are committed to working with the commissioner on community-based services and on the range of services and needs that she will address during her tenure. We believe that it would be a little premature to look at that before she has the chance to undertake that work.
I thank the hon. Member for raising the issue. I hope that the indications that I have given of the Government’s overall approach to helping victims will help to reassure her.
Christine Jardine
I thank the Minister for her reassurance. I know that the issue is of concern to a lot of people; all of us in this House deal with constituents every week for whom it is a barrier to safety that they simply cannot afford either to leave or to get the abuser to leave—it works against them either way. However, I accept the Minister’s assurances. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 18
Guidance: Child maintenance
“(1) The Secretary of State must issue guidance relating to the payment of child support maintenance where the person with care of the child is a victim of domestic abuse.
(2) Guidance issued under this section must take account of—
(a) the potential for the withholding or reducing of child support maintenance to constitute economic abuse under section 1(4) of this Act;
(b) the need for enforcement action to prevent non-payment; and
(c) the difficulties faced by victims of domestic abuse in obtaining evidence to support an application for a variation of a child support maintenance calculation.
(3) The Child Maintenance Service must have regard to any guidance issued under this section when exercising a function to which the guidance relates.
(4) Before issuing guidance under this section, the Secretary of State must consult
(a) the Domestic Abuse Commissioner, and
(b) such other persons as the Secretary of State considers appropriate.
(5) The Secretary of State must publish any guidance issued under this section.” —(Christine Jardine.)
This new clause would require the Secretary of State to issue guidance to the Child Maintenance Service to tackle the problem of abusers continuing economic abuse by withholding or reducing child maintenance payments.
Brought up, and read the First time.
Christine Jardine
I beg to move, That the clause be read a Second time.
I am sure that we have all had constituents who have come to us because their relationship or marriage has fallen apart and their child maintenance agreement is being used against them by their former partner as a form of manipulation and abuse. New clause 18 aims to address that situation.
Withholding or artificially reducing child maintenance payments can be a way for abusers to perpetuate economic abuse. It can be especially hard for survivors to get the evidence necessary to succeed in getting the Child Maintenance Service to increase the amount that the abuser has to pay. We tabled the new clause to require the Government to issue guidance on child maintenance payments to survivors of domestic abuse that would have to address their specific concerns. Often, for survivors of domestic abuse, using the statutory child maintenance system is not a matter of choice; it is a matter of safety.
The Government must surely understand that the reality of domestic abuse is not confined to one area of people’s lives. It needs to be addressed across all services and Departments, including child maintenance.
Child maintenance, which is sometimes referred to as child support, can be vital for separated families and the wellbeing of the children, particularly in single-parent families. It is impossible to overstate the importance of child support for some survivors. It helps with the cost of raising a child, from the day-to-day expenses of food, clothing and school expenses to the cost of running a child’s main home and giving a child a decent quality of life. It is vital, as we have said often in Committee, for children who are often damaged by witnessing domestic abuse in homes.
Child maintenance arrangements can, as we know, take different forms. They can be made privately between separated parents, through the Government-run Child Maintenance Service, or, more rarely, through a court order. The statutory child maintenance system has seen big reforms, but there are still concerns over its effectiveness. In 2017, the Government introduced a fee waiver for survivors of domestic abuse who applied to the Child Maintenance Service. Although the reform has been welcomed, the way in which it works leaves many trapped in a dangerous dilemma: get financial support at the risk of abuse, or avoid abuse and face financial hardship.
Research commissioned by the Department for Work and Pensions in 2017 supports Gingerbread’s concerns that new charges in the CMS prevent parents and children from accessing maintenance. The findings also suggested that survivors of domestic abuse, who are perhaps most in need of a Government service to help ensure maintenance is paid, are some of the worst served by the barriers created by the charges and the dilemma that I mentioned.
Domestic violence can be a barrier to setting up a maintenance arrangement at all. It is estimated that one in four receiving parents cited domestic violence as a reason for not setting up an arrangement after the Child Support Agency case had closed. People who are already survivors are being asked to try to survive something else.
In 2017, Women’s Aid told the Work and Pensions Committee that the Child Maintenance Service had a
“rigid focus on incentivising collaborative arrangements between parents”.
It had
“the potential to increase survivors’ risk of abuse, including financial coercion and control.”
We need to publicise the fee waiver. It places an emotional burden on parents to voluntarily disclose their experience of domestic abuse in order to receive their exemption. It is simply not fair. Those who do not do that miss out.
Similarly, the Government have reassured parents and campaigners that processes would be in place to avoid the risk of abuse as a result of having to request payment and share personal details to set up direct payment arrangements. However, parents often discover that even CMS staff and banks can be unaware of provisions such as non-geographic bank accounts, where the receiving parent’s location would not be identifiable from a bank account sort code. Researchers have found that although one in five receiving parents surveyed said domestic violence had made it difficult to set up a direct pay arrangement, just 2% reported using a generic or national bank account. They also found that many parents reluctant to share details did not know that the CMS could help with providing this information.
A Gingerbread helpline example was of a single parent with a history of domestic abuse. The last incident had involved hospitalisation. She was told that she had to have a direct pay arrangement, and was given the option of using a non-geographic bank account or using a pre-paid card. However, both those options would reveal her new name, which was adopted to make her harder to trace. She felt at risk and was now considering dropping her case.
Ensuring payment can also be difficult when receiving parents fear domestic abuse, and the murky interactions between direct pay and collect and pay services does not fill parents with confidence. The Government argue that when direct pay is not working, parents can report the paying parent and come into the collect and pay service. In reality, some parents are wary of flagging non-payment for fear of rocking the boat or inflaming tensions with ex-partners who face hefty collection charges if the CMS steps in. Economic abuse of survivors of domestic abuse is unacceptable. Too many of us see too many of these people in our offices every week. This new clause would address their situation.
Alex Chalk
I thank the hon. Member for Edinburgh West for the exposition of her new clause and the way she did it, which was of real assistance to the Committee and certainly to me. Again, I absolutely commend and underscore the spirit and intention behind the new clause. I hope to provide some context that she will find reassuring.
Domestic abuse touches the lives of many DWP customers, and the Child Maintenance Service takes the safety of its customers extremely seriously. The new clause seeks guidance; the hon. Lady wants the Secretary of State to issue guidance relating to the payment of child support maintenance where the person with care of the child is a victim of domestic abuse. We have issued guidance already, and we have gone further by actually implementing—guidance is one thing, but it is when it moves on to training that it makes a big difference.
That training feeds into precisely the point the hon. Lady raises in subsection (2):
“Guidance issued under this section must take account of (a) the potential for the withholding or reducing of child support maintenance to constitute economic abuse under section 1(4) of this Act”.
Absolutely. We get that point, and that is precisely what the training is designed to achieve. It has been created with input from Women’s Aid, and it trains caseworkers on domestic abuse to identify the types of abuse, including economic abuse. By the way, that is not optional training; it is mandatory training—that is point one. Point two is that the DWP has introduced a complex needs toolkit, which includes a domestic abuse plan specifically, to give clear steps for a caseworker to follow in order to support customers, and it also outlines the support available to caseworkers. That toolkit is regularly reviewed and strengthened based on customers’ insight.
It may be helpful to the Committee if I set out other ways in which the Child Maintenance Service currently responds to cases involving domestic abuse. This goes to the point raised by the hon. Lady about how victims go about accessing support. First, the CMS can waive the application fee for victims of domestic abuse. Secondly, it provides advice and support to help victims of domestic abuse use the direct pay service where no further charges apply to ensure there is no unwanted contact between parents. Thirdly—picking up a point made by the hon. Lady—the CMS can act as an intermediary for parents to facilitate the exchange of bank details and ensure that personal information is not shared. Fourthly, the CMS will provide information to parents on how to set up a bank account with a centralised sort code, which avoids parents being traced. Fifthly, where the parents have reported domestic abuse, agents are trained to signpost clients to additional sources of support. I do not suggest that it is a one-stop shop, but, none the less, they are trained in what support is out there.
The bottom line is that the CMS will not tolerate parents failing to meet their obligations to support their children. Where a parent fails to pay in full and on time, enforcement action will be taken. I mention enforcement because the second limb of subsection 2 says:
“Guidance issued under this section must take account of…(b) the need for enforcement action to prevent non-payment”.
Let me turn directly to enforcement. The Child Maintenance Service has a range of strong enforcement actions at its disposal. They include deducting directly from earnings; seizing funds directly from a paying parent’s bank account, either as a lump sum or as regular payments; and a good deal in addition.
Jess Phillips
I deeply respect that the Minister is reading out exactly what should happen, but has he ever tried to get money out of the CMS for one of his constituents?
Alex Chalk
I have. I am perfectly prepared to accept that no organisation always works precisely as one might like. That is inevitably the case, but I am not suggesting that that is my usual experience. By and large, we have been able to deliver for my constituents in Cheltenham, while recognising, as I do, that there is always room for improvement. Perhaps we shall leave it there.
The Government have gone further and extended the powers to cover joint and certain business accounts, removing the opportunity for paying parents to put their money beyond reach. Where appropriate, the Child Maintenance Service will use enforcement agents to seize goods, forcing the sale of the paying parent’s property. The Child Maintenance Service may also apply to a court to have the paying parent committed to prison or disqualified from driving. In addition, we have introduced the ability to disqualify non-compliant parents from holding or obtaining a British passport, which we believe will act as a strong deterrent.
The impact of all that is important, and this goes to the point made by the hon. Member for Birmingham, Yardley. Of course, we have our anecdotal experience—mine, by and large, has been pretty good, but I accept that other colleagues will have had different experiences—but it is important to look at the data. Compliance with the CMS Collect and Pay statutory scheme has increased from approximately 57% in the quarter ending December 2017 to 68% in the quarter ending December 2019, according to Child Maintenance Service statistics to December 2019. In addition, 723,500 children are covered by Child Maintenance Service arrangements, reflecting an increase of 158,300—almost 30%—since the quarter ending December 2017. That is from the same statistics source.
Given all those measures, the central point is that, while the new clause seeks guidance, what is already in place is guidance and training, and that training is informed by Women’s Aid, as I said. In the circumstances, our view is that no new clause is necessary at this stage, because the Child Maintenance Service already has sufficient enforcement powers and has further strengthened its procedures, training and processes to support customers who suffer domestic abuse.
We will, however, continue to monitor the impact of Child Maintenance Service enforcement powers, as well as the support provided to help domestic abuse victims to use the service safely. The hon. Member for Edinburgh West, who clearly takes a close and principled interest in this matter, will watch that closely but, with that assurance, I hope she feels able to withdraw her new clause.
Christine Jardine
I thank the Minister for his reassurance but, as the hon. Member for Birmingham, Yardley said, he describes the ideal—it is not how we find it works. If we could get closer—just closer—to the ideal, we might all be satisfied. However, given his reassurance, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 21
Duty of the Secretary of State to take account of matters relating to gender
“It shall be the duty of the Secretary of State in performing functions under this Act to take account of the point that domestic abuse is a subset of violence against women and girls, which affects women disproportionately.”—(Jess Phillips.)
This new clause establishes the gendered nature of domestic abuse in statute.
Brought up, and read the First time.
Jess Phillips
I beg to move, That the clause be read a Second time.
We all know that domestic abuse disproportionately impacts on women. I think pretty much everyone who has stood to speak in Committee has at one point said that—we always add the caveat that of course we know it mainly happens to women. One in four of us in England and Wales will experience it at some point in our lives, compared with one in eight men. Women experience domestic abuse in far greater numbers than men—that is just a simple fact.
When we take a deeper look into the statistics, however, gender is clearly intertwined with domestic abuse in a much greater way than bald prevalence stats first indicate. To start with, the stats on domestic abuse collected and published by the Office for National Statistics, while being the best we have, do not take into account coercive and controlling behaviour. Academics working in the field estimate that the disparity in experience of domestic abuse between men and women would increase significantly were coercive control taken into account.
Abusers will use any tool at their disposal to control and coerce their partners, which in far too many cases includes rape and sexual assault. More than 1.7 million women in this country have experienced domestic sexual assault and rape. That is more than 12 times the number of men who have experienced this trauma. Last year, five times more women than men were killed by their partner or their ex. Over the past few years, over 96% of women killed in domestic homicides—almost all of them—were killed by men. Of the men who were killed in domestic homicides, more than half were killed by other men.
None of this means that men do not experience domestic abuse; I have never suggested that, and nor would I ever, no matter what somebody might read about me online. What that means is that domestic abuse is a form of violence against women and girls, with women making up the vast majority of victims and survivors of domestic abuse, particularly when it comes to rape, sexual assault and murder at the hands of their partner or ex, and that men make up the overwhelming majority of perpetrators.
However, domestic abuse as a form of violence against women and girls is not just about the numbers, as stark as they are. Domestic abuse is, in the words of the Istanbul convention—you know, I was meant to be in Istanbul this week. Sad times. I would have walked around citing parts of the convention, which I am sure the people of Istanbul know very little about, other than that it is their namesake. Anyway, the Istanbul convention says that domestic abuse is
“a form of gender-based violence that is committed against women because they are women.”
It is about the patriarchy that instils in abusive men the belief that they are entitled to control, abuse, rape and murder women because we are lesser. Gender inequality is a cause and consequence of domestic abuse. It is used to keep us controlled and silenced, and it happens to us because we have a lesser position in society.
The nature of domestic abuse as a gendered phenomenon has to be understood, not just by feminist academics, thousands of individuals working on the frontline in domestic abuse services, or those of us working in Westminster, but by all those whose job it is to respond to domestic abuse survivors and perpetrators. Too often, the nature of domestic abuse is not appreciated by professionals who need to understand what it is. According to Refuge, the largest specialist provider of domestic abuse services in the country, it is becoming increasingly common for local authorities tendering for domestic abuse support services to rely on a complete misapprehension about the nature of domestic abuse and the needs of survivors. Time and time again, I have seen commissioning rounds go out that just say, “Domestic abuse services”, without any suggestion that some of those need to be women-only services, for example.
Refuge staff have also told me that when the police attend domestic abuse call-outs, their misunderstanding of the nature and dynamics of domestic abuse, including the role gender plays, leads to them arresting the survivor rather than the abuser; asking perpetrators to translate what survivors are saying; and referring survivors and perpetrators to completely inappropriate support services, for example.
Within the Westminster bubble, it is easy to labour under the false belief that a critical majority of people have enough of an understanding of domestic abuse as a form of violence against women and girls that those responses to survivors are anomalies. That is not the experience of organisations such as Refuge, and Members need only look at my Twitter feed after I have mentioned gender or domestic abuse to see that we cannot assume that the majority of people understand domestic abuse as a form of violence against women and girls. There was a discussion about misogyny earlier today, and I invite members of the Committee to look at what my online experience will be tonight after I have said this about women. I imagine that, for many, it will be shocking, and some of it will almost certainly be a hate crime, but one that would never be collected in the data.
It is critical that every effort is made to ensure that domestic abuse is understood as a form of violence against women and girls. It is my view, in addition to that of Refuge, Women’s Aid, the End Violence Against Women Coalition, Southall Black Sisters and virtually every other domestic abuse service provider, that the best way of raising awareness of domestic abuse as a form of violence against women and girls is to include that definition on the face of the Bill. The Government’s consistent response is to say that they agree that domestic abuse is a form of violence against women and girls, that both men and women experience it, and that they are committed to including this in the statutory guidance accompanying the Bill.
Alex Davies-Jones
In our Committee’s evidence session, we heard from Sara Kirkpatrick, the CEO of Welsh Women’s Aid, who said this, and I heartily agree:
“Some really exciting things have come out of the Welsh legislation, particularly the idea of taking that broader lens…of violence against women and girls”––[Official Report, Domestic Abuse Public Bill Committee, 4 June 2020; c. 66, Q158.]
I know that I am harping on about Wales again, and I make no apology for it. We know that domestic abuse impacts everyone—men, women and children—but we also know that it is women and girls who suffer the most frequent and severe abuse. It is important to acknowledge that in order to enable practice and support to be tailored to the specific needs of the person experiencing abuse, as opposed to a one-size-fits-all approach.
The Violence against Women, Domestic Abuse and Sexual Violence (Wales) Act 2015 includes all forms of violence and abuse against women and girls, including domestic abuse, rape and sexual violence, stalking, forced marriage, so-called honour-based violence, female genital mutilation, trafficking and sexual exploitation—including through the sex industry—and sexual harassment in work and public life. None of these forms of abuse are mutually exclusive, and policy and service provision should reflect that.
Victoria Atkins
I thank the hon. Member for Birmingham, Yardley for tabling the new clause. I hope that she knows that I always enjoy debating the issue of gender with her, because those debates draw us out of the nitty-gritty of the Bill’s text and make us think about wider and bigger topics. I very much accept that she will get all sorts of abuse tonight on Twitter, but may I gently remind her that Twitter is not the real world? I say that as someone who came off Twitter a few years ago and I have not missed it for a second.
My bigger concern when it comes to raising awareness of domestic abuse relates to a more common misunderstanding. It is not necessarily that women are disproportionately victims and survivors, because from my experience, I think that that is pretty well understood. What worries me is the idea that “She must leave him.” I hope that, through the Bill, and the work that we are all doing, we are beginning to change that conversation, but I absolutely understand why the hon. Lady has raised this issue.
The hon. Member for Pontypridd took the words out of my mouth: anyone can be a victim of domestic abuse, regardless of their age, gender or ethnicity. We have had to reflect that fact in the definition. We have followed the lead of the drafters of the Istanbul convention in adopting that gender-neutral stance. There is no reference to gender in their definition of the act of domestic violence. The explanatory report published alongside the convention expressly states that the definition is gender neutral and encompasses victims and perpetrators of both sexes.
However, we very much want to reflect the fact that the majority of victims are female, which is why we set out in clause 66, following careful consideration by the Joint Committee on the Draft Domestic Abuse Bill, the requirement on the Secretary of State regarding the guidance; the guidance reflects that fact. I appreciate that the definition is incredibly important, but the people commissioning services, training and looking at how their local services are working will be drawn to the guidance, in addition to the Bill, and will want practical help with it. That is how we adopted the definition.
We have made it clear that the definition has two fundamental elements: the first deals with the relationship between the abuser and the abused, and the second deals with what constitutes the categories of abusive behaviour. If the definition is to work for victims and survivors, it must work for all, regardless of gender or other characteristics. Interestingly, we have not been able to identify any other English-language jurisdiction that adopts a gender definition in relation to domestic abuse.
Victoria Atkins
Other than Wales—forgive me. Gosh, that was probably a career-ending slip. I take the hon. Lady’s point about Wales. Apart from England and Wales, we have not been able to find other examples, although it may be that the hon. Lady’s Twitter feed will be inundated with them tonight. We place the emphasis on the draft statutory guidance. Believe me, I am under no illusions: hon. Members in the Committee and outside will be paying close attention to the guidance. I very much hope that, at the end of the informal consultation process, the guidance will be in a shape that meets with the approval of members of this Committee.
Jess Phillips
I thank the Minister. I know that she fundamentally wants a system in which commissioning is gendered and recognises the fact that the vast majority of these crimes happen to women. I agree with that.
If I read all the things that were tweeted at me in any one day, I would lose the will to live. It is important, on today of all days, to remember that the aggression towards Members sometimes features in real life, and that anyone who is willing to stand up and say what they feel about something can pay a heavy price.
I recognise what the Minister has said, and I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 22
Children affected by domestic abuse: NHS waiting lists
“The Secretary of State must by regulations ensure that children who move to a different area after witnessing or being otherwise affected by domestic abuse as defined by section 1 of this Act are not disadvantaged in respect of their position on any NHS waiting lists.”—(Jess Phillips.)
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss new clause 23—Children witnessing domestic abuse: school admissions—
“The Secretary of State must by regulations require admissions authorities of all mainstream schools to give the highest priority in their oversubscription criteria to children who have moved as a consequence of witnessing or being otherwise affected by domestic abuse.”
Jess Phillips
These new clauses are about child and school admissions and NHS waiting list, and we heard compelling evidence about that from Hestia at the evidence session. They are about the importance of ensuring that children who are forced to relocate because of domestic abuse are prioritised. Last Tuesday, I spoke at length about the need to include children in the definition of domestic abuse—I am sure everybody will be relieved to hear that I will not repeat that now. I very much hope that that has been heard, and I await progress.
Hestia and Pro Bono Economics advised that the average wait for children who move to obtain a new school place is between four and six months in cases of domestic abuse. That is certainly my experience of working in refuges—there were often children out of school. Obviously, we must take account of the fact that we are in this weird time when most children are not at school.
This means they have four to six months away from their peers without the routine and safety of school, while living in an unfamiliar house or refuge. The alternative would be to attend a school that is an impossible distance away, in a location deemed too dangerous for that child to live in.
We see parents and their children day in, day out in my constituency office because those children are not in school, and they are desperate for assistance in finding a school place. Those parents and their children are often living in temporary accommodation—perhaps in a Travelodge, or in a refuge where children of varying ages and needs are sharing one room. Cooking facilities are rare, and they are often reliant on food banks.
Many do not have the required resources or technology to educate their children. Imagine being in a domestic abuse situation and also having to home-school your children—it is worth noting that previously I would have said, “Try to imagine what it’s like to have to home-school your children for that period.” I do not need to ask people to imagine that anymore. I am not in a domestic abuse situation, and I have a loving and kind husband, but I have found it almost impossible to home-school my children. Now layer on top of that a situation in which everyone is living in one hotel room and having to home-educate their children.
I am sure everybody will hear in their constituencies some of the most heartbreaking cases involving a teenage child trying to study in temporary accommodation, living in difficult circumstances and saying, “I just can’t study. I don’t want to tell my friends where I live, so I walk a different way home.” Those are the most heartbreaking stories. I have heard of cases of children with severe PTSD and anxiety being placed in accommodation with men who trigger their symptoms. There are cases of children with sleep disorders and suicidal ideation being placed in a Travelodge where noise is unavoidable and antisocial behaviour is rife.
The impact of covid-19 has demonstrated the importance of schools, not only in education but in the provision of food—a subject that was not quite as topical when I wrote this as it is about to be. It is estimated that 1.3 million children are now dependent on food parcels from their school, and according to my notes there is now a campaign for those food parcels to be available throughout the summer—I should just scrap this part and be grateful that food parcels will now be available over the summer. Children not enrolled in school cannot access the food parcels provided by schools, which forces them further into food poverty. Obviously, we have all had to overcome that during covid-19, but in normal times there is no food provision for children on free school meals living in a refuge who are out of school. It is a complicated situation.
Schools have also remained open for known vulnerable children, including those on a child in need plan, because schools also provide safeguarding and pastoral care. They can act as a referral mechanism for those with mental health problems or special educational needs. Schools can be a safety net and a place of sanctuary for children at risk—I do not just say “can”, because we all have brilliant schools in our constituencies, and it is impossible to imagine what kids’ lives would be like without them.
Schools have also remained open for children with special educational needs and those with an education, health and care plan. Schools are integral in referring those with special educational needs to the local authority so that they can receive an EHC plan—I would like to carry on calling it a “statement”, because that seemed easier. Those plans offer support to children and young people whose special educational needs require more help than would normally be provided. The plans identify educational health and social needs and set out additional support required to meet those needs, most often in the form of support provided by schools. Children who are not enrolled in school do not have access to that safety net and the nature of support that can be provided by a school. They are not afforded these protections and do not have access to support services. They are left at risk and vulnerable in circumstances in which they have experienced extreme trauma and upheaval.
It is also well known that the consequences of domestic abuse are significant and wide-ranging. Brain development can be affected, impacting cognitive and sensory growth. There are associated personality and behavioural problems, and a greater prevalence of suicidal tendencies and depression. Pro Bono Economics has advised that childhood exposure to severe domestic violence can increase the number of children in the UK with conduct disorders by around 25,000 to 75,000, and the number with hyperactivity disorders by around 10,000 to 25,000. Conduct disorders are the most common type of mental and behavioural problem in children and young people. They are characterised by a repeated and persistent pattern of antisocial, aggressive or defiant behaviour, much worse than would normally be expected in a child of that age. I hasten to add that that is quite a gendered view of those disorders. Often when girls present with attention deficit hyperactivity disorder or autism spectrum disorder, it presents in a different way, and those ways are often ignored.
Victoria Atkins
I thank the hon. Lady. I will deal first with the NHS and then move on to schools. I think there is agreement across the Committee that it is important to recognise the impact of domestic abuse on children and the trauma it can cause. The role of the NHS is to give the best care to address the immediate and continuing health needs of such children. It is a key principle that access to the NHS is based on clinical priority, so when patients move home and between hospitals, the NHS should take previous waiting times into account and ensure, wherever possible, that they are not disadvantaged as a result. A child’s need to access and receive health services will be assessed, and services will be provided according to clinical need, which will consider the individual needs of the child. We have to trust clinicians to take decisions about a patient’s treatment.
On schools, I agree with the hon. Member for Birmingham, Yardley that vulnerable children, including those who have been affected by domestic abuse, should be able to access a school place quickly, and that any gaps in their education must be kept to an absolute minimum. As I have said before, wherever possible, we want victims, survivors and their children to stay at home and the perpetrator to leave, but in some cases, sadly, that is not possible for their safety.
Before I explain the Government’s position on that, I will highlight an important distinction between seeking school places in the normal admissions round, such as the start of the school year, and doing so outside that process, which is called in-year admission. As we know, it is important that children who have experienced or witnessed domestic abuse are more likely to seek a school place outside the normal admissions round and to require the in-year process. During the review of children in need and the 2018 consultation on domestic abuse, we heard about the difficulties and delay that such children face in accessing new school places when moving into refuge after fleeing domestic abuse. Improving the in-year admission system is the most effective way to get vulnerable children back to school as quickly as possible.
The in-year application process varies between local authorities and can be particularly difficult to navigate for disadvantaged and vulnerable families, including those who have been victims of domestic abuse, because the school may already be full, and oversubscription criteria are unlikely to be helpful at that point. To ensure that this does not prevent children experiencing domestic abuse from accessing the school places they need, the Government have committed to make changes to the schools admissions code to improve the in-year admissions process. That will ensure that all vulnerable children can access a school place as quickly as possible.
That is not to say that the current system does not support the admission of our most disadvantaged children when they apply for a school place in year. Fair access protocols are in place to ensure that vulnerable children who need a school place outside the normal admissions round can secure one as quickly as possible, but we know from consultation that there is confusion about how fair access protocols should work, which means that sometimes they do not work as effectively as they should do. In some areas, fair access protocols are used as the default way to place every in-year applicant, rather than as a safety net for vulnerable and disadvantaged children.
I am pleased to state that we intend to consult on changes to the school admissions code to better support the in-year admission of vulnerable children, including those in refuge or safe accommodation. In practice, that means making changes to the provisions relating to the in-year admissions process and fair access protocols by introducing a dedicated section in the code that will set out a clear process for managing in-year admissions. We are also proposing to provide greater clarity in the code on fair access protocols, which will improve their effectiveness by making clear their purpose and what they should be used for, and by setting out a clear process by which they should operate.
We will also extend the categories of children who may be admitted via the fair access protocol, specifically to include children on a child in need or child protection plan and children in refuge and safe accommodation. That will ensure that those children are secured a school place quickly, keeping disruption to their education to an absolute minimum.
Liz Twist (Blaydon) (Lab)
The Minister has talked at some length about the schools provisions, which are important to ensure that children have quick access to a school near them. Will she say some more about the NHS provisions in new clause 22? She has talked about clinical priority but, as most of us know—not just from children, but from other situations—moving from one health area to another means that there is inevitably a setback. The new clause is intended to address that.
Victoria Atkins
I understand that, but the problem is that we are now rubbing up against the fundamental principle of the NHS, which is that it is based on clinical need and priority. Clearly, if a child is in the most urgent clinical need, we would absolutely expect them to be at the front of the queue to receive help, but there will be different gradations depending on the condition, the length of the condition and the way in which it manifests. We have had to keep to the fundamental principle that that must be clinician-led, because we could not, with the best will in the world, hope to categorise exhaustively in the Bill the many ways, quite apart from domestic abuse, in which children may suffer or be ill
Liz Twist
I think this is fundamental, really. Simply moving house can put someone back in a queue when clinical priorities are assessed in that new area. What we are all trying to do—as, I am sure, is the Minister—is ensure that the principle is one of clinical priority, rather than where someone is on a waiting list. This change is absolutely vital.
Victoria Atkins
Very much so; that is the key principle on which the NHS operates. The hon. Lady will appreciate that I am neither a doctor nor a Health Minister. I take her point about waiting times, but once the clinicians have assessed the clinical need, they must surely be the ones to determine what sort of treatment the child receives, as well as when and where.
Victoria Atkins
I can see that the hon. Lady is perhaps not with me on that, but it explains our position. We stick to the principle of the clinician and the clinical need leading on this matter. Of course, I accept the point about different areas.
Liz Twist
I am sorry to keep pushing this, but I know that it occurs for other groups of people who are disadvantaged. People receiving alcohol or drug treatments, for example, may move from one area to another and lose all their connections. We are talking about clinical priority within a different group, so although someone might have reached the top of the queue in one place, they might not somewhere else. The amendment seeks to ensure that those children get the best chance that they can.
Victoria Atkins
Again, that comes back to the principle that, wherever possible, we do not want victims and survivors to have to move and be put in that new place. The hon. Lady articulates very well one of the many ways in which it is incredibly traumatic for the survivor to have to leave the family home to flee to the other side of the country with the children. In some cases, the survivor has to do so because of the danger of the perpetrator, but where we can, let us try to keep her and her children at home, so that they do not have to put up with such concerns about things that are terribly important on a day-to-day basis, but sadly become another consequence of fleeing.
Jess Phillips
I thank the Minister for her comments and welcome what she has outlined with regard to school places. She is right that we are talking about in-year school placements in the vast majority of cases. Some people are lucky enough to have to move house just at the right moment for getting kids into school, but the vast majority are not. I therefore welcome what she has said about changes to that process.
With regard to waiting lists for children, she is not wrong to lean on the principle that it should be clinician-led. However, in these instances a clinician will never see the child, because the assessment takes two and a half years. It will not be based on any clinical decision; it will be based entirely on a paper exercise where you just go back into the system. If someone were to move from Berkshire County Council, where they had already waited the 799 days, and then they moved to Staffordshire on day 798, they would just go back into the system. No clinician would lay eyes on them for Staffordshire’s 695 days. The decisions are not being made by clinicians in this instance. As I said, it took two and a half years for me to be sat in front of a clinician with regard to the situation in my own family.
I will not push the new clauses to a vote at this stage, but I think this goes to what we were talking about with regard to public duties. That the local authority has a public duty in this regard is great, but the reality is that if we do not put a public duty on other organisations, such as CCGs and healthcare workers, those are the things that fall through the gaps. For a child who has moved and has already been on a waiting list somewhere—let’s say for 798 days in Berkshire—there should be some way to prioritise their needs. I do not think the Minister would disagree with that as the principle. I will not push it to a vote now, but the Opposition will be seeking answers for that area from the Department of Health and Social Care. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 24
Assess the impact of welfare reforms on survivors of domestic abuse
‘(1) It is the duty of the Department for Work and Pensions, in conjunction with the relevant government departments, in developing welfare reform policies, to assess the impact of such policies on individuals who are or are likely to become victims of domestic abuse within the meaning of section 1 of this Act, and to promote their wellbeing through those policies.
(2) “Wellbeing”, for the purposes of subsection (1) above, relates to any of the following—
(a) Physical and mental health and emotional wellbeing;
(b) Protection from abuse and neglect;
(c) Control over day-to-day life (including over care and support, or support, provided to the individual and the way in which it is provided);
(d) Participation in work, education, training or recreation;
(e) Social and economic wellbeing; and
(f) Suitability of living accommodation.
(3) In exercising this duty under subsection (1) above, the Government must have regard to the following matters in particular—
(a) the importance of individuals who are or are likely to become victims of domestic abuse within the meaning of section 1 of this Act being able to escape abusive relationships;
(b) the importance of individuals who are or are likely to become victims of domestic abuse within the meaning of s. 1 of this Act being able to become economically independent of the perpetrator(s) of abuse; and
(c) the importance of individuals who are or are likely to become victims of domestic abuse within the meaning of s. 1 of this Act being able to rebuild their lives.’—(Jess Phillips.)
This new clause seeks to create a duty to assess the impact of welfare reforms on survivors of domestic abuse, and to ensure welfare policies that promote their wellbeing.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 38—Social Security: Exemption from repaying benefit advances—
‘(1) The Social Security (Payments on Account of Benefit) Regulations 2013 are amended as follows.
(2) In regulation 7 (definition of financial need), after paragraph (3) insert—
“(4A) It shall be presumed for the purposes of this section that A is in financial need where A—
(a) is or has recently been a victim of domestic abuse; and
(b) provides evidence of the domestic abuse in one of more of the forms set out in regulation 33(2) of the Civil Legal Aid (Procedure) Regulations 2012.
(5) A has recently been a victim of domestic abuse if a period of 12 months has not expired since the domestic abuse was inflicted or threatened.
(6) For the purposes of this section—
(a) ‘domestic abuse’ has the meaning set out in section 1 of the Domestic Abuse Act 2020;
(b) ‘victim of domestic abuse’ means a person on or against whom domestic abuse is inflicted or threatened.”
(3) In regulation 10 (Bringing payments on account of benefit into account), after subparagraph (b) insert—
“(c) In the case of a payment on account of benefit made to a person who can provide evidence of being or having recently been a victim of domestic abuse, subsections (a) and (b) shall not apply.
(d) A person has recently been a victim of domestic abuse if a period of 12 months has not expired since the domestic abuse was inflicted or threatened.
(e) For the purposes of this section—
‘domestic abuse’ has the meaning set out in section 1 of the Domestic Abuse Act 2020;
‘victim of domestic abuse’ means a person on or against whom domestic abuse is inflicted or threatened.
(f) For the purposes of this section, evidence of being of having recently been a victim of domestic abuse must be provided in one of more of the forms set out in regulation 33(2) of the Civil Legal Aid (Procedure) Regulations 2012.”’
New clause 39—Universal Credit: Exemption from repaying hardship payments—
‘(1) The Social Security (Payments on Account of Benefit) Regulations 2013 are amended as follows.
(2) In regulation 116 (Conditions for hardship payments), subparagraph (1)(f), after (c) leave out “and
“(g) the Secretary of State is satisfied that the single claimant or each joint claimant is in hardship”
and insert—
“(g) the claimant is or has recently been a victim of domestic abuse; and
(h) the Secretary of State is satisfied that the single claimant or each joint claimant is in hardship.
(2) For the purposes of paragraph 1(g) a person has recently been a victim of domestic abuse if a period of 12 months has not expired since the domestic abuse was inflicted or threatened.”
(3) In regulation 116 (Conditions for hardship payments), after paragraph (3)(d) insert—
“(4) In this regulation—
‘domestic abuse’ has the meaning as set out in section 1 of the Domestic Abuse Act 2020;
‘victim of domestic abuse’ means a person on or against whom domestic abuse is inflicted or threatened.”’
New clause 40—Social Security: Exemption from repaying benefit advances—
‘(1) The Social Security (Payments on Account of Benefit) Regulations 2013 are amended as follows.
(2) In regulation 12 (Conditions for payment of budgeting advances), after paragraph (2) insert—
“(2A) Where B is or has recently been a victim of domestic abuse, sub-paragraphs (c), (d) and (e) shall not apply.
(2B) B has recently been a victim of domestic abuse if—
(a) a period of 12 months has not expired since the domestic abuse was inflicted or threatened, and
(b) B is able to provide evidence of the domestic abuse in one of more of the forms set out in regulation 33(2) of the Civil Legal Aid (Procedure) Regulations 2012.
(2C) For the purposes of this section—
(a) ‘domestic abuse’ has the meaning set out in section 1 of the Domestic Abuse Act 2020;
(b) ‘victim of domestic abuse’ means a person on or against whom domestic abuse is inflicted or threatened.”’
New clause 41—Housing benefit: exemption from benefit cap—
‘(1) The Housing Benefit Regulations 2006 are amended as follows.
(2) In Regulation 75A, omit “or 75F” and insert “, 75F or 75FA”.
(3) After Regulation 75F, insert—
“75FA Exception to the benefit cap: domestic abuse
(1) The benefit cap does not apply to a person (P) who is or is likely to become a victim of domestic abuse or where the victim of domestic abuse has fled domestic abuse within the previous two years.
(2) Subparagraph (1) applies where P provides evidence of having experienced domestic abuse or being at risk of domestic abuse in one of more of the forms set out in regulation 33(2) of the Civil Legal Aid (Procedure) Regulations 2012.
(3) The exception in subparagraph (1) above will last for a period of two years from the date on which the person became eligible for the exception.
(4) ‘Domestic abuse’ has the meaning set out in section 1 of the Domestic Abuse Act 2020.”’
Jess Phillips
All these new clauses deal with welfare provision and the multitude of ways that the benefits system currently prejudices victims of domestic abuse.
I will first speak to new clause 24, which would place a duty on the Government to undertake an impact assessment of welfare reform changes on survivors of domestic abuse. I recognise that the Ministers in front of me from the Home Office probably do not have the stomach to change actual welfare rules that are run by the Department for Work and Pensions. It would be churlish of me to suggest that they were going to start making Department for Work and Pensions policy right here on the hoof, although Marcus Rashford has not done a bad job. If they do not have the stomach to change the policy that some of these amendments seek to make, we may need to assess when welfare changes are made with regard to victims of domestic abuse.
The Bill rightly recognises that economic abuse is a key tactic used by perpetrators to coerce and control, but while the Bill recognises this as a key form of harm experienced by survivors, what does it do to provide a safety net for survivors who face years of economic sabotage, control and exploitation at the hand of a perpetrator? Economic abuse is sadly widespread and over half the survivors surveyed by Women’s Aid and the TUC could not afford to leave their abuser. That means they will stay and experience further abuse.
Research by the charity Refuge says that one in five people have experienced economic abuse and 88% experienced other forms of abuse at the same time. That means many survivors are in debt and have been prevented from accessing their household income. Access to welfare benefits is therefore vital to ensure that women can access the financial support they need to escape and rebuild their lives. I am not sure anybody would argue with that.
A robust safety net that enables survivors to escape and rebuild independence is not a luxury, it is a lifeline. The cumulative impacts of numerous changes to welfare reform policy in recent years are having some serious consequences for survivors, including universal credit, the benefit cap, the two-child limit, the under-35 shared accommodation rate—which I recognise there are now exemptions on—and the bedroom tax. Welfare reforms are restricting the resources women need to leave.
Specialist organisations like Women’s Aid are receiving direct reports from their member services about the stark choices between poverty and safety that women are being forced to make as a result of welfare changes. This has obviously sharply increased during covid-19. Women’s Aid member services have reported serious concerns about women’s access to food and basic essentials.
In my constituency I meet woman after woman who has been placed in temporary accommodation, often a local hotel or bed and breakfast, sharing a room with her children, and without any access to cooking facilities. The women are often in significant financial distress, without access to any form of support. They and women in refuges are largely reliant on food banks. Specialist domestic abuse services are telling us that delays to universal credit and the cumulative impacts of welfare reforms are resulting in women being unable to access their most basic rights to food and survival. That cannot be right.
While the Government have made the case for bringing in various welfare reform policies, they are also having to retrospectively revise those policies because of the unintended consequences. Every time Ministers have stood up, they have oft warned of the unintended consequences of changing our laws, so they are only too alive to that possibility.
Many of the welfare changes in the last few years have had unintended consequences for survivors of domestic abuse. There is the well-documented case of a survivor who was forced to pay the bedroom tax because of a panic room that had been installed in her flat. That panic room had been installed because the survivor and her son were at such high risk of domestic abuse from her ex-partner, and the impact of the bedroom tax was to plunge her into financial instability and force her to move to a far less secure property, without the protections that the panic room had afforded her. Ultimately it was ruled by the courts that the survivor did not need to pay the levy, setting a precedent for others with panic rooms. However, the process was inefficient, costly, time-consuming and placed an unimaginable emotional toll on the survivor. It should not be on survivors to make welfare policy right. It is not the job of domestic abuse survivors to strength-test the system for us.
It is clearly the Government’s intention to transform the response to domestic abuse through the Bill, including economic forms of abuse. However, that intention is at risk of being seriously undermined by welfare reforms. Although the consultation on the Bill stated the intention to identify
“practical issues that make it harder for a victim to escape”,
and to
“consider what can be done to help victims of economic abuse”,
there is no mention of welfare reform policy. The range and severity of concerns regarding the current welfare reform agenda demonstrate that a new approach is needed. It is vital that the impacts and unintended consequences on survivors of welfare reform policies are safely and robustly assessed before implementation in the future.
I have personally had to take cases to court, with victims, regarding legislation that has not protected them. I have to say that, in almost every case, the court finds in favour of the victim in cases of domestic abuse. All the new clause asks is that, when we make new changes to welfare policy, considerations are made for victims of domestic abuse. Those considerations do not have to be listened to, but should be considered.
For example, when universal credit was originally rolled out, if somebody changed their situation, they would trigger a universal credit update. They may have been on legacy benefits, but if their situation changed and they went into the jobcentre and said that their address has changed because they have been moved into the area, they would then be put on to universal credit, as part of the roll-out. Immediately, the income of single mothers and victims of domestic abuse would drop by £600 overnight, simply by virtue of that.
Anyone who works with domestic violence victims would be able to look at every single welfare thing and say, “Well, this won’t work for this reason, and this may need mitigation for this reason.” That is not to say that we cannot have any welfare reforms that would never harm victims of domestic violence, but some time to prepare for what they are going to be would not go amiss, especially because the court eventually agrees with me and overturns them in the long term anyway, costing the taxpayer a huge amount of money.
New clauses 38 and 40 concern the non-repayment of advances. As with new clause 24, we need to ensure that the benefits system works for survivors of domestic abuse and enables them to support themselves and their children away from the perpetrator. We must recognise that access to money is fundamental and understand the benefits system as one of our most powerful tools to support survivors and enable them to live safely. Our social security system—particularly universal credit—does not support survivors and provide that essential safety net to help them live independently from the perpetrator. In fact, it does the opposite. It often forces them into poverty, exactly at the point that they make the incredibly difficult, traumatic and dangerous decision to leave their abuser.
Take a woman going into a refuge as an example. At the moment, after a few days in the refuge, she will be supported to apply for universal credit. For most women, this will be their first interaction with universal credit, having either never received benefits before or having received legacy benefits. It will typically be much harder for survivors to make an application for universal credit than most. Some will not have their own bank account, because they have been prevented by their abuser from opening one. Others will have left without key documents and ID. Refuge staff will help women overcome those barriers, but it still might take a few weeks to sort it all out. Only after that will survivors be able to make an application. They must then wait a minimum of five weeks before they receive the first payment. That means seven to eight weeks without any income at all. Refuge managers tell me that a wait of around two to three months before receiving the first payment is very common for survivors of domestic abuse.
While they wait for the money, survivors are reliant on food banks, perhaps a small amount of money that the refuge provider can give through a hardship fund and whatever else refuge workers can access from other charities and community groups. We must remember that this is happening at the very same time that the woman has left her home, her job, her friends and her family, because she fears for her safety. Many of these women will have been raped; many will have been subject to torturous physical abuse or will have experienced a sustained campaign of coercion and control.
Julie Marson (Hertford and Stortford) (Con)
Does the hon. Lady agree that, in some of these circumstances and given the really complex issues that she describes, a comprehensive training package is needed, as the most powerful place to intervene and help is the frontline? So, the training that the caseworkers in jobcentres receive, the tools they have and the relationships they build are really powerful ways to help people in those situations.
Jess Phillips
There is absolutely no doubt about it, and a good jobcentre worker is worth their absolute weight in gold. I have a gold star system for the ones in my local jobcentre, who are excellent in lots of circumstances. The hon. Lady is absolutely right. However, when we are talking about domestic abuse and universal credit, we have put in a huge amount, and maybe that could have been avoided if we had looked at some of the impacts of how this policy was going to be rolled out. For example, on the issue of split payments in universal credit, we are now asking jobcentre staff potentially to intervene directly when two people are sitting in front of them, saying, “So, would you like split payments?” It is rocky terrain for a jobcentre worker to have to try and deal with that.
In fact, if we look at the take-up of split payments, we see that it remains persistently low, compared with the number of victims of domestic abuse who are claiming universal credit. That situation means that there is potentially a need for the complete redesign of jobcentres, so that there are permanent private spaces for every single person who might need one, and so that people can be talked to separately. There are all sorts of things that can be done to make the situation better, and training at the frontline is absolutely key in that.
However, that roll-out of universal credit was not done in my own area; I had to go and ask what was being done. I have sat in the Department for Work and Pensions with Ministers and asked them what they are going to do about these issues. The issue of split payments was very much an afterthought, and I suppose that all I am asking for in new clause 24 is that it is not an afterthought but is built into the system from the very beginning. However, the hon. Lady is right—frontline staff are worth their weight in gold.
The way that universal credit has been designed means that women are forced to choose between staying with a perpetrator or being unable, in lots of cases, to feed themselves and their children. That cannot be right and cannot be allowed to continue. Although the reasons why a woman might return to a perpetrator can be complex, it should not surprise anyone in this room that their not having enough money to provide for themselves and their children is the most common factor. In a survey for Refuge, one refuge worker said,
“the changeover to Universal Credit has caused a significant delay in accessing benefits when women arrive at the refuge. The five- week waiting time means women have to survive with their children with no income, and only a few food bank vouchers. This means that many struggle with whether they’ve made the right decision to leave, if they can’t even feed their children on their own.”
Of course, the Government response is that advance payments are available for those who experience hardship during the minimum five-week wait. That is true, but the crucial thing about advances is that they are loans, which must be paid back immediately from the very first payment, at the rate of up to 30% of the person’s payment. In offering such loans, we are offering women the choice of having no money now or not having enough money for many, many months afterwards.
We must remember that this is often the period when women are traumatised, and supporting their traumatised children, while trying to rebuild their lives in a new place without their support network. They might well be going through the criminal justice process, or the family courts, or both. The system requires them to do that either without a penny, or with some money but in the knowledge that they will spend at least the first year of their life away from their perpetrator struggling to make ends meet, as they have to pay that loan back.
Specialist services supporting survivors tell me that many women they support do not take advantage of the advance payment, even though they desperately need it. Those women are frightened about the consequences of taking on debt at the very beginning of their life away from the perpetrator. Those who have experienced years of economic abuse might have thousands of pounds in debts that they were coerced into taking, with their perpetrator fraudulently putting their names against a variety of debts. That is very common. They know that they will likely spend the next decade paying that debt off and they do not want to start their new lives by volunteering for even more debt.
Those fears are often well founded. Research from Citizens Advice shows that people who take out an advance loan from the Department for Work and Pensions are more likely to get into further debt as they struggle to pay the loans back. The answer to this is to get rid of the five-week wait—some well-trodden evidence regarding everybody, but there we go. In the case of domestic abuse victims, the answer is to pay benefit advances to survivors of domestic abuse as grants, rather than loans.
It is hard to overstate how much of a positive difference that would make to women and children up and down the country. It is the difference between a woman in a refuge hoping the food bank has not run out of baked beans and a woman in a refuge being able to treat her child to a yoghurt or some sweets after dinner on their first day in a new school. It is the difference between a woman feeling hopeful that she made the right decision and can look forward to a life without abuse or a woman feeling that she has no choice but to go back, because she simply cannot afford to live away.
When I explain to Ministers the impact of the five-week wait and repayment of advances for survivors, they often tell me that they cannot treat different groups differently under universal credit or that it is impossible because people would lie and pretend to be victims—usually they say both. In fact, last week the Ministers wrote to me saying that paying advances as grants to survivors includes significant fraud risk.
On treating people differently, there are many exceptions in our social security system. The Minister herself already referred to the shared accommodation exemption for victims of domestic abuse, which is a recent change. It is a strength that there are differences for different people. It makes our system work better and better protect people.
There are already exemptions for survivors of domestic abuse in the benefits system. For example, the domestic violence easement means that survivors do not have to comply with job-seeking conditions of benefits for a few months while they focus on their safety. The destitution domestic violence concession, which we will no doubt discuss at length tomorrow, is a crucial example from immigration rules, which provides a lifeline to survivors on spousal visas. Exempting survivors of domestic abuse from repaying benefit advances would be another important difference for survivors of domestic abuse that ensures the system works as a safety net for them and not as a barrier.
On the point of making it up, as someone who has worked in specialist domestic abuse services, I can tell you that it is a thousand times more likely that a woman will minimise the abuse that she has suffered, or think it is not abuse because they have started to believe what the perpetrator is telling them—that it is their fault and they are making it up. I understand, however, the Government’s desire to ensure that public money is not received fraudulently and therefore accept that some level of evidence is needed.
The best model for providing evidence is the legal aid gateway, which sets out the evidence requirements for survivors of domestic abuse to access legal aid. The same framework can be used here. This is an affordable policy that would make an extraordinary difference. I urge the Committee to support new clauses 38 to 40, which would ensure that benefit advances are treated as grants and do not need to be repaid.
I will now briefly turn to new clause 41, which would exempt survivors of domestic abuse from the benefit cap. The benefit cap limits the total level of benefits that a household can receive. It was introduced in 2013 and has impacted 250,000 households since the limit was lowered in 2016. While the cap was one of a number of policies intended to reduce our deficit, the Government’s own evaluation shows that only 5% of households moved into work because of the benefit cap; 95% did not.
Instead, the cap largely impacts lone parents and those with an illness or disability. Seven out of 10 capped households are single parent families, of which 69% had at least one child under the age of five and 24% had a child under two, according to figures from May 2019. Around 90% of single parents are female, so it is unsurprising that single female parents make up 85% of all households whose benefits have been capped, but the cap is having a particularly devastating impact on survivors of domestic abuse and increasing the barriers that women face in leaving an abuser. There is no free childcare before the age of two, meaning that lone parents with young children often do not work enough hours to avoid the impact of the cap. The issue is particularly acute where a women has fled domestic abuse and is far from her support network, so is unable to rely on friends or family for childcare and is perhaps unable to work due to the abuse she has experienced.
Although survivors are exempt from the cap while living in refuges—another exemption that has been put through—they are not exempt as soon as they leave. That is severely restricting survivors’ ability to find a safe new home and move on from refuge, as their benefits might not cover the cost of housing, either in social housing or in the private rented sector. It is leading, essentially, to bed-blocking, where women who are ready to leave a refuge are stuck in the service, blocking spaces that other survivors fleeing abuse desperately need.
The impact of the cap on survivors was made starkly clear in the case of R v. the Secretary of State for Work and Pensions, which considered the legality of the benefit cap. Two of the claimants in the case were survivors. One was living in statutory overcrowded housing and was unable to move herself and her family anywhere suitable and safe due to the cap. Another was stuck in a refuge because the cap meant that she could not afford any move-on housing, and she was therefore blocking a much-needed space for another survivor. They told Women’s Aid that they felt financially penalised for escaping domestic abuse.
I know that the Department for Work and Pensions states that discretionary housing payments, which are paid by local authorities, are available for survivors in such circumstances. However, DHP allocations remain inconsistent, short term and dependent on different councils’ policies and practices—it is yet another postcode lottery. They are not monitored by the Government centrally, so it is impossible to know whether they are providing an effective solution.
The Department for Work and Pensions has repeatedly claimed that the benefit cap is saving money. As I have highlighted, however, the cap creates significant hardships, and the Department therefore gives back a significant proportion of the money it takes from claimants by providing funding for discretionary housing payments to local councils in order to help them support capped claimants. The circular process of transferring public money from one budget to another fails to consider the impact that has on families, particularly survivors, who rely on less stable support and are certainly under somebody’s “discretion”.
The Department does not include in its figures the cost of DHPs included in administration costs, nor does it consider the increased cost to local authorities through temporary accommodation or the wider cost that the hardship created by the cap might have on other public services. Women’s Aid is concerned that the DHP allocation remains inconsistent, short term and dependent on different councils. The DWP confirmed that it has not carried out a full cost-benefit analysis of the cap. In 2018-19, however, the DWP allocated £60 million of DHP funding for local authorities in Great Britain to support capped households.
For those reasons, I urge colleagues to support new clause 41 in order to exempt survivors of domestic abuse from the benefit cap. To summarise, the Bill must do more for survivors of abuse, including those suffering economic abuse, than merely define what is happening to them. The new clauses would ensure that the Bill has a legacy of not only recognising that money is used to control and abuse, but making significant changes to reduce the number of women who are forced to stay with their abusers because they cannot afford to leave.
Victoria Atkins
With regard to new clause 24, the Department is already obliged to consider the impacts of its policies through existing equality assessments, in accordance with the public sector equality duty. Moreover, the Department reviews, and is consistently striving to improve, services, working with partners who are experts in the areas that they support. This has included the roll-out of a significant training programme and the implementation of domestic abuse points of contact in every jobcentre.
Jess Phillips
Can the Minister not see the problem with a woman going in and asking for a split payment, and then returning home that evening?
Victoria Atkins
That is why we do not have it as a default. We are sensitive to that precisely because it will not work for some women. It has to be done led by the victim—led by the survivor—and not imposed universally. I will come on to our concerns about the default position in a moment but, if I may, I will carry on building the argument towards that.
The Department will also signpost individuals affected by abuse to specialist support and will work with them to ensure that they are aware of the other support and easements available under UC. Those include special provisions for temporary accommodation, easements to work conditionality and same-day advances. That approach ensures that victims are supported, while simplicity is maintained for others.
In July last year, the universal credit digital claims system was changed to encourage claimants in joint claims to nominate the bank account of the main carer for payment. We continue our support of payment of universal credit to the main carer through that messaging. This strikes the right balance between encouraging positive behaviour and allowing claimants to choose how best to manage their finances.
The proposed change in approach would be inappropriate for some vulnerable people who struggle to manage their money—for example, if one partner has addiction issues or is a carer for the other. A number of practical issues would present further challenges to vulnerable people. For example, 1.3 million adults in the UK do not have a bank account—most of them are on low incomes or unemployed.
The current process does not require both claimants to have bank accounts. The Government are working to improve financial inclusion, but it remains the case that the introduction of split payments by default could result in unnecessary payment delays for joint claimants when one partner does not have a bank account. It is necessary, therefore, to retain a single payment option.
Moreover, a move to split payments by default does not eliminate risk. Sadly, we know that, irrespective of how someone receives their money, perpetrators use a broad spectrum of abusive tactics to dominate and control their partners. That is the point about split payments being rolled out as a default.
The DWP has rolled out a significant training programme and implemented domestic abuse single points of contact in every jobcentre. That means that jobcentre customer service managers and work coaches have the right knowledge, tools and local relationships to support customers who are experiencing or fleeing domestic abuse. The Department continues to support survivors of domestic abuse through a range of measures, including signposting to expert third-party support, special provisions for temporary accommodation and other measures that I have mentioned, including easements to work conditionality.
We are achieving positive cultural change in jobcentre sites and, while we accept there is always more to learn, our departmental awareness of and support for those who have suffered or are suffering domestic abuse is better than it has ever been. I appreciate that the hon. Member feels strongly about her proposed measures, but I hope that I have reassured other colleagues about the steps that the Department for Work and Pensions is taking to support those who receive benefits, whether legacy benefits or universal credit.
Jess Phillips
Often the words that get read out bear no relation to the experience that we feel on the ground, whether as a benefit claimant or and as somebody supporting benefit claimants. With that idea that single payments are somehow safer and better, it is noble of the Minister to try to argue that universal credit going to one person in the household is better for victims of domestic abuse, but it is genuinely—
Victoria Atkins
I chose my words very carefully. What I said was that this must be led by the victim herself. I fully accept the point that the hon. Member made when she intervened on me. For some victims, walking in at the end of the day and saying, “I’m getting my UC separately,” may be a trigger. That is why we have to be led by the victim/survivor, rather than having split payments by default.
Jess Phillips
I understand, but about a year ago, I asked how many people had asked for split payments, and obviously the answer was, “We don’t collect that data”—the Government literally were not collecting the data nationally. When I asked them to collect that data, please, we saw that very few people are currently asking for split payments. That is not because people do not want some of their own money coming into their own hands; it is because the current system is not safe for having split payments. Split payments by default is a way of protecting people.
On the other equality areas that the Minister talks about, I totally take the point that saying that victims of domestic abuse do not have to repay the loans opens things up to care leavers. I am okay with that. If care leavers think that they cannot cope when we think about the universal credit five-week-wait loan, I would live with that. I think we need to look at all vulnerable groups. We are here to talk about the Domestic Abuse Bill, so I am leading chiefly in regard, but I am okay with other vulnerable groups not having to repay the universal credit loan. If anything, covid-19 has proved to us that the five-week wait is too much.
We can sit here and say that there are more than ever, but the reality on the ground is that victims are telling us that they cannot move out of refuge—they cannot afford to become free. We have to listen to them. There have been times in the Department for Work and Pensions—I really hope that that era will break out again under the current Secretary of State—when their voices were heard. I truly hope that that will happen, so we will continue to push this.
I shall not bother pushing a Home Office Minister into a vote to change the policy of the Department for Work and Pensions. I recognise all our limitations in that regard. However, we will continue to focus on this. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Rebecca Harris.)
Trade Bill (First sitting)
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Good morning. Before we begin, I remind everyone to please switch off their electronic devices, or to put them on silent. Tea and coffee are not allowed during sittings. The Hansard reporters would be very grateful if Members could email electronic copies of their speaking notes to hansardnotes@parliament.uk.
Does anyone have a relevant interest that they would like to declare? If not, I call the Minister to move the programme motion, which was agreed by the Programming Sub-Committee yesterday.
The Minister for Trade Policy (Greg Hands)
I beg to move, Date Time Witness Tuesday 16 June Until no later than 10.30am The Institute of Directors The Confederation of British Industry Tuesday 16 June Until no later than 11.00am Advertising Association Tuesday 16 June Until no later than 11.25am Perpetuum Ltd Tuesday 16 June Until no later than 2.40pm Ernst & Young UK Trade Policy Observatory Tuesday 16 June Until no later than 3.10pm The National Farmers’ Union Tuesday 16 June Until no later than 3.45 pm The Chemical Industries Association Make UK Tuesday 16 June Until no later than 4.10pm The Trades Union Congress Tuesday 16 June Until no later than 4.30 pm Monckton Chambers Tuesday 16 June Until no later than 4.50pm Trade Remedies Authority Thursday 18 June Until no later than 12.00pm Client Earth The Trade Justice Movement Thursday 18 June Until no later than 12.30pm Digital Trade Network Sam Lowe, Centre for European Reform Thursday 18 June Until no later than 1.00pm British Chamber of Commerce in Korea
That—
(1) the Committee shall (in addition to its first meeting at 9.25am on Tuesday 16 June) meet—
(a) at 2.00pm on Tuesday 16 June;
(b) at 11.30am and 2.00pm on Thursday 18 June;
(c) at 9.25am and 2.00pm on Tuesday 23 June;
(d) at 11.30am and 2.00pm on Thursday 25 June;
(2) the Committee shall hear oral evidence in accordance with the following Table:
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 3; Schedules 1 to 3; Clauses 4 and 5; Schedules 4 and 5; Clauses 6 to 12; new Clauses; new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00pm on Thursday 25 June.—(Greg Hands.)
I should point out that we have accommodated the Opposition’s desire to have more scrutiny sessions. There is now an additional scrutiny session on Thursday morning. That was arranged with the agreement that we would none the less finish considering the Bill by close of play next Thursday.
Question put and agreed to.
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Greg Hands.)
The Chair
Copies of written evidence that the Committee receives will be sent to Committee members by email.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Greg Hands.)
The Chair
Before calling on the first Member to ask a question, I would like to remind all Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion the Committee has agreed. For this session, we have until 10.30 am, so it is an hour. For the record, I will introduce the witnesses, Allie Renison, head of EU and trade policy at the Institute of Directors, and Jonathan Brenton, head of trade policy at the CBI. Welcome, and thank you for coming.
Allie Renison: Thank you.
Jonathan Brenton: Good morning.
Katherine Fletcher (South Ribble) (Con)
I don’t think they will be able to hear you on mic.
Stewart Hosie (Dundee East) (SNP)
Do you want to invite the witnesses in turn to make their opening remarks, and then we can see how this will work?
The Chair
Q
Allie Renison: Absolutely. Forgive me, but people raised in America have no problem, unfortunately, projecting their voice. My name is Allie Renison. I am head of EU and trade policy for the Institute of Directors. That is at the intersection of working on EU negotiating priorities and wider trade priorities. We have a very high share of members who trade internationally—about 70% export. Largely, about two-thirds are in services, and one-third are in goods. So international trade is a big part of members’ focus.
All in all, from discussing the purpose of the Trade Bill with members of the IoD, there is broad-based support for it, in so far as the objectives remain limited to continuity agreements and what is necessary to put in place requirements for taking up our trade defence measures outside the EU. There are some question marks around the future of new trade agreements, but in so far as the Bill is understood to cover the continuity phase, there is broad-based support for trying to ensure that that is over the line.
The Chair
Q
Jonathan Brenton: I will keep this quick because I am conscious that you want to keep moving. Our members generally welcome much of the Bill. They realise that time is against us and that we need, as Allie said, to make provision for trade continuity and for trade defences.
However, there are two schools of thought. There are those who wish the Bill had been wider in scope, a bit more about trade strategy and linked to policy areas, but there is a smaller group who say that time is limited, and recognise that other pieces of work need to be done, such as the secondary legislation needed to put the Bill in place, and that we need to get the trade defence authority up and running. I will just quote what one member said, to give you a flavour of this:
“I think we’d argue for something bolder and more visionary, that could capture the high ground for the future of international trade, and position the UK as leader in key global issues like climate change. However time is short, and it may be we have no alternative to short term pragmatism.”
So we recognise where we are. We will not get a perfect holistic framework for policy if we have to work with the grain of the Bill we have, but there may be one or two improvements that some of our members would like, especially on the working of the TRA in consultation.
But we remember the wider context, and I have to say, ladies and gentlemen, that that wider context is also about the unprecedented challenge of covid. Our members have shown extraordinary resilience, and I pay tribute to that, but they are not superhuman. For many of our members, this Bill is not at the top of their priorities, given there is so much going on in the UK economy at the moment. Those are my opening remarks.
The Chair
Thank you. Can I ask the Committee to put its questions, starting with the shadow Minister?
Bill Esterson (Sefton Central) (Lab)
Q
The Chair
Either of the witnesses can go first. Allie?
Allie Renison: Further to my counterpart’s evidence, in terms of discussing the agreement with businesses, there was some interest in it when there were developments in and around it, when the UK was seeking to accede to it in its own right six or 12 months ago. There was lots of interest in understanding what it actually meant. But, all in all, in so far as the purpose of it is to maintain a level playing field—unfortunately, the notion of a level playing field, and the importance of it in many areas of business, has been soured somewhat by some of the discussions and the context in the EU negotiations—having a level playing field and allowing people to bid on that level playing field, when it comes to Government procurement, is very important. Also, when it comes to future trade agreements, it is an important starting point.
At a time when the global trading system is being called into question by some very fundamental players on key aspects of it, including in some press reports over the last six to 12 months since the Government procurement agreement, it is really important that the UK puts down a marker and says that it wants to be part of this rules-based trading system. It is very important from a continuity perspective and as a marker in the sand in the UK’s international trade obligation commitment.
Bill Esterson
Q
Jonathan Brenton: I agree with what Allie just said on the importance of a level playing field and the important signal that it sends about the UK in a global trading system that is clearly under strain. I can quote the figures given at the time that the UK signed this. The size of the global market is £1.3 trillion. We are talking about the 19 signatory states—major trading partners such as the US, Canada, the EU and Japan.
There are agreements—they exist, and it is absolutely vital to sign them. Making them work and obtaining market access is not always the same as securing or signing an agreement. The most obvious example would be the United States, where many states have not ratified GPA. There is a very big procurement market in the US at state level, which we have asked the UK to look at and push for in the context of a US trade deal. Allie will know better than I do that opening up state-level access in the US is not that easy. There are also major markets such as Mexico that have not signed up to the GPA. So it is absolutely right that we should do this, but it is one step on the route to a fully transparent market in Government procurements across major markets.
Bill Esterson
Q
Jonathan Brenton: That is quite a big question. However, as a general principle, trade is more than trade deals. There are markets where the UK is focused on getting new global trade deals—the US, Australia, Japan and so on, although Japan is doing a kind of roll-over deal, but certainly Australia, New Zealand and the US. There are also markets where a trade deal is more of a long-term aspiration, because of the—[Inaudible]—of the UK in signing deals, and also the readiness of those countries to do deals. India and China would be examples.
There, what I think our members are looking for is for the UK to continue and step up its existing work through, say, the economic and financial dialogue in the JETCO—the joint economic trade commission—with both countries, to put on the table those issues that are important for business, and to do that in a way that matches what the UK wants with what the host country also wants, because I think this has to be win-win. In tandem with trade deals, we also want a push on market access, with the information coming from business being a part of UK strategy. I am simplifying it a bit, because I suspect in the case of the US that it will be a mixture of the two, and that, as and when we sign a US trade deal, there will still be work on the state level. I think it will take a long time to get the access we probably want.
Allie Renison: Can I follow that up? Can I just add a note on the US market? When it comes to a level playing field, the UK probably has a much more level playing field for its own internal market. That is largely, I would say, in some respects, because of single market legislation, which allows that level playing field not only in the UK but across all of the constituent parts of the EU.
By contrast, the US, and particularly Canada, do not have that kind of consolidated internal market. As was alluded to, there are differences at the state level. There have been very limited attempts to try to rectify that for trade agreements, when it comes to the US. I think there have been some studies in the past showing that despite the lack of, for want of a better word, “noise” around the closed aspect of some of the US procurement markets—those at a federal, state and even municipal, or county or local government, level—it is a bit more overt in some respects. When it comes to the actual implementation, some of the disruption, or patchwork approach, to determine access in other EU countries, on paper it is the same, but in practice it is sometimes different. I think that US can sometimes get a bad reputation for this, because it is a bit more overt.
In the context of trade agreements, I would say that, in terms of most of the work that is done to deal with the existing legislation around Buy America, which is the obligation that the US, at multiple levels of government, requires certain thresholds for suppliers to meet from a US origin point of view, they can get wavers for that at the federal level for trade agreements; they are not very common at the state level. Very often, I think that trade agreements are seen as an opportunity to start the conversation rather than necessarily unlock state-level market access.
Bill Esterson
Q
Allie Renison: If you were to compare approaches, obviously there was some discussion about having a Buy European agenda, which was under the campaign platform of Emmanuel Macron when he was campaigning to be President. However, that really did not get much traction, effectively because of the EU’s own rules around competition and state aid, and it was also seen as not necessarily wanting to compete with the US, and the current Administration, in that respect.
I do not think it is a big priority, in that it would depend on what the structures underpinning it would be. In a coronavirus world, countries and industries will probably want to hold on and fight for every piece of market share, in particular, but I do not think that that should be seen as an opportunity to try and make it harder for other countries to access our internal market, simply because we have a lot of members who do that reciprocally in other countries. We find that with the exports of a lot of companies working in manufacturing and heavy industry, specifically from a goods and services perspective. You can think back to the classic example of Rolls-Royce, which initially began manufacturing engines and then decided, just with a couple of engines, to—[Inaudible]—services. That is how it really gained its edge in the marketplace.
If you think of it from that perspective, that is an important feature of what British manufacturing brings to other parts of the world. To have that reciprocity closed off—because our members are so internationally oriented, compared to the average, I would say that that is a bigger a priority. We have a very low share of members who are looking at Brexit as an opportunity to reshore or bring back manufacturing, so to speak. Even the data that we have seen so far shows that there is much more of an indication, from an industry perspective, of diversifying in other markets rather than trying to onshore operations. I would not think that that is a big priority for our members.
I would distinguish that, however, from the Government’s general approach to foreign takeovers and investments, meaning there is some difference there, but when it comes down to procurement access, most of our members do not see Brexit as an opportunity to try to have us buy British, so to speak.
The Chair
I will move on to Andrew Griffith and to Stewart Hosie. I remind witnesses to speak slowly, because the sound quality is not brilliant in the Committee Room. We are struggling to hear you. It would be very helpful if you could speak slowly and speak up.
Andrew Griffith (Arundel and South Downs) (Con)
Q
Jonathan Brenton: I think we can take it as a given that the continuity of trade is the biggest priority for our members. Let us break that down into two questions. If the UK were to lose access to its trade deals, I think there would be an enormous loss in credibility in our trade policy and a loss of trust among business.
In terms of the individual sectors, I will take the specific example of Turkey. Turkey is a special case, of course, because it is in a customs union, but we know that it is pushing for a trade deal, which the UK would welcome. It all depends on getting a good EU deal, or an EU deal. If there were no trade deal with Turkey, a multi-billion auto trade—I would have to dig out the figure for you—that has doubled in the last five or six years, would face a 10% tariff. That would be an enormous shock to the UK auto industry. That is the kind of practical—[Inaudible.]
The Chair
Thank you. Allie, can we have your view please? Have we lost the connection? Allie can you hear us? Jonathan are you still on the phone? I will suspend the proceedings for a moment while we sort this out.
The Chair
We will now carry on with our proceedings. I welcome back Allie to answer the last question. Allie, can you keep your answers concise because we are up against the clock? Thank you very much.
Allie Renison: Thank you. I believe I heard the question that my counterpart answered about the importance of the roll-over. About 15% to 20% of our members have indicated that they make use of the trade agreements. The most important part, in addition to the roll-over, is the practical implementation of that. Briefly, what I mean by that is simply that we can have a roll-over or as close to roll-over as possible on paper, but what happens when it comes to changes at the border in other countries is another matter. I think that that, tied together, is the most important thing to make sure that we get. Obviously, we need to have the roll-overs in place so that we minimise any additional hits or disruption associated with changes arising from the UK-EU relationship.
The Chair
Thank you.
Jonathan Brenton: May I just go back and give you one stat to answer Andrew’s question?
The Chair
Yes, certainly.
Jonathan Brenton: UK engine exports to Turkey were £100 million in 2015. They were £900 million in 2018. You have a thriving trade that would hit a tariff wall of 10% if we cannot get a roll-over trade agreement. That is the stat I was looking for.
Stewart Hosie
Q
Allie Renison: You are very right to raise that point. On the modification issue, I suppose we do not know to what extent that will become an issue, as it depends on where we get to with the roll-over process. I cannot speak for other countries’ priorities, but I think there is a distinct feeling that when the roll-over process was happening during the article 50 period, the time pressure certainly meant that it was a choice between either having an agreement and rolling it over or not having it in place. That may have helped get the agreement over the line. There may be some scope for increased modification.
That probably becomes a bigger negative issue for some of the agri-producers, depending on whether, for example, quotas are changed to get a deal over the line. It depends on the level of quota, it depends on the sector and it depends on the sensitivity of that sector. That is probably the only example, and it is not a particularly prominent one. We have far more members in the processing industries when it comes to agri-food retail and wholesale, rather than actual producers. Their priority is making sure that you are able to get the agreement over the line in the first place.
Just to wrap up my answer, when I say that there is some concern about future trade agreements, I should probably clarify that that means they wanted to understand what the purpose of the Bill was and whether it laid out enough scope for engagement with other devolved Administrations. That is an important point to put on the record: we do not want to get to a situation on the one hand where a future trade agreement can be easily held up, with the Walloon experience in Belgium in the rear-view mirror. However, it is very important that we see it. We do not think that the current CRAG provisions are sufficient for future trade agreements, simply because we want to see the devolved Administrations more involved from the outset, rather than coming in as a blocker at the end. That is why I should clarify the delineation between the concern over future trade agreements and the split in process.
Gareth Thomas (Harrow West) (Lab/Co-op)
Q
Allie Renison: I am happy to begin on that, and I will slow down, rather than speeding up to get more information in. Keep in mind that that deal is a future trade agreement, rather than what is covered under the Bill. On future trade agreements, although I think the Government can do both, if you were to look at it in terms of priorities, the EU negotiations are four times as important as new trade agreements for our members.
With that in mind, however, when it comes to the US market, it is difficult to compare this with members’ views on the US negotiations with the EU, because there were not triangulation issues to the same effect. We do not know to what extent liberalisation with the US will impact on our relationship with the EU, so we simply do not have that triangulation problem. The triangulation issue rears its head more often now. If you think about it purely from a tariff perspective, a number of people in Great Britain who are trading in Northern Ireland simply want to know how it is going to work with the Northern Ireland protocol and how the tariff will operate. I do not think many members at this point have an offensive/defensive point of view. They want to know how the tariff changes will intersect with the EU negotiations. That is probably where the majority of our members are.
From a defensive point of view, some businesses have an eye on what changes there will be from an inward procurement perspective. There are some concerns about how standards will feature, without knowing how they are being discussed. I would not say that standards—chlorinated chicken and hormone-treated beef, for example—are big-ticket concerns for our members, because we do not have a lot of them in our membership.
From an offensive point of view, several big things unite our whole membership. First, there are the changes to delivering services physically—not immigration policy, but temporary labour mobility and the ability to go and provide services in the US. That is a big-ticket item for many members, who do not know whether that will be part of the trade agreement discussion. Secondly, e-commerce and facilitating digital commerce will probably be an even bigger offensive interest for both sides in the light of the pandemic.
The Chair
Q
Jonathan Brenton: Quickly, I would separate Japan and the US. For Japan, the timescales are very short because the legislation will need to go through the Japanese Parliament. Our members’ first priority is to ensure that we have a deal that matches what we already have. Given the chance, they would like to go further. Data is an important area. They also have concerns around pharma and the implementation of the economic partnership agreement, and there are some defensive interests around accumulation and ensuring that what we have in EPA is maintained.
On the US, I second what Allie said about mobility and services, and I would add mutual recognition of qualifications. It is notable, for example, that some US companies use Australian architects because they cannot use British architects, so there are deals to recognise qualifications in that area. There are historical tariffs that could be cut back. I agree with Allie about e-commerce, and there is a whole piece on future regulation. The role of the US market for SMEs is very important; it is a great way to begin exporting. Finally—this is an aspiration, perhaps—public procurement needs to start being opened up on a regional basis.
Many of our members make the point that the US deal should not jeopardise what we already have. We have a thriving relationship, and it is important that we safeguard what we have and go further.
The Chair
It ended so suddenly that I thought the line had gone again, but thankfully not.
Bill Esterson
Q
Jonathan Brenton: It is very important that I put on record, first, that the CBI is a member of both the Strategic Trade Advisory Group and the expert trade advisory groups, in terms of our personnel, and our members are also active on the ETAGs. We strongly welcomed the STAG and the ETAGs. As an organisation, we called for such a system in a letter to the previous Secretary of State, Liam Fox, in 2017. I think the first reaction of our members to any review of the ETAGs would be: “Keep them.” We have appreciated the insights that we have had through the ETAGs, on which a colleague of mine sits, regarding the continuity of trade deals.
Where could the system be made better? We have said to the Department for International Trade that we could have more transparency around membership. When we talk to members about ETAGs, one of the most common asks that we get is: “How can we be on one? Who is on the ETAGs?” An ask that we have had, which we hope will be fulfilled, is that the membership of the ETAGs should be published and there should be a transparent membership application process—as there has been for the STAG, the membership of which is published.
There also needs to be a clearer relationship between the STAG and the ETAGs. How does the STAG interlink? There could also be greater clarity about the role when it comes to negotiations. I should say, in terms of how the process is working, that when a negotiation has been launched, as is the case with the US and with Japan, there have been efforts by the DIT to brief the members of the STAG and the ETAGs. There have been short written records of the negotiations. We also know that there has been informal contact between business and DIT negotiators with specific questions related to the negotiations.
We welcome the system. It needs to be better, and it is really important that we understand that it is win-win. We see our role in business as giving negotiators the information that helps them to get the best possible deal for Britain. It should be possible to tweak the system to put the UK in the best possible position against its partners. If the US and the EU have a system in place, we should aim to match that.
Allie Renison: I will add briefly that the Institute of Directors is not part of the official main STAG, but it sits on several ETAGs. I echo much of what my counterpart said. I add one caveat: in respect of the continuity process, there are certainly lessons that we have drawn for the future. This does not just go to all the ETAGs and STAG. The DIT has done a fairly good job of setting them up and trying to ensure that business groups feel that they are part of the engagement process. We would like to have seen that to the same extent for the EU negotiations, because that is where there is the biggest potential for change coming out of trade agreements, compared with the other ones.
On the continuity process, we would have benefited from greater clarity early on about what was and was not going to be possible. If the Government had made it clear at the time that it was going to be impossible to roll over the Turkish customs agreement and why—keeping in mind that much of the roll-over, in so far as we can roll over what we have with Turkey, is linked to our relationship with the EU—we would have benefited all round from a lot more clarity early on in the process. The Government could have said that, based on the kind of relationship that the UK was seeking with the EU, it had not been possible to roll this over. Everyone understood that to be the case at the end of the process, but it could have been a lot clearer to businesses at the beginning, particularly for some of the fundamental ones.
From a preparation perspective—this goes to the heart of how ETAGs can certainly improve on what they have today—you need to make sure that you do not have a system whereby communication is so tightly controlled that you cannot go back and engage with members on the content of what you are discussing on policy. That is a very important addition to make one aware of: there is a balance to be struck between the Government having commercial sensitivities affected and making sure that, in this dialogue with business and stakeholders, we are able to actually have those conversations with members and that we are not overly restricted in doing that.
Matt Western (Warwick and Leamington) (Lab)
Q
Jonathan Brenton: Business and industry called for the Trade Remedies Authority. We welcome it; it is obviously essential. It is not an area that gets as much attention as perhaps it should do in trade policy. We have been told that the non-executive TRA board members will act to provide us with decisions that will be made in a fair manner. We have been told that they will be experts in trade, but they will not have any ideological bias. It is no surprise to you that some of our members would like to see provision for industry practitioners—not just business, but also trade unions, particularly for the manufacturing sector—to be involved in the TRA. First, they would bring their experience, and, secondly, it would be a matter of building confidence. Consensus is a really important principle in trade. It is a big, historic change for the UK to have its own independent trade policy, and we would like to think that it was built on a wide area of consultation, so that people feel involved.
Thinking about some of the other things that might be done to the TRA, it might be useful if the TRA was required, in its annual report, to review how it is acting compared with its peers: the EU and the US. That is a good principle for the UK and trade policy. There is no reason why the UK has to follow the EU and the US in everything; there is no reason why we cannot do better. As we embark on our own independent trade policy, we should be benchmarking ourselves against what others are doing, to check that we are in the right place.
Allie Renison: This is one of the areas in which, even with the trade-offs, there are many other questions when it comes to our relationship with the EU. This is certainly more in the opportunity basket of having a system that is more tailored to the UK’s needs. It is important to remember the context for the Trade Remedies Authority. It does not exist just to act for its own sake; it exists to undertake investigations. We should be careful not simply to assume that because every business has a concern about unfair competition or dumping, that is actually taking place.
Transparency is a very important part of what the TRA will be set up to do. Our broad support for the Bill is particularly because it is so linked to the creation of that. When I say transparency, if we think back to how it worked in the EU, the way decisions are taken on trade defence measures, anti-dumping measures, countervailing duties—the whole lot, so to speak—is probably one of the least transparent aspects of EU trade policy decision making. We should learn from that and make sure that it is not the case, because some decisions that are taken—rightly so, in the end—have come of that.
When we talk about the calculations and ratios needed, I think we should make that as transparent as possible, simply because once such a decision is taken, even if it is found to be justified in response to a case of dumping, it can have reverberations across supply chains. There are a lot of unintended consequences when it comes to defensive trade measures, and we should be careful to make sure that we understand that. That is not to say that producers do not have an absolute right to have their concerns taken up and redressed, but when it comes to action, because of the way supply chains work, there are often lots of unintended consequences, particularly for measures that are left in place for a longer period of time.
I close with another example of that. A small cluster of German solar panel producers decided to lobby the European Commission to put such measures in place. Please keep in mind that the UK, at that point in time and generally speaking, was more of a net importer, for efficiency and climate change purposes. In such a situation, it became quite difficult to get the UK’s voice heard. I call on that example to make sure that we understand that transparency is as important to the work of the TRA as the outcome itself. I do not know if you heard all that; I had something in my ear for most of it.
The Chair
Thank you. This will have to be the last question, given the constraints on time.
Gareth Thomas
Q
Jonathan Brenton: Can you repeat the question closer to the microphone?
Gareth Thomas
Could you expand on your hint about some concerns with the way the Bill has been drafted, which you alluded to in your opening remarks? Secondly, can you tell us whether the CBI still holds to the view it had the last time the Trade Bill was debated—that there should be more scrutiny of trade agreements by Parliament?
Jonathan Brenton: Do you mean parliamentary scrutiny?
Gareth Thomas
Yes.
Jonathan Brenton: I think we probably recognise that the debate about parliamentary scrutiny is, first and foremost, not for us, as a business organisation, although I think some of our members say that they would like to see more. Very important to us is that we have a trade policy built on consensus, with wider support built up in Parliament and civil society. One thing I commend about the STAG and ETAGs is the place for trade unions, non-governmental organisations and so on, and the fact that there is debate.
Our position is that we recognise, on balance, that the Bill has to be done in the time and conditions we are under, and that we need to be ready for the Brexit deadline, which is looming fast. However, we have not given up on our aspiration and calls for a more strategic approach to trade. We have said that repeatedly, and I think you will hear us say it more. We would like to feel that we have an approach to trade policy that is aligned with trade promotion, and an approach to trade deals that plays to the UK’s strengths, such as services, and future strengths. We would like to think that there are tested systems in place for consultation with business. I think some of these things are happening—the STAG system and ETAGs systems are evolving, and you can see the work that the Department for International Trade is doing on expanding its digital networks—but it would be reassuring for business to have that set out more comprehensively, and aligned with other policy areas like climate, and with the covid agenda, so that we had a confident framework.
Let us remember the historical moment that we are in, the time pressures we are under and the huge changes that have been brought on by the popular vote for Brexit and subsequent elections. We need to move pragmatically, given the situation we are in.
The Chair
Q
Allie Renison: You may have heard my remarks earlier; to reiterate them, for a future trade agreement, we do not think that the Constitutional Reform and Governance Act is sufficient, simply because this is where we take a view on the long-term impact and role of trade policy. We have all learned from the way in which the agreement between the EU and Canada was held up because of that country’s constitutional requirement to ratify it. [Inaudible.]—to have concerns about that early in the process. While we would not want to see, for example, devolved Administrations or Parliament trying to block trade deals at the outset, we think it is important to have that scrutiny requested. Perhaps in the Bill that is through developing future negotiating mandates, or asking whether we follow the EU trade example on that.
There needs to be a lot more front-loaded effort to help with future trade agreements, whether from a buying perspective or a scrutiny perspective. We do not want trade policy to become a politicised issue, in the way that it is in other countries. We would like this to be an issue of consensus as far as is possible. That is why we perhaps take a stronger view about the future role for scrutiny. We see this as integral to trying to build a bigger consensus around trade, rather than having it become another issue for both sides to argue about. I would distinguish that from this Trade Bill, which is about the continuity agreement. There is that possibility for modifications, the extent of which may vary, but we would separate that from the comments that I have made, and would distinguish between the continuity agreements and future trade deals.
Theo Clarke (Stafford) (Con)
Q
The Chair
Before the witnesses answer, I should say that I am prepared to go beyond 10.30 am, given the quality of the line. Please keep answers concise.
Allie Renison: Perhaps the Government could answer better on the exact implications of the Bill, but this is very much in the forefront of people’s minds. The businesses that we have spoken to have linked the Bill to the ability to carry on with the trade remedy provisions that we have. The Bill is an integral step to making sure that that competence is smoothly transferred over. I suppose the upshot of that is that certainly, for businesses that are relying on anti-dumping measures—[Inaudible.]
Bill Esterson
If we can get to the two witnesses, could we ask them to put their key points in writing to us, just in case Hansard missed anything? I am sure we would all appreciate that. I could not hear everything.
The Chair
In the interest of making sure we have a complete record of proceedings, that is a good suggestion. Thanks to our witnesses, Allie and Jonathan, for their forbearance and their time.
The Chair
We will now hear oral evidence from Konrad Shek, deputy director for policy and regulation at the Advertising Association. We have until 11 o’clock. We are experiencing some technical difficulties, Konrad, so if you can speak slowly and project your voice, the Committee will appreciate it. Please introduce yourself for the record.
Konrad Shek: Thank you very much, Chairman. Good morning, ladies and gentlemen. My name is Konrad Shek, deputy director for policy and regulation at the Advertising Association, which is a tripartite trade body that represents brands, advertisers, agencies and media. We also represent direct marketing and market research. Shall I give some background to the association?
The Chair
Yes, please.
Konrad Shek: The association is a member of the Professional and Business Services Council, which is co-sponsored by the Department for Business, Energy and Industrial Strategy, and also a member of the Creative Industries Council, which is sponsored by the Department for Digital, Culture, Media and Sport. I sit on a number of the DIT expert trade advisory groups. Among professional business services, advertising and market research is one of the largest exporters. We exported £9.7 billion, according to the latest Office for National Statistics figures.
There is general support for the Trade Bill from our members from the trade continuity perspective. I would caveat that somewhat, given that many of our members are preoccupied with covid-19 and Brexit. The technical details of the Trade Bill are perhaps not a high priority among members at the moment.
Trade with the EU is a significant portion of exports. The largest destination for our exports is France and Germany, so there is a lot of interest in getting a deal with the EU. There is also a lot of interest in the public procurement side of things from ad agencies and market research companies. Advertising agencies typically get involved in trade investment promotion, events and education promotion. They work for state-owned enterprises, especially sovereign wealth funds. Market research companies obviously get involved in opinion polling. Because of the international nature of London, we are very fortunate to be a global hub for advertising and market research, and a lot of companies get invited to tender for such projects.
Gareth Thomas
Q
Konrad Shek: Looking at some of the research out there, and analysis of the Bill, there is probably capacity for more scrutiny of the Bill. There is probably a lack of detail on the Trade Remedies Authority, although that is not necessarily a huge priority for us. A lot of remedies tend to be focused on the producer side of things, whereas we tend to export a lot more services. From the association’s point of view, I do not think that we necessarily have strong views on where the Bill would be improved, other than what I have said.
David Johnston (Wantage) (Con)
Q
Konrad Shek: One of the difficulties about data collection for services generally is that it is quite hard to collect that information. When you see reports from the ONS on the export of services, there is a significant lag in the reporting of that information. It is not quite as easy and straightforward as reporting the export of goods. Obviously, if there were an improvement in collecting data regarding the export of services, that would be hugely beneficial.
Bill Esterson
Q
Konrad Shek: From what I have seen, the Bill would really lock in current arrangements, rather than bring new opportunities as such. My understanding of the Bill is that it is more about continuity. The UK is a member in its own right. That carries benefits, because we have the opportunity to contribute directly and influence the rule-making around Government procurement, but my understanding is that there is a roll-over of current commitments on offer, based on the EU schedule. My analysis of it is that it is really just maintaining the status quo.
Bill Esterson
Q
Konrad Shek: Anything that could be done to help small and medium-sized enterprises to get involved in the public procurement market would be hugely beneficial. There are a lot of SME-type firms in the advertising and market research industries, and there are natural psychological barriers to participating in such projects. There are also cultural barriers, particularly if you go into markets where they do not necessarily speak the language. One of the benefits of the GPA is that there is a standardised process, whereby tenders are put out in the standard languages of the World Trade Organisation, and there is a certain amount of transparency about the bidding process, which helps with the overall level playing field.
Bill Esterson
Q
Konrad Shek: A lot of our companies are flexible, particularly in terms of their structures and how they operate around the world. Obviously, the larger agencies have local subsidiaries or local partners, but smaller agencies will probably rely on DIT support; activities such as those to do with taking part in trade fairs or trade missions are hugely beneficial for the smaller companies. There is a real mix.
As I said in my opening comments, we are quite fortunate: with London being a global hub, we are finding that business also comes to us; we do not necessarily have to search for it overseas. But there are definitely opportunities, particularly in the middle east, which are perhaps slightly harder to navigate, and without those local connections, SMEs may find it harder to get the resources to understand things.
Bill Esterson
Q
Konrad Shek: Given what is happening with the global economy in the light of covid, it is quite important for DIT to continue lobbying host Governments to keep their markets open and to refrain from trade protectionism—to keep the trade flowing as much as possible. It could also potentially do more work to get intelligence on the ground, understand new projects that might be coming into the pipeline, and feed that quickly to companies.
Matt Western
Q
Konrad Shek: I do not have a particular view on the Trade Remedies Authority at the moment. As I say, a lot of these anti-dumping subsidies tends to fall on the exports of goods rather than services. It is very hard to understand what distortions might come into play. As services are delivered by people, they are generally affected more by migration and immigration policies than subsidies or specific duties. I cannot think of a particular example at the moment, but there is a possibility that a country may put a tax on digital trade.
Gareth Thomas
Q
Konrad Shek: There is obviously a lot of interest in future free trade agreements. There seems to be a lot of discussion about moving away from the current structures of free trade agreements and looking for these lighter, more flexible types of free trade agreements, which can be negotiated in a shorter time. That is something we welcome, but there is obviously a trade-off; the lighter and more flexible type of agreements mean there is a lot better detail.
We would welcome having these agreements—[Inaudible.] Also, it has an important information aspect. If the UK signs a free trade agreement with a country, that disseminates the information that it is okay, or encouraged, to do business with that country. It sends a very good signal in terms of promoting trade investment links.
There probably needs to be some thought as well about the consultation process and the understanding of what companies require in terms of the wider economy and understanding the trade-offs. By opening or liberalising one particular sector, do we lose out in other sectors? There needs to be a balance, and a lot of political decisions need to be taken there.
There is scope for more consultation and perhaps a feedback process, hopefully for constructive criticism. One issue I have found with the DIT consultation is that it was good that we were able to feed in information, but there was perhaps less information being fed back to help in understanding about how issues lay or were being prioritised in the whole agreement.
Theo Clarke
Q
Konrad Shek: I do not have that much information on them. I do not suspect that our advertising agencies have a huge amount of business with those types of country. I do not have a particular view on that. There may be some side projects, perhaps for market research, but I do not have any detail on that.
The Chair
If no more Members want to ask questions, I thank you very much for your time, Konrad. That was very useful for the Committee.
The Chair
We will now hear oral evidence from Roy Freeland from Perpetuum Ltd. This session can last until 11.25 am. Roy, could you please introduce yourself for the record?
Roy Freeland: Good morning everyone. I am sorry, I am having some difficulty hearing.
The Chair
If you could introduce yourself, Roy, that will be great. I will now ask members of the Committee to ask you questions. We can hear you fine, so do not worry.
Katherine Fletcher
Q
Roy Freeland: I am broadly very supportive of the Bill because, as other speakers have said, we need to be pragmatic about the situation we are in. However, there are some issues. I am speaking as a representative of a high-technology SME supplying the rail industry that has particular problems or requirements for GPA, simply because many of our customers are effectively part of a Government procurement in their countries, so it is uniquely important to transportation businesses. I also have some comments on SME issues.
The Chair
Please do expand.
Roy Freeland: The improvement that I have to suggest is the question of reciprocity, which has already been mentioned. Article 85 of the EU directive in 2014 talked about ensuring comparable and effective access for undertakings to the markets of those third countries. I would like to see the Trade Bill include a brief provision so that countries that are applying restrictions to UK exports can have similar restrictions applied when they are trying to export to the UK. This is a non-confrontational way to deal with the issue. It has major advantages, in that it would be fair, and would be seen to be fair, being based on reciprocity rather than unilateral protectionism. It would help to demonstrate the UK’s leadership on free trade and refusal to accept unfair restrictions. I think it would also provide a negotiating tool for us. Exporters to the UK would put pressure on their own Government—[Inaudible.] This whole process would provide a backstop and would provide flexibility to deal with Government procurement issues without—[Inaudible.]
The Chair
Mr Freeland, are you still there?
Roy Freeland—ammunition for future negotiations, and some form of remedy in the short term.
Andrew Griffith
Q
Roy Freeland: I am afraid I am not an expert in reading parliamentary legislation, but I did not get the impression that the Bill is quite as explicit as I would like it to be. Certainly, the Trade Remedies Authority would be the right route to deal with this, possibly with a little help from a statutory instrument under the Taxation (Cross-border Trade) Act 2018. However, it is a very important issue.
The EU described the Buy America provisions of the Surface Transportation Assistance Act as one of the most fundamental obstacles to accessing to US procurement. The Transatlantic Trade and Investment Partnership fell over, and this Buy America provision was one of the issues. I am not advocating that we should have a—how can I put it?—Don’t Buy America Act, as much as I would like to see that. That might be rather provocative. However, we should have provisions to take action, and if a few US steel makers, for example, found that they could not supply High Speed 2 with rail track because of such rules in the Act, I think some reverse pressure might be put on the Americans to reconsider their position.
Andrew Griffith
I have no further questions. However, I think you should be reassured, Mr Freeland, and we wish you all the best with the successful exports of your business going forward.
Roy Freeland: Thank you.
Bill Esterson
Q
Roy Freeland: I am not convinced, as a supporter of free trade, that a Buy British element is appropriate. All I suggest is that we ensure adequate reciprocity, so that if a country effectively has Buy Local Acts, such as the Buy America provisions, we can respond by saying, “You’ve got that; we’ve got similar provisions.” Indeed, tenders could request confirmation from tenderers that their own country would not prohibit comparable and effective access in reverse. A simple requirement like that is appropriate at this stage, rather than prejudging the whole US FTA.
I should point out that the World Trade Organisation and the EU have noticeably failed to deal with Buy America. Therefore, one needs to look at it in another way.
Bill Esterson
Q
Roy Freeland: No, I am not a member of the FSB. However, I was a member of the Rail Supply Group council running the SME workstream, and of the Rail Industry Association SME group, so I am very familiar with SMEs’ issues. Indeed, I consulted with the Federation of Small Businesses prior to giving this evidence.
The particular problems for the SMEs that will be affected by the Bill include the requirement for membership of the GPA. Large multinationals can get round the GPA by simply setting up factories in the respective countries. A lot of them in the rail industry have already done that. SMEs do not have that capacity. I am slightly concerned that SMEs do not have the resource to fight the sort of legal battles that are clearly going on in the current version of trade remedies, and they need some support there. Those are particular problems that SMEs can face, but they absolutely need the GPA.
The Chair
Any further questions? Mr Freeland, we are experiencing some technical difficulties at this end, so if there are no further questions from Members, I propose that we wind this session up slightly earlier. Thank you very much, Mr Freeland, for your evidence. It has been very helpful to the Committee.
Ordered, That further consideration be now adjourned. —(Maria Caulfield.)
Trade Bill (Second sitting)
Tuesday 16th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Trade Bill 2019-21 View all Trade Bill 2019-21 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 16 June 2020 - (16 Jun 2020)
The Chair
Before I welcome the witnesses, I remind everybody to please switch their electronic devices to silent. Tea and coffee are not allowed during sittings, but Members can obviously drink water. I also remind Members that the Hansard reporters would be very grateful if they could email electronic copies of their speaking notes to hansardnotes@parliament.uk.
We will now take evidence from the first panel. I welcome George Riddell, the director of trade policy at Ernst & Young, who is here in person, and I hope I can welcome Alan Winters of the UK Trade Policy Observatory. I think Charlotte Nichols wants to make a declaration.
Charlotte Nichols (Warrington North) (Lab)
I want to declare an interest: my father is the president of the TUC this year.
The Chair
Professor Winters, I am Graham Brady, and I am chairing the Committee. I know that you cannot see me and we cannot see you, so I am going to make sure everybody lets you know who is speaking to you when they are asking questions and making points.
I thank Professor Winters and Mr Riddell for joining us and helping the deliberations of the Committee. As Chairman, I am entirely independent. I will not be involved in the questioning, but I will be calling others to put their questions to you. I first call Bill Esterson, who is the shadow Minister. Could you introduce yourself before you start?
Bill Esterson (Sefton Central) (Lab)
Q
Professor Winters: I can if I concentrate hard.
Bill Esterson
Q
Professor Winters: In general, the Bill is trying to do sensible things in a basically sensible way. The issues that arise are about whether or not it is drafted in a way that would allow it to be used for things beyond these intentions.
For instance, it says that the Government do not expect to make major changes with this Bill, yet the procedures that it will set up might allow a Government that wished to do so to make really quite dramatic changes through secondary legislation. As we know, and you know better than me, secondary legislation is not typically challenged. For instance, under the GPA—the agreement on government procurement—if I understand it correctly, the Government have the power to make changes in the coverage of the agreement. A lot of that is about new members, which seems sensible, but if I understand it correctly, it also seems to be about the coverage of sectors within the UK.
When we deal with non-tariff provisions in the trade continuity agreements, for instance, the mutual recognition agreements are very serious bits of trade policy, particularly for services sectors. I think a non-tariff provision would include things like sanitary and phytosanitary regulations and technical barriers to trade. These are mostly governed by EU law at the moment, and in implementing a trade agreement, the Government could change a number of them. Rather than having to bring them back to the legislature as primary legislation, they would actually be able to move through a secondary legislation process, so I think there needs to be a little more attention on the potential spread of the use of this. The Bill can also be extended indefinitely in five-year periods. That seems to me to be not in the spirit of the Bill, which is about cleaning up.
Let me make one last point. The Bill is obviously designed, in terms of trade agreements, to deal with the continuity trade agreements, but there are at least two cases that, so far as I can see, will fall under the Bill and will really go further than just tidying up the details so that trade can continue. The first is UK-Korea. Korea and the UK have signed a continuity trade agreement, but with a commitment to renegotiate a fuller and more ambitious free trade agreement within two years. So far as I can tell, any of that would essentially be covered under this Trade Bill. Similarly with Japan, we do not really know what the Government intend to discuss with the Japanese Government, but the analysis that we got last month was—what shall we say?—studiously unspecific. Essentially, it reads as if it is going to be basically a new agreement; in a sense, the table is blank, and stuff will be put on or taken off. However, so far as I can tell, because Japan had an agreement with the EU on 31 January, it will be covered by the Trade Bill. Korea and Japan are two major trading partners, and this might not get very much scrutiny, essentially because you can undertake quite major changes under the heading of the Bill, which I interpreted largely as a tidying-up Bill.
Bill Esterson
Q
Professor Winters: The WTO’s government procurement agreement is restricted to the set of countries that have signed it, so quite a lot of this Bill is about what we do when that set of countries changes: what concessions do we expect from them and offer them? That seems, in a sense, to be fairly uncontentious. The other element of coverage is that the Government lists in the annexes to the government procurement agreement the sectors, and the thresholds for procurement in those sectors, that will be open, subject to the GPA’s requirements. I think that the powers in the Bill permit the Government to change that as they will, rather than, given that who you allow to bid for different bits of procurement is a fairly major piece of public policy, having a process that is open to more scrutiny.
Bill Esterson
Q
Professor Winters: Yes. The traditional way that we have handled trade agreements and, as far as one can tell, the Government’s intention going forward, is to say that the Government negotiate these treaties under the royal prerogative but that, to the extent that they require changes in regulation in domestic law, these will come to Parliament. In cases where that would normally be primary legislation, those changes will have to be made by Parliament through the processes for primary legislation.
What this Bill does—and it is the same in the European Union (Withdrawal) Act 2018—is say that a number of things can be changed by secondary legislation, even though they were originally set out under EU procedures through routes for primary legislation. It potentially brings to Ministers a number of issues one would generally expect to have the full scrutiny of Parliament. It would be a process that allows a little bit of scrutiny, the affirmative process, which, de facto, does not seem to result in very much. Again, in a sense, the worry is not that one might need these powers to tidy up a clause here or there, but that, in fact, quite serious issues would suddenly fall to the discretion of the Minister.
One of my colleagues, Emily Lydgate, has investigated this on environmental regulations under the European Union (Withdrawal) Act, and it is fairly alarming. As far as I can see, one could fall into that situation through the Trade Bill in the sense that the Japanese or Korean trade agreement could agree something that would normally be subject to primary legislation within the UK but that can now be handled with secondary legislation under the cover of the Trade Bill.
Bill Esterson
Q
George Riddell: Thank you; it is a pleasure to be here. I would characterise the Bill as creating the baseline of the UK’s trade policy. It tries to continue the basic trading conditions for rest-of-world trade that UK business currently enjoys.
That includes the continuity agreements. A lot of people, when commenting on those agreements, go straight to the tariffs: “If you don’t have a continuity agreement, you’ll face tariffs; if you do, it will continue as it currently is.” For the services sector, which I represent, there are also important establishment provisions within the services trade chapters of those agreements and mobility provisions that allow business travellers to travel between the UK and those third countries to supply services. The discussion about the continuity agreements and ensuring that the UK is able to continue to trade past 31 December this year is therefore wider.
The same goes for the government procurement agreement. The UK has enjoyed the status of the government procurement agreement at the WTO since its creation in 1995, although its membership of that particular agreement came through the European Union.
I will pick up two points that Professor Winters talked about. First, yes, new members join the GPA on a fairly regular basis. There are a number of ongoing accessions to the agreement, some with shorter timeframes than others. It is right that there is provision for the agreement to expand, as it naturally does, at the WTO. The other point is about the coverage and the entities. The UK list of covered entities is rather out of date. Many current Government Departments are not listed as part of coverage under the GPA, so the list is very outdated. Therefore, even if the thresholds the UK has signed up to as part of the GPA are not changed, there is a need for a technical update of the UK’s commitment to reflect the current machinery of government.
We are also establishing the TRA and bringing back powers from the Commission in Brussels to establish a trade remedies regime here in the UK. On the statistics front, which is very important in making trade policy, I would flag the interest in improving the trade in services statistics for the UK. Trade in services statistics are notoriously unreliable, and powers in the Bill could be used to make the UK a leader in how we measure services trade in this country and globally.
Bill Esterson
Q
George Riddell: If I understood correctly, Professor Winters’ point was about the potential for including new entities on the list and going further than the UK’s current commitments with regard to the GPA, leaving the continuity agreements question to one side. There are two aspects here. From my understanding of discussions in Geneva, they have been very focused on understanding what the UK’s current machinery of government looks like and how that could be represented as part of its GPA commitments. Certainly, the Government have said, from my understanding, that they do not intend to change the scope of the commitments, even if technical updates are necessary. I would not want to go further than that.
Katherine Fletcher (South Ribble) (Con)
Q
George Riddell: Two initiatives have been undertaken recently. One is that the Office for National Statistics has launched its experimental trade in services datasets, which it is looking to continually improve. Anything that supported that initiative would certainly look good. For the past Trade Bill, in the previous Parliament, a number of organisations, such as TheCityUK, put forward written evidence with more concrete suggestions. I do not have that with me, unfortunately, but I am happy to share it.
Coming to the point on the data being notoriously unreliable, both the US and the UK claim that they have a trade surplus in services with each other. There have been a number of attempts by statisticians on both sides to try to bottom out why that might be the case. It goes to show that, often, trade in services statistics are indicative and a good rule of thumb, but putting too much faith in them is not necessarily a wise move.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Q
Professor Winters: I confess that I do not know how to draft it in legislation, but I would suggest that one has something in the Bill that gives concrete form to the statements that we have that the Government expect not to use it to make major changes, and that such changes would come with primary legislation. At a practical level, one would need some sort of early-stage scrutiny to identify issues that were mere technicalities or minor issues, and to flag up larger issues that might require primary legislation.
I am afraid I am not a draftsman. I do not know how to write that, but it seems to me that that is what we require. This is a very sensible, pragmatic tidying-up Bill, but it seems to have loose ends that might, under some circumstances, lead to places other than those that the Bill says it is intended to cover, and more than the House would wish.
David Johnston (Wantage) (Con)
Q
George Riddell: In terms of the service sector, I would say that the two biggest elements are definitely the continuity agreements and the government procurement agreement. The government procurement agreement, although it largely covers goods, has several services provisions in it that are particularly important for small and medium-sized enterprises that operate cross-border government procurement contracts.
On the continuity agreements, it is difficult to say exactly, because there is different coverage in each of the continuity agreements for different service sectors. Broadly speaking, you have the horizontal elements in the more advanced trade agreements, such as that with Korea, which covers investment and establishment for service providers, and additional mobility provisions for short-term business visitors and the suppliers of services.
There are also, in some of those agreements, additional commitments on the digital economy, and how the UK and the third country can co-operate in order to foster more digital trade, which is of growing importance, particularly in the light of the pandemic that we are experiencing. I know that many of the people here have dialled in or participated remotely in these sittings, so it is a very pertinent topic for the service sector.
Fleur Anderson (Putney) (Lab)
Q
Professor Winters: I do not see strong and direct implications for our relationship with developing countries. Most of the countries with which we are signing these continuity agreements are, in fact, developing countries. I think the issue again, essentially, is that the Minister has powers to make regulations concerning non-tariff provisions, and some of those regulations could indeed rebound to the disadvantage of the countries we are dealing with—those on the other side. For instance, if we have issues surrounding conditions of entry for particular goods, the Bill might be used to tighten those up.
Having said that, the agreements we have with the developing countries—the continuity agreements—have genuinely continued, so far as they can, trade relations with those countries. There are some complications that are not in our gift, such as rules of origin, but I understand that the agreements that have been signed already under the heading of continuity trade agreements have made no changes, so far as access to the UK economy is concerned.
There is nothing I have seen in the Bill that is specific to developing countries that raises an alarm, but on the other hand, it is not clear that trade with developing countries is exempt from my residual nervousness about what the Bill might be used for under less satisfactory circumstances.
George Riddell: One thing that I am keen to emphasise is how the UK’s trading relationship with developing countries is split across the continuity agreements contained in the Bill and the customs Act, which gives effect to the generalised system of preferences and duty-free, quota-free access for least-developed-country exporters. You have the continuity agreements under this Bill, but there are also very important trade provisions in the customs Act, and making sure that they are aligned and work together to support developing countries’ trade into the UK is very important.
As for your question about SPS measures specifically, in my experience of working in developing countries and looking at how they trade, one of the biggest things is meeting food standards, health standards and environmental standards. The UK does capacity building very well through DFID—pending recent announcements today—and through programmes such as aid for trade in developing countries, in order to allow businesses and exporters to take advantage of the provisions in the trade agreements and EPAs.
Gareth Thomas (Harrow West) (Lab/Co-op)
Q
Professor Winters: I am not a huge fan of the process that we have under the CRAG, which seems to me to allow the Executive a bit too much scope to do things unscrutinised—
The Chair
We will try to find out whether we still have Professor Winters. Mr Thomas is there something you would like to pursue?
Gareth Thomas
I would very much like to hear what he has to say. [Interruption.]
Professor Winters: I did not catch all of your question. With the process we would be using for, say, the agreement with the US, my honest preference is that we would set up a system for new trade agreements that involved more formal consultation and more reporting back to Parliament than is obligatory under the CRAG. In one sense, I see the Trade Bill offering an even easier route for Executive decisions than the standard CRAG procedure, and I do not think that will really give us enough scope for bringing Parliament and the people along.
I think the issue, essentially, is that if this was abused in order to try to introduce major changes, there would be even less defence. There is no commitment to discuss, consult and so on, and the Minister is being granted extensive secondary legislative powers. Under the CRAG, although the treaty has to be approved through an affirmative process, if changes in domestic law are required to implement it as a new trade agreement, it would potentially have to go through primary legislation. As far as I can tell, that is not required here for any of the continuity agreements.
Gareth Thomas
Q
Professor Winters: In general, most other countries have processes that involve more formally required consultation and rather more engagement with the legislature as the process goes through. For instance, in the USA there is a whole series of trade advisory committees—I think that is what they are called—which the Government speak to on a confidential basis. There is formal approval of a mandate, particularly if they want to do something on fast-track.
Those are things we do not have in the UK. We do not yet have a completely definitive statement about how these things will be handled, but essentially the CRAG process is fairly light on scrutiny and consultation. Compared with Australia, the US and Canada—where there is, if not constitutionally, at least informally a good deal of consultation with the provinces—we have a system that allows the Government rather more discretion.
Matt Western (Warwick and Leamington) (Lab)
Q
Professor Winters: For the Trade Bill, which is presented as a piece of legislation to make it feasible to roll over the continuity agreements that we are trying only to roll over and not to change—we have already joined the GPA and are not trying to change our schedule—you do not necessarily need a huge apparatus. If we get into a situation where the Trade Bill is used to make quite dramatic differences to the arrangement with Korea or to make essentially a new agreement with Japan, it is unfortunate that there would be less of an obligation to consult the devolved Administrations, parts of the legislature and stakeholders. The solution is not so much to nail those processes on to the side of the Trade Bill, as to try to find a way to ensure that the Trade Bill is not used for purposes that involve a major change relative to the status quo.
George Riddell: I agree with many of the comments made by Professor Winters and would add two additional points. The first is on consultation and its importance. Not only does it help the UK to identify what its offensive and defensive interests are and how best to achieve them through negotiations; it also helps to build political support. The thing that businesses want when they are looking to use trade agreements is the certainty that, when they make an investment under the provisions, in five, 10 or 15 years they will continue to be able to trade under the terms of that trade agreement. By not having wide consultation and the necessary support, it calls into question that certainty. The question of scrutiny and everything else is for this House and this Committee, but from a business perspective, we want widespread support for the trade agreements so that they can continue into the future.
Matt Western
Q
George Riddell: My understanding from reading the Bill is that it covers the continuity agreements that existed between the EU and third countries.
Matt Western
Professor Winters?
Professor Winters: Is somebody trying to get my attention? I am afraid you all faded away.
Matt Western
Sorry, I was just asking whether you feel that the Bill covers the current UK-US negotiations.
Professor Winters: As I understand it, the Bill does not cover current negotiations with the US. It is restricted to those countries that had agreements with the European Union on 31 January this year.
The Chair
That brings us neatly to the end of the time allotted for questions to these witnesses. I thank both of the witnesses, Mr Riddell here in person and Professor Winters struggling with technology to join us. It is very kind of you both to assist. Thank you very much.
We will have a brief suspension while we engineer the next session.
The Chair
Welcome, Mr von Westenholz. We have until 3.10 pm to hear evidence in this session with the National Farmers Union. Will you give a brief introduction of yourself for the record?
Nick von Westenholz: Good afternoon, Chair, and thank you. The NFU has submitted evidence on the Trade Bill. We will come to more detailed questions, but we want to raise two issues in particular: one is on trade and standards of food production, which is not covered in the Bill at present but we think ought to be; and the other is the issue that has been discussed at some length, which is scrutiny of trade agreements, both roll-over and future agreements.
The Chair
Thank you very much. I should have introduced myself. I am Graham Brady, and I am chairing the session. I will call other Members to speak but will not ask questions myself. We will start with the shadow Minister.
Bill Esterson
Q
Nick von Westenholz: As I mentioned, one of the key issues that we have raised about the Bill and, indeed, the Government’s broader trade policy is to do with the way in which food imports are dealt with, in particular the standards of production of those food imports. I am sure that members of the Committee are well aware of many of the concerns that have been expressed for a number of months—even a number of years now—about the implications of future trade agreements for the standards of food imports.
The Trade Bill deals only with our existing agreements by merit of our former membership of the EU, and not with future trade agreements. It is really future trade agreements where many of the issues lie. Nevertheless, we think that this is an issue for this Bill because of something that has been communicated to us on a number of occasions in recent months. We had lobbied on the Agriculture Bill—[Interruption.]
The Chair
Mr von Westenholz, we have a bell ringing at the moment, for a three-minute suspension of the sitting in the Chamber. It will stop shortly, but will ring again when the sitting starts. It is probably worth pausing while the bell rings.
Apologies for the interruption—do continue.
Nick von Westenholz: Not at all. I was just referring to the passage of the Agriculture Bill, to which a number of amendments were tabled attempting to address this issue of trade and food standards. It was often stated in our conversations with MPs about that Bill that it was not the correct vehicle for dealing with the matter, because it was a matter for the Trade Bill. We listened to that advice and we are looking at the Trade Bill as a legitimate and suitable piece of legislation to address the issue.
It is a complicated issue; there is no doubt about that. It is not necessarily straightforward to legislate in a way that manages the broader issue of ensuring that food imports meet standards of production equivalent to those that UK farmers are required to meet, but there are ways of doing it; some of the amendments tabled to the Agriculture Bill were well drafted to meet that aim. We certainly think that it is a shortcoming of this Bill that there is no provision for that sort of legislative approach.
Bill Esterson
Q
Nick von Westenholz: The Bill as it stands does not go beyond continuity agreements. The provisions in clause 2, for example, seem clearly to deal with those continuity agreements that we are currently party to, or were party to as a member of the EU. Going further would require new clauses, certainly; the reason why, as you imply, we want to explore whether that is appropriate is that the point has been made on numerous occasions in recent weeks that the Trade Bill is the appropriate vehicle for that.
Gareth Thomas
Q
Nick von Westenholz: Sorry, the sound is not great, but I think that that question was about our potential concerns with the EU’s CETA deal and whether we have concerns about a UK-Canada deal.
Maybe the best answer is that all trade deals, whether they are continuity or future trade agreements, present opportunities for UK farmers. We are very keen to make that clear: we are certainly not opposed to the notion of free trade agreements, and we hope that they might present opportunities to increase our exports of our fantastic food.
At the same time, however, all trade agreements will also look to increase access to UK markets for overseas producers, which will increase competition for UK farmers. Again, that in itself is fine, but we want to ensure that that competition is fair—whether it is Canadian farmers, US farmers or anybody else. The reason why we talk about overseas farmers meeting equivalent standards to UK farmers’ is simply on the basis of fairness; we are certainly not opposed to trade liberalisation, as long as that liberalisation is fair.
Fleur Anderson
Q
Secondly, on trade information, clause 7 provides new powers for HMRC to collect information on the identity and number of UK exporters, but the Government have said that providing that information will be voluntary. What impact would that position have on your members?
Nick von Westenholz: I will answer the second question first because, I am afraid, my answer will be brief. We have members who are exporters as well, but most of our members are probably not directly exporting themselves—they will be at the start of the supply chain; it will probably be their customers who are exporting. We have not yet done any assessment on what the impact of those provisions would be, so I am afraid that I cannot comment directly on that, although I suspect that it would be minimal.
Coming to the first question, the point is that UK farmers—like most EU farmers—operate under high standards of production in terms of the requirements they observe, particularly on animal welfare, for example. That is not to say that there are not farmers around the world who operate high standards of welfare. But in many cases in the UK, those are legal requirements, for example those around stocking densities for poultry, access to light, limitations on veterinary medicines that they can use—antibiotics, for example—and many other things. All those will have a connected direct or indirect cost for farmers, and will increase the cost of production in comparison to farmers overseas, who do not have to meet the same requirements.
For farmers who then have to compete directly against produce that is produced more cheaply because the regulatory burden is lower, it is, for us, a simple issue of fairness. In a way, I am loth to put too much emphasis on the differences of approach, because, as I have said, many farmers overseas will produce to high welfare, but we know that many farmers overseas produce to lower requirements because, very simply, they are not required to by their legal and regulatory structures.
Fleur Anderson
Q
Nick von Westenholz: The EU—and, by extension, the UK at the moment—operates a plant protection approvals regime that is much more precautionary that in other parts of the world. That means that UK farmers have access to far fewer plant protection products—pesticides, say—than many of their counterparts in other parts of the world. Again, that really comes down to an issue of equity if they are then being asked to compete against those farmers who have access to many more technologies, which UK farmers do not.
We have to distinguish between the issue of fair competition and what those standards would actually be. As I have said, the EU approach is very precautionary and there is—and there should be—an ongoing debate about what sort of standards are required when it comes to plant health and plant protection.
It is not always as easy as saying, “Lower standards or higher standards?” about these things. There is, for example, a long-standing debate about the use of glyphosate, the most widely used weed killer in the world. Although people might prefer less glyphosate use, or even for it to be banned, doing so would probably result in more carbon emissions, because farmers would be required to cultivate more and use more tractors passes. They would use more fuel as they go over the land and release more carbon into the atmosphere as they plant as part of weed control.
These issues are not always straightforward, and there needs to be a proper debate about an appropriate level of protection that also provides farmers with the tools that they need. It is important to take the opportunity to distinguish between debating what our standards ought to be and ensuring fairness and equity in competing with farmers overseas once a decision has been reached about what those standards are.
David Johnston
Q
Nick von Westenholz: I guess I am thinking about some of the continuity agreements that are not quite continuity agreements—for example, the Japan agreement, which is being renegotiated. Certainly, we would hope that there is the opportunity for UK farmers to open up more markets in the far east.
Really what I was saying was that, as farmers, we want to be ambitious about increasing the markets, whether at home or overseas, for our produce. If we are going to increase them overseas, we have to recognise that that assumes a degree of free trade, international trade and imports. We certainly want to expand those overseas opportunities, and it may be that some of those continuity agreements, which are being looked at again, provide particular opportunities.
Matt Western
Q
Nick von Westenholz: I got the second question. Could you repeat the first question, sorry?
Matt Western
Q
Nick von Westenholz: In principle, the idea of mutual recognition agreements can work. There is nothing that we would object to in an MRA in principle. An important aspect of this is that, if we simply try to hold overseas producers to precisely the same standards as UK producers, that might create as many problems as it solves. We need to develop a mechanism for comparing standards as easily as possible to certify, accredit or whatever it might be a degree or level of production standards that we accept as equivalent to our own.
A lot of the things I have mentioned already demonstrate the complexity and difficulty with some of these issues. That is one of the reasons why we have suggested the establishment of a trade and food and farming standards commission to get under the skin of all these pretty tricky policy areas and set out a road map for Government of the sort of policies and legislation needed to tackle the issues properly. We would like that to be established in law, under the Trade Bill or any other legislation, so that it reports to Parliament and contributes to some of the shortfalls in parliamentary accountability and scrutiny that have already been flagged to the Committee. We think that that is a very good and sensible idea. That commission would absolutely look at such things as MRAs and broader issues of how you manage and measure equivalence.
On the Trade Remedies Authority, we have not flagged any specific concerns other than to acknowledge that the constitution of the committee is very broad, and quite a lot of leeway is provided to the Secretary of State in the formation of that committee. We would like to explore further the possibility of ensuring specific representation for specific sectors if necessary. Having said that, we would hope that the TRA, even in its current format as set out by the Bill, would consult fully and take into account all parts of the economy when advising on trade remedies.
Bill Esterson
Q
Nick von Westenholz: There is the prospect of including those sorts of provisions in any of the deals that the UK Government are either currently negotiating or imminently going to negotiate. I am not sure that that is an issue specific to the continuity agreements. Countries all around the world are increasingly considering how such issues can be better accommodated in trade deals. Traditionally, they have not been part of trade agreements, although we have seen in the draft text between the EU and Mercosur, for example, provisions for preferential access to Mercosur for eggs where the production standards have been equivalent to animal welfare requirements in the EU, which is interesting.
This is a really important point: the UK Government should be seizing this moment to be a global leader in negotiating trade agreements that accommodate some of these sorts of policy areas, such as animal welfare, environmental impacts and climate change, and being creative and imaginative in how future trade agreements ought to look—not looking backwards and seeing how trade agreements have been done in the past, and merely looking to replicate those.
The Chair
That brings us almost exactly to the end of our allotted time. Thank you, Mr von Westenholz, for your assistance to the Committee in giving evidence. We will again suspend briefly while we prepare for the next evidence session.
The Chair
Our third panel of witnesses giving oral evidence is from Make UK and the Chemical Industries Association. We have until quarter to 4. Could I ask both witnesses to introduce themselves for the record—first Richard Warren in the room, and then Mr Cranshaw?
Richard Warren: I am Richard Warren, head of policy and external affairs at UK Steel. Although UK Steel sits within the wider organisation of Make UK, I will be speaking specifically on behalf of UK Steel and the steel industry rather than the wider manufacturing sector.
The Chair
If you would like to make any opening remarks, you are welcome to.
Richard Warren: Certainly. The Trade Bill deals with a number of issues that are extremely important to the steel industry, not least the one I am most keen to discuss this afternoon: trade remedies. Of just over 40 measures that are being carried over from the EU, 15 or 16 relate to steel, so we are probably more affected than any other sector in UK industry. Obviously the vast majority of that regime and how it will operate is dealt with by the customs Bill, so I will not dwell on it too much, but the Trade Bill is critical in establishing the Trade Remedies Authority as an independent authority that can act independently from the Department for International Trade.
The second element, of equal importance to the steel industry, is the continuity of trade agreements. There are a number of trade agreements, particularly with Turkey, that I would highlight as critical for establishing continuity with. Turkey is our third biggest export market after the EU and the US, accounting for 300,000 tonnes, which is about 8% of UK exports. The ability of the Bill to ensure that we can have as much of a continuity arrangement as possible with Turkey and with other, smaller export markets is paramount to the steel sector.
The other issues dealt with in the Bill are of lesser importance but are still worth commenting on. The UK steel industry obviously supplies public contracts in other countries, so ensuring that we are still members of the GPA after the end of this year is critical for the steel sector. In terms of data management and data sharing, there is already an issue that has come up during the transition period and the process before that. Ensuring that HMRC is able to share data with the Department for International Trade is extremely important to us, and I will touch on that later.
The Chair
Q
Ian Cranshaw: Good afternoon, Chair, and thank you for the opportunity to address the Committee today. My name is Ian Cranshaw. I am head of international trade at the Chemical Industries Association. The CIA has been around for over 50 years, and it represents and advises chemical and pharmaceutical companies located across the UK. Our core membership is a mix of chemical and pharma companies. They are all obviously treated as UK companies, but many of them are multinational companies using the UK as a base for their European and UK operations. We have small and medium-sized enterprises and MNCs.
Chemicals is a significantly enabling industry for downstream manufacturing. I think that most members of the Committee will understand that chemicals are a key ingredient in 96% of manufactured goods, so pretty much everything you see, touch, drink or use will have chemicals in it.
That is our intro. I am sorry—I did not really hear what you wanted me to focus on straight after the introduction, Chair.
The Chair
We will move to questions now, Mr Cranshaw, but that is very helpful. Thank you. We will start with Bill Esterson, who is the shadow Minister.
Bill Esterson
Q
Richard Warren: Certainly. We have a very good relationship with the organisation, as it currently exists within the DIT. There is only one live case—a case on welded tubes that are produced in Corby by Tata Steel, which I believe has been live for three months now—and we have had very good engagement with the organisation.
One critical issue is our ability as a sector to participate in trade remedies investigations, and particularly to finance them. I do not think it will be any surprise to people in the room that those cases cost an awful lot of money, particularly at this stage, when, frankly, industry in the UK does not have the same level of expertise that our European counterparts do. Bringing in external legal support and external consultancy has been critical, and our ability to do that as a sector has been severely disrupted by coronavirus. To put it bluntly, discretionary spend within many manufacturing companies, including in the steel industry, has effectively been halted. I say that to point out that we have asked for an extension with the TRA, and it has been as flexible as possible in providing us with an additional three months. I provide that case as an example to show that we have a very good working relationship with it .
In terms of how well, practically, those investigations will operate on an ongoing basis, and whether we feel that we are getting a fair hearing, I cannot comment on that yet, in the sense that we really are at the very first stages of the first investigation. We have another two or three investigations to go through this year. If I was to comment again at the beginning of 2021, I would probably have a more informed opinion.
To touch on the second question, about the membership of the Trade Remedies Authority, that is an important point. I would say that it is probably the only outstanding issue specifically within the trade remedies element of the Bill that we would still be pushing for reform of. In terms of the non-executive membership selected by the Secretary of State and appointed by them and the chair, there is no stipulation about how, or where from within industry and wider society, those members will be chosen.
That is an important point, because nowhere does the Trade Bill, the customs Bill or the secondary legislation actually define the role of the non-executive membership of the Trade Remedies Authority. All reference to decisions by the Trade Remedies Authority— recommendations to the Secretary of State—are referred to as, “The Trade Remedies Authority will do x or y.” Precisely what the role of those non-executive members is is still somewhat vague.
I understand that the Government will have left it that way to provide maximum flexibility and to allow for the organisation to grow into its role and to find its feet. But, from our perspective as industry, while it remains vague, we can have anything, from the board or the non-executive membership merely providing an admin task—looking over the funding of the organisation, the remuneration of staff and so on—right through to it having influence on the recommendations that the organisation ultimately makes on anti-dumping and anti-subsidy measures.
Therefore, while we have that ambiguity, industry is keen to see representation from a cross-sector of business. Everything from unions through to manufacturing interests and people who may be classified as trade remedies experts, who may have a slightly different view on trade remedies to industry, should be represented on that organisation to show there is a spectrum of views.
Bill Esterson
Q
Richard Warren: To a certain extent, it depends, ultimately, on the role of the non-executive membership. If the non-executive membership functions as a board providing steering for how the organisation operates on an admin basis, you could say it was less important. If the membership has a high level of influence over the outcomes of those investigations and the recommendations that are made, we would say it is extremely important.
On the same token, if the board membership was made up exclusively of trade lawyers from firms that have exclusively represented exporting producers, one would say that the outcome of those investigations may be biased. On the opposite end of the spectrum, if you had the entire membership made up of people who had a more protectionist bent, again, that may result in a biased outcome. While we have ambiguity around the role of the non-executive membership, industry will err on the side of caution and say it should represent a range of views so that it can come to a balanced decision on whether those measures are in the interests of industry and the wider UK economy and its workers.
Bill Esterson
Q
Ian Cranshaw: We started this journey back in January 2017. Previously, I would have said that policy has moved quite quickly—that was before coronavirus, where, obviously, policy has been delivered in a matter of weeks or months. However, I think some credit goes to the Department for International Trade, which has gone from a standing start, with a handful of 30 or so trade policy experts on trade defence instruments within the EU. Now, we have a significant and very capable resource in the Department. At the same time, when the Trade Bill passes, they will establish the authority, which will have 100, growing to 130, staff whose level of expertise has grown significantly over the last three years. We have seen many of them, and we have had good exposure to many of the employees of the Trade Remedies Investigations Directorate.
But the point I would make, and what that highlights, is that when they were developing that knowledge, who did they turn to for expertise and the nuance of how to carry out an investigation, how to assess the injury margin and how to build a case to prove that there had been inappropriate trade behaviour by a competing company or nation? That was really about turning to the manufacturers. One of our member companies has welcomed a continuous stream of TRID or TRA officials into their facilities, explaining how to build the case, because that case has to satisfy WTO criteria. It is a significant piece of work. Mr Warren mentioned the cost of building the case, and companies do not go into this lightly.
The second part of your question was about the make-up of the TRA board and how to achieve the balance. The Minister, Mr Hands, said that you do not necessarily invite people with a specific ideological position to the board—we really want trade experts. All that I would say is that trade experts are not necessarily trade remedy experts, and often that representation from the manufacturers or trade unions—some labour point of view; labour with a small “l”—generates and delivers real balance for any non-departmental public body that has to look at the entire scenario, certainly in a period when we are looking to build back better.
I am not going to keep stealing other’s summaries of how we are trying to work, but the Government have already said that they want to rebalance the economy and put more investment in certain areas. The chemical sector is focused in the north-west of England and the north-east, along the Humber—areas that require significant investment, and they need to know that they are competing on a level playing field. All of that, with a balanced view and a balanced board, would really help to ensure that all views and positions were reflected appropriately in policy development.
Bill Esterson
Q
Ian Cranshaw: Sorry, I heard that the question was about chemical regulation. Was it about whether chemical regulation is covered in the Bill?
Bill Esterson
Do you think that it should be covered in the Bill? It is not, as it stands. Do you think that it should be, and why?
Ian Cranshaw: There is an awful lot of work going on in chemicals, and the Government are keen to deliver a chemical strategy. That is something that DEFRA has covered over the past couple of years, and it is right that we have one. We have no issue with the amount of regulation on the chemical industry. We are dealing with sensitive products, and they ought to be regulated in the way that they are. Again, we have had a good hearing from the Government, but it is about the criticality of making sure that any deal with the EU—this is key for us—can include access to data sharing, because we do not need to replicate the testing of individual chemicals to build up a UK database when a perfectly functional database exists at the European Chemicals Agency. There is plenty of provision elsewhere for chemicals and chemicals regulations, and I do not necessarily think that it needs to be in the Trade Bill.
Katherine Fletcher
Q
Ian Cranshaw: That is probably me for me, because Richard is focused on steel. It is really important. We want a Trade Remedies Authority to be established, fully functioning and delivering support for UK industry from 1 January next year. Chemicals go into every other manufactured good. There are chemicals in the automotive sector; there are chemicals in chlorination of water; there are chemicals in putting the aroma into the natural gas that we all use in our stoves every evening. Chemicals does have downstream industries that will all be impacted, so we need a strong chemicals sector.
If I am honest, looking at remedies and chemicals, there are not a huge number of current remedies in place in the EU, so when the Department transitioned those remedies that were relevant to the UK, did a call for evidence and assessed exactly which remedies should be brought into the UK, of the 23 remedies that existed in the chemicals sector, only two were transitioned into UK law. I am not suggesting that it is a huge area, but it is a very significant area, and those two remedies that are in place are very important to those companies, and to downstream industries in the UK. One of them is producing fertilizer, and it is the major supplier of that fertilizer in the UK, so you can appreciate that its availability to UK farmers is absolutely crucial to their operations. If they were exposed to unfair trade from external operators, that really would be a significant loss to UK capability, especially when we are looking at supply chains and ensuring that our really critical production is safely onshored at the moment.
Katherine Fletcher
Q
Richard Warren: There are a number of agreements that are obviously already in motion to be carried over. One to highlight is that north African nations like Morocco, and South Africa, are important markets for steel. It is a bigger concern that the agreement for one of the biggest markets for our UK exports, Turkey, probably will not be carried over, regardless of the Bill. Whilst the Bill would allow for it to be carried over—the steel element, without getting into too many dull details about the coal and steel free trade agreement between the UK and Turkey—it seems like it is an almost impossible ask now to get that carried over.
So that wider concern, that sits outside the Trade Bill, is a bigger one for us; it is a very important one. The Trade Bill would allow that to legally happen, but with politics and the complexities of negotiations, I fear, that agreement will not be in place by the end of the year, which would result in 15% tariffs, on average, on UK steel going to Turkey—8% of our exports. It is an extremely competitive market already; a 15% tariff would pretty much knock that on the head. At the same time, because the UK has no tariffs on steel, we would still have up to half a million tonnes of steel coming in from Turkey, but it would be a very uneven trading relationship at that point. That is probably our biggest concern at this point, in terms of continuity trade agreements.
Katherine Fletcher
Q
Richard Warren: Obviously, yes. If we do not pass the Bill, there is no way that the Turkish agreement can be passed, but there are other complexities on top of that.
Matt Western
Q
Richard Warren: Certainly. As I said, the vast majority of how the trade remedies regime will operate—the responsibilities of the organisation itself, how it reports to the Secretary of State and so on—are dealt with within the Taxation (Cross-border Trade) Bill and the secondary legislation. There were still outstanding issues that we had with that legislation. Obviously, it has passed now, and we are working with the regime as it has been established. If we had an opportunity as an industry—we are talking about a hypothetical now—to strengthen the trade remedies regime, change elements of how it was operated, perhaps be more explicit in legislation about how those investigations are conducted, and change certain elements of the methodology, like dumping and how we treat certain non-market economies, that would be fundamentally best be dealt with in the Taxation (Cross-border Trade) Bill and the secondary legislation that supports it.
This Bill is fairly cursory in what it establishes in the trade remedies regime. Our key request at this point remains the make-up of the non-executive membership, rather than dealing with precisely how that regime operates. It really is the customs Bill that we would look to if we were making changes.
The Chair
It was a slow burn, but I have to say that the witnesses have excited the Committee, and I am getting lots of people wanting to get in, so if everybody can try to be quite crisp in their questions and answers, it would be appreciated. Antony Higginbotham next.
Antony Higginbotham (Burnley) (Con)
Q
Richard Warren: As Ian Cranshaw noted earlier, we have been on this journey for quite some time. We first started having discussions on the possibility of a Trade Remedies Authority at the back end of 2016. At that stage, there obviously was uncertainty. I do not think the UK Government had thought about—no one in the UK had—the need to establish a Trade Remedies Authority. Obviously, after the Brexit vote in 2016, that became immediately apparent to the UK steel industry. So if there has been an assessment done, I suppose it was an unofficial assessment through the evidence that we provided and the discussions we had with Government, and it became evident that this was an absolute must and there was no question that the UK would need an authority. I am happy to provide further data or evidence to the Committee afterwards.
If you look at the impact that trade remedies have had on imports and on dumping into the UK, the evidence speaks for itself. It is clear. China was exporting perhaps 500,000 tonnes to the UK in 2015-16. That has been reduced to 100,000 tonnes because of the measures that have been in place on the key steel products that it was found to be dumping and that were subsidised by the Chinese state. If that had gone on—it was a major cause of the difficulties that the steel industry was undergoing in 2015-16, when we saw a major restructure of the steel industry and new ownership—and those measures had not come in, the situation would have been far more dire, and the modest recovery that the steel industry saw in 2017-18, which has obviously been knocked off course by recent events, certainly would have been far slower and far more fragile.
Drew Hendry
Q
Ian Cranshaw: In chemicals, the REACH regulation is the key documentation, and that is stored by ECHA. We would accept that if you had to design a system now, it probably would not look a lot like what it does, but here we are 13 years after the ECHA database and the REACH regulations were introduced. UK companies alone have spent upwards of £600 million in furnishing that information on to the database, so you can appreciate the nervousness that, if we do not negotiate a deal with the EU that gives us access to that data, we will be back to a point where UK companies will have to rebuild a new database under UK REACH. There is no suggestion from DEFRA that we would move away from REACH. Globally it is seen as the gold standard for chemical regulation, so it is critical that we secure access to the data.
It is worth pointing out that UK companies are the second largest contributor of data to the information held on the ECHA database. Not only have our companies paid for the ability to use those chemicals, but, through their own innovation, research and capability, they have contributed significantly to the value of that database. It is crucial that we secure access to the data.
David Johnston
Q
Richard Warren: From our perspective, in terms of continuity—obviously, putting the EU to one side—the most important market is Turkey, with 300,000 tonnes and 8% of exports. It has a value of around £350 million. I can provide further details afterwards, if that would be useful. Without a shadow of a doubt, in terms of carrying over, that is the most important agreement.
There are other important markets, perhaps less for the sector as a whole but for individual companies supplying them. Manufacturing sectors in certain countries are very important, such as South Africa, Mexico and some of the north African countries I mentioned earlier. In terms of opportunity, we are essentially establishing what we already have, so it is difficult to see that there is a brand new opportunity. I wouldn’t say that it isn’t hugely important—we want to continue to trade with these countries and to make sure that we do not have a resumption of tariffs, but fundamentally the position is not going to be any different to what we currently have.
It depends on how you view the question. If you view it as, “If we don’t have this, you will have tariffs,” then there is a huge opportunity, because we would be in a worse situation than we currently are. If you view it from how we currently are, we are looking at exactly the same situation.
The Chair
Mr Cranshaw, I think you wanted to answer as well. Mr Cranshaw? We may have lost the line. We only have about three minutes left. Would you like to ask the witness a question, Gareth Thomas?
Gareth Thomas
Q
Richard Warren: Indeed. While it is not dealt with directly in the Bill, the complexity and complication around agreeing a deal with Turkey is that, obviously—sorry if I am teaching Members to suck eggs—it is in a customs union with the European Union. Once we have a trade deal with the European Union, we will have tariff-free access to the Turkish markets for things covered by the customs union.
Unfortunately for the steel sector, there is a rather antiquated agreement that just deals with coal and steel products. That would need to be replicated in addition for them to get access. As far as I understand from discussions with officials, it is not really on the table for discussion until an agreement with the EU has been established. Until we manage to get to that perspective, we are not looking at a replication of current arrangements and therefore it will be a 15% tariff, on average, for steel products going into Turkey. As I said before, we will not be putting any tariffs on steel coming in from Turkey, because we already have a zero-tariff position on steel. In a nutshell, that is the situation we find ourselves in. If you would like further information, we can provide it. [Interruption.]
The Chair
Apologies for the bell, which is out of our control, as the sitting is suspended in the main Chamber. We are nearly at the end of the time allotted for this session. I thank both the witnesses and all the Members for being here. If Mr Cranshaw cannot hear us, we will make sure that he is subsequently thanked for joining us.
The Chair
Q
Rosa Crawford: I am Rosa Crawford, a policy officer covering international trade at the Trades Union Congress. We are the national union centre of the UK, representing just over 5.5 million workers. I did not hear the second part of what you wanted me to introduce—was it some headline concerns on the Bill?
The Chair
Yes, if you just give an overview of your views about the Bill, that would be really helpful.
Rosa Crawford: The TUC believes it is crucial that UK trade policy supports a recovery from the pandemic based on good jobs, respect for workers’ rights, quality public services, support for the UN sustainable development goals and a just transition. Within that, we believe that the trade priority of the UK must be getting a good deal with the EU to protect rights and jobs, and we believe it is reckless that the UK Government have dismissed the offer by the EU of a deal that would provide zero tariffs and no-barrier access to the EU single market, with a guarantee that workers’ rights and social standards will not be lowered.
We are concerned that what we see in the Trade Bill is not a framework that would support the trade policy that workers need. Our main concerns focus on the fact that it provides no role for trade unions or Parliament in the negotiation of trade deals. It fails to provide a role for trade unions at the Trade Remedies Authority—to be able to have a say on the measures to prevent unfair trade and dumping. It provides no assurance that workers’ rights will be respected in trade deals, and it fails to ensure that UK procurement rules will promote respect for workers’ rights. It provides no assurance that public services will be protected in trade deals. I am happy to go through those concerns in more detail if that is helpful to the Committee.
The Chair
We have until 10 past 4 for questions, so perhaps we will see whether they are drawn out by questioning.
Bill Esterson
Q
Rosa Crawford: The TUC is in contact, and works very closely, with trade unions around the world, in advocacy for trade deals that promote good jobs and strong protection for workers’ rights and public services. We find that in other parts of the world, there is much more meaningful engagement between Government and trade unions, as well as with employers in trade negotiations. In our partners in Europe—in countries such as Austria and Sweden—there is routine consultation with the Government on the negotiation offers in trade negotiations.
Outside the EU, in countries such as the US, there is systematic and ongoing consultation by Government of the unions on the text that they propose. In the UK-US negotiations that have just been launched, we know that our US counterparts have seen a number of proposals that the US negotiators are putting to the UK Government. On the UK side, we have not seen any part of that negotiation so far. There is a much more meaningful engagement and a process whereby unions can comment on the text of the negotiations and have that input taken on board, which is very important, so there is a process whereby texts can improve to reflect what workers need in them.
As an example, the US unions were able to comment on the USMCA labour chapter and add significant improvements that prevented, for example, restrictions on freedom of association in Mexico. We would want that process in the UK trade negotiations and so we would want the Trade Bill to outline and affirm that trade unions would be engaged in the process of trade negotiations and would be consulted on the text, and that that would be the process going forward, not just for the continuity agreements but for all agreements. We would obviously also want that for the UK-EU negotiations, which we have not had that engagement on.
I would flag that there has been some movement in terms of Government consultation with members of the expert trade advisory groups that the unions sit on roughly half of. It has been indicated that we may get to see confidential material associated with trade negotiations on the condition of signing a non-disclosure agreement, but it is important to flag that the non-disclosure agreement is currently drafted so broadly that unions are concerned that it would limit what we are able to say in terms of our public advocacy. A balance needs to be struck between the legal restrictions placed on organisations and their ability to comment on the text of negotiations.
We welcome the fact that it looks like the Government are taking some steps forward in consultation, but it is currently not in the shape that we think is adequate and we have concerns about the restrictions they might place on us. We seek engagement with the Government on that, as the TUC and unions going forward. In the Bill specifically, a reference and an affirmation that unions will be consulted on the process of trade negotiations—as well as Parliament, which is crucial for democratic scrutiny—is key for us.
Bill Esterson
Q
Rosa Crawford: Yes. The TUC and unions were concerned about the fact that we were not consulted on any of those 19 continuity agreements before they were ratified and the fact that they were negotiated with countries where there are significant concerns about workers’ rights expressed to us by the unions in those countries.
To give two examples, the UK has now signed continuity agreements with South Korea and Colombia. In South Korea, for many years we have been expressing concern, with trade unions in South Korea, that freedom of association has been routinely overridden, with trade unionists thrown in prison for peaceful protest for workers’ rights, including two union leaders imprisoned last year who were only freed after a concerted global campaign. Trade union offices are raided and exploitative conditions are prevalent in large Korean multinationals such as Samsung. The UK signed an agreement with them that has no enforceable commitment on workers’ rights within it. Although there is a mention of International Labour Organisation standards, there is no enforcement mechanism for that, and therefore there can be no reprisal through the agreement and no penalty for abuse of workers’ rights.
We also have significant concerns about Colombia, which is one of the parties to the UK-Andean agreement. Colombia is listed by the International Trade Union Confederation as the world’s most dangerous country to be a trade unionist, with routine murders of trade union leaders, widespread repression of freedom of association and a real rolling back of rights, in contrast with the commitments made in the peace process by the Government. The fact that the agreement was signed, again without an effective enforcement mechanism on workers’ rights, is very concerning to us and indicates that these agreements will not be used to increase respect for workers’ rights, but will actually make it easier for companies to go to places where it is easier to exploit workers because human and trade union rights are not respected.
Bill Esterson
Q
Rosa Crawford: Trade unions have expressed concern that there was no enforcement mechanism in the EU agreements with South Korea or Colombia either. However, the EU is now engaged in a process of reviewing the enforcement mechanisms in its trade agreements—[Inaudible.]
The Chair
Rosa, we are delighted to have you back. Bill Esterson has one further question.
Bill Esterson
Q
Rosa Crawford: The TUC has confirmed that the Bill does not give assurance that the UK’s public procurement rules will promote respect for workers’ rights or environmental standards in its accession to the World Trade Organisation’s government procurement agreement. The GPA as it stands has no requirement for members to promote social standards in their tendering process.
The UK’s Public Contract Regulations 2015, which you mentioned, transpose provisions in the EU procurement directive of 2014, which states that Governments must ensure that public contracts uphold international, environmental, social and labour standards. Importantly, those regulations also include provisions about a price-quality ratio, which is intended to ensure that public authorities select tenders on the basis of quality and positive social impact, rather than price alone. We are worried that once we leave any kind of relationship with the EU and we just have to rely on the UK’s public contract regulations, the UK Government may roll back on those commitments to promote social standards through the tendering process.
We know the Prime Minister and members of the Cabinet have talked many times in the past about wanting to repeal EU-derived rights around working time, agency workers directives and other important protections for workers’ rights. We are worried that that may be the direction of travel with procurement as well, which is why we seek an addition to the Trade Bill that states that the GPA schedule that the UK files will make sure that it at least replicates article 18(2) of the EU’s 2014 public procurement provisions, which makes it clear that social standards must be part of the criteria used for settling public contracts, and that contractors must uphold those international labour and environmental standards. We would want the UK to go further than that and actually make it a compulsory criterion that the highest standards are used by contractors who receive public money, because that is the way to ensure that we get the best quality public services and provisions through our procurement arrangements.
We are concerned at the moment that we do not have a rigorous enough process of selecting tenders that always have the highest social standards, and that has had a terrible impact on the quality of services that we get, so it has had real public health implications. With the pandemic that we are facing now, we have had cases such as the Government choosing to import 40,000 protective gowns from Turkey on the basis that they were presumably lower priced than gowns they could get from a country that has higher standards. As we all know, all those gowns had to be impounded, as they did not reach NHS standards for safety. It is worth remarking that, in Turkey, there is extreme repression of workers’ rights.
By choosing the contractor with the lower price and the lower protection for workers’ rights, it leads to a much worse result for the public, and obviously there is a cost as a result. If there were concerted Government support for domestic manufacturing and domestic producers, and a preference was provided through the provisions in the GPA and through domestic legislation for providers who upheld workers’ rights and promoted the higher standards of workers’ rights, we would see more contracts going to UK manufacturers where there are strong trade union agreements, good protection for workers, decent pay and generally better conditions that promote a much more sustainable approach to business. Ultimately, there will be a better product for the public, which meets a public health need.
We think it is very important to send a signal with the Trade Bill that the Government’s accession to the GPA will be linked with making sure that the highest social standards are embedded in our public procurement criteria, and that that will be used as a key component for selecting tenders—not just price, but quality and the overall investment in sustainable development, good jobs and strong protection for workers’ rights.
David Johnston
Q
Rosa Crawford: As I outlined at the start, the crucial trade relationship that we believe the Government need to secure is that with the EU, which is our closest and most integrated trading partner and where the majority of our exports go. We are crucially reliant on—[Inaudible.] The trade agreements that the UK Government have secured through the continuity agreements do not represent anywhere near the importance to our trade. Although there will be some gains for certain sectors, it is not anywhere near as important for the EU. For us, the crucial thing about the continuity agreements is the lack of engagement with unions on them. They have been agreed on terms that we do not believe are advantageous to workers—for example, they do not have enforceable commitments around workers’ rights in them, which facilitates capital and UK businesses to go to countries such as Colombia, where the respect for worker’s rights is much lower.
For us, the crucial trading focus of the UK Government must be on securing a good deal with the EU. We do not believe that continuity agreements can substitute for those or, indeed, for agreements with the US or Japan, or Australia and New Zealand, which have launched in the last few weeks. We agree that there is a place for agreements—
David Johnston
Q
Rosa Crawford: It would be hard to make that estimation, because drawing a direct line between how trade agreements facilitate access for our businesses and imports and exports and specific jobs is quite difficult. Unions would treat any figure with some scepticism. We could probably look into which sectors were linked with particular countries. As I say, however, what would come out again and again is the overriding importance of the EU in promoting and supporting jobs in the UK. The continuity agreements do not represent a significant proportion of the jobs that are supported in the UK, if you could draw out some analysis that was credible on that.
Fleur Anderson
Q
Rosa Crawford: To focus on public services first, we are concerned that the Bill does not provide a guarantee of an exemption for all public services through a positive list, which is what we want to see in the Trade Bill. That is the only way to affirm that public services will be protected in trade agreements to make sure that there is no investor-state dispute settlement.
We are concerned that the trading partners that the UK Government have lined up as priorities for trade agreements once we leave the customs union with the EU are those that have explicitly made it clear that they would seek access to the UK’s public service market as a particular objective in trade negotiations. The US in particular, in its negotiating objectives, made it clear that regulations on drug prices were a barrier to market access which it would seek to overturn in trade agreements.
We know that in all recent US trade deals, such as the USMCA with Mexico and Canada, they have taken the negative list approach, which is where all services are included in the agreement unless specifically exempted. That means that if we had a similar deal with the US, part-privatised public services in the UK would be included in the agreement. If a future Government tried to renationalise them or regulate privatised parts of the public service, such as the provision of pharmaceuticals and medicines, they could be sued by the US Government. If ISDS is in the agreement, they could be sued through an ISDS tribunal. We are concerned that without an explicit commitment in the Trade Bill, as well as in all future trade negotiations, that public services are written out and there is no ISDS, our public services could really be on the line. That is what we need to see, rather than empty assurances from the Government that the NHS is protected.
In terms of workers’ rights, we have particular concerns about the US and the fact that they have ratified only two of the five fundamental ILO conventions. Forms of child labour are still legal in the US and there is legislation against freedom of association in a number of states where right to work laws exist.
It is clear that the US would see many of the employment protections we have in the UK, which we have derived from EU law, such as around working time, discrimination and paid holidays, as barriers to trade. They would say to the UK, “We are signing a deal with you only if you remove those barriers to our businesses being able to make more money, because we want workers to be able to work longer hours, have less holiday pay or be dismissed without any notice, or for agency workers to be fired on the day they are hired if we want to.” That kind of flexibility, we know, is the US approach.
Trade unions in the US have expressed grave concerns about that. The TUC and trade unions in the US have signed a joint statement making it clear that trade deals must protect workers’ rights and expressing concern about the breaches of workers’ rights in the US. With the Trade Bill not providing any affirmation that trade deals with existing countries, through the EU and the continuity group, and new trade agreements will have enforceable protection of workers’ rights, unless we see that kind of language making an affirmation that workers’ rights will be protected and effectively enforced through trade agreements, we know the realpolitik is that the likes of not only the US, but others such as Australia, New Zealand and others in the comprehensive and progressive agreement for trans-Pacific partnership, the CPTPP, are likely to pressure for lower workers’ rights. That will be their objective in a trade agreement; otherwise, the UK is a less attractive option for them.
The Chair
Ms Crawford, thank you very much for your time and for assisting the Committee with your evidence. That brings us to the end of the time allotted for this session. We will suspend briefly while we get the next one set up.
The Chair
We will now hear oral evidence from George Peretz, QC, of Monckton Chambers. We have until half-past 4 for this session. Let me introduce myself, Mr Peretz. I am Graham Brady; I am chairing the Committee and will be calling Members to put their questions, but I will not be questioning you myself. If you would be so kind as to give a brief introduction of yourself and any opening observations about the Bill, we would be very grateful.
George Peretz: Thank you, Chairman. I am George Peretz and I am a QC at Monckton Chambers. I specialise in a number of areas of law, but, relevant for these purposes, customs law and EU law, including trade remedies.
The Chair
Thank you very much. Do you have any initial observations on the Bill, or would you like to move straight to questions?
George Peretz: It is a short Bill and the Members are familiar with it, so while there are a number of issues that I am sure people will want to discuss, I do not have any opening observations.
Bill Esterson
Q
George Peretz: Did you say the scrutiny provisions?
Bill Esterson
The scrutiny provisions.
George Peretz: I am sorry, I am having slight difficulty hearing you.
Bill Esterson
The scrutiny elements of the Bill.
George Peretz: Yes, I thought I had heard it correctly. The first point to make is that the scope of the Bill, as set out in clause 1, is clearly confined to agreements with countries that had either a free trade agreement or an international package agreement with a free trade agreement with the EU before exit day. In that sense, it is limited, but none the less it is not quite right to portray it as simply a roll-over Bill, because the Bill does not prevent the Government from entering into an agreement, with a country that had such agreements with the EU—such as Japan or Canada—that is significantly different from the agreement that that country had with the EU before the United Kingdom left the EU. The absence of scrutiny provisions in the Bill needs to be seen in that light: that the agreement that the Government negotiate with Canada or Japan, for example, might look somewhat different—in fact, there is every reason to think that they probably will look somewhat different—from that which both countries entered into with the EU, most obviously because for those countries, an agreement with the United Kingdom is not the same as an agreement with the EU—it is a different market. Both countries will have different objectives and concerns in relation to the United Kingdom from those they had when negotiating with the much larger EU.
When one looks at the provisions of the Bill, which essentially do not provide much scrutiny at all, it is important to have that background in mind. There is the debate, with which Members are probably familiar, about the extent to which it is appropriate for there to be parliamentary scrutiny of free trade agreements. I can give you some thoughts on that, if you like. It is important with this Bill, however, to make that preliminary point.
Bill Esterson
Q
George Peretz: In this country, or elsewhere?
Bill Esterson
Either would be good.
George Peretz: I am just trying to think of an example. I suppose a case that ran into trouble, at least in part because it was accepted that there was not adequate scrutiny at an early stage, was negotiations between the EU and the United States on the transatlantic partnership agreement. Essentially—you would have to ask someone else for the precise detail—the EU side ran at what the European Parliament and member states were prepared to accept. That is one potential difficulty.
The issue with free trade agreements now, compared with what they looked like in the 19th century, when Richard Cobden could trot off to Paris to negotiate a free trade agreement with Napoleon III in a week or so, which involved a few tariff reductions, is that they are a lot more complicated than that now. Particularly once you move away from tariffs into other areas, agreements now require a lot of potentially important decisions on questions such as how matters of food safety are regulated, or the terms on which professional and other types of services are regulated, like auditing. Those are very sensitive indeed; they can profoundly affect both the public generally and particular interests.
So there is always the risk that, if an agreement has not been scrutinised properly at an early stage, a Government will go too far and then not be able to get the necessary legislation through Parliament. That is less of a risk inherent in our system, particularly in the present Parliament, given that the Government have a healthy majority, so it is not politically that likely. Also, the Government can quite often control agreements by secondary legislation anyway. But that can be a bit of a problem, and the TTIP negotiations turned out to be one.
Another issue with lack of scrutiny is much more difficult to find examples of, because it is not something from the textbook of finding examples. None the less, it is a fact, which people involved in trade negotiations fairly freely acknowledge, that it can be quite helpful to a Government to be able to say, “We are under scrutiny from our Parliament. We simply cannot make concession X, because we have discussed this with our own Parliament and know very well that it’s going to be very controversial; it’s going to be very difficult for us. We simply can’t do it.” That can be quite a useful negotiating tactic. As a lawyer, one is quite familiar with a situation where one is in negotiations with the other side and it is actually quite helpful sometimes to be able to say, “I’m afraid my client is very unreasonable; I simply can’t accept that.” That is quite a useful way of resisting certain types of pressure, and I think the same is true in trade negotiations, so it is another advantage of scrutiny.
Bill Esterson
Q
George Peretz: On the first question, plainly an unsatisfactory situation would have happened, had the United Kingdom left the EU with no deal last year. It is plainly an unsatisfactory situation if you have a whole set of powers in one Act of Parliament that are conferred on an authority that does not actually legally exist, because the legislation that sets it up has not at that stage been passed. That is what happened with the Trade Bill in the last Parliament. It is a bizarre situation, which is bound to create legal problems of one sort or another. There would have been challenges, no doubt, to the validity of the decisions taken by the Secretary of State, given that the mechanism by which he took them had no satisfactory statutory basis. The Department for International Trade told the world that the mechanism that it had adopted to get round that problem would have been sufficient to deal with it. We will never know whether it was right about that, but I think it would have created a set of legal issues that probably everyone could have done without if trying to—[Inaudible]—effective trade remedies. It will certainly be better if, at the end of transition, when all this comes into play, there is a strong remedies authority in existence, doing the job that the 2018 Act gives it.
The structure of the 2018 Act did seem to me sensible. I wrote an article that laid out the—[Inaudible.] It is the largely technical task of looking at the potentially legal point—[Inaudible]—a factual question about whether the various tests of dumping, subsidy domestically and so on have been met, through an independent authority that would be able to assess those reasonably objectively. It is charged with those functions. And there is the essentially political job of assessing the public interest, which is carried out by the politicians, who are directly accountable to you in the House of Commons. That seemed to me to be a sensible divide, and that is what the Government have done. That division of competence seemed to me to be broadly right.
A final point about the composition of the Trade Remedies Authority, going back to what I just said, is that the TRA’s job is in large part a technical one. It has to make a series of quite difficult legal and economic judgments that are essentially technical ones, but it does have a job of assessing the economic interests of the United Kingdom, which involve somewhat wider criteria. There is a case for the non-executive directors having to fit a number of those criteria; it is always desirable for there to be a diverse group of people on bodies such as this, because diversity brings strengths of its own. To focus on the particular task of this body, it is almost certainly helpful to have people who have experience of industry, because they will understand a lot of the issues and concerns that the TRA will have to grapple with. It would be helpful for some of the board to have backgrounds in law and in economics, because those are essential aspects of the TRA’s work, and it helps to have people right at the top who are familiar with such things.
The Chair
Mr Peretz, thank you very much. I am keen to get one more question in in the time we have available, if possible.
Gareth Thomas
Q
George Peretz: I am only broadly familiar with the US position, but I know a bit more about EU scrutiny. It is certainly at the lower end. This question was gone into in some detail at the International Trade Committee’s evidence session on 10 June, which I had the chance to listen to. It was with Brigid Fowler, who some people know from the Hansard Society, and a couple of other people whose names I cannot remember off the top of my head—one person from the Institute for Government and one from Global Justice Now. They went into some detail about the comparative perspectives, and it is worth looking at that.
In broad terms, the UK system as currently set up is something of an outlier. I do not know anything about the Canadian system, but one of the experts who gave evidence to that Committee—I think it was the person from the Institute for Government—said that Canada’s system is comparable to the UK, in that it has a reduced level of scrutiny. However, it is hard to think of any other examples of leading western countries where the scrutiny level is as low as it is in the UK.
One always has to be conscious that this sort of system is very different from the United States’ system. The US has separation of powers between the legislature and the Government, so it is rarely very enlightening when applied to a UK context, because the setup is so different. The EU is of course a very different body, because it represents a whole set of different states and has a set of controls that is appropriate for that, but not so appropriate for a unitary state. However, if we are looking at more obvious comparators such as Australia or New Zealand, I do not claim expertise on either of them, but I think there is a considerably greater degree of parliamentary scrutiny in both countries. It is certainly true, if one draws a comparison to the EU, where the European Parliament has to approve the mandates given to the Commission and has to be informed of changes and developments in the negotiations throughout. It is—[Inaudible]—comparable to what we have in the UK.
The Chair
Mr Peretz, thank you very much. I am afraid that brings us to the end of the time available for this session. Many thanks for joining us, and for assisting the Committee with its deliberations. We will now suspend briefly while we prepare for the next session.
The Chair
Q
Simon Walker: I am Simon Walker. I have been the chair of the Trade Remedies Authority for three months—a fairly recent appointment. From my limited exposure, given that I only made two visits to the office before the lockdown, I can report that the authority to be, which is still part of the Department for International Trade, is in good shape and raring to go.
Bill Esterson
Q
Simon Walker: I am not sure that falls within the purview of the Trade Remedies Authority to be. It seems a broader question than that. The TRA’s decisions will be subject to parliamentary scrutiny, because the final decision maker on our recommendations is the Secretary of State. If she rejects our recommendation, she must table her reasoning before Parliament.
Bill Esterson
Q
Simon Walker: I do not think I do, to be honest.
Bill Esterson
Q
Simon Walker: There are two underway at the moment, which are both transition agreements. One is about welded steel and tubes, and the other is about rainbow trout. Those two transition arrangements are in process at the moment. I cannot pretend that it will always be cheap to lodge a claim with the TRA, because it will require quite a lot of legal and technical expertise, so I would not want to over-sell that. It is a very substantial meta-seeking recommendation from us on the base of anti-dumping and fair subsidies or the need for an economic safeguard. It is a major intervention in economic process that I think justifies significant resource going into it.
David Johnston
Q
Simon Walker: I suppose the big worry about anti-dumping in general is that an overseas producer will seek to eliminate domestic competition in a predatory way and then force up prices as soon it has put its UK competitors out of business. That is at the heart of the issue, but there are infinitely more subtle variations of that, particularly if the exports come from countries where there are hidden or perhaps unfair subsidies of different sorts or where there is a disguise. The absolutely crucial thing is that there have to be UK producers of that product. If a product which happens to be massively available in another country is dumped cheaply in the United Kingdom and there are no UK producers, there is no domestic interest in that. That kind of unfairness aspect is fundamental to everything that we are going to be doing.
David Johnston
Q
Simon Walker: I think the Canadian, Australian and European Union’s trade remedies authorities operate competently and efficiently. The United States authorities have rather wider powers and a broader, much more variable political remit than this country’s will have, where our role is going to be to implement very strictly what is in the legislation. However, we are going to have to evolve something that is suited to the interests of this country absolutely specifically. That will be a challenge, because it has not been a function that the UK has had for some decades now, but I am confident that we can build up the expertise that will be required in the three basic strands. One is legal, one is analytical and economic analysis, and the third is investigatory, where claims are brought to us that require a detailed investigation. My hope is that over time we will build up the expertise to be recognised as an independent authority operating very much in the interests of this country, but that is an ambition and it will take a while to get there.
Gareth Thomas
Q
Simon Walker: It is important to stress that it is the Secretary of State who will make that ultimate decision. There are appeals mechanisms in this country, should we come to that finally. The appeals would need to be exhausted properly, but the remedies would be enforced in the same way as tariffs are enforced on imports to this country. There is not the ability of companies in other countries just to refuse to pay. That would have the same consequence as if they refused to pay normal tariffs or import duties on any goods.
Gareth Thomas
Q
Simon Walker: Certainly there are arguments that happen at WTO level all the time. One of the realities is that proceedings at the WTO normally take a very long time—I think that is particularly the case at the moment for various internal reasons—in the course of which considerable damage could be done in that case, unless the remedy were applied. That is why it is important that this country has the ability to act in that situation.
Fleur Anderson
Q
Simon Walker: I am happy with nine as a target. Three of them are internal, but we are going to want the other five non-executive directors all to be appropriately qualified in some way. I think we will get there. Nine to me feels the right sort of level.
It is important to stress that this is a board and it is fundamentally about governance. I would not want to mislead you about its decision-making capacity. Its role will be to set strategy, to hold the Executive to account, to test the strength of the arguments internally and to maintain the independence of the TRA from any organisation, including the Government. Those are the fundamental roles of the board, and we are going to be needing people who have that governance orientation in particular.
I am not supportive of the principle of representatives of particular organisations as such—to have representatives of industry or trade unions or the devolved Administrations —for a number of reasons. One is that I feel it would compromise the objectivity of the members of the board. The second is that it might reduce the capacity to appoint on merit. Thirdly, I think it would reduce the accountability if someone’s primary reporting back was to a sectoral interest group. To me, that would be a weakness.
Will there be people with trade union or industry experience, with close links with farming or with the devolved Administrations? I absolutely hope so. I very much hope that there will be people in those categories who apply for the board and are appointed, but they will be appointed as individuals who will work together as a board to hold to account the Executive.
I suppose the special skills I would cite that I am quite keen to see in non-executive board members are someone with a strong legal background, so that they can hold the legal team to account; someone with a financial and accountancy background, with real strengths in those areas; and if there is someone who has an investigatory background, perhaps, who could probe into material that is not always going to be easy to extract, that could be a useful facet. I hope they will be people who understand and relate to the devolved Administrations. I hope they will be diverse, because that has always been a goal of the Department and will be of the TRA once it is independent, but they will there as individuals working together on a board that is fundamentally about holding the Executive to account rather than making decisions itself.
Fleur Anderson
Q
Simon Walker: I am not sure that is really in our domain. I am very sympathetic to your point, but I am not sure how much that is in the remit of the TRA as such. Our professional teams will be trying to establish whether there is dumping, for example, from a particular country, and the sale of a product below its cost in that other country. If that is contrary to the economic interests of the UK, the TRA will try to assess that as objectively as possible. It is conceivable—I do not think it likely, but it is conceivable—that that might be from a developing country. There are shields for developing countries against an awful lot of tariffs—that is an element of exports that I hope will help them—and I certainly do not see developing countries being a big part of our focus, but I do not think that our remit is to look specifically at that.
Matt Western
Q
Simon Walker: I have not looked at other nations in that sort of competitive way. I suppose that what I have looked at is, as an organisation of not quite 100 people that might grow to 140 or 150 people—that sort of size—what it will take to run an organisation like that in terms of personnel with professional qualifications. It is not that hard to arrive at a budget for that kind of organisation, because it is not as if we are going to be paying for the submissions that are made to us. We are obviously taxpayer funded and our proposed budget—we are not in existence until the legislation is passed—is laid down by the Department. I think it is pretty much what anyone would expect, within a relatively modest scale, for an arm’s length body. Does that answer your question?
Matt Western
Q
Simon Walker: I do not think, I am afraid, that we have powers in that situation. Our mandate is very strict: it is about dumping, unfair subsidies and—this is very rarely used—safeguards in the event of unforeseen exports from another country that swamp the market. As I say, that is very rarely used. I take your point completely; that is a serious problem for the UK if that situation happens. I do not think it is one that the TRA can address.
Matt Western
Q
Simon Walker: The Department for International Trade and the Government as a whole. It is a matter for the Department and the Government as a whole rather than for us as an independent arm’s length body that will then be completely separate.
The Chair
That brings us to the end of our allotted time. I thank our witness very much. We are very grateful for your assistance.
Ordered, That further consideration be now adjourned. —(Maria Caulfield.)
Immigration and Social Security Co-ordination (EU Withdrawal) Bill (Sixth sitting)
Tuesday 16th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 View all Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 16 June 2020 - (16 Jun 2020)
The Committee divided: - Ayes: 2 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 8 - Question accordingly negatived.
The Chair
Just before we begin, I should say that if members of the Committee wish to take their jackets off, they have my permission to do so. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East and the Opposition Front-Bench spokesperson have spoken. If no Back Benchers indicate that they wish to speak, I will call the Minister. I remind the Committee that with this we are also discussing the following:
New clause 10—Extension of registration for EU Settlement Scheme—
‘(1) The EU Settlement Scheme deadline shall be extended by a period of six months unless a motion not to extend the deadline is debated and approved by both Houses of Parliament.
(2) Any motion not to extend, referred to in subsection (1), must be debated and approved no later than three months before the deadline.
(3) In this section, “the EU Settlement Scheme Deadline” means the deadline for applying for settled or pre-settled status under the Immigration Rules.’
This new clause would ensure the EU settlement scheme was not closed to new applications until Parliament has approved its closure.
New clause 11—Application after the EU Settlement Scheme deadline—
‘(1) An application to the EU Settlement Scheme after the EU settlement scheme deadline must still be decided in accordance with appendix EU of the Immigration Rules, unless reasons of public policy, public security, or public health apply in accordance with Regulation 27 of the Immigration (European Economic Area) Regulations 2016 (as they have effect at the date of application or as they had effect immediately before they were revoked).
(2) In this section—
“an application to the EU Settlement Scheme” means an application for pre-settled or settled status under appendix EU of the Immigration Rules;
“the EU Settlement Scheme Deadline” means the deadline for applying for settled or pre-settled status under appendix EU of the Immigration Rules.’
This new clause would ensure that late applications to the EU settlement scheme will still be considered, unless reasons of public policy, public security or public health apply.
New clause 25—Report on status of EEA and Swiss nationals after the transition—
‘(1) This Act shall not come into effect until a Minister of the Crown has laid a report before each House of Parliament setting out the impact of the Act on EEA and Swiss nationals in the UK.
(2) A report under subsection (1) must clarify the position of EEA and Swiss nationals in the UK during the period between the end of the transition period and the deadline for applying to the EU Settlement Scheme.
(3) A report under subsection (1) must include, but not be limited to, what rights EEA and Swiss nationals resident in the UK on 31 December 2020 have to—
(a) work in the UK;
(b) use the NHS for free;
(c) enrol in education or continue studying;
(d) access public funds such as benefits and pensions; and
(e) travel in and out of the UK.’
This new clause would require Government to provide clarity on the rights of EU nationals in the EU in the grace period between the end of the transition period, and the closure of the EU Settlement Scheme.
The Parliamentary Under-Secretary of State for the Home Department (Kevin Foster)
It is a pleasure to serve under your chairmanship this afternoon, Mr Stringer. These new clauses give us an important opportunity to consider the position of EEA citizens—those who are already here and are covered by the EU settlement scheme, and those who will come to the UK under our future points-based immigration system.
Before the break, I was asked a couple of questions. I can assure my right hon. Friend the Member for Scarborough and Whitby that we are looking at a range of communications materials, and have already done so, in a number of common European languages. We have engaged with diaspora media, and are looking particularly at how we can work with them over the coming year, as we approach the deadline next year, to ensure that as many people as possible hear the message—not just those who need to apply, but their friends and families, so that people feel familiar with the system and realise that it is actually a relatively simple process. The vast majority of people do it via an app on their phone.
I was grateful for the question from the hon. Member for Halifax. She asked what the position would be if someone applied on 20 June 2021 and their application was still outstanding on 1 July 2021. That is a perfectly reasonable issue to raise. As set out in the withdrawal agreement, the rights of someone who has made a valid in-time application to the EU settlement scheme will be protected while that application is pending. The regulations under the European Union (Withdrawal Agreement) Act 2020 will save relevant rights in relation to residency and access to benefits and services for those who make an application before 30 June 2021 until it is finally determined.
The Home Office will clearly not take immigration enforcement action against an individual whose application is pending. That reflects some of the other principles in the migration system. Committee members may be familiar with 3C leave—the concept that if someone has extant leave and applies, their leave is extended until their application is determined.
I assure Members that the statutory instrument making the regulations will be subject to debate and approval by Parliament, and will need to come into force at the end of the transition period. The Government are currently developing those regulations, which will be debated and made in good time prior to their entry into force at the end of the transition period.
On the linked question of what happens in relation to status checks and other things, let me be clear that an individual undergoing an eligibility check while their EUSS application is pending will have the same entitlement to accommodation, work, benefits or services that they had before the grace period ended. The Home Office will confirm whether an application is pending when an eligibility check is carried out—for example, if someone has to prove their status to their employer. Given that it is a digital-only system, it will be very similar to the process that people would use if they had been given pre-settled or settled status. I hope that is of use. Given the nature of the issue, I will set that out in writing for members of the Committee. They may wish to refer to it later.
New clause 9, moved on behalf of our friends in Plaid Cymru by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, seeks to delay the ending of free movement and the introduction of the new points-based immigration system for as long as possible. That is no surprise, given the views of the hon. Gentleman and Plaid Cymru.
My response on behalf of the Government is simple: we must accept the wishes of the people of our United Kingdom. Free movement is ending now that we have left the European Union. It is just six months since the general election, during which my party said that we would introduce a points-based immigration system that will enable us to bring in the best talent from around the world—based on the skills that a person has, not where their passport is from. The Government will therefore reject any attempt to perpetuate free movement or delay the implementation of the new points-based immigration system. The Government have a mandate, and we will fulfil our pledges to the people. We will introduce our new firmer and fairer points-based immigration system from 1 January 2021, when the transition period ends.
Having said that, I appreciate the importance of proper data and information. It is precisely for that reason that the Government have published a detailed impact assessment to accompany the Bill. It was published on 18 May and can be found on gov.uk and the Parliament website. Copies were also placed in the Library, and I know it has been referred to at times during the debates we have had so far.
The impact assessment is slightly unusual because it is not confined simply to the scope of the Bill, which, as Sir Edward and you, Mr Stringer, have reminded us on a number of occasions, is relatively narrow. Instead, it seeks to map out the consequences that will flow from the introduction of the points-based immigration system that was set out in the policy statement, which my right hon. Friend the Home Secretary published on 19 February.
The impact assessment sets out the likely implications for both EEA and non-EEA citizens of the changes that we will make, and it deals with many of the issues raised by the new clause. In particular, it makes it clear that we will develop plans to evaluate policies under the future skills-based immigration system. I remind the Committee that we have expanded the role of the independent Migration Advisory Committee. Not only will the MAC respond to specific commissions from the Government; it will also be able to consider any aspect of immigration policy that it chooses.
We have also asked the MAC to produce an annual report, which will give it the opportunity to comment on what it believes is working well and anything it thinks is working less well in our system. Although it is for the MAC—as I have said, it is independent of Government—to decide how to exercise its new responsibilities, I would be surprised if it did not want to comment on the operation of the new points-based system once it is fully up and running, so that there is further assurance for the public and for the movers of the new clause. For those reasons, the Government cannot accept the new clause.
I will now speak to new clauses 10, 11 and 25, which concern the EU settlement scheme and the grace period that will run from the end of the transition period to 30 June 2021. New clause 10 is designed to extend the deadline for applications to the EUSS by six months, which would happen unless and until Parliament debated and approved a motion not to extend the deadline.
I share the aim of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East to ensure that eligible EEA citizens are able to obtain the UK immigration status they need to continue to live and work here. As we constantly say, they are our neighbours and friends—we want them to stay. However, I do not think that is best achieved by the new clause, which has the effect of shifting the deadline for applications to the scheme potentially indefinitely. That would cause confusion. Instead, a clear deadline of 30 June 2021 will encourage applications to the scheme and ensure the greatest number of resident EEA citizens secure their status in a timely manner.
Furthermore, new clause 10 is ambiguous. It is not clear whether it is intended to be a one-off extension of six months or a rolling extension of a six-month period until such a time as Parliament votes to close the scheme with just three months’ notice. Having a clear and well-publicised deadline by which eligible citizens need to apply ensures that the maximum number do so rather than putting it off due to the impact of new clause 10, which could mean that a deadline is set with three months’ notice. The new clause could also mean that applicants face difficulties and delays in demonstrating their rights and entitlements in the future, as they would not be able to distinguish themselves from EEA citizens who arrived after the end of the transition period.
The Government have made it clear that we will continue to support eligible citizens in applying to the EU settlement scheme. In addition, as we have shown with all aspects of the scheme, we will take a flexible and pragmatic approach and allow people with reasonable grounds for missing the deadline a further opportunity to apply. We will set out further guidance on this issue in due course, but with over a year to go until the deadline, our focus is on getting as many applications before it as possible.
On new clause 25, we will bring forward a statutory instrument under powers in the European Union (Withdrawal Agreement) Act 2020 to set the deadline and save the residency rights of people who are eligible to apply to the scheme and who do so before the deadline. I am not sure whether this is the intention of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, but the effect of new clause 10 would be to breach our obligations under the withdrawal agreements. The deadline of 30 June 2023 applies only to EEA citizens and their family members who reside in the UK by the end of the transition period. Their close family members outside the UK at the end of the transition period—where the relationship existed before then and continues to exist when they seek to come here—and their future children have a lifelong right of family reunion with the resident EEA citizen. A universal deadline makes no provision for this group, whether it is 31 December 2021 or any other date, and it would be inconsistent with the provision to enable them to apply within three months of their arrival, as set out in article 18(1)(b) of the withdrawal agreement.
New clause 11 is intended to require the consideration of all applications to the EU settlement scheme made after the application deadline, unless reasons of public policy, public security or public health apply. As the hon. Gentleman will be aware, the withdrawal agreement requires late applications to be considered
“if there are reasonable grounds for the failure to respect the deadline.”
As I said earlier, the Government will adopt a flexible and pragmatic approach to the consideration of late applications. Where an eligible EEA citizen or their family member has reasonable grounds for missing the application deadline of 30 June 2021, they will be given a further opportunity to apply. This approach gives people a clear deadline and incentive to apply while also protecting those who are unable to do so through no fault of their own.
Our collective focus must be on encouraging applications to the EU settlement scheme before the deadline.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
In terms of intention, I think everybody in this room is at one. The Minister provides assurance in relation to people who miss the deadline through no fault of their own. Would that include people who, because of their complicated immigration nationality situations, had not appreciated that they needed to apply for the scheme?
Kevin Foster
I think it is safe to say that the list will not be an exhaustive one. There will need to be an element of discretion as we cannot list every single possible situation that might reasonably cause someone to be late in their application, but if, for example, they have had a difficult court case or something that meant they had not been able to apply, and a status had then been granted, it is likely that that would be seen as a reasonable excuse. It will be set out in guidance.
Our intention is to set out a list of situations that are not exhaustive but indicative. We can all think of circumstances that would be perfectly reasonable. For example, in the case of a child in the care of a local authority, we would expect the local authority to have made efforts to get them registered. We could make a very long list and still not get to an exhaustive level. The list will demonstrate grounds, but it will not be an exhaustive list of the only situations that we would accept as reasonable grounds for failing to apply on time.
As I say, we will take a flexible and pragmatic approach with those who miss the deadline. We have more than a year to go before the deadline. If people feel that they might need to make an application, the best thing to do is to find the information and make the application. That is our absolute focus at the moment. We are working closely with support groups to ensure that we can reach out to vulnerable communities who might need assistance. We have kept a range of support services running throughout the recent period and have now reinstated all routes for application, including paper applications that are made available to those with the most complex needs.
We want to encourage applications before the deadline. That will ensure that EEA citizens can continue to live their lives here, as they do now, without interruption. To make a commitment now that we would also consider all late applications would undermine that effort.
Where there are reasonable grounds for submitting a late application, we will consider the application in exactly the same way as we do now, in line with the immigration rules for the EU settlement scheme. That includes the consideration of conduct committed before the end of the transition period on the grounds of public policy, public security and public health, and of conduct committed thereafter under the UK conduct and criminality thresholds. As I have mentioned, we will publish guidance for caseworkers on what constitutes reasonable grounds, to ensure consistency of approach. Again, however, with more than a year until the deadline, it is premature to do so now, for the reasons I have given.
Stuart C. McDonald
It is a pleasure to serve under your chairmanship, Mr Stringer. I am grateful to all hon. Members for taking part in this debate and to the Minister for his response. There have been some useful comments, including on the transition period, in response to points made by the shadow Minister, the hon. Member for Halifax. We will take that back to discuss with concerned groups and may revisit the matter.
For those who fail to apply in time, we understand that there will be guidance in due course. Again, we are grateful for that little bit of further information on how that will function through a non-exhaustive list of types of case where caseworkers will look sympathetically on a late application. I am grateful for that. The Minister will understand that we will revisit that repeatedly between now and next June, due to our concern about what will happen to those people who have the right to be here but risk losing it.
As I said in my intervention, we have a similar purpose across the House; we just have different views on how to go about doing it. Having adopted this course of action, we will continue to press and push the Government at every possible opportunity, so that we get the maximum reach possible and as few people as possible lose their rights and end up being cast adrift in a hostile environment or lose their right to be in this country altogether.
The two new clauses were possible solutions to that. I will go away and think again about their detailed drafting. The Minister provided some interesting comments in that regard. At this juncture, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 12
Immigration health charge
‘No immigration health charge introduced under section 38 of the Immigration Act 2014 may be imposed on an individual who is an EEA or Swiss national.’—(Stuart C. McDonald.)
This new clause would prevent EEA or Swiss nationals paying the immigration health charge.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss new clause 42—Immigration Health Charge: Exemption for EEA and Swiss citizens who are healthcare and social workers—
‘(1) The Immigration Act 2014 is amended as follows.
(2) After section 38 (Immigration health charge) insert—
“38A Health care workers and social workers from the EEA or Switzerland
(1) Any person who but for the provisions of the Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 would have the right of free movement is exempt from the Immigration health charge if that person is—
(a) a healthcare worker; or
(b) a social care worker.
(2) The exemption will also apply to a person who is a family member or dependant of an EEA or Swiss national who meets the conditions in section (1)(a) and (b).
(3) For this section—
“healthcare worker” means a worker who works in a healthcare setting within and outside the NHS who may come into contact with patients, including clinical administration staff, and care home staff;
“social care worker” means a worker as defined by section 55(2) of the Care Standards Act 2000.’
Stuart C. McDonald
This brings us to the hot topic of the immigration health surcharge. It is worth remembering that the health surcharge is a fairly new concept, as it was introduced in 2014. It is set at £400 per year for most applicants, with a discounted rate for students and tier 5 youth mobility workers. The Government have decided to increase the fee to £624 per person per year in October.
Those are hugely significant sums of money, as the charge has to be paid per person per year for the full duration of the visa being applied for, before that visa application has even been considered. Somebody who comes in under a typical five-year tier 2 visa will have to pay more than £3,000 up front in health charges. If they have a husband or wife and a couple of kids, that is three extra NHS surcharges, so more than £12,000 up front without even thinking about the visa fee. On a discounted rate, a student coming for three years will need to pay more than £1,400 up front. Again, that is completely separate from the visa fee. Of course, the Bill extends the scope of the immigration health surcharge to many more applicants.
A particular injustice is done to people applying for leave to remain based on long residence. They are individuals and families who are forced on to a dreadful treadmill of applications and expense. Repeatedly, they have to apply for 30 months’ leave to remain. A single parent with two kids applying under those rules would need to pay almost £4,700 in health charges, and more than £3,000 in immigration fees, for just 30 months. They have to make that same application over and over again until they get to 10 years. When they get to 10 years and are met with a settlement fee of £2,400 per person, they will already have paid £10,300 per person. For a family, £10,000 per person is impossible. Shamefully, those people are often prohibited from having access to public funds.
Those people are applying because of long residence in the UK so, realistically, in many cases, there is no other country that they can go to. The children have spent most, if not all, of their lives here. It can put families in intolerable situations where they have to choose which family member they can afford to pay the fee for. A child may end up missing out because the most immediate and pressing priority is to pay the fee for a breadwinner.
In a way, the charge represents the worst of Home Office policy making, although the Treasury is as much to blame for stripping the Home Office right down to the core and instructing it to use migrants as cash cows to fund its activities. It also illustrates the Home Office at its worst, because the policy is more about grabbing the headlines than anything else. It is illogical, unjust and counterproductive.
The excuse given is that the policy ensures that migrants contribute towards the cost of the NHS system that they may use—but in that case, why is there an NHS charge but not an education charge, especially for families with kids? Why is there not a public transport or roads charge, or a local services charge? It is essentially a fig leaf for the fact that it is simply a general tax.
It is also unjust in that it is a form of double taxation and it is a poll tax. Migrants, of course, contribute to public services through general taxation like everybody else, through income tax, council tax and indirect taxes. The NHS surcharge is totally regressive. It falls unfairly on different migrants, as a wealthy bank worker with no dependants will pay about a quarter of the sum that an NHS careworker will pay if he or she comes in with kids. Most importantly, it falls unfairly on migrants as opposed to those who are citizens or settled. Migrants pay a general tax that the rest of us do not, while at the same time paying all the other taxes that we do.
Finally, from a different perspective, this is a policy that makes the UK an eye-wateringly expensive place for people to come to work. That will now expand to EU and Swiss nationals, and to the small and medium-sized businesses that employ them. Just as businesses are struggling to keep their noses above water, the Government intend to whack them with a plethora of fees, vis-à-vis skills charges and the NHS surcharge.
As we heard last week, it is the big multinationals that are well practised in this system over time, and that have the know-how and resources. Small and medium-sized businesses will end up not only having to navigate the complex tier 2 system, but often meeting the cost of the immigration health surcharge. If a job pays around £26,000 or £27,000, nobody in their right mind is going to come if they have to pay almost half a year’s salary up front. The small hotel and the fish-processing factory will have to pay it on their behalf and, quite simply, they may well not be able to afford to do that. It will not just be one job that remains unfilled. The danger becomes that that hotel or factory simply cannot continue to function and it moves elsewhere. Workers will go where they are not being totally ripped off.
Can the Minister give me examples of other countries that operate such a system in relation to a health surcharge? If so, what is the comparable rate? All the comparisons that I have looked at show that the UK is charging people to come here at a rate that is several times that of most of our competitor countries. In short, this is unjust, it is counter-productive, it is a double poll tax and it should be axed altogether. We support the Labour amendment and new clause as far as they go, but our view is that the solution is total abolition, rather than trimming around the edges.
Holly Lynch (Halifax) (Lab)
It is a pleasure to serve under your chairmanship once again, Mr Stringer. I rise to speak to new clause 42. I agree with a great deal of what my friend the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East said about the immigration health surcharge.
The Labour party is undertaking a significant piece of work with colleagues in the health team about the subject, so we will not make any further comments at this stage about new clause 12. We tabled new clause 42 and we welcome the Government’s commitment to scrap the NHS surcharge for migrant health and care workers, which we feel is long overdue.
The pandemic has shown the enormous contribution of overseas workers to our health and care system. They have put their lives on the line every day to keep us safe. It has been an insult and injustice to then ask them to pay extra for the very services they help provide. The Government acknowledged it was wrong, and said they would be scrapping the fee, which was described as “appalling, immoral and monstrous” by Lord Patten, the former Conservative party chairman, on 21 May, but details have yet to be published about exactly how and when it will happen.
I am mindful that the commitment made by the Prime Minister, following the exchanges between our party leaders at the Dispatch Box, was broader than the new clause before us due to the scope of the Bill. The U-turn was made when a No. 10 Downing Street spokesman announced:
“The PM has asked the Home Office and the Department for Health and Social Care to remove NHS and care workers from the NHS surcharge as soon as possible. Work by officials is now underway on how to implement the change and full details will be announced in the coming days.”
We share the opinion of Donna Kinnair, general secretary of the Royal College of Nursing, who said it was
“a shame it took this pandemic for the government to see sense”.
We also share the opinion of the British Medical Association, the Royal College of Nursing, the Royal College of Physicians and Unison, which have written to the Prime Minister to demand clarity about his commitment. I hope that the Minister can update the Committee and, indeed, the general public on what progress the Government have made. Can he confirm that all health and care workers will be exempt from the charge on a permanent basis, including those employed in the NHS, independent settings and the social care sector; that the spouses and dependants of health and care workers will also be exempt from the charge; and that health and care staff, who have paid the charge in advance, which will be all those currently working in the NHS and social care, bearing the brunt of the pandemic, will be appropriately reimbursed?
New clause 42 intends to hold the Government to the commitments made following PMQs on 20 May. As you can imagine, Mr Stringer, international doctors and nurses, who have just had to endure the most difficult, traumatising period of their careers, were hugely relieved when the Government made the overdue decision to scrap this unfair charge for health and care workers, finally recognising the vital contribution that overseas staff make to the NHS. However, we are nearly a month on since the announcement was made and we are still awaiting the details that we were promised.
Mr Robert Goodwill (Scarborough and Whitby) (Con)
I thank the hon. Member for Halifax for making the point about the contribution that overseas workers make to our health service and the way the Government have responded to that by suspending the immigration health charge. However, I have some concerns about new clause 12 and its discriminatory nature.
For example, it would extend an exemption to Poland, which has a 0.1% black and minority ethnic population, but not to other countries, particularly Commonwealth countries, which have very close links to the UK. If one looks at the European Union as a whole, its record on inclusivity is not good. For example, all 28 commissioners are white. Following the departure of the UK from the European Union, the number of Members of the European Parliament dropped by 20% as our MEPs left Strasbourg and Brussels, and only 24 of the 705 MEPs are from black and minority ethnic groups.
Stuart C. McDonald
The simple problem that I face here—again—is the scope of the Bill. I would love to abolish the immigration health surcharge altogether. If that is the only problem that the right hon. Gentleman has, I urge him to get in behind the new clause and we can work to scrap it for everybody else as well.
The Chair
Before the right hon. Member for Scarborough and Whitby resumes, I refer him to what the new clause says. He is beginning to stray a little.
Mr Goodwill
Thank you, Mr Stringer. The point that I was working up to was that by having an exemption only for EU citizens, we are discriminating against a large number of people who would wish to come and work in the UK from around the world. The ethnic mix of those particular groups would indicate that allowing the new clause would give a land bloc where the majority of people are white an unfair advantage over the rest of the world. I understand the aspiration to abolish the charge completely globally, but if we were to agree the new clause, we would end up in a situation where black and minority ethnic people from around the world would be at a great disadvantage to predominantly white people coming in from the European Union, EEA countries and Switzerland.
Kevin Foster
I thank the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East for tabling new clause 12 and the hon. Member for Halifax for tabling new clause 42, both of which relate to the immigration health charge, and for the opportunity they provide to debate this issue.
The background, for members of the Committee, is that the immigration health charge ensures that temporary migrants who come to the UK for more than six months make a fair contribution to the NHS services available to them during their stay. Income from the charge contributes to the long-term sustainability of our fantastic health service across our Union, although certain groups are exempt from the requirement to pay the charge and others benefit from a discounted rate.
The health charge is designed to help support the NHS services that we rely on throughout our lives. It raised approximately £900 million in much-needed income for the NHS from its introduction in 2015 to the end of the 2018-19 financial year—income that, I will be clear, has been shared between the four devolved health administrations in line with the Barnett formula, helping to fund the NHS across our United Kingdom.
Turning to the future, all migrants will be treated the same under our new points-based immigration system. The expectation is therefore that all nationals applying, including EEA citizens, will pay the charge if staying for temporary periods of longer than six months, unless an exemption applies. Of course, EEA citizens who are resident in the UK before the end of the transition period on 31 December 2020 are not subject to the immigration health charge. That was agreed as part of negotiations on the withdrawal agreement with the EU, which also protects the rights of UK nationals in the EU.
To touch on the point made by my right hon. Friend the Member for Scarborough and Whitby, now we have left the European Union, it would be rather hard to defend having an exemption for EEA nationals alone, given that we no longer have freedom of movement in place and will no longer members of the EU, and then applying this to the rest of the world. I respect the SNP’s point—they have made it regularly and I am sure they will make it again at regular intervals—and their principled view on this issue overall, but it would not make sense to have an exemption for one group applying under the points-based system rather than another, based on nationality alone. I appreciate the point and it will be interesting to hear what conclusions the hon. Member for Halifax comes to as part of her review.
The Government believe that new clause 42 is unnecessary. As has already been said, hon. Members will be aware that my right hon. Friend the Prime Minister has asked the Home Office and the Department of Health and Social Care to exempt NHS and social care staff from the charge. The exemption will apply to the relevant applications regardless of nationality—as I say, we are moving to a global points-based system—once that system is in place.
Officials are currently working through the detail of the exemptions; sadly, I will have to disappoint the hon. Member for Halifax and say that I cannot go into the full details today of where it will be, but hon. Members will appreciate that that is because we want to get this right and are working with our colleagues in the DHSC to do that.
There was a point made about renewals for doctors currently in the NHS. It is worth pointing out that those who are currently working in the NHS as doctors, nurses or in a number of health professions, are subject to automatic extension for a year. If they get an automatic extension for a year, that also waives the immigration health charge. It is not just the visa fee that goes, but the immigration health charge. Someone currently working for the NHS whose visa is due for renewal is getting a free year, and certainly by this time next year we will have the detailed guidance out there for them. I hope that provides some reassurance about the position as we stand here today.
I recognise the concerns about the financial impact of the health charge on people migrating here, including those who contribute to the NHS through tax and national insurance payments. The health charge provides comprehensive access to NHS services regardless of the amount of care needed during a person’s time in the UK, and includes treatment for pre-existing conditions.
The IHS not only represents excellent value when compared with the alternatives, but ensures that individuals do not need to worry about insurance or how they will pay for unexpected treatment while they are here. It compares favourably with the type of health insurance or other health care costs that those migrating to other countries might well face in order to get the same level of services that our NHS provides to all at point of need, free of charge, here.
As I said earlier, the Government is exempting NHS and care workers from the charge in recognition of the enormous contribution they make to the NHS directly. It is, however, only fair to expect people arriving in the UK to work in non-health-related roles to contribute to the range of NHS services available to them, given that they will not have the history of making contributions towards it that most long-term UK residents will have. It is also worth remembering that those who receive indefinite leave to remain—that is, settlement—are exempted from the IHS, in recognition of the long-term commitment to our United Kingdom this represents.
Finally, the Government are in the process of negotiating reciprocal healthcare arrangements with the EU, and it is important that we do not undermine the integrity of those negotiations through this Bill. I therefore invite the Members from the Scottish National party to withdraw the motion.
Stuart C. McDonald
I am grateful to the Minister for his response. We are essentially debating a fundamental point of principle here: we have different views about the appropriateness of this charge.
To respond to the right hon. Member for Scarborough and Whitby’s intervention, I am of course constricted in what I can table as an amendment or new clause. I would scrap the charge for everybody, not just EEA nationals, but the scope of the Bill prohibits me from tabling a broader amendment. I think that if an assessment of the NHS surcharge’s impact on black and minority ethnic people were carried out, it would make for interesting reading, but that is a debate for another day. I stand by my party’s position that this is a double tax that is completely unjustifiable, and will therefore push new clause 12 to a Division.
Question put, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss the following:
New clause 36—Immigration Fees—
“(1) No fees may be charged for processing applications included in subsection (3) for those persons who have lost rights of free movement under section 1 or schedule 1 beyond the cost of that processing, unless the Secretary of State has complied with the procedure in subsection (2).
(2) If the Secretary of State proposes to make changes to the rules under subsection (1), the Secretary of State must get the approval of both Houses of Parliament.
(3) The list of fees to which subsection (1) applies includes, but is not restricted to, the following—
(a) fees for applications to enter or remain in the UK;
(b) fees for sponsorship licenses;
(c) immigration health surcharges; and
(d) immigration skills charges.”
This new clause will ensure that immigration fee changes must be agreed by Parliament.
New clause 37—Citizenship Fees—
“(1) No fee may be charged for processing applications relating to the citizenship status of a person who has lost rights of free movement under section 1 or schedule 1 beyond the cost of that processing, unless the Secretary of State has complied with the procedure in subsection (2).
(2) If the Secretary of State proposes to make changes to the rules under subsection (1), the Secretary of State must get the approval of both Houses of Parliament.”
This new clause will ensure that citizenship fee changes must be agreed by Parliament.
Stuart C. McDonald
These new clauses continue with the broad topic of fees and expense. Although I understand why they have been grouped together, it is important that they are not treated as being about exactly the same thing; we must separate out two distinct issues.
New clauses 36 and 37 were designed to flag up the issue of how far above the cost of processing immigration and citizenship fees have been set, generally speaking, and to challenge the Minister and Committee members about why we have allowed that to happen and what the appropriate approach to setting fees should be. I accept that there will be a whole range of views on what the price of immigration applications or certain nationality applications, particularly naturalisations, should be. My own view, and that of my party, is that the prices have been set too high. This brings us back to the fact that the Home Office’s budget has been cut to smithereens in recent years by the Treasury, and it is left with no other option but to milk every penny from the immigration and citizenship system to subsidise its activities. I urge Members to wake up to the enormous burden that, at this time of crisis, the Government are about to dump on business—especially small and medium-sized enterprises—as well as individuals by expanding all these fees to companies that recruit from the EEA labour market.
It is important to distinguish new clauses 36 and 37 from new clause 13, which raises a wholly separate issue and is about righting a profound injustice. We can debate fees more generally, but there should be no scope for debate about new clause 13. I know that Members of all parties have been troubled by Government policy in this area, because, like Labour, Liberal Democrat, Democratic Ulster Unionist, Green and Plaid Cymru Members, Conservative Members also signed an early-day motion that I tabled on the topic in 2018. When I applied for a Backbench Business debate I had support from Conservative MPs as well, as I did during the debate.
Holly Lynch
We support new clauses 13, 36 and 37, which were tabled by the SNP and address immigration and citizenship fee charges that fall within the scope of the Bill. We believe that visa charges should not exceed the cost price, for all the reasons that have already been set out.
Subsection (1) of new clause 13 would prohibit EEA and Swiss citizens from being charged a fee for registering as a British citizen that is greater than the cost of the registration process. As we have already heard, there is enormous cross-party support for this approach.
The Home Office makes a profit of up to 800% on immigration applications from families. The fees are now £1,012 for children and £1,206 for adults, which are really quite significant sums. We have all had constituents come to us because such fees are causing a huge amount of anxiety and stress after a change in circumstances. We have all had casework in which applications have been turned down on technicalities, which we have been able to challenge through our parliamentary offices. Families are often forced to make further appeals and further applications, and to pay again.
EEA and Swiss nationals will soon join the rest of the world in having to pay visa fees or fees for starting the journey towards British citizenship. The British Nationality Act 1981 contains provisions to ensure that no child with entitlement to register for British citizenship should have to pay a fee. Subsections (2), (3) and (4) of new clause 13 are designed to safeguard that Act, in spite of the Bill. I particularly welcome subsection (2), which would provide a further safeguard for children who receive assistance from their local authorities, adding to our proposals in new clause 58. We will come on to clause 58, but those provisions seek to provide automatic settled status for all EEA and Swiss children in care, and for those entitled to care-leaving support.
With that in mind, we welcome the independent chief inspector’s report, “An inspection of the policies and practices of the Home Office’s Borders, Immigration and Citizenship Systems relating to charging and fees”, which was presented to the Home Secretary last September. It set out concerns about the legislative procedure for citizenship and immigration fees, and it recommended that the Home Office undertake to provide considerably more clarity on fee levels, stating that the Government should:
“Either make public any Policy Equality Statements produced for ministers or publish separate statements that show clearly what has been considered when proposing fees levels/increases in terms of equality and diversity, in particular the social and welfare impacts on children, families and vulnerable persons.”
New clauses 37 and 38 would require Parliament’s consent for changes to be made to citizenship fees and immigration fees respectively. As we have discussed, the Government are attempting to grant themselves sweeping Henry VIII powers throughout the Bill; we have rehearsed that debate several times. We believe it is vital that parliamentary oversight is at least afforded to these charges, which will dictate the lives and prosperity of EEA and Swiss migrants in the UK for years to come. Ideally, that should be done through parliamentary legislation rather than through the current framework, which relies on statutory instruments.
Kevin Foster
I am grateful to the hon. Members for Cumbernauld, Kilsyth and Kirkintilloch East and for Argyll and Bute for tabling new clauses 13, 36 and 37, which provide the Committee with the opportunity to consider fees charged in respect of applications made by those who will lose the right of free movement under the Bill for citizenship, leave to enter or remain in the United Kingdom, the immigration health surcharge, the immigration skills charge and sponsorship licences. I pay tribute to the hon. Gentlemen’s diligence in going through all the points that they wished to highlight.
It may be helpful to provide some background information for the Committee. Application fees for border, immigration and citizenship products and services have been charged for a number of years, and they play a vital role in our country’s ability to run a sustainable system. To put them into context, the current charging framework across the operation delivered £1.98 billion of income in the financial year 2018-19. That income helped to deliver the funding required to run the borders, immigration and citizenship system, and it substantially reduces the burden on UK taxpayers, as I am sure members of the public would rightly expect us to do.
The immigration health charge ensures that temporary migrants who come to the UK for more than six months make a fair contribution towards paying for the NHS services that are available to them during their stay. As was touched on earlier, income from the charge directly contributes to the long-term sustainability of our fantastic health service across our United Kingdom. Certain groups are already exempt from the requirement to pay the charge, and others benefit from a discounted rate.
The immigration skills charge is designed to incentivise employers to invest in training and upskilling the resident workforce to move away from reliance on the UK’s immigration system as an alternative to investment in staff retention, productivity, technology and automation. Income raised from the charge will be used to address skills gaps in the UK workforce, and that will be of benefit to businesses in the long term. Any fees to be charged are already approved by both Houses of Parliament.
New clause 13(1) is designed to limit the Secretary of State’s power to charge a fee for applying for British citizenship to the cost of processing. That would apply to anybody who has enjoyed free movement rights at any point. Imposing such a provision would cut across the existing statutory framework for fees and would risk undermining the funding and coherence of the whole current and future system.
Additionally, making fee provisions that are specific to certain nationalities as part of the Bill would be unfair to all users of the border, immigration and citizenship system, and it could lead the Home Office to discriminating on the basis of a person’s nationality. That clearly goes against our policy, although I accept that part of the rationale for that was to get the new clause into the scope of the Bill.
Stuart C. McDonald
Yes, that is absolutely the case. This does not apply even to every EU national exercising free movement; it applies to EU nationals who have the right to British citizenship through registration. It is a very specific subset, to which hugely different considerations apply; they are not in the same position as folk who have chosen to turn up and apply through naturalisation. They have a right, under an Act of Parliament, to British citizenship.
Kevin Foster
I re-emphasise that having this type of provision in the Bill would cut across and create a new precedent. We would be talking about someone whose right of free movement was removed by the Bill. That would create incoherence, particularly once we have left the European Union, with provisions based on rights from being in the EU—a situation that does not now exist. We have put in protections that are appropriate and proportionate.
New clause 13(2) is designed to prevent the Secretary of State from charging the child of a person who has exercised free moment rights a fee to register as a British citizen, if the child is in receipt of local authority assistance. “Local authority assistance” is too broad a term and could include those who access a range of financial and practical support measures offered by local authorities. For example, a child may receive assistance from a local authority if they attend day-care facilities while they are not yet at school. That is quite different from a child who is looked after and in the care of the local authority by way of a care order made by a court, or a voluntary agreement with the parent to accommodate the child.
It is important to remember that any child, irrespective of nationality, who is looked after by their local authority can apply for limited and indefinite leave to remain without being required to pay application fees, ensuring that no child in local authority care is unable to access leave to remain. Although many will choose to pursue British citizenship, having citizenship, as opposed to an award of indefinite leave to remain, is not essential for any individual to work, live, study or access services in the UK .
Stuart C. McDonald
I urge the Minister not to pursue that line, which was pursued by a previous Prime Minister and Home Secretary. No one would say to anyone in this room, “You don’t really need British citizenship. Why not just settle for indefinite leave to remain?” The Minister is missing the point—I am talking about people who have as much right to British citizenship as anyone in this room. It is not a substitute to say, “Just become a migrant in your own home country and apply for immigration status here.”
Kevin Foster
I was talking about the logic of our fee system and the fact that we have exemptions to do with the status of people who need to access public services. Traditionally, our position on citizenship is that it is not something that people need in order to access services. I re-emphasise the breadth of the provisions in the new clause—I notice that that was not disputed.
New clause 13(3) would remove fees for the children of people who have exercised free movement rights to register as a British citizen where the child or the child’s parent, guardian or carer is unable to afford any associated fees. It raises similar points to subsection (1) in respect of fairness, discrimination and suitable legislative structures already being in place. Subsection (4) would require the Secretary of State to take steps to make persons who have exercised free movement rights aware of their rights to obtain British citizenship under the British Nationality Act 1981.
When explaining the rights that are afforded by settled status obtained via the EU settlement scheme, we make it clear that they may include a right to apply for British citizenship, provided that eligibility requirements are met. Of course, there is no charge for applying to the EU settlement scheme. Information about becoming a British citizen is also available in published guidance on gov.uk, and we are committed to ensuring that information of this nature is fully accessible for all. I hope that reassures the Committee that we are taking steps to make people aware of their rights, and that a statutory obligation to that effect is therefore unnecessary.
Stuart C. McDonald
I am grateful to the Minister for his comprehensive explanation, at least in so far as it related to new clauses 36 and 37. I do not agree with everything he said about the degree of scrutiny that MPs can apply on these matters, but he makes a very detailed case.
On new clause 13, I think that the Minister, probably for the first time, has not got the point that was being made. I challenge him to go back and speak to his officials about what the issue is really about. It is quite a narrow issue, in some respects, but none the less it is profound. It relates to kids, in particular—although it can be adults—who have a right to British citizenship. That is a small subset of EEA and Swiss nationals.
It is slightly bizarre that it is a Scottish National party MP who is having to stand up and champion the cause of British citizenship in this Parliament—I urge some Conservative Members to make this their cause, grab some headlines and win the day. These kids deserve it. They are as entitled to British citizenship as anybody in this room, and it is totally inappropriate for them to be priced out of that. I ask Conservative Members to think again.
I ask the Minister to speak to his officials again. Under his predecessor, I had the privilege of being able to take some kids who had been impacted to discuss the matter, along with some organisations representing them, and I would love to have that opportunity again. I feel very strongly about new clause 13 and wish to press it to a vote.
Question put, That the clause be read a Second time.
Stuart C. McDonald
I beg to move, That the clause be read a Second time.
The Bill, in combination with others that have gone before, removes from some people the right to be in this country, and requires them to apply for rights under the EU settlement scheme. As hon. Members know, I object to that approach, but I acknowledge that, for the vast majority of people, it will thankfully be a fairly straightforward matter and there will be no need for legal advice. As we have seen, the scheme has reached a good number of people so far. We have also seen that these issues can be complicated. It can be complicated for someone to know whether they are required to apply or whether they have the right to be here as a UK citizen or through some form of migration status. For some, proving the right to be here in order to get settled status can be tricky, and advice will be needed on the type of evidence required or whether, for example, an old criminal conviction brings a risk in applying.
In Scotland, some will be able to get advice and assistance funding from the Scottish Legal Aid Board in order to seek some support on these issues, subject to a means test, but it is not the same in England and Wales. We have to learn the lessons of history: restrictions on access to legal aid were a contributing factor to the Windrush scandal. In itself, it would not cost much money to allow some basic legal advice to be handed out to those who need it. I very much hope the Government will consider this proposal seriously and put right the absence of legal aid.
Holly Lynch
We very much support the right to access to justice for all, and legal aid is an essential component of that, so we support new clause 14. Cuts to legal aid have been disastrous for access to justice. Time and time again, we have seen that it is the most vulnerable who suffer. Huge swathes of areas of law were deemed out of scope by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Most evidence now suggests that there have been few or no cost savings to the Ministry of Justice from taking those areas of law out of scope, especially in relation to early advice.
When those representing themselves try to navigate complex areas of law without representation, cases are often longer and precarious, and thus more costly to the taxpayer. Indeed, the Williams review found that the withdrawal of legal aid contributed significantly to the problems faced by the Windrush victims. We do not want anyone else to be in a similar position when free movement comes to an end. We therefore support new clause 14.
Kevin Foster
I thank hon. Members for their contributions. The legal aid scheme is designed to target legal aid funding at those who need it most. Legal aid is available for the most serious cases to ensure and maintain access to justice while delivering value for money for taxpayers. The Bill itself does not provide a right to enter or remain for EEA citizens, and the new clause would bring issues relating to the end of free movement, such as applications under the EU settlement scheme, into scope for legal aid.
The EU settlement scheme has deliberately been designed to be streamlined and user-friendly. The majority of applicants will be able to apply without the need for advice from a lawyer. However, we recognise that there will be some vulnerable individuals who may need support in using the scheme, and we have put in place safeguards to ensure that the scheme is accessible to all.
The Government have always been clear that publicly funded immigration legal advice is available to some particularly vulnerable individuals. Individuals who are claiming asylum, those identified as potential victims of modern slavery or human trafficking, separated migrant children and victims of domestic violence are eligible for legal aid funding for immigration legal advice, subject to statutory means and merits tests.
Stuart C. McDonald
I am grateful to the Minister for his explanation. By reassuring us how simple the scheme is, which it is for the vast majority of people, he also makes the case that this will not cost a great deal of money. Only a very small number of people will require legal advice, but there will be some significant issues that they will need to work through. This is fundamentally about the rule of law, which the Westminster Parliament has lost sight of in relation to how important legal aid is. For that reason, I will stick to my guns and press the new clause to a vote.
Question put, That the clause be read a Second time.
Stuart C. McDonald
I beg to move, That the clause be read a Second time.
Illegal work was made a crime in its own right in the Immigration Act 2016. Lots of groups and MPs raised concerns at the time about the negative implications that would have, compared with any benefit it might bring. I think it is important always to revisit changes that this Parliament makes and to push the Government to explain what impact they really had.
I look forward to hearing from the Minister about the impact of that legislation. How many prosecutions have there been? What were the results of those prosecutions? What sorts of sentences were handed down? When the Government or law enforcement took that approach—the other side of the coin—what action was taken against those employers who were found to be employing people illegally?
As the Minister will be aware, at the time that legislation was introduced, all sorts of concerns were raised about the fact that it would strengthen the hand of exploitative employers, who would be able to have greater control over undocumented workers, essentially by having the knowledge that these individuals were committing a crime by undertaking that work and making it much less likely that they would even consider, never mind actually report to the authorities, the abuse and exploitation that they were suffering.
The offence applies to any migrant found to be working while they do not have valid legal status granting them leave to be in the UK, or when visa conditions ban them from working, such as in the case of asylum seekers, or if they work hours beyond those permitted by their visa, as may be the case for students. The penalty includes a maximum custodial sentence of six months and a fine at the statutory maximum. It also allows any wages paid to an illegal worker to be seized as the proceeds of crime.
The concerns raised in 2016 were that undocumented migrants in the UK forbidden from working illegally are forced to rely on illegal work, on charity and on the support of friends or family members, which can lead to situations of abuse and dependency, as well as instances of survival sex, for example, and destitution, homelessness and starvation. Often, agents who find work for undocumented migrants also run overcrowded, slum-like accommodation for the workers, keeping them isolated and cheaply accommodated.
Undocumented migrants who find work despite the prohibition are forced to look for work among some of the most unscrupulous and exploitative of employers. They are often underpaid or unpaid, forced to work extremely long hours, denied all workplace health and safety protections and threatened with being reported if they complain. As much of the work can be carried out cash in hand, the state sees none of the tax benefit either.
There are huge concerns here about modern slavery. I am grateful to the Catholic Bishops’ Conference on migration for its briefing, which states:
“Those perpetrating the horrors of modern slavery will seek every chance to take advantage of new migration policies. The government has a responsibility to ensure that proper safeguards are in place… the fear of prosecution currently deters people from escaping abusive employment practices or presenting themselves to the police. One particularly important step towards protecting people from exploitation would therefore be to repeal the offence of illegal working, so that no victim is at risk of being punished.”
Will the Government explain how this measure has helped in any way with what they want to achieve, and what steps they have taken to assess all the negative implications that we have been warning about and to militate against them?
Holly Lynch
We have one or two unanswered questions on how the new clause would work in practice. We want to ensure that we have done all our due diligence before lending it our support. We may well come back to this on Report.
The new clause gives us the opportunity to say to the Minister that we are incredibly concerned that there are people who, when free movement ends—innocent, ordinary, decent, hard-working people—for the whole raft of reasons that we have already been through in the Committee, may find that they have missed the deadline. They have then not only got a precarious migration status, but could, if they continue to wait, find themselves in the criminal justice system and criminalised. We need to address the issue now.
One example that we have mentioned is that which the BMA raised with me. Its doctors, on the frontline of fighting coronavirus, will potentially leave applying to the EU settlement scheme to the last minute for that reason. If they continue to work as a doctor, would they be criminalised if they had not done their due diligence in making sure they have their applications in, but were continuing to work in our NHS? Will the Minister reassure us that nobody will be criminalised and in our criminal justice system who absolutely does not belong there when free movement comes to an end at the end of this year?
Kevin Foster
To respond to my shadow, the hon. Member for Halifax, as we touched on at some length earlier, there would be grounds for reasonable excuse as to why someone had filed a late application. We will set out the criteria; it will not be an exhaustive list, because it would be impossible to come up with an exhaustive list of things that would be reasonable in many individual circumstances.
It is worth noting that the scheme has now been open for more than a year. The first group who started to apply to it were NHS workers, and there has been some very welcome work by NHS trusts and employers to make sure their employees are aware of it. For those very skilled people working in our NHS, it is worth remembering that what we are talking about is using an app on their phone with chip checker technology—it is a relatively simple and appropriate process. Certainly, any enforcement will be proportionate throughout the system, as people would expect.
New clause 15 intends to exclude all EEA citizens from the criminal offence of working illegally created by the Immigration Act 2016, as stated by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East. I am grateful to him for the opportunity to debate this important topic. Again, as he would expect me to say, the amendment is at odds with our commitment to introduce a single global migration system. I accept that he wants to pick the issue up in the scope of the Bill, but that is a core reason why the Government believe it is right for us to have a single system.
Under the new system, everyone will be required to obtain the correct immigration status, and we will clearly distinguish between those who are here lawfully and those who are not, regardless of where their passport is from. Working illegally is a key driver of illegal migration and we are determined to tackle it. Illegal working results in businesses that do not play by the rules undercutting legitimate businesses that do. It encourages people to break our immigration laws, leaving people vulnerable to exploitation, and means that they are paid under the legal minimum wage.
The offence of illegal working applies if an individual works in the UK when they are or have reasonable cause to believe that they are disqualified from working because of their immigration status. The new rules will be clear and will set out what is expected of people as well as their entitlement. Any person who wants to work in the UK will need to have the correct status before starting a job.
EEA citizens with EU settlement scheme status will continue to enjoy the right to work and access the same services as they do now. As I have already said, we will continue to encourage applications to the EU settlement scheme before the deadline, and will implement the new points-based system that treats EEA and non-EEA citizens equally.
The new clause would discriminate in favour of EEA citizens, which is not justifiable after we have left the European Union. I appreciate the hon. Gentleman’s principled position in the provisions. I have touched on the provisions that are implemented proportionately, where they are applied. There is enforcement, particularly against employers who seek to exploit people. I hope that, in the light of those points, he will withdraw the clause, because it is not one that the Government can support.
Stuart C. McDonald
I am grateful to hon. Members for discussing the subject, but I do not think we really got into the meat of it. I do not think that only EEA nationals should be exempt from the criminal offence of illegal working; there are good grounds for getting rid of it altogether. I wanted to find out whether the Government have done any analysis about how it has helped in any way and, in contrast, about the unintended consequences, such as making exploitation more serious and more significant. We will perhaps return to some of those issues when we debate other aspects of the hostile environment later. I might write to the Minister to try to press again for answers to some of the questions that I raised at the outset. In the meantime, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 16
Immigration Rules Advisory Committee for Immigration Rules for EEA and Swiss nationals
‘(1) The Secretary of State must establish an Immigration Rules Advisory Committee to consider relevant Immigration Rules.
(2) In this section “relevant Immigration Rules” mean Immigration Rules that apply to persons whose right of free movement is ended by section 1 and schedule 1 of this Act.
(3) The function of the Immigration Rules Advisory Committee shall be to give advice and assistance to the Secretary of State in connection with the discharge of his functions under this Act and in particular in relation to the making of relevant Immigration Rules.
(4) The constitution of the Immigration Rules Advisory Committee shall be set out in regulations.
(5) The Secretary of State shall furnish the Immigration Rules Advisory Committee with such information as the Committee may reasonably require for the proper discharge of its functions.
(6) No relevant Immigration Rules may be made by the Secretary of State, until the Immigration Rules Advisory Committee is established.’—(Stuart C. McDonald.)
This new clause would require an advisory committee to be established in order to provide advice on immigration rules for EEA and Swiss nationals.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 30—Procedures for amending Immigration Rules—
‘(1) The Immigration Act 1971 is amended in accordance with subsection 2.
(2) After section 3(2) insert—
“(2A) Any statement of the rules, or of any changes to the rules, which affect the rights and obligations of persons who will lose their right of freedom of movement under the provisions of the Immigration and Social Security Co-Ordination (EU Withdrawal) Act may not be made or have effect unless the Secretary of State has complied with subsections (2B) to (2F) below.
(2B) If the Secretary of State proposes to make changes to the rules under subsection (2A) above, the Secretary of State must lay before Parliament a document that—
(a) explains the proposal; and
(b) sets it out in the form of a draft order.
(2C) During the period of 60 days beginning with the day on which the document was laid under subsection (2B) (the “60-day period”), the Secretary of State may not lay before Parliament a draft order to give effect to the proposal (with or without modification).
(2D) In preparing a draft order under section (2A) above, the Secretary of State must have regard to any of the following that are made with regard to the draft order during the 60-day period—
(a) any representations; and
(b) any recommendations of a committee of either House of Parliament charged with reporting on the draft order.
(2E) When laying before Parliament a draft order to give effect to the proposal (with or without modifications), the Secretary of State must also lay a document that explains any changes made to the proposal contained in the document under subsection (2B).
(2F) In calculating the 60-day period, no account is to be taken of any time during which Parliament is dissolved or prorogued or during which either House is not adjourned for more than 4 days.”’
This new clause would amend the Immigration Act 1971 to ensure that any changes to the UK’s Immigration Rules which affect EEA or Swiss nationals must be made under the super affirmative procedure.
New clause 31—Powers to make immigration rules on specific topics—
‘(1) Powers to make Immigration Rules in relation to certain persons who have lost free movement rights under section 1 and schedule 1 must be exercised only by the relevant Secretary of State as set out in subsection (2).
(2) For the purposes of (1), the “relevant Secretary of State” is as follows—
(a) if the rules relate to students, or to family members, the Secretary of State for Education,
(b) if the rules relate to investors, workers, or the self-employed, the Secretary of State for Business, Energy and Industrial Strategy.’
Stuart C. McDonald
New clause 16 is about how we make immigration rules. I would like to know how many hon. Members present have ever looked at the immigration rules, at least directly for any considerable period of time, because they would drive anyone round the bend, frankly. I am not looking for raised hands but I make the point because they are vital, but we never really have an opportunity to debate their context in any holistic way or to suggest amendments to them.
Instead, hundreds of amendments to the rules are tabled each year and we barely get a look in. They contain fundamental questions about family, workers, education, business and how we run our economy, yet the Home Office keeps all of those—essentially legislation-making powers—to itself. If we look at immigration rules and immigration statutes, we find that they can be incredibly technical. Hence, we have recently seen the Law Society tasked with the job of trying to simplify them—work that will be incredibly challenging but is nevertheless essential. It is for these reasons that I have proposed new clauses 16 and 30, to change the way the rule making is done in this country, to help MPs to understand immigration law and the changes that have been made and to give them a say in what those rules are.
Last week we heard Jill Rutter from British Future refer to the work done by the Social Security Advisory Committee in providing analysis that aids MPs’ understanding of changes that have been made to social security law and flagging up things that perhaps require greater scrutiny and debate. She supported the idea of something similar operating in the field of immigration. That is why I have tabled new clause 16, as I think I did last year as well. In a similar way, a committee would analyse what the Government are doing and their proposals for changing immigration rules; it would flag up any concerns it might have and allow MPs to decide what further steps were required by way of scrutiny or challenging the Government on the proposals.
Kevin Foster
I am once again grateful to the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, and to others, for providing a further opportunity to discuss parliamentary scrutiny of the immigration rules and the powers to make them. Parliamentary scrutiny is an important issue, and one that I am aware members of the Committee are rightly very interested in. I will therefore take each new clause in turn.
I will first address new clause 31—I think I can respond pretty swiftly to this one. The UK Government work on the basis of collective responsibility. All policies are collectively agreed and reflect the views of all parts of Government. I may be the Minister for Future Borders and Immigration, and I have the good fortune to speak for the Government on matters connected with our new immigration arrangements, but I can assure the Committee that the policies I put forward are the policies of the entire Government, which were endorsed in December’s general election by the British people. No other Minister standing in this spot would advocate any different policies.
The notion of collective agreement and collective responsibility has long been a feature of the way this country is governed, which is why legislation confers powers on “the Secretary of State” generically. Incidentally, this approach also has the benefit of future-proofing our legislation in the event of machinery of Government changes.
I have the utmost respect for my right hon. Friends the Secretaries of State for Education and for Business, Energy and Industrial Strategy; both are doing excellent work in their posts and we are lucky to have them. But let me be very clear: were they to make immigration rules, they would be no different from those that my right hon. Friend the Home Secretary will be making, because this is a single united Government with a clear policy on these matters.
Our policies were put before and endorsed by the electorate, more detail was set out in a policy statement endorsed by the entire Government, and they represent the settled view of the Government as a whole. New clause 31 would therefore add nothing to the Bill. Having heard the explanation of how the Government system works, I hope the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East will withdraw it.
New clause 16 would require the Home Secretary to establish an immigration rules advisory committee to provide advice and assistance on any immigration rules relating to EEA citizens once free movement to the UK has ended as a result of this Bill. I have said previously that our new points-based system will be set out in the immigration rules. Those rules will be subject to parliamentary scrutiny in the usual way. The new clause seeks to add an additional layer of scrutiny, and will prevent the Home Secretary from making any immigration rules before an advisory committee is established by regulation. There is no justification for establishing a statutory advisory body to advise specifically on the rights of EEA citizens, who will be treated as other EEA citizens under the future immigration system.
Mr Goodwill
Does my hon. Friend agree that the Migration Advisory Committee carries out much of the work already? New clause 32 is specifically covered by the MAC.
Kevin Foster
I thank my right hon. Friend for his intervention. I will come on to new clause 32, which is about an annual report on the labour market, in a moment. We are freeing up the MAC to consider matters of interest to it and to provide recommendations on policies, although I expect it will be more nuanced when we come to reports on the labour market overall. That is more to do with the Department for Work and Pensions. We want a coherent strategy where migration is a part of that. We did not want to set it out purely in relation to EEA nationals.
Kate Green (Stretford and Urmston) (Lab)
The difference between the MAC, which, as the Minister rightly says, is interested in labour market trends and developments, and the Social Security Advisory Committee, which the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East set up as an analogy for the Minister to consider, is that the SSAC looks specifically at the implementation of secondary legislation and advises on new regulations that the Government might introduce. Given the extent of immigration policy introduced in immigration rules, I would suggest that the MAC is not actually set up, and is not even likely to be set up in future, to provide advice to the House on those matters.
Kevin Foster
The hon. Lady makes a not unreasonable point. The MAC gives advice on general policies on immigration. For example, it came up with what occupations should be on the shortage occupation list. It does not necessarily draft the legislation. However, the core of what we are driving at is there. I will continue with my speech because there have been significant changes in relation to simplification since an identical Bill was considered in the previous Parliament. Fundamentally, creating a statutory advisory body would simply delay the Government from introducing new consolidated and simplified rules by 1 January 2021, which could cause considerable confusion and ambiguity about which rules apply to EEA citizens once free movement ends.
In any event, the new clause is unnecessary. The Law Commission, in its consultation paper on simplification of the immigration rules, published in January 2019, asked whether an informal consultation or review of the drafting of immigration rules would help to reduce complexity. In its final report, published in January 2020, the Law Commission recommended that the Home Office should convene at regular intervals a committee to review the drafting of the rules in line with the principles recommended by the Law Commission. That is the more nuanced point that the hon. Member for Stretford and Urmston referred to. On 25 March the Government published our response to the Law Commission report and recommendations, and we accepted that recommendation. We included in our response the terms of reference for and membership of the simplification of the rules review committee. To be clear, this covers the whole ambit of the rules, not just those as they relate to EEA nationals.
The committee is, as recommended by the Law Commission, made up of Home Office civil servants, immigration practitioners and organisations representative of non-expert users of the rules, including those representing vulnerable applicants such as children. The review committee meets monthly to advise on the Home Office’s proposals to draft simpler rules and accompanying guidance and how they can be made more accessible online.
I hope that, as we have already established a review committee and its terms of reference and membership are transparent, that will give the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East the confidence to withdraw new clause 16.
New clause 30 seeks to introduce the super-affirmative procedure for immigration rules. Typically, that procedure is used only for deregulatory orders that amend or repeal primary legislation, such as legislative reform orders or public bodies orders, or remedial orders under the Human Rights Act. In those circumstances, it is right that the highest level of scrutiny should be applied, but it is not appropriate to apply the same procedure in respect of changes to immigration rules, which obviously are not, and cannot amend, primary legislation.
Under the current, well-established procedure, the Government are able to update the immigration rules in a responsive way, to ensure that we have an immigration system that meets the UK’s needs, commands the confidence of the public and reflects the wider economic, social and political context in the UK at any time. Requiring a minimum 60-day standstill period—that would be a minimum, because if, for example, changes were laid in late June, the period would not expire until late October—would severely hamper our ability to make timely and effective changes to the rules to respond to emerging situations.
Mr Richard Holden (North West Durham) (Con)
In evidence at the start of Committee proceedings, we heard from Mr McTague from the Federation of Small Businesses, who picked up this point. He said:
“I think the fact that the Home Secretary is in a position to vary it and respond to changes in market conditions is better than if…we had to go through some sort of legislative process”.––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 14, Q28.]
That is exactly the point that we are trying to get at. Changes are much better if they are in the hands of the Home Secretary, who can then address Parliament on them, rather than having to go through statutory changes like this.
Kevin Foster
I thank my hon. Friend for reminding us of the evidence that was given. The core of the matter is that our immigration rules need to remain flexible to respond to emerging situations. For example, if the conditions around visas were in primary legislation, we would have to be putting through Acts of Parliament to alter and extend visas in relation to the current covid-19 situation, which none of us would feel was a sensible way of handling that type of thing. In addition, this process has been established for a very long time. Parliament, rightly, can oversee the immigration rules, but they can be flexible and adapt. To be clear, putting forward, effectively, an immigration rules change could not, for example, alter the provisions that we have on Irish citizens in this Bill and in the primary legislation.
Kate Green
I just want to make sure that I have understood correctly—I may not have—what the Minister is saying and the provisions of the Bill. I understood him to say that the super-affirmative procedure is appropriate only in circumstances that include amending primary legislation, but is it not the case that the provisions of this Bill give the Government, in some circumstances, the opportunity to do that?
Kevin Foster
They do, subject to the affirmative procedure, but that is—as we discussed under previous clauses and particularly in the clause 4 debate—for specified purposes. The measure does not just give us an unending power.
We could not, for example, change our international obligations and some other areas via this method, the use of which relates to the narrower areas of the Bill. It is not a carte blanche to change all primary law that affects immigration law, but applies where it is consequential to the purposes of the Bill.
Stuart C. McDonald
I am grateful to the Minister for his response. New clause 31 was simply an opportunity to flag up the idea that we perhaps need to ensure that we look at immigration policy with a slightly broader perspective than simple numbers. The Minister protests perhaps slightly too much about collective responsibility and the idea that other Departments would have come to the same decisions as the Home Office in relation to certain policies, but I will leave that there.
I anticipated in my remarks about new clause 30 that the Minister would speak about the need for flexibility and the ability to act quickly. I am not calling for immigration rules in Acts of Parliament or anything like that; I am just saying that anyone who follows this area of policy closely over time knows that, in essence, Parliament has no realistic role in it whatsoever, and that has to change. It will not be changed by the Bill, but it is something that we should think about in the longer term.
On new clause 16, I absolutely agree with the Minister and totally welcome the ongoing work to simplify the immigration rules; the proof will be in the pudding. That is not an easy task, and I do not envy the folk who are undertaking it, but I wish them the very best of luck. However, new clause 16 is not just about simplifying what is already there, but about understanding the changes that the Government propose as we go along and providing detailed advice to help us in our scrutiny role. As some witnesses said last week, it is every bit as appropriate to do that in this sphere of policy as it is with social security, between which pretty good parallels can be drawn. I insist on pressing new clause 16 to a vote.
Question put, That the clause be read a Second time.
Holly Lynch
I beg to move, That the clause be read a Second time.
The new clause stands in my name and those of the shadow Home Secretary and my Committee colleagues. The new clause offers a sensible method to help to safeguard the rights of all EEA and Swiss nationals who are registered through the European Union settlement scheme by providing them with physical proof of that registration. We have already discussed some of these issues under new clause 25.
In the largest survey of EU citizens’ experiences of the EUSS, which was carried out by the3million, 89% expressed unhappiness about the lack of physical proof of their status. Simple physical proof would provide citizens with the type of reassurance that is offered only by something that can be held in the hand. Although in principle we largely support the aspiration to move toward a much more digital immigration system, we have already pointed out to the Committee time and again that, as the hostile environment persists, in the shameful shadow of the Windrush scandal, confidence in the system is at an all-time low.
The Home Office works through banks and landlords, and across Departments, actively to query a citizen’s immigration status. To have physical paperwork to hand, in order to put to bed any doubts about a person’s status quickly and confidently, would be a welcome addition to an e-visa.
There are also inherent IT risks when relying on purely digital proof for immigration status. The truth is that the Government cannot completely rule out the possibility of an irretrievable data loss or, even worse, the hacking of a data system. It is less than two years since the so-called WannaCry cyber-attack caused havoc for the IT systems of the NHS, locking users out of personal computers and resulting in 19,000 cancelled appointments. It transpired that the systems that the NHS used included Windows XP, which at the time was already a 17 year-old operating system and so was vulnerable to such interference. It does not bear thinking about, but in a nightmare scenario where such hacking or corruption affected the Home Office, a potential loss of data, or even the inability to access the data for a period of time, could have devastating consequences for those at the mercy of the hostile environment.
As stated by Luke Piper on behalf of the3million in last week’s evidence session, to trial a new digital-only scheme on over 3 million people is quite a gamble, and currently no other group in the UK is managed in this way. We share the concerns of the House of Lords European Union Committee, which were mentioned by Luke Piper in his evidence to this Committee. He said:
“The House of Lords European Union Committee made the point that there are real worries that those without physical proof will face similar problems to those faced by the Windrush generation; there is a risk that they will face discrimination because they do not have physical proof of their status.”––[Official Report, Immigration and Social Security Co-ordination Public Bill Committee, 9 June 2020; c. 61.]
There are day-to-day practical complications that will be inflicted upon those in the EUSS who do not have physical proof of their status. For example, the Residential Landlords Association has repeatedly called for some form of physical proof to assist its members in both adhering to the law and avoiding discriminatory practices.
The Joint Council for the Welfare of Immigrants carried out research on the right-to-rent scheme in 2017. Out of 150 emails from migrants requesting that landlords check their identity online, 85% received no response. Only 12% of inquiries received a response that might invite a follow-up, such as a phone call or a viewing. Only three responses explicitly stated that the landlord was willing to conduct an online check. A migrant with documentation received a response rate of roughly 50%. Although there are still indications that renting migrants face unacceptable barriers, that is at least a marked improvement on the previous situation.
The fear is that the lack of physical proof will also act as an impediment for EU citizens applying for jobs. Millions of people work in the gig economy, which is characterised by short-term contracts and freelance work. We have already referred to the work of the Institute for Public Policy Research, which recently used data from the labour force survey in a report that found migrants are more likely to be working in industries or sectors, such as accommodation and food services, that have around 9% of EU workers. Facing competition from British citizens, who can prove their right to work by showing a passport, should that be required, and from non-EEA citizens, who can prove their right to work by showing their physical residence card, EU citizens have to go through the complicated hassle of a nine-step online process and then ask their potential employer to go through a 10-step process. It is inevitable that many employers will not have the desire or the time to complete such an arduous process, and as a result the employment prospects of those registered in the EUSS could potentially suffer.
Those are just a few examples of how a lack of physical proof could affect those who have pre-settled or settled status through the EUSS but exclusively digital confirmation of that status. The inconveniences and delay that could result threaten to permeate through daily life for millions of people, yet that could so easily be remedied by the Government with a degree of physical proof.
I want to take the Minister back to something he said during last week’s evidence session, when he put a question to the Children’s Society on the issue of granting automatic status to children in care and care leavers, which we will come to later. He said to Lucy Leon, the immigration policy and practice adviser for the Children’s Society:
“You talked about automatic status—granting something under a piece of legislation to someone. Under your suggested system, how, in decades to come, would an adult evidence the status that they were granted as a child?”
As it took several attempts for the question to be heard, due to the terrible sound quality, the Minister, in his second attempt, repeated:
“If they had to evidence their status many years later, how would they do it? How would they be able to define their status…?”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; cs. 64-65.]
The Minister put a very good question. In the scenario that he described, he said that if status was granted by the Home Office, how would it then be evidence? We must acknowledge that the granting of a status only solves half the problem. The ability to prove that status is the other half of the problem.
On this issue, I am inclined to agree entirely with the Minister. I politely remind him that he proposes a problem, but he is the architect of the solution to this issue. He can overcome our own reservations by granting the physical proof to his own satisfaction, however he sees fit to do so. The Government should ensure that their systems automatically issue physical proof on granting status to someone, and they should allow the millions of people on the EUSS the certainty and convenience of physical proof of status.
Kevin Foster
It is a pleasure to talk about the new clause and to hear that my shadow agrees with me on some issues, but we slightly disagree on how best to evidence things. I accept that the new clause is well intentioned, but it may help if I explain first that we email everyone granted status under the scheme a PDF document, which they can print and retain for their own records as confirmation of their status and for future reference, as they may wish.
Like many other countries, we are moving away from issuing physical documents to be used as evidence of a person’s immigration status and their entitlement to work and access benefits and services, and towards a system that enables direct checks through online sharing of status by the individual or via system-to-system checks. Our border and immigration system will become digital by default for all migrants, and we intend over time to replace physical and paper-based products with secure online access to immigration status information, which the migrant can share with prospective employers, landlords and service providers.
New clause 19 is unnecessary, as we are already legally required to issue everyone granted status under the EU settlement scheme with a formal written notification of their immigration status in the United Kingdom. The notification also includes information about how they can access and share their immigration status information online, and about where they can find help to do so if needed. However, it is important that we do not return to relying on insecure paper documents, which can be lost, damaged or stolen, to evidence immigration status and entitlements.
The use of digital technology is now a well-established mechanism that people use when banking and shopping. Employers, landlords and service providers are likely to be concerned by any decision to issue what is specified as an insecure physical document, such as a paper certificate. They would also see it as an undesirable retrograde step that places additional administrative burdens on them to ensure that their staff are aware of the characteristics of a certificate, which might be some years old, and what it means. It would also be very susceptible to forgery and being tampered with, which could actually make it more difficult for EEA citizens, employers and others to determine genuine entitlement. We cannot allow that to happen.
Mr Goodwill
Does the Minister agree that some of the identity documents issued in places such as Greece and Italy are very insecure because they do not contain biometric data? That is an example of why a paper document would not be secure.
Kevin Foster
My right hon. Friend hits the nail on the head, and that is particularly true in an era of modern computing, scanning and high-quality printers available at home. We used to rely on paper documents as standard across society—for example, driving licences. To be fair, the previous Labour Administration moved away from having a paper driving licence that nowadays could probably be easily printed on most printers at home, and towards a plastic version. As we now move on, most people do checks digitally—for example, how many of us have a physical MOT certificate? It is done via an online system, which allows people to check easily. It is even possible to check online whether a car has an MOT before buying it, rather than having to look for a paper certificate.
We all know about the issues there used to be with paper MOT certificates, with blank books being quite valuable. That is why we have started to move towards digital status, which is more secure. It is, of course, retained by the Home Office for many years and allows that access. Again, we touch on some of the lessons learned from the Windrush review. Part of this is about having up-to-date and easier ways to access information, rather than relying on people to recognise documents that could have been issued some decades before. It is better that we have secure digital status that can be easily shared as technology advances and people move forward. That is right, but we are still already obliged to send a PDF confirmation so that if someone wants to print something out and keep it for their records, they can.
Holly Lynch
I just stress the point that we are not talking about an either/or approach to digital confirmation and physical proof. I am open to the taking of physical proof, and whatever format the Minister is most comfortable with. However, we are not talking about a system where someone relies exclusively on physical proof. Something will be issued in addition to digital status. Does the Minister accept that that would address the anxieties felt by the 3 million and more?
Kevin Foster
Again, I appreciate the points that are being made, but a secure, easy-to-share digital status does what it says on the tin. More and more countries are heading towards that, and we have seen it in other areas of life. To be clear, the new clause specifies a paper certificate as the preferred means. I do not think that something like that adds to something that is easily shareable—and easy to update, in relation to changing passport, or in other areas. That is why we have taken this approach and why we are clear that it is what we want migration status to move towards more generally. I do not think that printing out paper certificates, and having that as an either/or, is the best place to be headed, in trying to prove status. It is better that there should be a clear process and that landlords and employers should know the process that they need to engage with when employing EEA citizens beyond the end of the transition period.
As a transition measure, employers, landlords and public service providers will continue to be able to accept the passports and national identity cards of EEA citizens until 30 June 2021—the same day as the deadline for applying to the EU settlement scheme. After that date, EEA citizens with status under the EU settlement scheme will need to share their immigration status online to prove their rights and entitlements in the UK. Alongside that, in future, when an individual accesses public services such as benefits or healthcare, the Home Office will be able to confirm their status to the service provider automatically through system-to-system checks, at the point at which the person seeks to access the service. Their non-EEA family members will also continue to be able to use their biometric residence card until we have completed the roll-out of digital services online.
Eventually, all migrants to the UK—not just from the EEA but from the rest of the world—will have an immigration status that can be accessed and shared online. Having to rely on a document to prove immigration status will be seen as old-fashioned and vulnerable to abuse. By contrast, new clause 19 would impede our ability to encourage migrants to access and share their immigration status securely online, creating confidence that it is the appropriate process, and giving confidence to those who engage with it. I hope that, with the assurances that I have given, the hon. Lady will feel able to withdraw the new clause.
Holly Lynch
I am grateful to the Minister for his explanation of why he rejects the new clause. I stress again the vulnerability that people feel in the shadow of Windrush, when they do not have something they can physically hold in their hand, to give an assurance of their immigration status. There is great support for the physical proof approach in the House of Lords and I suspect that we have not necessarily seen the end of the issue, but I do not want to divide the Committee at this time and I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 21
Annual review: Impact on health care and social care sector
‘(1) The Secretary of State must commission an annual report from the Migration Advisory Committee on the impact of the provisions of this Act on the health care and social care sector in the UK.
(2) In undertaking the evaluation, the Secretary of State must consult—
(a) the relevant Scottish Ministers;
(b) the relevant Welsh Ministers; and
(c) the relevant Northern Ireland Ministers
(3) The report must be laid before each House of Parliament as soon as possible after it has been completed.
(4) A Minister of the Crown must, not later than three months after the report has been laid before Parliament, make a motion in the House of Commons in relation to the report.’—(Holly Lynch.)
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 49—Impact assessment on the social care workforce—
‘(1) No Minister of the Crown may appoint a day for the commencement of any provision of this Act until the condition in subsection (2) is met.
(2) This condition is that a Minister of the Crown has published and laid before both Houses of Parliament an assessment of the impact of the Act on recruitment of EU citizens, EEA nationals, and Swiss citizens working to the social care sector.’
This new clause makes the coming into force of the Act conditional on the production of an impact assessment of the changes on the social care workforce.
New clause 61—Duty to commission an independent evaluation: health and social care sectors—
‘(1) The Secretary of State shall commission an independent evaluation of the matters under subsection (5) and shall lay the report of the evaluation before each House of Parliament.
(2) The Secretary of State must appoint an independent person to undertake the evaluation (“the independent evaluator”).
(3) In this section, “independent person” means a person who is independent of Her Majesty’s Government.
(4) No person may be appointed under subsection (2) unless their appointment has been consented to by—
(a) the relevant Scottish Ministers;
(b) the relevant Welsh Ministers; and
(c) the relevant Northern Ireland Ministers.
(5) The evaluation under subsection (1) shall consider an assessment of the effects of this Act on—
(a) the health and social care workforce;
(b) the efficiency and effectiveness of the health and social care sectors;
(c) the adequacy of public funding for the health and social care sectors; and
(d) such other relevant matters as the independent evaluator sees fit.
(6) In undertaking the evaluation, the independent evaluator must consult—
(a) the Secretary of State;
(b) the relevant Scottish Ministers;
(c) the relevant Welsh Ministers;
(d) the relevant Northern Ireland Ministers;
(e) providers of health and social care services;
(f) persons requiring health and social care services;
(g) representatives of persons requiring health and social care services; and
(h) such other relevant persons as the independent evaluator sees fit.
(7) The independent evaluator must prepare a report on the evaluation for the Secretary of State.
(8) The Secretary of State must lay that report before Parliament no later than one year after this Act is passed.
(9) A Minister of the Crown must, not later than six months after the report has been laid before Parliament, make arrangements for—
(a) a motion relating to the report to be debated and voted upon by the House of Commons; and
(b) a motion relating to the report to be debated and voted upon by the House of Lords.’
This new clause would require an independent evaluation of the impact of the Act upon the health and social care sectors across the UK to be produced and laid before Parliament. It would require that the devolved nations are consulted as well as other interested parties.
Holly Lynch
The new clause would require the Government to commission the Migration Advisory Committee to produce a report on the impact on the health and social care sector of ending free movement.
I very much welcome some of the new developments that the Minister outlined earlier, to do with the changes in the way that the Migration Advisory Committee will operate. The group includes a number of new clauses, and we very much recognise the merits of all of them. In essence, they all plead with the Government fully to think through the implications of putting this hard stop on free movement in place without the systemic reforms to health and social care that would be required to address the workforce issues in those co-dependent sectors.
At the evidence session last week, we heard some pretty damning evidence from witnesses, even though, interestingly, none of them were there explicitly to represent the health or care sectors. Martin McTague of the Federation of Small Businesses told the Committee that the FSB felt that the £25,600 minimum income threshold
“should be lower, because there are quite a few jobs, especially in the care sector, that pay less than £25,600.”
He went on:
“That is why we have called for a care sector visa, because we think the requirements of that sector will always be uniquely different from most of the rest of the economy.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 6, Q5.]
In response to a follow-up question from my hon. Friend the Member for Kingston upon Hull North, Martin McTague said:
“It is clear from the experience that we have had over the last few months that this sector is under massive pressure. Any major changes would be disastrous.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 11, Q16.]
We can all agree that this Bill represents a major change in immigration.
Brian Bell of the Migration Advisory Committee made a number of scathing points, which we should all reflect on. He said that
“immigration has historically been used as an excuse to not deal with the problems of the social care sector.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 21, Q44.]
He is right. The problem is, when we suddenly turn off freedom of movement at the end of December and the Government are not able to deliver the radical reforms required in that timeframe, what happens to social care?
I will answer that. Unless we have a significant breakthrough with a vaccine, care homes and the care sector will still be battling the coronavirus. If we do not do our due diligence on this, by adopting the new clause, the Bill will be set recklessly to undermine social care at a time when it can least afford it.
A MAC report is necessary, and would give the Government an opportunity to develop a coherent strategy by conducting the exercise annually for the health and care workforce. That could inform both the domestic skills agenda and our immigration policy, allowing us to create fast tracks within immigration based on our needs at the time. Without that, the NHS will struggle to function. According to the British Medical Association, 29% of doctors in the NHS are from overseas. Freedom of movement has greatly facilitated that, as for years EEA staff have benefited from the flexibility it grants, allowing them to work in the UK and EEA simultaneously.
We have discussed in earlier stages of the Committee the potential introduction of visas and the costs attached to the changes brought about by the Bill. That might act as a major disincentive against attracting the best talent to the NHS. As always, there should be a clear national commitment to training future healthcare workers. Nevertheless, it is hard to imagine that the domestic workforce alone will be able to deliver. For a long time, the workforce has been supplemented with EEA workers.
The NHS reported nearly 90,000 job vacancies between October and December 2019. That has already led to rota gaps across the medical profession, and to well-founded concerns about the ability to staff services adequately. It can take up to 10 years to train a doctor. It is unrealistic to believe that a domestic push will address that vacancy shortage or likely subsequent shortages due to the UK’s decision to leave the EU and free movement.
Domestic recruitment drives also have barriers to overcome. The Royal College of Nursing has reported that the Government’s much publicised increase of 50,000 nurses consists of 12,000 more international nurses, 15,000 student nurses and another 15,000 retained nurses who had previously left the profession. In reality, therefore, only about 27,000 nursing vacancies have been filled, and that fails to address adequately the 40,000 nursing vacancies reported in the NHS in November 2019.
In the evidence session, Brian Bell, interim chair of the MAC, stated that occupational shortages were
“a failure of the British education system”.––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 24, Q49.]
If the Government seek to prioritise domestic healthcare recruitment over immigration, some pretty urgent steps must be taken to address that.
The threat of ending free movement for the NHS is incredibly concerning. The threat of ending free movement for our social care sector is existential. The proposal to extend the tier 2 visa system to EEA nationals would sever recruitment and compound gaping occupational shortages.
The Institute for Public Policy Research modelled the impact on EEA nationals currently living in the UK and working in social care, and found that 79% of EEA employees—about four in five—working full-time in social care would have been ineligible to work in the UK under the skills and salary thresholds proposed by the MAC. Unison reports that there are currently 110,000 vacancies in social care, and while I suspect the Minister will tell me that his aspiration is to fill those solely through domestic recruitment, I wonder what assurances he can give us that that is possible in the timeframes required.
It was encouraging to hear the MAC report that senior care workers would be eligible to be included in future shortage occupation lists, yet we fear that deterring the recruitment of care assistants and more junior care workers from overseas may lead to a further increase in job vacancies in the care sector. We have all heard the warnings from Brian Bell that migrant workers cannot continue to act as a sticking plaster, working their socks off on low pay to mask the systemic problems in social care, but it is clear that we will be exacerbating the workforce issues impacting on the quality and availability of care unless the Government undertake a full and regular review. I urge the Government to adopt new clause 21 in order to fully understand the ways in which the new immigration system will affect patient care across all health and social care settings.
Brendan O'Hara (Argyll and Bute) (SNP)
As always, it is a pleasure to serve under your chairmanship, Mr Stringer. I will speak to new clause 61, which seeks an independent evaluation of the specific impact of the Bill on the health and social care sectors across the United Kingdom. This independent evaluation would follow from consultation between the Secretary of State for Health and Social Care, the relevant Ministers in the Scottish and Welsh Governments, the relevant Northern Ireland Ministers, service providers, those requiring health and social care services, and others. The new clause would require the Secretary of State to lay a copy of that report before both Houses of Parliament
“no later than one year after this Act is passed”,
and would require a Minister to make arrangements
“no later than six months after the report has been laid before Parliament”
for it to be debated and voted on in Parliament.
The new clause has gathered support from service users, third-sector organisations, trade unions and charities from every part of the UK, among them the Scottish and Northern Irish councils for voluntary organisations, Disability Wales, Unison, Camphill, Scottish Care, and the Welsh and Northern Irish branches of the British Association of Social Workers. I think the reason why they and many others have supported this independent assessment is that, as people who work on the frontline of health and social care every day, they are extremely worried that the Bill, which will end freedom of movement and introduce a points-based immigration system, will adversely affect hundreds of thousands of their clients: disabled people, children and young people, older people, unpaid carers and those with long-term health conditions—those who rely most on the health and social care services to look after them every day.
There is no doubt that the current coronavirus pandemic has given us all the opportunity to see just how precious our national health service and social care sector are. The NHS has risen to the challenge magnificently, as has everyone who works in it, and we are all hugely indebted to them. It has also reinforced just how lucky we are to have our national health service—should that have needed reinforcing—and we must do everything we can to protect it, so that future generations can have what we currently enjoy. We cannot afford to take chances with the future of our NHS or our social care services, and I believe that anyone who took chances with them would never be forgiven.
That is why so many in the health and social care sector are deeply concerned about what is contained in the Bill: they recognise that there is already a crisis in social care across the United Kingdom. On top of the seemingly relentless pressure on funding, we have an ageing population with increasingly complex care needs. The health and social care sector is battling every day to find and keep the workforce it requires, yet this Government have cut off a source of labour, with no clear plan as to what will replace it.
At the end of September 2019, NHS England reported having more than 120,000 unfilled posts—an increase of 22,000 on the previous year. Both the Care Inspectorate and the Scottish Social Services Council have found that 40% of social care organisations have unfilled vacancies going back over a year.
Kevin Foster
I have great respect for the hon. Member for Argyll and Bute, but I think people outside the House listening to the debate will wonder whether he has looked at today’s worrying figures on the employment market and the economic impact of covid-19. He asks where people might be found, but a significant number of people will be looking for new employment.
I welcome the opportunity to put on the record again the fact that the Government recognise the vital nature of the health and social care sector to the United Kingdom. I recognise that, in their view, hon. Members tabled the new clauses to protect a key sector. I assure members of the Committee that health and social care will be at the heart of the UK’s new points-based immigration system. The new skilled worker route will be open to a broader range of roles than the current tier 2 general route, following expansion of the skills threshold.
Under the current immigration system, only those coming to do graduate-level jobs are able to come to the UK under tier 2. In the future, our points-based skilled worker route will encompass jobs requiring school leaver qualifications. That means that all migrants—not just those from within the EU or EEA—will be able to apply for jobs meeting the skills threshold, including, as has been mentioned, senior care workers, giving a global reach to recruitment in the sector.
The general salary threshold will be set at £25,600, or the appropriate rate for the job that the person is coming to the UK to undertake. For a number of roles in health and social care, the rate will reflect the current national pay scales. We are also removing the cap and resident labour market test to make it quicker and easier to recruit workers from overseas where necessary. That will benefit all migrant workers and their employers, including those in the health and social care sector.
As with all immigration routes, we will continue to keep the points-based system under review. These changes are the first phase, and we will continue to develop and refine the points-based system based on experience.
Brendan O'Hara
On a point of clarity, did the Minister say that there will be sufficient capacity in the labour market to move the people losing their jobs as a result of coronavirus into the health and social care sector? Was that his argument? Does he recognise that there are currently 122,000 vacancies in England alone, and that there are projected to be another 320,000 over the next 10 years due to retirement? Does he really think that that will be made up by people losing their jobs?
Kevin Foster
Many people will be surprised to hear the hon. Gentleman suggest that one of the issues that the UK is facing at the moment is a shortage of labour. Sadly, we are seeing the impact of covid, and we know that health and social care will play a key part in providing job opportunities for those who need new employment. I am seeing that in my constituency. Many people would be surprised if there were Members in this building who did not think we should prioritise getting people who have faced the impact of the economic change into new skills and employment. That should not be a controversial point. I suspect that many of his constituents would be rather surprised if that is the point that he wished to make.
Brendan O'Hara
I am trying to stick to the Bill, but is the Minister saying to the country and people who are losing their jobs that, contrary to what the Prime Minister and the Chancellor have been saying, those jobs are not coming back, and they had better go find something else? The message has been that this is a temporary blip, we will recover from it, and the jobs will be coming back.
Kevin Foster
Thankfully, we will see many jobs come back. The Chancellor himself said that it will be difficult to save every role, and we can see that some of the changes in our economy, particularly in the retail sector, have been sped up. I am sorry that the SNP is looking to put its political philosophy ahead of the practical situation. I do not think it is controversial to say that, in Scotland, where there are vacancies, we should be trying to make sure Scottish-based workers are going back to work. I think the SNP will find it very interesting when it meets the electorate next May and explains why that was not its priority.
Holly Lynch
Does the Minister not accept the example that we have just been through? The Government, having recognised the labour shortage in agriculture, made a co-ordinated attempt to redeploy people who are currently out of work into the agriculture sector, but it proved incredibly difficult and the numbers have not transpired in reality. If he is saying that we can do something similar for social care, we would be keen to see the plan. What is his plan if we cannot redirect those people into social care in the timeframe that we are talking about?
Kevin Foster
There is a slight difference between talking about temporary roles in seasonal agriculture and carers, which is not a seasonal job. I represent a constituency with plenty of seasonal roles. It would be odd to start describing care as a seasonal one; it is not, for obvious reasons. People’s care needs do not vary by the season in the way the agricultural sector’s needs do in terms of picking fruit and veg.
Certainly, there is a need to make sure that we have the appropriate structure. Again, I think that people outside this room would be stunned that Opposition Members do not think that, at the moment, we should prioritise getting UK workers back to work. That might explain why, in December, people did not feel that those were the parties they wished to trust with being in government.
Moving on, our new firmer, fairer and swifter immigration system will have benefits for all sectors of the economy, but we recognise the special role that the NHS and those connected with it have in our society, which the events of the last few months have demonstrated clearly. That is why, in line with our election manifesto, the Government are introducing a healthcare visa, which will provide eligible health and social care workers with fast-track entry, the support of a dedicated team in UK Visas and Immigration and reduced visa fees.
As I said earlier, we are looking to exempt all those working in health and social care from paying the immigration health surcharge. We are also investing in social care. For example, in response to the coronavirus crisis, we have announced £2.9 billion to help local authorities respond to pressures in key services, such as adult social care, and to enhance the NHS discharge service, which allows patients to return home safely. No one should doubt our support for that critical sector of our society.
The hon. Member for Halifax talked about damning evidence, so it is worth remembering the evidence that the chair of the Migration Advisory Committee, Professor Brian Bell, gave to the Committee on 9 June. He said:
“If people say that the response to the social care issue should be, ‘Well, employers should be allowed to bring in as many migrants as they want at the minimum wage,’ first, that does not sound like the low-wage problem of the social care sector is being dealt with, and secondly it suggests that one of the groups that will really suffer from that is the social care workers. You are saying that you are going to keep on allowing their wages to be held down by allowing employers to bring in workers at the minimum wage”.––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 22, Q44.]
On new clause 21, the MAC is an independent non-departmental public body that advises the Government on immigration matters. It has a UK-wide remit and works across Government to provide transparent, independent, evidence-based advice. It currently undertakes work based on commissions from the Government; the Government determine the matters that they believe require consideration and ask it to consider and advise. As we have touched on, the Government are committed to expanding that role. This will be the first year that the MAC has produced an annual report, which is an important development to increase transparency and provide more regular evidence on issues relating to immigration.
In future, in addition to specific commissions from the Government, the MAC will be able to undertake other work that it considers necessary, including regular reporting on migration matters. I therefore cannot support a clause that requires it to look annually at a specific sector. As hon. Members will be aware, its reviews are thorough, and it takes time to seek views and analyse a broad range of evidence from across the UK. That means that the reports often take many months to complete, and we must be mindful of its finite resource and time. Requiring it to undertake an annual review on health and social care may prevent it from undertaking reviews on other issues where there may be a more pressing need, or may duplicate work that it plans to do.
I am also unable to support new clause 49, which would require the Government to consider the impact of the Bill on EEA citizens, but which ignores the new points-based system that we will implement at the beginning of January 2021. The Government have already published an impact assessment of the points-based immigration system, which sets out the impacts on all those who will use the system, not just those from the EU or the EEA.
We understand fully that ending free movement and the proposals for the future immigration system will have an impact. However, with the dramatic changes that we have seen in the UK labour market over recent weeks, it is right that we focus on getting UK-based workers back into employment and ensuring that employers are investing in and retaining the existing workforce. Migration policies need to be considered alongside that work, not in isolation from it. The Migration Advisory Committee will have the opportunity to decide what it wishes to consider alongside its annual report.
Holly Lynch
I heard the Minister’s comments. I would stress, once again, that new clauses 21, 49 and 61 are genuine attempts to ask the Government to recognise our concern about health and social care when free movement comes to an end. We are not attempting to play politics; our concern is genuine. We would be very happy for the Government to go away and look at any one of those options. Without pushing this to a vote, we ask the Minister to consider these issues in all further deliberations on the future immigration system. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 22
Tier 2 Immigration skills charge
“No Tier 2 Immigration skills charge will be payable on an individual who is an EEA or Swiss national and is coming to the UK to work for the NHS.”—(Holly Lynch.)
This new clause would exempt NHS employers from having to pay the immigration skills charge.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 35—Immigration skills charge—
“No Immigration skills charge introduced under section 70A of the Immigration Act 2014, or by regulations thereunder, may be charged in respect of an individual who is an EEA or Swiss national coming to work in the UK.”
This new clause ensures no skills charge can be levied in respect of EEA or Swiss nationals coming to work in the UK.
Holly Lynch
I beg to move, That the clause be read a Second time.
I rise to speak in support of new clause 22, tabled in the name of the shadow Home Secretary, myself and my Committee colleagues. The new clause would exempt NHS employers from having to pay the immigration skills charge.
As I have already stressed in my attempts to win support for other new clauses, the NHS workforce has historically relied on the support of professionals from across the world coming to the UK. In recent decades, that has included a supply of EU nationals. Nearly 10% of doctors, 8% of social care staff and 6% of nurses working in the UK are from EEA countries.
As things stand, NHS trusts pay the skills charge for those coming to work in the NHS from countries outside the EU and will be expected to pay those costs for those coming from EU countries after free movement ends. The immigration skills charge is effectively a skills tax paid by employers who have recruited from overseas instead of from the domestic workforce, to act as a disincentive and to promote recruitment from a local talent pool. That is fair enough, but in the context of the NHS, levelling the tax on NHS trusts is nothing short of an outrage.
If trusts cannot find clinical specialists here in the UK, they have no choice but to find them from overseas. The UK has a number of clinical skills shortages in many specialist areas and, in the absence of any Government strategy to respond to that domestically, the NHS has to hire from overseas.
We have already heard a lot about Brian Bell’s contribution to the evidence session last week. He gave the example of the nurse shortage. He said:
“often the shortage occupation list identifies a failure of the British education system to provide the people who are needed. A classic example of that is nurses. Nurses have been on the shortage occupation list since I can remember ever hearing of it. Every time they are put on the list, we hear statements along the lines of, ‘Yes, we know that they are in shortage, and we have a plan to increase the number of nurses who go through training so that we deal with the shortage in the long run.’ They are still on the shortage occupation list. We should be using the shortage occupation list to signal both to Government and to employers that there are training needs that need to be fulfilled.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 24, Q49.]
An NHS trust cannot unilaterally decide to train more nurses from the domestic labour force if it is struggling to recruit; it needs Government intervention to deliver the uplift.
In the MAC’s 2019 full review of the shortage occupation list, where all doctors were added to the list, under section 4B on health occupations, the review was keen to stress that
“the rise in vacancies and concern over lack of staff has occurred under freedom of movement and during a period when many health occupations have been on the SOL. Ultimately it will take more effective workforce planning and efforts to increase the flows into health professions (and decrease flows out) to meet growing demands.”
That is a worrying thought.
We have clinical workforce shortages almost across the board in the NHS, and that has been while we have had free movement. Adopting new clause 22 would be just one small step towards protecting the NHS from the inevitable impact of free movement coming to an end with the Bill.
As constituency MPs, we all have casework relating to patients with rare medical conditions who have been on waiting lists for years to see a specialist, because there may be only one or two doctors specialising in that condition in the country. There may be only a handful in the world, so trusts are regularly looking to recruit from overseas because they seem to have no choice. The immigration skills charge punishes trusts for doing so, with the Government taking back much-needed cash from budgets in order to pay the fees. It seems grossly unfair and counterproductive, and it takes money out of frontline hospital services.
The Labour party has submitted freedom of information requests to 224 NHS hospital trusts in England, asking how much of the charges they are paying back to the Government. So far, only 45 have responded—around 21% of the trusts. To give an indication of what some hospitals are paying out, I should say that Lewisham and Greenwich NHS Trust had to pay the Government £961,000 in immigration skills charges over the past three financial years. Portsmouth Hospitals NHS Trust tells us that it paid out more than that in the 2019-20 financial year alone, with a bill for £972,000 in just 12 months; it has paid over £2 million in immigration skills charges since 2017. The Royal Free London NHS Foundation Trust has paid over £1 million in the same timeframe, and the University Hospital Southampton NHS Foundation Trust has paid £1,224,509 since 2017.
From the 21% of trusts that have responded to our FOI request, we know that nearly £13 million has been taken out of the NHS and handed back to the Government since 2017—nearly £13 million from just 21% of hospital trusts in England. That some hospitals can pay out nearly £1 million in immigration skills charges in a single year surely has to be a sign that the system is not working as intended. To repeat the point made by the MAC, this is all while people have been able to come under free movement, where fees would not have been applicable. That is about to come to an end. I urge the Minister to adopt new clause 22 to mitigate any further detrimental impact on the NHS workforce and to ensure that NHS funding stays in the NHS.
Stuart C. McDonald
In a sense, this debate echoes the one we had on the immigration health surcharge. I support everything that the shadow Minister has said, but I would push the Labour party to go a bit further and scrap the whole scheme.
I have nothing against the principle that employers should pay a contribution towards the cost of training and developing the skills on which businesses rely, but why should it apply only to those who recruit from abroad? That is not in any way a proxy for determining which businesses, companies and employers are not doing enough training in their own right. In fact, very often the opposite is the case: many of the businesses, companies and employers who recruit from overseas are also the ones who invest considerable sums of money in training and upskilling their workers.
However, skill shortages often arise at very short notice. For all the workforce planning that they do, and for all the training that they invest in, employers regularly have a need to recruit from abroad. As I say, it is a very poor proxy for trying to target companies that are not properly investing in training. The whole thing needs rethinking.
Kevin Foster
I thank the hon. Members for Halifax and for Cumbernauld, Kilsyth and Kirkintilloch East for tabling the new clauses. The objective of the immigration skills charge is to incentive UK-based employers to take a long-term view of investment and training, and it is designed to address the UK’s historical underinvestment in training and upskilling. The income raised is allocated to the Department for Education and the devolved nations to address skills and training gaps in the resident workforce.
We can all agree that immigration must be considered alongside investment in, and development of, the UK’s resident workforce, and it is only right that we provide those workers with opportunities to develop skills in order to further their careers and to contribute to the future economy. That is with particular reference to the situation we see at the moment in our country, where many people might need to find new employment opportunities due to the economic impact of covid-19.
The Committee may also wish to note that the introduction of the charge was supported by the independent Migration Advisory Committee as part of its December 2015 review of the tier 2 route.
The Migration Advisory Committee also recommended that the charge be extended and retained to cover employers of EEA citizens in the future immigration framework. In its September 2018 final report on the impact of EEA migration in the UK, the MAC said:
“We believe that extending the ISC to cover EEA citizens under any post-Brexit work-permit scheme would, on balance, be appropriate.”
It would also make no sense, now that we have left the European Union, to apply exemptions based purely on being an EEA national, as this suggests.
On new clause 22, the Government recognise the vital nature of the health and social care sector to the United Kingdom. Health and social care will be at the very heart of the UK’s new points-based immigration system, and we are doing all we can to ensure that the new system is fair, attractive and welcoming to the best and brightest overseas migrants. The new skilled worker route will be open to a broader range of roles in the sector—following the expansion of the current skills threshold—than the tier 2 general route.
As I mentioned earlier, the income for the immigration skills charge is used to address skills and training gaps in the resident workforce, including the healthcare sector. It is right, therefore, that we focus on providing UK resident workers with the opportunity to develop skills that will enable them to become the healthcare heroes of tomorrow—the revenue from the immigration skills charge does that. For those reasons, the Government are not prepared to accept the two new clauses.
Holly Lynch
We absolutely cannot wrap our heads around that, given how much money is being taken out of the NHS frontline, which seems to be an indication that the whole approach is not functioning as intended. However, with that in mind, I will not seek to divide the Committee. But the Labour party may return to this point at a later date. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Tom Pursglove.)
Finance Bill (Eighth sitting)
Tuesday 16th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Finance Act 2020 View all Finance Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 16 June 2020 - (16 Jun 2020)
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Chair
With this it will be convenient to discuss the following:
That schedule 10 be the Tenth schedule to the Bill.
The Financial Secretary to the Treasury (Jesse Norman)
It is lovely to see you in the Chair, Ms McDonagh. I apologise to hon. Members who have had the pain of seeing me do the urgent question in between our two Public Bill Committee sittings; I can only admire their strength and resilience.
Clause 86 introduces schedule 10, which enables changes to be made to the Hydrocarbon Oil Duties Act 1979 to require white diesel to be used for filling private pleasure craft such as yachts and canal barges, to meet our international obligations under the EU withdrawal agreement. It is an enabling power, and it follows consultation with private pleasure craft users and fuel suppliers in 2019.
There is no current timetable for commencement of these changes. Details of implementation via future secondary legislation will be set out in due course, after the consultation that the Government are planning this summer on wider changes to red diesel that were announced at Budget 2020. Once commenced, the changes will affect only the type of fuel that private pleasure craft can use and not the amount of fuel duty users pay. They already pay the standard white diesel rate for propelling their craft, and they are entitled to use rebated red diesel for other, non-propulsion purposes, such as heating and cooking. The changes will not affect that. Where craft have a shared tank for propulsion and non-propulsion purposes, such as heating, the Government will explore options that prevent users from paying more duty for their non-propulsion use than they would otherwise have to pay.
In 2018, the Court of Justice of the European Union ruled that the use of red diesel to propel private pleasure craft breached the fuel marker directive, which is designed to ensure, given the variation in duty treatment in member states, that any misuse of diesel crossing EU internal borders can be detected. Over the summer of 2019, the Government consulted on how they intended to implement the Court judgment by requiring private pleasure craft to use white diesel for propulsion. More than 1,600 replies were received. At the present time, private pleasure craft use the lower-duty red diesel for both propulsion and non-propulsion, but pay a top-up to the white diesel rate on the proportion of fuel that they use to propel their craft.
Last year’s consultation saw evidence on the impact that requiring private pleasure craft to use white diesel propulsion would have on users of diesel-propelled craft operating in UK inland waterways and along the coast, and on the companies that supply diesel to them. The responses are informing implementation issues for suppliers, known as registered dealers in controlled oils, or RDCOs, and users of diesel fuel.
The changes made by schedule 10, once commenced by secondary legislation, will amend sections 12 and 14E of the Hydrocarbon Oil Duties Act 1979, to disallow the rebates that apply to diesel, biodiesel and bioblend not used for road vehicles on the fuel used for propelling private pleasure craft. In practice, such craft have not been benefiting from the rebated rate on fuel use for propulsion, as they have been paying the additional duty to ensure that they pay the full rate as required while we are in the transition period.
Schedule 10 creates new penalties for using marked fuel for propelling a private pleasure craft, similar to those that exist when marked fuel is used in road vehicles, and also gives Her Majesty’s Revenue and Customs powers to take samples. It also provides for secondary legislation to mitigate the impact of the measure on houseboats and permanently moored residential craft; as they do not use fuel to propel their houseboat, they should be entitled to continue to use red diesel.
Finally, the schedule amends schedule 7A to the Value Added Tax Act 1994, to provide for the removal, if necessary, of the reference to marked fuel used in private pleasure craft in respect of which a declaration has been received. It provides that the changes will be brought into force on the days and in the areas appointed in secondary legislation at a future date.
This clause and schedule will ensure that we respect our international commitments, by enabling us to make changes to legislation covering fuel use by a private pleasure craft to the extent required to meet those commitments. I therefore commend the clause and the schedule to the Committee.
Wes Streeting (Ilford North) (Lab)
I should have said this morning that, although those on the Government Front Bench are doing a joint effort today to give each other a break, this is my penance for the shadow Chief Secretary, my hon. Friend the Member for Houghton and Sunderland South, handling the digital service tax single-handedly last week, so I am afraid that Members will be getting even more tired of my voice than the Financial Secretary’s voice.
I want to raise a few points on clause 86. First, as the Minister said, this clause and schedule are intended to enact the judgment of the European Court of Justice and to make sure we abide by our obligations under the withdrawal agreement. The challenge for various industry bodies is that this proposal effectively means that we are going to have to go through a number of changes, unless the Government intend this to be a permanent change in approach.
It is a significant disruption for the industry. British Marine, the main leisure boating industry body, said the change would present
“severe problems for boat users and the industry”,
and that was the position of all representative bodies. Given the issues raised by industry bodies and the strength of objections, why has the Minister sought to implement the judgment of the Court of Justice of the European Union when we will have left the European Union and, at some point in the not too distant future, these sorts of judgments will not have to be abided by?
Suppliers and industry bodies have deemed the switch as not viable due to its being uneconomical and impractical to change waterside fuelling locations from red to white diesel. What will the Minister do to support suppliers in this transition and to ensure that commercial users, such as fishing boats, are not negatively impacted by the switch?
Jesse Norman
I thank the hon. Gentleman for his questions. We fully appreciate the degree of concern that has been shown by the industry. As he will be aware, we are under an obligation to abide by EU judgments while we remain under the withdrawal agreement. The proposal underlines how seriously we take legal obligations that have been incurred in the EU withdrawal agreement, and that includes implementing the result of the European Court of Justice judgment.
It should be made clear that, during the transition period, if the Commission were not convinced that necessary steps had been taken to implement the judgement, it could, in principle, refer the case back to the European Court and ask it to levy fines for non-compliance. Those fines can be pretty substantial—up to €792,000 a day plus a potential one-off fine of at least €10 million—so we are very focused on communicating the seriousness of our intent in passing this enabling legislation. We do not believe that paying fines to the EU, especially as we have now left the EU, would be an effective or good use of taxpayers’ money, not least when we are making broader changes to reduce the entitlement to use red diesel more widely.
It is worth pointing out one other thing: we have not set an implementation date. The reason is that we recognise that it is important for Government to continue to work with users of private pleasure craft and with fuel suppliers to understand how they can implement the changes, precisely to make sure that those changes are as little onerous and as easy to enact as they can be. It is only once we have seen that consultation, gone through that process, reflected further on it and had a chance to consider how the legislation could be framed that we will be able to return to this issue.
Question put and agreed to.
Clause 86 accordingly ordered to stand part of the Bill.
Schedule 10 agreed to.
Clause 87
Rates of air passenger duty from 1 April 2021
Question proposed, That the clause stand part of the Bill.
The Exchequer Secretary to the Treasury (Kemi Badenoch)
Clause 87 makes changes to ensure that the long-haul rates of air passenger duty for the tax year 2021-22 increase in line with the retail price index. The change will make sure that the aviation sector continues to play its part in contributing towards funding our vital public services.
Aviation plays a crucial role in keeping Britain open for business, and the UK Government are keen to support its long-term success. Indeed, the UK has one of the highest direct connectivity scores in Europe, according to the latest Airports Council International Europe report. The Government appreciate the difficulties that the airline industry currently faces as a result of coronavirus. That is why the Chancellor provided a comprehensive package for all businesses affected by the virus on 20 March. However, as air passenger duty is paid on a per passenger basis, the recent decline in passenger demand will have resulted in a reduction in air passenger duty liabilities for airlines. As the industry returns to health, it is right that the revenue raised from air passenger duty should continue to remain in line.
The clause increases the long-haul reduced rate for economy class nominally by only £2 and the standard rate for all classes above economy by £4—a real-terms freeze. The rounding of air passenger duty raised to the nearest £1 means that short-haul rates will remain frozen in nominal terms for the eighth year in a row, which benefits about 80% of all airline passengers. More broadly, the Government will consult on aviation tax reform. As part of the consultation, we will consider the case for changing the air passenger duty treatment of domestic flights, such as reintroducing the return leg exemption, and for increasing the number of international distance bands.
The changes made by the clause will increase the long-haul APD rates for the tax year 2021-22 by the RPI. Air passenger duty is a fair and efficient tax, where the amount paid corresponds to the distance and class of travel of the passenger and is due only when airlines are flying passengers. The changes ensure that the aviation sector will continue to play its part in contributing towards funding our vital public services. I therefore commend the clause to the Committee.
Wes Streeting
The industry has stated that the proposed changes do not support it and its net zero plans. The news that the airline industry does not like air passenger duty will come as a surprise to no one. As we are debating air passenger duty under clause 87, and as Treasury Ministers declined to come to the House in response to an urgent question from the Chair of the Transport Committee, this is an opportunity for me to raise concerns directly with Treasury Ministers about support for the airline industry in the light of the challenges it faces because of covid-19.
The Minister said that the airline industry has benefited from Government support. In so far as any industry and employer has benefited from the general schemes made available—the job retention scheme, the self-employment income support scheme, the various business grants and loans that are available—that is true. However, back in March, the Chancellor referred to specific support for the aviation industry. It is now June and that support has not yet materialised. In fact, we do not even have any outline of what that support could entail or whether it will materialise at all.
Let us bear in mind that the industry contributes £22 billion a year to the British economy. It supports 230,000 jobs in aviation and throughout the manufacturing supply chain. If we take into account the broader sweep of jobs based around the supply chain, airports and travel, we are probably looking at something closer to 500,000 jobs.
Ministers, whether in the Treasury or the Department for Transport, ought to be embarrassed by the fact that, only a matter of weeks ago, a leading figure in the airline industry told the Transport Committee that the Government have been “asleep at the wheel”. That is not the way that the Treasury should approach a major industry. Of course, the airline industry has a lot to change in order to meet our country’s net zero ambitions, but I am sure we would all agree that we would prefer it if the aviation industry got to that point through research, innovation, sensible application of technology, change of consumer behaviour and a just transition to support the workforce as the industry changes, rather than because airlines go bust and people lose their jobs.
Anthony Browne (South Cambridgeshire) (Con)
This is my first ever Bill Committee, but I was under the impression that we were meant to talk about the actual elements of the Bill, rather than wider economic policy or industrial strategies for business. The hon. Member for Ilford North has kindly emphasised all the support the British Government are giving the airline industry, but it is completely irrelevant for discussion now.
The Chair
I would just say to the hon. Gentleman that the decision on what is spoken about and what is not is mine. My general attitude is to encourage participation and comment. I will show the same latitude to both Government and Opposition Members. I call the Minister.
Kemi Badenoch
On the issue of a specific support package for the industry, the hon. Member for Ilford North has mentioned the range of measures that we have put in place, and we know that the DFT, the Transport Secretary and the aviation Minister are in close contact with the aviation sector. What the hon. Gentleman does not know is that Treasury Ministers, including myself, have also received lots of representations from the industry—it is not an issue that we are ignoring—but we need to be careful about how we make interventions.
The aviation sector is important to the UK economy. When those companies, as with any other companies that make a material contribution to the economy, find themselves in trouble as a result of coronavirus and have exhausted the measures already available to them, the Transport Secretary and Chancellor are listening to understand the issues, but any intervention needs to represent value for money for the taxpayer.
As we saw in the urgent question earlier today, there are so many people we need to help. We need to be careful about how we spend taxpayers’ money and where it should be directed. At this time, the Chancellor has not made that decision, but we will continue to work closely with the sector, and we are willing to consider the situation of individual firms, rather than working a sector-wide basis, once all the other Government schemes and commercial options have been explored and exhausted. That includes—I am sure this is something Opposition Members agree with—raising capital from existing investors and approaching other investors first.
Question put and agreed to.
Clause 87 accordingly ordered to stand part of the Bill.
Clause 88
Amounts of gross gaming yield charged to gaming duty
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
Clause 88 increases the thresholds for the gross gaming yield bands for gaming duty in line with inflation. This is a very small change, which is assumed by public finances.
Gaming duty is a banded tax paid by casinos in the UK, with marginal tax rates varying between 15% and 50%. Public finances assume that the bands are uprated with inflation each year to prevent fiscal drag. Without an annual uprating, over time, casinos would pay gaming duty at higher rates, so the change made by clause 88 uprates the bands of gaming duty in line with inflation. That is expected by the industry and assumed in public finances. Rates of gaming duty will remain unchanged. The change will take effect for accounting periods starting on or after 1 April 2020. I therefore commend the clause to the Committee.
Wes Streeting
We have heard representations from the chief executive of the Betting and Gaming Council, Michael Dugher, who will be known to many hon. Members across the House. The council is calling for reform of business rates and casino taxation. In the light of its representation, which, unsurprisingly, makes the industry case, and reflecting on some of our earlier conversations about alcohol duties, tobacco and smoking, what plans does the Treasury have, if any, to look at reform of gambling taxation generally and at the specific reforms Mr Dugher is calling for of business rates and casino taxation?
We have also heard strong representations from hon. Members across the House, such as my hon. Friend the Member for Swansea East (Carolyn Harris) and the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), about their work to highlight the impact that gambling has on people’s lives. Irresponsible gambling blights people’s lives. In the light of our conversation this morning about the positive role that Treasury decisions can play in promoting good public health outcomes, is the Treasury minded to look at those issues in the round as part of a wider review of the gaming duty and gambling taxation more generally?
Kemi Badenoch
The answer is to look at what the duty is designed to do. It is a change to gambling taxation; it is not related to the regulation of gambling activity, which, as we know, is the remit of the Department for Digital, Culture, Media and Sport.
The Government continue to monitor the effectiveness of existing gambling controls. As the December 2019 election manifesto set out, we intend to review the Gambling Act 2005. We will always consider the potential impact of tax changes at the same time.
We should remember that freezing the duty bands would have a small impact on public finances, while pushing smaller, generally regional, casinos into higher duty bands. The casino industry paid about £220 million in duty in the last financial year. The Government believe that the sector already makes a fair contribution to the public finances. I do not believe it is the small regional casinos that we would be looking to affect in terms of problem gambling.
Question put and agreed to.
Clause 88 accordingly ordered to stand part of the Bill.
Clause 89
Rates of climate change levy until 1 April 2021
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
Clauses 89 and 90 ensure that the climate change levy main and reduced rates are updated for the years 2020-21 and 2021-22 to reflect the rates announced at Budget 2018. The climate change levy came into effect in April 2001. It is a UK-wide tax on the non-domestic use of energy from gas, electricity, liquefied petroleum gas and solid fuels. It promotes the efficient use of energy to help to meet the UK’s international and domestic targets for cutting emissions of greenhouse gases. Energy-intensive businesses that participate in the climate change agreements scheme run by the Department for Business, Energy and Industrial Strategy qualify for reduced rates in return for meeting energy efficiency or carbon reduction targets.
Budget 2016 announced that electricity and gas rates would be equalised by 2025, because electricity is becoming a much cleaner source of energy than gas as we reduce our reliance on coal and use more renewable resources instead. These changes give effect to rate changes announced in 2018 and reaffirm the commitment to equalise the main rates for gas and electricity. The reduced rates will be subject to increases in line with inflation, as in previous years. In order to ensure better consistency in the tax treatment of portable fuels and the off-gas grid market, it was announced in the 2017 Budget that the climate change levy rate for liquefied petroleum gas would be frozen at the 2019-20 level in the years 2020-21 and 2021-22. For that reason, the reduced rate for liquefied petroleum gas that applies to CCA participants will remain set at 23% for the years 2020-21 and 2021-22.
Clauses 89 and 90 will update the climate change levy’s main and reduced rates for 2020-21 and 2021-22, as announced in the 2018 Budget, to reflect that electricity is now a cleaner energy source than gas. The electricity main rate will be lowered, whereas the gas main rate will increase so that it reaches 60% of the electricity rate in 2021-22. The rates were announced over two years ago, to give businesses plenty of notice to prepare for the rate changes. To limit the impact on the CCA scheme, participants will see their climate change levy liability increase by retail price index inflation only. That protects the competitiveness of over 9,000 facilities in energy-intensive industries across 50 sectors. I therefore commend the clause to the Committee.
Wes Streeting
The Chancellor suggested that pollution taxes would increase as a result of his Budget, but Jayne Harrold, PwC’s UK environmental tax leader, said that under the 2020 Budget:
“There was not really an increase in pollution taxes as the Chancellor suggested with the climate change levy (CCL) changes announced. In fact, freezing CCL rates on electricity to level up the gas rate faster based on carbon emissions will reduce the amount of pollution tax applied. Extending climate change agreements for two years is equally minor good news for energy intensive businesses who get significant CCL reliefs.”
Can the Minister give us a sense of what more the Treasury will do to ensure that taxes from polluting behaviour increase?
I also want to probe on the green gas levy. The 2020 Budget promised the introduction of a green gas levy to help fund the use of greener fuels, to work in conjunction with the rise in the climate change levy. When and how do the Government plan to introduce the levy?
Kemi Badenoch
I missed the hon. Member’s last question, but I can write to him on this issue, if he is happy with that. I go back to the question whether we are doing enough to achieve net zero. The answer is that we are going as far as we can, but we must also ensure that we protect the competitiveness of businesses throughout the UK. As announced in 2016, the changes to the climate change levy rates will see electricity and gas main rates equalised. That is being done incrementally—not because we do not want to go far enough, but in order to protect the tax liability of businesses. The Treasury review on the cost of transitioning to net zero will consider the role of tax in the transition. Does that answer the question?
Wes Streeting
My question was specifically about the changes that the Government plan to make in relation to the green gas levy, which had been announced in the Budget. When and how do the Government plan to introduce the green gas levy?
Kemi Badenoch
I cannot give the hon. Member an answer to that, but I will definitely write to him. I think officials will be able to brief him on the green gas levy. I cannot talk about it in the context of the climate change levy, which is what we are discussing, but I take his point. It is a good question. It is a Department for Business, Energy and Industrial Strategy competency, which is why I do not have an answer from a Treasury perspective, but I can speak to my counterparts in that Department and get back to him.
Wes Streeting
Thank you.
Question put and agreed to.
Clause 89 accordingly ordered to stand part of the Bill.
Clause 90 ordered to stand part of the Bill.
Clause 91
Rates of landfill tax
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
The clause increases both the standard and lower rates of landfill tax in line with inflation from 1 April 2020, as announced at Budget 2018.
Landfill tax has been immensely successful in reducing the amount of waste sent to landfill. Landfill tax provides a disincentive to use landfill and has made it the most expensive waste treatment method in terms of average gate fees. The success of the tax has contributed to a 70% decrease in waste sent to landfill since 2000. Household recycling has increased to 45%, from 18%, over the same period. The benefits of this reduction are twofold: first, there are economic benefits as valuable resources are used better, rather than being simply tipped into a hole in the ground, and secondly, there are environmental benefits, not only from the increased efficiency in the use of our precious resources, but through a reduction in greenhouse gas emissions from decomposing waste.
When waste is diverted from landfill we promote more sustainable waste treatment practice, such as recycling. The Government want to move towards a more circular economy and we are working together with business, industry, civil society and the public to achieve that aim. Landfill tax is one of the Government’s primary levers in achieving this.
When disposed at a landfill site, each tonne of standard-rated material is currently taxed at £91.35 and lower-rate material draws a tax of £2.90 per tonne. These changes will see rates per tonne increase to £94.15 and £3 respectively from 1 April 2020. By increasing rates in line with RPI we maintain the crucial incentive for the industry to use alternative waste treatment methods and continue the move towards a more circular economy. The increase in landfill tax will affect businesses and local authorities that send waste to landfill, but by continuing the positive trend of managing waste more sustainably businesses and local authorities will be able to reduce their landfill tax liabilities.
In conclusion, clause 91 increases the two rates of landfill tax in line with inflation from 1 April 2020, as announced in the autumn Budget in 2018. The clause maintains the incentives in the landfill tax for businesses and local authorities to divert waste treatment away from landfill and to continue to invest in sustainable methods of waste disposal, helping the Government meet their environmental objectives. I therefore commend the clause to the Committee.
Wes Streeting
Aside from paying tribute to my own local authority, the London Borough of Redbridge, and other local authorities for the efforts they have made to reduce the amount of waste going into landfill, there is only so much that can be said about an inflationary increase in landfill tax. I am happy for us to support the clause.
Question put and agreed to.
Clause 91 accordingly ordered to stand part of the Bill.
Clause 92
Carbon emissions tax
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss, That schedule 11 be the Eleventh schedule to the Bill.
Kemi Badenoch
At Budget 2020 the Government announced that they would make the necessary legislative changes to the carbon emissions tax in Finance Bill 2020 to ensure that this policy remained a viable option to maintain carbon pricing in the UK after the transition period, in the event that a trading system proves undesirable. If the Government decide to use the tax as their carbon pricing policy after the transition period, the tax would be commenced, by secondary legislation laid in late 2020, from 1 January 2021.
The clause and schedule strengthen the effectiveness of the carbon emissions tax by ensuring that penalties can be issued for non-compliance and late payment and the legislation is updated to reflect developments since the tax was established in the Finance Act 2019. In line with the withdrawal agreement, the UK will remain in the EU emissions trading system, known as the EU ETS, until the end of the transition period on 31 December 2020. The UK will continue to have legally binding carbon reduction targets after leaving the EU.
As set out in the UK’s approach to the negotiation, the UK would be open to considering a link between any future UK emissions trading system and the EU ETS, if it suited both the UK’s and the EU’s interests. If a linked trading system between the UK and the EU is not agreed, the UK would introduce an alternative carbon pricing policy. The Government are therefore preparing both a UK standalone emissions trading system and a carbon emissions tax.
Budget 2020 announced that legislation would be included in this Finance Bill to provide a charging power to establish a UK ETS linked to the EU ETS or a standalone UK ETS, and update the existing legislation relating to carbon emissions tax. This schedule amends the Finance Act 2019 to ensure that the tax will be ready to be operational from the end of the transition period, if needed. The clause and schedule deal with the latter.
Clause 92 introduces schedule 11, which makes amendments to part 3 of the Finance Act 2019, which established the carbon emissions tax. Schedule 11 will amend the Finance Act 2019 so that the carbon emissions tax is ready to commence from 1 January 2021 if needed.
I will briefly highlight the most significant changes in what is a fairly technical schedule. Paragraphs 9 and 10 add provisions to the tax for a penalty for failure to make payments of tax to HMRC on time. That would be achieved by adopting the existing provisions on late payment penalties in schedule 56 to the Finance Act 2009. The penalty would be commenced by appointed day regulations if the tax were introduced.
Similarly, paragraph 4 allows for provisions to be made for the imposition of civil penalties for failure to comply with a requirement of the regulations; the review of, and a right of appeal against, a specified decision relating to the tax; and the modification of domestic and EU regulations relating to the monitoring and regulation of emissions.
Paragraph 8 amends the commencement and transitional provisions to ensure that the regulations needed to operate the tax may be made before the tax has commenced. It also removes provisions that were needed when we were planning to commence the tax partway through an emissions reporting period. Those are no longer needed, as we would now start the tax on 1 January, the first day of an emissions reporting period.
Paragraph 3 allows the Treasury, by regulations, to exclude regulated installations of a specified description from the charge to tax. That enables the Government, for example, to exclude Northern Ireland power generators from the tax, were they to continue to participate in the EU ETS as provided for in the Northern Ireland protocol. Paragraph 6 ensures that regulators will be able to recover costs incurred in doing work connected with carbon emissions tax, even if that work is done before regulations are made.
In conclusion, the clause and schedule ensure that the carbon emissions tax is ready to commence from 1 January 2021 if needed. It would provide a stable carbon price and help the UK to meet its carbon reduction commitments. I therefore commend the clause and schedule to the Committee.
Wes Streeting
The clause and schedule that we are discussing make perfect sense in light of the impact of our exiting the European Union. I just have a few questions for the Minister.
This clause gives the Government the power to introduce a UK emissions trading scheme or carbon tax via a statutory instrument. As we have already heard from the Minister, and as we have heard from public statements on both sides of the channel this week, we will leave the EU emissions trading scheme on December 31 2020, when we leave the transition period.
I think the Minister alluded to the fact that so many of the questions that stakeholders have remain unanswered. I accept that this is just an enabling clause in anticipation of the further detail, and I appreciate that some of these questions may relate to responsibilities in the Department for Business, Energy and Industrial Strategy, so I will accept it if she sends me in that direction, but does she know when the Government plan to respond to chapters 1 to 3 of the consultation on the future of UK carbon pricing? Can she give assurances that there will be time to scrutinise Government proposals and implement a new scheme by the end of the year, bearing in mind that the proposals will have an impact on a wide range of organisations?
Touching on a theme I raised this morning about support for businesses as they undertake a transition to new frameworks, how do the Government intend to support UK companies during the transition, bearing in mind that, just as we are feeling the impact on Government business of disruption caused by the pandemic, many businesses are feeling exactly the same disruption? Is it realistic or desirable for companies across the country to be adapting to a new scheme that is not yet known and that may need to take force by the end of this year?
Kemi Badenoch
We published a consultation response on 1 June, and the carbon emissions tax consultation is due to be published shortly. I will say to the hon. Gentleman, “Watch this space.”
In terms of the impact on businesses, the carbon emissions tax would have an impact on around 1,000 installations that currently participate in the EU emissions trading system, most of which are operated by large businesses. Businesses whose emissions exceeded their allowance would need to familiarise themselves with the tax and pay a bill once a year, in lieu of surrendering trading allowances under the EU emissions trading system. It must be said, however, that the administrative burdens of complying with this tax are not expected to be more than what they would have been under the EU emissions trading system.
Question put and agreed to.
Clause 92 accordingly ordered to stand part of the Bill.
Schedule 11 agreed to.
Clause 93
Charge for allocating allowances under emissions reduction trading scheme
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
The clause provides the power to auction carbon emissions allowances, to establish a UK emissions trading system, which could be linked to the EU’s or operate independently. Alongside clause 92, to update the carbon emissions tax, this clause ensures that a strong carbon price remains in all scenarios, while supporting the ongoing negotiations.
The UK’s membership of the EU emissions trading system will end following the transition period. As mentioned in the previous clause, the EU ETS covers around a third of UK emissions, including the power sector, heavy industry and aviation. It has been an important tool, alongside other taxes and regulations, in helping to reduce emissions.
Following the UK’s exit from the EU, we have choices about how best to put a price on carbon, tailoring our approach to the UK economy. Carbon pricing will continue to play an important role to help meet the UK’s legally binding carbon budgets and net zero. The Government are preparing an independent UK emissions trading scheme, which could be linked to the EU ETS. As set out in the UK’s approach to negotiations, we are open to considering a link if it suited both sides’ interests.
Clause 93 is essential to the establishment of a UK ETS, as it provides the power for Government to auction emissions allowances and intervene in the market to deal with any price volatility. As I mentioned earlier, the Government are also preparing a carbon emissions tax and a possible alternative in clause 92. Introducing legislation to support potential negotiated options, as well as legislating for alternative approaches to carbon pricing after the transition period, will provide certainty that we maintain an effective carbon price in all scenarios, continuing to drive reductions in emissions on our journey to net zero.
The changes made by clause 93 introduce a charging power. This means that through regulations, emissions allowances can be auctioned by the Government in any future UK ETS, ensuring that participants pay a price for their pollution. The clause will also enable regulations to be made for additional market stability mechanisms, to operate in an independent UK emissions trading scheme. That will ensure a smooth transition for businesses. First, a price rule, known as the auction reserve price, will maintain a carbon signal when allowance prices are low. Secondly, a cost containment mechanism will respond to in-year price fights, protecting the competitiveness of UK business when allowance prices are high. Further detail on these measures has been set out in the Government’s recent response to our consultation on the future of UK carbon pricing.
This clause is a prudent and sensible one to legislate for. It will pave the way for an emissions trading scheme, which could be linked to the EU ETS, if that is in our interests. It also ensures that a stand-alone emissions trading scheme could be implemented as an alternative policy, should a link not be agreed. Alongside that, legislation will be updated related to the carbon emissions tax, so we are keeping all options on the table for maintaining a carbon price signal from 1 January 2021.
Wes Streeting
The Minister asked us to watch this space. We will certainly do that and wait to see how discussions progress. We look forward to seeing the details of future arrangements in the not-too-distant future.
Question put and agreed to.
Clause 93 accordingly ordered to stand part of the Bill.
Clause 94
International trade disputes
Alison Thewliss (Glasgow Central) (SNP)
I beg to move amendment 14, in clause 94, page 76, line 33, at end insert—
“(2) The Government must lay before the House of Commons by 9 September 2020 a statement of the conditions under which it would consider it appropriate to vary rates of import duty under this Section.”
This amendment would require the Government to state the conditions under which it would consider it appropriate to vary rates of import duty in an international trade dispute.
The Chair
With this it will be convenient to discuss the following:
Amendment 15, in clause 94, page 76, line 33, at end insert—
“(2) No regulations under this section may be made unless a draft has been laid before and approved by a resolution of the House of Commons.”
This amendment would require the Government to seek the approval of the House before making regulations varying rates of import duty in an international trade dispute.
Amendment 16, in clause 94, page 76, line 33, at end insert—
“(2) The Chancellor of the Exchequer must, no later than a month before any exercise of the power in subsection (1), lay before the House of Commons a report containing the following—
(a) an assessment of the fiscal and economic effects of the exercise of the powers in subsection (1);
(b) a comparison of those fiscal and economic effects with the effects of the UK being within the EU Customs Union;
(c) an assessment any differences in the exercise of those powers in respect of—
(i) England,
(ii) Scotland,
(iii) Wales, and
(iv) Northern Ireland; and
(d) an assessment of any differential effects in relation to the matters specified in paragraphs (a) and (b) between—
(i) England,
(ii) Scotland,
(iii) Wales, and
(iv) Northern Ireland.”
This would require a review of the economic and fiscal impact of the use of the powers in section 94 including comparing those effects with EU Customs Union membership.
Clause stand part.
Alison Thewliss
This is a small clause in the Bill, but hidden within it is the Government’s intention to set the conditions under which they would consider it appropriate to vary the rates of import duty in an international trade dispute. With amendments 14 to 16, we seek to amend clause 94 because we are concerned that it gives the Government a huge amount of additional power, with which they will avoid scrutiny. The explanatory notes state that the clause
“replaces the requirement for ‘authorisation’ with a requirement to have regard to international obligations.”
The Government need to explain why they feel they need the additional power, what the safeguards to it will be and why they think it is appropriate at this time.
Trade wars are damaging and should be very much a last resort. If the Government intend to take such actions, they deserve the scrutiny of the House. It should not just be about what the Secretary of State deems to be appropriate. I remind Members of the dispute affecting the Scotch whisky industry in Scotland, which is facing a 25% tariff because of US actions regarding Airbus and Boeing. Disputes have spillover effects that affect other parts of the economy, so we need a good understanding of why the Government are seeking these powers.
Amendment 14 would force the Government, by 9 September 2020, to set out the conditions under which they would breach international law to engage in a trade war. If none exist, they can surely remove the clause from the Bill. If there are conditions under which they would jeopardise our economic prosperity, the House deserves to know. Amendment 15 would require Commons approval before Ministers could follow such an irresponsible course of action. Brexit campaigners said they wanted to restore parliamentary sovereignty. If that is the case, the Government should accept that Parliament must have a say in such important matters.
Amendment 16 would force UK Ministers, no later than a month before any exercise of power, to make an economic assessment of the implications of the power and compare it with the economic health that the UK would be enjoying within the EU customs union. Ensuring that the public are informed of the impact of such an act of economic vandalism should not be controversial. We were promised a veritable land of milk and honey during the EU referendum campaign, so we certainly deserve to see the truth about these kinds of actions. The Government must explain why they think it is important to remove that authorisation and allow the Secretary of State to do what they want without the check and balance of this House.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
The Opposition have considerable sympathy with the hon. Lady’s arguments and the amendments tabled by the SNP. We have many concerns about clause 94, which seems buried, given that it is of such considerable importance for the years ahead.
The change to the language in section 15 of the Taxation (Cross-border Trade) Act 2018 has worrying implications for the Government’s adherence to the World Trade Organisation’s dispute settlement system. Replacing the requirement for authorisation under international law with the more nebulous consideration of appropriateness is extremely concerning, and implies that the Government may seek to sidestep international law regarding trade disputes. The matters set out in section 28 of the 2018 Act already give the Government considerable flexibility over what they consider to be appropriate action in the light of international law. It is effectively up to the Secretary of State to decide which international agreements are relevant to the exercise of the function. Loosening up the language even further in this clause is thus highly questionable.
The proposed changes seemingly downgrade the Secretary of State’s responsibilities when it comes to their international obligations. Having regard is nowhere near as onerous as having authorisation. That would allow the Secretary of State to operate at a much lower standard of requirement, and move away from recognised EU standards. We therefore seek to understand the reasoning behind the change. What is wrong with the current provisions regarding the variation of import duties in trade disputes?
There are further questions to which we seek answers from the Government. What will they use the clause for? It does not detail what kind of dispute is in question. How might the Trade Remedies Authority be involved in the decision-making process? Could this be an upshot of the digital services tax? The US has already found similar measures by France to be trade-restrictive, leaving the office of the United States trade representative to authorise retaliatory tariffs, as we discussed last week in Committee with reference to the digital services tax. While both parties are in the process of reaching a deal over the matter, it is possible that the Government wish to introduce this clause in preparation for a similar confrontation with the US. I hope the Minister can assure us that that is not the case, but why do the Government wish to reduce their responsibilities in adhering to international law?
The amendments tabled by the hon. Member for Glasgow Central and her colleagues go some way towards responding to that. The production of a report by the Chancellor no later than a month before any exercise of the power regarding the economic impact of such an action might enable Parliament to better scrutinise the actions taken through the clause. As it stands, other than through the scrutiny of primary legislation, Parliament has little say over international trade. I welcome the amendment to seek approval of any regulations deriving from the clause by resolution of the House of Commons, in the spirit of parliamentary scrutiny. However, the Government hold a considerable majority, and therefore I question how far the amendment would go in practice towards ensuring that the Government act in accordance with international law.
I welcome the amendment regarding the requirement for the Government to detail the conditions under which they would consider it appropriate to vary the rates of import duty under the clause. However, I believe that the implications of the wider clause are of significance and that the Government ought to provide these details during debate, rather than by September, although we are sympathetic to the intention behind the amendment. I stress that I would like the Minister, when he responds to the hon. Lady’s concerns, to explain the reasoning behind this change, what kinds of disputes the clause would cover, and whether the Trade Remedies Authority will be involved.
If the changes in the clause are in anticipation of a dispute with the US over the digital services tax, does this not involve giving the Government permission to ignore international trade rules when disputes arise, undermining the authority of the WTO in the process? I hope that the Minister will provide assurances on the issue of appropriateness and respond to the concerns that the hon. Lady and I have, because this is a significant change. We have reservations about the measure that the Government are putting forward, and we would like to understand much more about their intentions.
Jesse Norman
I thank hon. Members for their comments, and pay tribute to my colleague the Exchequer Secretary for rattling through the clauses we debated earlier with such effectiveness. The hon. Member for Glasgow Central has raised important questions, which I want to address properly, so I will give this issue quite a considerable amount of discussion because it is an important aspect of the Bill.
Clause 94 makes a change to the criteria in section 15 of the Taxation (Cross-border Trade) Act 2018 to ensure that the UK can vary the amount of import duty in the context of an international trade dispute. Provisions in various international trade agreements allow for the UK to vary the amount of import duty applied to goods in the context of an international trade dispute. There is existing provision in section 15 of the 2018 Act that gives the Secretary of State the power to
“make regulations varying the amount of import duty”
where
“a dispute or other issue has arisen between Her Majesty’s government…and the government of a country or territory”.
Currently, section 15 of the 2018 Act is worded in a way that could be interpreted to mean that a binding ruling of the World Trade Organisation is needed before the UK can impose a duty, which would be restrictive. In certain circumstances, countries are within their WTO rights to impose additional tariffs quickly in relation to the actions of other WTO members and, where necessary, outside of WTO dispute proceedings.
In addition, since section 15 of the 2018 Act was enacted, there have been developments in the wider sphere of trade policy, including increasing trade protectionism and problems with the WTO dispute settlement system. The WTO appellate body has stopped functioning, and it has now become possible for final and binding resolution of a WTO dispute to be blocked by a party to the dispute by appealing a panel report. That means it may not be possible to apply retaliatory duties, even where a panel report has found in the complaining body’s favour and the respondent has failed to bring itself into compliance.
Against this background, it is essential to ensure that the UK has the appropriate tools to respond to any unilateral measure or action taken by a WTO member that is not compatible with its obligations to the UK and that harms UK interests. Clause 94 therefore amends the original provision to ensure that, after having regard to relevant international arrangements, the Government may deal with such an issue by varying the amount of import duty. The EU is seeking similar powers, it should be noted, through amendments to its enforcement regulation, because it too recognises the importance of being able to respond quickly in the event of illegal measures being taken against it. What we are talking about is therefore in parallel to a process seeking similar powers within the EU.
At present, section 15 of the 2018 Act permits variation of import duty only where the UK is authorised under international law to deal with the issue. Clause 94 will amend section 15 to allow the Government to vary import duty where they consider it appropriate, having regard to relevant matters, including the UK’s international obligations, as set out in section 28 of the 2018 Act. That amendment will allow the UK to respond more effectively to developments in the international trading system, in line with international laws and our rights as an independent WTO member.
To come to the question asked by the hon. Member for Glasgow Central, there are a number of situations in which it would be appropriate to vary rates of import duty. The most likely situation is that in which the UK has successfully challenged another WTO member’s measures in the WTO dispute settlement system, and the other member has failed to bring itself into compliance. The UK could then impose retaliatory measures, including higher import duty against the other member. That is not contrary to and does not undermine the international rule of law; it insists on the international rule of law, in the face of measures that could disable it.
Import duty variations might also be imposed following a dispute brought under a free trade agreement or in the context of a WTO member applying a safeguard measure but failing to agree an adequate level of trade compensation for the adverse effects caused by the measure. It is also possible that the UK could lose a dispute under a free trade agreement and could agree compensation with another country. The compensation could take the form of lower import duty on certain goods.
In each of those circumstances, the Government are still required by the 2018 Act to have regard to our international arrangements that are relevant to the exercise of this power. It need hardly be said that the UK strongly supports the rules-based international trading system and appropriate enforcement of WTO agreements. It is because appropriate enforcement would be otherwise lacking that this clause is being brought into effect.
Amendment 14 would require the Government to state the conditions in which they would consider it appropriate to vary rates of import duty. As you will know, Ms McDonagh, international trade disputes are broad and varied, depending on the nature of the international agreement under which they are conducted and on the subject matter of the dispute. It would limit the Government’s ability to respond effectively in a particular dispute if they were required to list in advance conditions for varying import duty in a dispute. I have already set out several situations in which it would be appropriate to vary rates of import duty. Examples have also been provided in the explanatory notes to both the Taxation (Cross-border Trade) Act 2018 and the Finance Bill.
Amendment 15 would require the Government to seek the approval of the House of Commons before making regulations varying rates of import duty in an international trade dispute. It is important to say that clause 94 is not an unchecked power. Any specific tariff measure introduced under section 15 of the 2018 Act would require secondary legislation, as is prescribed in that Act. The requirements set out in amendment 15 are therefore not necessary. Secondary legislation will involve the public passage of a piece of legislation. The Government need flexibility to respond effectively to state-to-state disputes, but with the understanding that they must have regard to the international arrangements to which the UK is party.
Amendment 16 would require the Chancellor of the Exchequer to lay before the House of Commons a report containing an assessment of the economic and fiscal effects of the exercise of the powers in clause 94, including a comparison of those fiscal and economic impacts with the effect of the UK being within the EU customs union, and an assessment of any differences in the exercise or effects of those powers in respect of England, Wales, Scotland and Northern Ireland.
Information on the expected impacts of import duty variations will be provided in the documentation accompanying any and each statutory instrument. However, it would not be appropriate to publish extensive detail, because doing so could undermine the effectiveness of the UK’s response. It would also not be appropriate to compare the economic and fiscal impact of the use of the powers in clause 94 with EU customs union membership. First, the EU may not itself have a dispute with the WTO member against which the UK has brought an action. Secondly, even if the EU were applying retaliatory measures against that WTO member, the EU’s retaliatory tariffs would be based on the impact on the EU27 and would not take into account impacts on UK industries and sectors. The amendment would therefore invite the Governments and others to compare apples with oranges.
Alison Thewliss
Although the Minister spoke for a long time, he did not get to the nub of why the clause is necessary, what safeguards are in place, and why the requirement for authorisation is replaced with a requirement to have regard to international obligations. I will press my amendment to a vote.
Question put, That the amendment be made.
Alison Thewliss
I beg to move amendment 17, in clause 95, page 77, line 5, after “tax” insert
“which is due at the relevant date from the debtor and which became due in the 12 months immediately preceding that date, and/”.
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
The Chair
With this it will be convenient to discuss the following:
Amendment 18, in clause 95, page 77, line 6, after “deduction”, insert
“from a payment made by the debtor in the period of 12 months immediately preceding the relevant date.”
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Amendment 19, in clause 95, page 77, line 29, after “tax”, insert
“which is due at the relevant date from the debtor and which became due in the 12 months immediately preceding that date, and/”.
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Amendment 20, in clause 95, page 77, line 30, after “deduction”, insert
“from a payment made by the debtor in the period of 12 months immediately preceding the relevant date.”
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Amendment 21, in clause 95, page 78, line 9, after “tax”, insert
“which is due at the relevant date from the debtor and which became due in the 12 months immediately preceding that date, and/”.
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Amendment 22, in clause 95, page 78, line 10, after “deduction”, insert
“from a payment made by the debtor in the period of 12 months immediately preceding the relevant date.”
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Amendment 23, in clause 95, page 78, line 26, at end insert—
“(8) The amendments made by this section do not apply to any debt secured by a floating charge in respect of monies were advanced to the debtor before 1 December 2020.”
These amendments seek to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Clause stand part.
Clause 96 stand part.
Alison Thewliss
The amendments seek to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy being applied retrospectively, and by limiting that preference only to taxes that became due in the 12 months before the relevant date as given in the Bill, which is 1 December 2020. In the current context, that is particularly important. With firms increasingly running the risk of insolvency, it really is unfair to give HMRC a queue jump to recoup lost funds, when other businesses and individuals in the real economy may be well out of pocket.
The plan is to grant HMRC preferential status in insolvency proceedings from December 2020, and measures will make directors personally liable for a company’s tax liabilities where HMRC considers that avoidance or evasion is taking place or where there is evidence of phoenixes in the tax abuse using company insolvencies. I understand that the insolvency and restructuring trade body R3 is very concerned about the prospect of the policy. It feels very strongly that introducing such a policy would damage business lending and impede business rescue. UK Finance has suggested that the measure could hit lending to small firms by over £1 billion.
When I made representations in the Chamber on Second Reading, I explained that the policy is incredibly problematic. On the issue of phoenixism, R3 has suggested that the policy could lead to blameless shareholders, lenders, businesses and rescue professionals being made liable for the tax avoidance activities of rogue directors. What do Ministers intend to do to protect those who are innocent in the system from becoming liable under the proposals?
As well as having a detrimental impact on business and economic growth, restricted lending will make it harder to rescue businesses, increasing the knock-on effect of one business’s insolvency on other businesses and individuals further down the line. Business investment, returns to creditors and confidence in the UK’s corporate framework all stand to be damaged as a result. Ministers really need to give us a bit more detail about why they feel the policy is necessary.
Although the measure on tax abuse using company insolvencies can be mitigated through accurate legislative drafting and detailed guidance from HMRC, the SNP feels strongly that the policy to grant HMRC preferential creditor status should be withdrawn in its entirety. It is an introduction that could well prove a hammer blow to business rescue money across the UK, at exactly the same time as the Government are seeking to level up the economy and support businesses as they try to make their way through these difficult days. We all know of businesses in our constituencies that are really struggling and might not make it further than a couple of months ahead. Knowing that the policy is being introduced could have a detrimental effect on those who are supporting such businesses and on lenders.
In addition to scrapping the clause, the SNP believes that the UK Government must urgently introduce a comprehensive financial package to ensure a strong economic recovery, protect jobs and prevent new businesses from going under. With dire warnings emerging that up to half the loans issued under the bounce-back loan scheme are at risk of not being paid back, and with businesses defaulting on payments due to financial difficulties, it is vital that the Government introduce strengthened and tailored financial support urgently. The Treasury must heed the calls and turn its bounce-back loan scheme into grants for those who require them. It should write off debts for businesses that are facing increased hardship to ensure that they can survive in the long term and that jobs are protected wherever possible.
Many businesses are struggling to stay afloat during these challenging times, and despite the extensive financial support that has been provided by the Government, which we do not dispute, loans will not be the answer for every business. For many businesses, it is not income deferred, but income lost completely. For example, hospitality and tourism businesses will not be able to recoup that money, and loans will just put them further into debt.
It is important that the Government look at this matter very carefully and take on board the very substantial concerns that R3 has raised about the proposed policy, hence why we have tabled so many amendments. I would be grateful if the ministerial team could tell us exactly why this change is required and why it has been brought about.
Wes Streeting
I must confess that I come to this clause with a slightly different set of questions for Ministers to respond to. There is no doubt that in the current climate, the risk of insolvency to businesses is much greater, and it is right that the Government do all they can to stop preventable collapses, to safeguard jobs and to ensure that the UK is well positioned for the economic recovery that we hope will follow in short order, with the aim of making this recession as short and shallow as possible.
That is why my right hon. Friend the shadow Secretary of State for Business, Energy and Industrial Strategy and the shadow Minister for business and consumers, my hon. Friend the Member for Manchester Central (Lucy Powell), were prepared to work closely with their opposite numbers in the Department for Business, Energy and Industrial Strategy to expedite through the House of Commons the recent Corporate Insolvency and Governance Bill.
Turning to clause 95, the question I wish to pose to Ministers is why HMRC is only a secondary preferential creditor. HMRC will remain an unsecured creditor for the taxes that the bankrupt businesses owed, and we have had strong representations for HMRC to be a preferred creditor across the board, to ensure certainty and to recognise the fact that HMRC contributes, through tax collection and maintenance of general rules, to the general operating environment from which all businesses benefit.
Although we have heard that the risk exists that businesses may lose out as a result of HMRC having greater preferential status in the process of recovering money, it does not necessarily follow that the businesses that would lose out are those that most of us would have in mind as being of greatest concern, such as small to medium-sized enterprises. When a business becomes insolvent, bank loans need to be paid off first; unpaid bills to SMEs would have a much lower priority and be less likely to be paid off anyway.
I recognise the concerns expressed by UK Finance. They are concerns I heard in my previous life on the Treasury Committee, and I am always open to talking to colleagues at UK Finance and across the across the banking industry. However, they have to go somewhat further to make a more convincing case than they have outlined. It would be interesting to hear from the Minister why HMRC is only a secondary preferential creditor and why, on this occasion, the Treasury has not gone further.
To respond to the lobbying from the financial services industry, I would say that it was ever thus—when measures like are brought forward, it says that the sky will fall in and business lending will stop. There are challenges with business lending in this country, but it is stretching the imagination somewhat to say that such challenges will be presented by this modest clause.
Anthony Browne
As somebody who used to run the British Bankers Association, which turned into UK Finance, I was very involved in some of those earlier lobbying efforts. I must say that in this case, I simply do not believe it. I do not think this measure would have any impact on business lending; it is quite clear that the tax has already been paid by employers or customers, and it would have a very limited impact—virtually no impact—on the actual risk of a loan or the risk of default. I fully support the Government on this.
Jesse Norman
I am grateful to colleagues for their comments. I will talk about the clauses in a moment, but I will first enjoy this moment in Committee: a senior Opposition Member of Parliament says that he is resistant to financial sector lobbying, which I am thrilled about; and on the other side, someone who headed up the lobbying organisation says that, from an inside standpoint, we are talking about irrelevant minutiae. Let us enjoy for a second that rare moment of harmony and joy in Committee.
Alison Thewliss
From what the Opposition Front-Bench team said, I do not think that I have support for the amendment, so I am content to withdraw it, but I may return to the subject later. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 95 ordered to stand part of the Bill.
Clause 96 ordered to stand part of the Bill.
Clause 97
Joint and several liability of company directors etc
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss, That schedule 12 be the Twelfth schedule to the Bill.
Jesse Norman
Clause 97 and schedule 12 introduce a new power to allow HMRC to tackle the behaviour of tax avoiders and evaders who seek to reduce their tax bill unfairly through the misuse of company insolvency. This measure tackles the small minority of people who use insolvency intentionally to sidestep tax liabilities. It does so by allowing HMRC to issue notices that make directors and other persons connected to the company jointly and severally liable for the company’s avoidance, evasion or phoenixism debts, as they are described, if insolvency is threatened. It is not linked to clauses 95 and 96, which make HMRC a secondary preferential creditor for certain tax debts.
The Government announced our intention to consult on tax abuse and insolvency at Budget 2017. The consultation ran from April to June in 2018, and the Government published a response document in November 2018. The Government also published draft finance Bill legislation for technical consultation in July 2019.
As I made clear when I discussed earlier clauses, it is the Government’s aim to support companies and help them to avoid insolvency, particularly at this very difficult and challenging time, and the measures recently announced to restructure the UK’s insolvency framework support this aim. This legislation will not impede those restructuring plans, and the measure focuses firmly on those who misuse insolvency in connection with tax avoidance or evasion, or who run up repeated liabilities that they then step away from.
In ordinary times, insolvency is a highly unfortunate but necessary part of commercial life. However, a small minority of people misuse insolvency for their own ends. They hide behind a company to engage in tax avoidance or evasion, or repeatedly build up tax debts, and then strip out the assets, liquidate the company and leave nothing to meet outstanding tax liabilities. Not only does this deprive the Exchequer of funds for important public services, but it undermines the insolvency process and adversely affects creditors and other businesses, and it casts the whole reputation of insolvency into disrepute. It is only right that we should act to discourage such misuse, and that is what this measure is designed to do.
Clause 97 introduces schedule 12, which contains details of the new regime and sets out conditions that must be met before the legislation will apply. First, paragraph 2 sets out the conditions that must apply before HMRC can issue a notice to an individual connected to a company that has engaged in tax avoidance or evasion. The conditions are: that the company has begun an insolvency procedure, or there is a serious risk that it will; and that the person was responsible for, facilitated or knowingly benefited from the avoidance or evasion.
Paragraph 3 sets out the conditions that must apply before HMRC can issue a notice to an individual who is connected to companies that repeatedly go insolvent with significant outstanding debts. Such companies are often referred to as phoenix companies, and it is widely agreed across the House that they are a blight on commercial life. The conditions are: that the person must have had a connection in the previous five years to at least two companies that began insolvency; that the person has a connection to a new company that carries out the same trade as the old ones; and that the amounts due to HMRC from the old companies total at least £10,000 and at least 50% of the amount due to unsecured creditors overall. That is an important safeguard to ensure that the measure focuses on catching those who play fast and loose with their tax. Paragraph 4 allows the amounts to be varied by a statutory instrument.
Wes Streeting
It is always the case that when a new measure is introduced, criticism can be made of it simply because it had not existed previously. In this case, it really is a reflection of the Treasury’s failure to clamp down effectively on the abuse of the system and the people trying to avoid and evade their taxes. Despite the Government’s previous efforts to impose greater accountability for tax avoidance and evasion, there are still too many holes in the system, but I welcome the fact that clause 97 and the schedule will go some way to addressing that.
What is the threshold of responsibility for the conduct? When will HMRC consider the serious possibility that the tax liability might not be paid? At what stage will HMRC conclude that there is likely to be a tax liability arising from the avoidance? Might the Treasury go further, for example, by asking HMRC to report on how much money is lost by companies participating in or promoting tax avoidance schemes and then becoming insolvent before HMRC can counter the schemes and collect the money owed? Following on from that, how much money would be collected if those companies’ directors, participators and associated persons were made jointly and severally liable?
Alison Thewliss
I want to comment briefly on the huge gap that exists within Companies House as part of this process. If we go after companies and directors that are involved in phoenixing, why can that not be stopped at source when those companies are registered at Companies House? Why is there no link to the Government’s Verify scheme for those who wish to register companies there? Companies House is obliged only to register the information, not to check whether any of the information is accurate, correct or related to any other kind of activity. It is not involved in anti-money laundering obligations, but it really should be. Will the Minister look carefully at the question of Companies House? That could be a key part of preventing phoenixing in the first place. For example, I have a friend who employed a builder to do work on his house for his disabled son. The builder went bust and phoenixed, as he has done on several occasions. My friend is out of pocket, and that company continues to trade. It is employing sub-contractors who lost out last time because there is nobody else to hire them in that small community. There needs to be a stop on those types of people and behaviours, and I urge the Minister to consider ensuring that Companies House is a big part of that.
Jesse Norman
I thank both hon. Members for their comments. I draw from them strong support for the clause, although it was caveated in the way they described. Let me address the issues that they raised.
The hon. Member for Ilford North asked, “Why not do this earlier?” There is a long-standing principle in company law that the corporate veil should not be pierced, and limited liability should exist in place. As he will recall, there was a moment not so long ago when HMRC had Crown preference and was always the first, or close to the first, creditor to get paid out. It then got moved to the back of the queue.
As we think about the current insolvency and abuse regime, there has been a process of further reflection on all the different aspects of it, and that inevitably includes the phenomenon that we have seen. My impression—I do not know whether it is true—is that phoenixism is a better recognised phenomenon and a more widely understood problem than it has been. This is part of a much wider effort that has been made—particularly since I have been Financial Secretary to the Treasury, but before that, too—to really push on the issue of avoidance and evasion, and that is what we are doing.
The hon. Gentleman also asked about process. It is a perfectly good, important question, and I have been through it myself with HMRC officials. I will not read out the conditions in each case, but there are central cases for the issuance of avoidance and evasion notices, avoidance and evasion facilitation notices, and repeated insolvency notices. Each has some quite specific criteria sitting underneath it. For avoidance and evasion facilitation notices, a company must have begun an insolvency procedure or given assurance that it will; it must have incurred a penalty for facilitating tax avoidance or evasion; there must be a serious risk that some or all of that liability will not be paid; and the person must have a relevant connection to the company at the time that the behaviour leading to the penalty occurs. There are important threshold tests that must be met, and there are appeals processes against notices that have been filed, which are designed to provide safeguards, for all the reasons that one might imagine.
I have a degree of sympathy for the point that the hon. Member for Glasgow Central makes about Companies House. In the promoter strategy, which we published at the time of the Budget, we looked to create a more integrated approach to trying to crack down on abusive avoidance and evasion, and the promotion of avoidance and evasion. It has been in part about pulling together different entities, one of which might be Companies House and another of which might be the Advertising Standards Authority, if the two had been outside the purview of a more traditional approach. I take the hon. Lady’s point, and I thank both hon. Members for their support for this important clause and schedule.
Question put and agreed to.
Clause 97 accordingly ordered to stand part of the Bill
Schedule 12 agreed to.
The Lord Commissioner of Her Majesty’s Treasury (David Rutley)
One more!
Clause 98
Amendments relating to the operation of the GAAR
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
New clause 12—General anti-abuse rule: review of effect on tax revenues—
‘(1) The Chancellor of the Exchequer must review the effects on tax revenues of section 98 and Schedule 13 and lay a report of that review before the House of Commons within six months of the passing of this Act.
(2) The review under sub-paragraph (1) must consider—
(a) the expected change in corporation and income tax paid attributable to the provisions in this Schedule; and
(b) an estimate of any change, attributable to the provisions in this Schedule, in the difference between the amount of tax required to be paid to the Commissioners and the amount paid.
(3) The review under subparagraph (2)(b) must consider taxes payable by the owners and employees of Scottish Limited Partnerships.
This new clause would require the Chancellor of the Exchequer to review the effect on public finances, and on reducing the tax gap, of Clause 98 and Schedule 13, and in particular on the taxes payable by owners and employees of Scottish Limited Partnerships.
That schedule 13 be the Thirteenth schedule to the Bill.
Jesse Norman
One more clause unto the breach, dear friends; or close the wall up with our English dead, and possibly our Scottish dead as well—our British dead. We will rephrase the bard.
Clause 98 makes minor procedural and technical changes to the general anti-abuse rule referred to as the GAAR to strengthen its procedural efficiency and ensure that it operates as originally intended. The clause tackles a small minority of taxpayers who deliberately avoid, in this case, providing information and thereby frustrate HMRC’s ability to pursue inquiries into abusive tax arrangements under the GAAR.
The clause also introduces some minor amendments to remove ambiguity and to ensure that, where HMRC decides not to pursue a case using the GAAR, inquiries can continue using other arguments. This measure was announced at Budget 2018 and the Government published draft legislation for technical consultation in July 2019. The changes will help to protect over £200 million in tax revenue by ensuring that the GAAR works effectively.
As I have often said, the Government take a firm line against those who seek to avoid tax and try to circumvent the rules. The GAAR was introduced in July 2013 and it has become an important part of the Government’s strategy to clamp down on tax avoidance; to deter individuals from engaging in it in the first place; and to prevent promoters from marketing and selling such arrangements.
The GAAR focuses on tackling abusive tax avoidance. By abusive, I mean the sort of arrangements that push the boundaries of the law and are clearly not within the spirit of what Parliament intended. The GAAR legislation asks whether a specific tax arrangement is abusive and applies what is known as the “double-reasonableness” test. Tax arrangements are considered abusive if they cannot reasonably be regarded as a reasonable course of action. An independent advisory panel provides an opinion to HMRC on whether a tax arrangement constitutes a reasonable course of action.
The clause will strengthen procedural changes made to the GAAR previously in 2016 which tackle mass-marketed tax avoidance schemes. The changes in 2016 introduced provisional counter-action notices, which allowed HMRC a 12-month window to gather information and consider whether to continue a GAAR challenge or pursue a different approach.
Some taxpayers and advisers, I am sorry to say, have deliberately refused to co-operate with HMRC during that window, deliberately withholding information to prevent HMRC from making an informed decision. In effect, those people are seeking to run down the clock and it is right the Government take action to prevent this. At the moment, HMRC has no recourse against such people. Once that window closes, no further GAAR action is possible and HMRC is unable to pursue any alternative non-GAAR approaches.
The clause replaces the provisional counter-action notices introduced in 2016 with a simpler protective GAAR notice. This will enable HMRC to carry on its investigations beyond 12 months and it mirrors the way normal tax inquiry notices work. The amendments will also confirm that where HMRC decides not to pursue the GAAR, cases can still be pursued using a technical non-GAAR argument. That has always been the intention of the legislation.
The changes remove the incentive not to co-operate with requests for information and ensure that appropriate safeguards, such as appeal rights and the oversight exercised by the independent GAAR advisory panel remain in place. Given that the GAAR targets the abusive end of the avoidance spectrum, the changes proposed here will only affect a small minority—those who persistently go to extreme lengths to sidestep the rules. These changes are needed now to ensure that HMRC can take action against those who are constantly looking for new ways to avoid paying their fair share of tax.
New clause 12 in the name of the SNP requires the Chancellor of the Exchequer to review the impact of clause 98 and schedule 13 within six months of the Bill receiving Royal Assent. Specifically, it would require the Chancellor to review the effect on public finances and on reducing the tax gap, particularly on taxes payable by earners and employees of Scottish limited partnerships.
In response, I highlight to hon. Members that amendments to the GAAR are minor procedural changes designed to ensure the policy operates as originally intended. The effects of these changes to the regime will not be visible within six months’ time. As with all tax measures, however, we will continue to review and monitor the effect of this change, as is standard.
HMRC already publishes the “Measuring the tax gap” report annually which shows how the tax gap has changed year on year for different forms of behaviour and different taxpayer groups. HMRC also publishes an annual report and accounts that provide specific information on the impacts of the GAAR, including the number of GAAR opinion notices issued. For that reason, I ask the Committee to reject new clause 12.
To sum up, these amendments ensure that the GAAR remains an effective tool in HMRC’s armoury for tackling abuse of tax avoidance. I therefore commend the clause and the schedule to the Committee.
Wes Streeting
As the Financial Secretary outlined, this clause is designed to tweak the system. Therein lies my criticism and my concern. The challenges we face when it comes to tax avoidance and abuse have been well documented during this Committee in relation to the loan charge. Even where Government have sought to clamp down on avoidance and HMRC has put in place controversial but rigorous arrangements, there continue to be, to this day, companies and promoters that tout schemes that are patently against the spirit and letter of the law. HMRC has made it clear that such schemes do not work, but those companies and promoters are still at it.
The most recent examples I have seen are of umbrella companies targeting public sector workers in the NHS. Rather than just tweaking, Ministers should be trying to give the general anti-abuse rule more bite. For example, they could extend the general anti-abuse penalty rules to apply a 100% penalty for any tax avoidance scheme that fails the GAAR or, more likely, fails for some other reason, but would have failed the GAAR as well. They could prevent operators of avoidance schemes simply running away from their liabilities and victims, making directors, shareholders and other associated persons jointly liable for the new GAAR penalty, as I alluded to in the previous discussion.
Umbrella companies create a unique opportunity to flog tax avoidance schemes to low-paid workers. We see that exploitation taking place. We could counter that by making umbrella company directors and associated persons jointly liable for unpaid PAYE, national insurance and VAT. We should make the promoters, scheme designers and independent financial advisers jointly liable for unpaid tax and penalties from a failed scheme, with a safe harbour designed to protect people acting in good faith. For example that could be where a promoter followed specific tax advice from a regulated adviser, where factual assumptions in advice were reasonable or where advice was shared with scheme participants; the list goes on. There are reasonable exemptions, or reasonable assessments could be made, where people are acting in good faith, but we still see far too many examples of people designing or promoting schemes in the full knowledge that they will make a quick buck but will not pay the consequences.
As we have seen, the Government and HMRC are trying to clamp down. When they catch up with people who have followed advice, often in ignorance of tax rules and in the belief that they were following good, independent financial advice, the bite really hurts. Why are we not going after the scheme promoters much more aggressively? Despite all the controversy—the headlines generated off the back of the loan charge, the debates in Parliament, inquiries and grillings before the Treasury Committee—we still have not got to the heart of the issue.
In my opinion, and that of many people following our proceedings, the people who design, contrive and promote such schemes are still not paying the price for giving bad advice to their customers, who believe they are following good advice and the law. We are not going to quibble about clause 98 and the tidy up it is doing, but I am disappointed by the lack of aambition. The Treasury has to be much more aggressive with the promoters than it is currently.
Alison Thewliss
In new clause 12, we mention the issue of Scottish limited partnerships. I make no apology for doing so, as they are still a problem. We only need to look at the ongoing campaign journalism by Richard Smith and David Leask on this issue to know that Scottish limited partnerships are being used in nefarious ways to move money and goods around the world. They have been involved in war crimes and all kinds of things. The loopholes existing in Scottish limited partnerships and Companies House must be closed by the Government. They are harming not only individuals who suffer the effects of these crimes, but Scotland’s reputation. They are called Scottish limited partnerships, but Scotland really has no part in it; they are an historic arrangement, but they are governed here.
There are still people not doing the simplest things such as registering persons of significant control. The answer to my recent parliamentary question suggested that 948 companies have still not registered a person of significant control. That is dramatically down from where it was, but it tells me that people are using other means to hide their money, rather than going through Scottish limited partnerships, and that no Government fines have been levied on the 948 companies that have not registered a person of significant control. That is money that the Government could have in their pocket. They are deciding that they do not want to pursue that for their own reasons. It really does stick in my craw that this is a continual issue: I have to raise it on the Finance Bill and the Scottish National party has to raise it in this House.
We are also concerned about the tax gap. The tweaks being made here are not really going to change that significant gap. In June 2019, HMRC published revised estimates, which put the tax gap at £35 billion for 2017-18, representing 5.6% of total tax liabilities. The Minister, no doubt, will say that the tax gap has fallen—it has—but that does not disguise the fact that it still exists, and that tax is money that could be coming into the revenues. It could be supporting businesses and individuals across the country and we could be abolishing policies such as the two-child limit, because the money would be there in the Government’s bank account. The Government could use that money rather than not collecting it. I could go into great detail, which I have here, about all the anti-avoidance mechanisms that have happened. I am sure other hon. Members are as warm as I am and would like to get some fresh air, so I will skip that in the interest of the patience of all colleagues.
We do need workable general anti-avoidance rules. They must tackle tax avoidance in all its forms. They must not exempt existing established abuse from action being taken. They must include international tax abuse within their scope. They must give the right to the tax authority to take action against tax avoidance, defined in an objective fashion capable of being numerically assessed, without the consent of the unelected authority. They must increase the burden of proof on this issue on to the taxpayer.
In 2014, the coalition Government announced the introduction of a system of follower notices and accelerated payment notices. In cases where someone is in dispute over their assessment, HMRC may issue a follower notice if this arises from the use of an avoidance scheme that is the same or similar to arrangements that HMRC has successfully challenged in court. In July 2017, HMRC reported that it issued over 75,000 such notices worth in excess of £7 billion and managed to collect nearly £4 billion. That is still a significant gap of £3 billion. HMRC must be able to collect the taxes it is due in real time instead of waiting for those judicial decisions.
With Scottish limited partnerships, the extent of the abuse of the current system is laid bare in the Global Witness report “Getting the UK’s house in order”, which highlights the deficiencies at Companies House that have been going on for many years. This needs to be dealt with soon. Reviews have been carried out, things have been talked about, but there has not really been any action. It makes no sense to me that we have such a system but do not allow it to catch the people it should be catching.
I sat on the pre-legislative Joint Committee for the Registration of Overseas Entities Bill in the last Parliament. That Bill seems to have disappeared completely. It would help to tackle some of the money laundering that goes on with property registered in the UK. People across the country, particularly in many London boroughs, see blocks of flats with nobody living in them. People could live in those flats. They are being used for money laundering and moving money about. We need to bring that Bill back and ensure those people are held to account. We should close these loopholes in the system and ensure that the tax that is due is collected for the benefit of all of us.
Jesse Norman
I am grateful to colleagues for their contributions. I want to take up some of the points made by the hon. Member for Ilford North. The delicacy and agility in his ability to pivot from detailed scrutiny to a swingeing extension of tax powers, and new taxes galore, is interesting to watch, but the fertility of his invention is great, and I will read his suggestions with some care, in the record. I am grateful to him for that.
The ugly truth of the matter is that tax avoidance and, in particular, the promotion of it, is an amoebic activity that tends to flow into empty spaces and to be parasitic, if amoebas can be parasitic—I am not sure whether they can—on good activity. So, right next to where we see good or lawful and legal activity, we can see some unpleasant, nasty and abusive tax avoidance.
The hon. Gentleman is right to focus on how we see new forms emerging. It means that the battle against tax avoidance and evasion is never fully won. I hope that he will take some comfort from all the work we are doing on the promoter strategy. It is designed not merely for potential new powers, but for a different way of thinking about disrupting the economics of the supply chain. To pick up on a point that he raised about effectiveness, the GAAR can lead to a fine of 60% of the counteracted advantage. It can be pretty substantial, and it has genuine teeth.
I hope what I say in responding to the point made by the hon. Member for Glasgow Central on Scottish limited partnerships falls within the framework of the Bill. The issue is well understood, and there is public concern about it, which is shared across the House. She will be aware that BEIS introduced some new reporting requirements for Scottish limited partnerships in June 2017. Since then, new registrations have declined sharply. Of course, there is a sump of existing partnerships and, as she will be aware, BEIS is consulting on wider reforms to prevent the criminal misuse of those partnerships but retain their core and, in many ways, effective and important other purpose. It announced reforms in that area as of December 2018, and the Government have made clear that they will legislate when parliamentary time admits. So although the matter does not, in its preponderance, fall directly within the clause, she is right to raise it and the Government are fully sighted in that regard, and fully seized of it.
Question put and agreed to.
Clause 98 accordingly ordered to stand part of the Bill.
Schedule 13 agreed to.
Ordered, That further consideration be now adjourned. —(David Rutley.)
Written Statements
(3 years, 10 months ago)
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Coronavirus Impact: BAME Community
(3 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Health and Social Care (Jo Churchill)
Today, Public Health England has published the result of ITS work to engage with individuals and organisations within the BAME community, to hear their views, concerns and ideas about the impact of covid-19 on their communities. As the House will know, my hon. Friend the Equalities Minister will be leading on the next steps, working with PHE and others. Copies will be deposited in the Libraries of both houses and are available on PHE’s website, https://www.gov.uk/government/organisations/public-health-england
[HCWS296]
Coronavirus: Easing of Restrictions
(3 years, 10 months ago)
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The Secretary of State for Health and Social Care (Matt Hancock)
On 26 March 2020, the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 came into force, imposing restrictions on people’s movements and gatherings, and requiring the closure of certain retail and public premises, in the interest of public health in light of the coronavirus pandemic. On 13 May and 1 June, we introduced some cautious easements of some of the measures in the regulations, in order to begin reopening the economy and returning to normal life, while continuing to protect the NHS and save lives.
Taking into account scientific advice and the Government’s assessment against the five conditions required for change, I have now made some further amendments to the regulations to ease the restrictions as has been announced by the Government in recent weeks.
The changes which have come into effect include allowing for adults who live without another adult in their household, including single parents with dependent children under the age of 18, to form a “support bubble” with another household, and allowing individual prayer in places of worship.
The changes also updated the arrangements for businesses. Non-essential retail can open, as can some additional outdoor attractions, including drive-in cinemas and zoos. Libraries will be able to operate an order and collect service. The amendments also expressly provide for people to make visits such as end of life visits where appropriate.
Publicly available Government guidance on gov.uk is being updated to ensure it fully corresponds with the amended regulations. These remain strict measures, but they are measures that we must take in order to protect our NHS and to save lives.
[HCWS295]
Delegation to the Parliamentary Assembly of the Council of Europe (Appointment)
(3 years, 10 months ago)
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The Prime Minister (Boris Johnson)
The hon. Member for Gower (Tonia Antoniazzi) has been appointed as a full member of the United Kingdom Delegation to the Parliamentary Assembly of the Council of Europe in place of the hon. Member for Walthamstow (Stella Creasy). The right hon. Member for Islington North (Jeremy Corbyn) has been appointed as a substitute member.
[HCWS294]
Covid-19: Disparities in Risk and Outcome
(3 years, 10 months ago)
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The Minister for Equalities (Kemi Badenoch)
On 9 June 2020, the hon. Member for Brent Central (Dawn Butler) made a point of order raising concerns that I misled the House about the role Professor Kevin Fenton had in the Public Health England (PHE) review of disparities in the risk and outcomes of covid-19, and also whether third-party submissions were part of its final report. As I was unable to attend to respond in person, I am writing now to do so.
On 4 June, I stated in the House that Professor Fenton was leading PHE’s review. A press release from PHE on the 4 May clearly stated, “Professor Kevin Fenton, Public Health Director for London will lead the review” of how different factors can impact on people’s health outcomes from covid-19. In the same press release, Professor Fenton said “We are committed to hearing voices from a variety of perspectives on the impact of covid-19 on people of different ethnicities”. Duncan Selbie, the chief executive of PHE, has since written to the hon. Member and me to clarify that the review Professor Fenton led refers to a parallel piece of work to engage with individuals and organisations within the BAME community.
I understand the purpose of this was to gain insights into what communities themselves felt the impacts of covid-19 were. This work was separate to the epidemiological review of the data, which the chief medical officer commissioned. However, they are all part of the work PHE has been doing to investigate this issue. Today, a document summarising this engagement and its findings was formally submitted to me and due to be published by PHE.
In regard to the hon. Member’s suggestion that I misled the House about whether third-party submissions were part of PHE’s report, my statement as I made it is accurate. Third-party submissions are part of Professor Fenton’s extensive stakeholder engagement work as he made clear on 4 May, which will contribute to and inform the next stage of work that I am taking forward.
[HCWS293]
House of Lords
Arrangement of Business
The Deputy Speaker (Lord Bates) (Con)
My Lords, the Hybrid Sitting of the House will now begin. A limited number of Members are here in the Chamber, respecting social distancing. Other Members will participate remotely, but all Members will be treated equally, wherever they are. For Members participating remotely, microphones will unmute shortly before they are to speak—please accept any on-screen prompt to unmute. Microphones will be muted after each speech. I ask noble Lords to be patient if there are any short delays as we switch between physical and remote participants. Oral Questions will now commence. Please ensure that questions and answers are short.
Constitution, Democracy and Rights Commission
(3 years, 10 months ago)
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Baroness Whitaker
To ask Her Majesty’s Government what will be (1) the terms of reference, and (2) the appointment process, for the constitution, democracy and rights commission.
The Minister of State, Cabinet Office (Lord True) (Con)
My Lords, the commission will examine the broader aspects of the constitution in depth and develop proposals to restore trust in our institutions and in how our democracy operates. Careful consideration of the scope of the commission is required, and further announcements will be made in due course.
Baroness Whitaker (Lab) [V]
Events have moved on since this commission was first announced. How will its remit and membership take account of the rights of black and minority ethnic marginalised and poor people, as well as the citizen’s right to a clean and sustainable environment?
Lord True
My Lords, the commission was promised in the Conservative manifesto last December. Since then, we have had the Covid crisis. As I said, further announcements about the commission will be made in due course, but I have no doubt that it will be able to take into account all events anterior to its creation.
Lord Strathclyde (Con) [V]
My Lords, when my noble friend the Minister is discussing the terms of reference for this commission, will he also consider the case for examining political interference by the judiciary, and for looking at the provisions of the Constitutional Reform Act 2005 and the possibility of the role of Lord Chancellor returning to this House permanently?
Lord True
My Lords, I cannot anticipate the scope of the commission at this point. Of course, like my noble friend, I well remember the appalling events when the Lord Chancellor’s office was abolished by a press release from No. 10. I assure noble Lords that the commission will be proceeded with in a more thoughtful and sensitive fashion.
Lord Kilclooney (CB)
My Lords, considering the increased indifference among some English Conservatives towards Scotland and Northern Ireland, can the Minister confirm that representatives from Scotland and Northern Ireland will be on the commission, who would ensure the future of the United Kingdom?
Lord True
My Lords, as I have said, I am afraid that I cannot respond in detail prior to the announcements of the scope, composition and focus of the commission. However, the noble Lord makes a vital point about our union, the preservation of which is fundamental to the objectives of the Government.
Lord Maxton (Lab) [V]
My Lords, can the Minister confirm that the commission will cover all aspects of the constitution, including that most basic of all: how we vote in both local and general elections? If, as I hope it will, the commission advises that it will go for electronic voting with an ID card which has built into it either a fingerprint or facial recognition so that there can be no cheating, will the Government implement the commission’s proposal?
Lord True
My Lords, again, I cannot anticipate the composition and focus of the commission. However, I can say to the noble Lord that the Government have already presented legislation on boundaries, which is before the other place at the moment, and we have also signified that we will look at matters relating to the conduct of elections.
Lord Wallace of Saltaire (LD) [V]
My Lords, I welcome the Minister’s statement that the Government are taking very careful consideration of the agenda. There is a great deal of expertise on constitutional and political issues in this Chamber. Will the Minister commit to a Lords debate on the agenda and terms of reference of the constitutional commission, either before the summer or at least in our September Session, to inform the process of consideration?
Lord True
My Lords, I had the pleasure of sitting on the Back Benches behind the noble Lord when he was on the Front Bench, and he will know that that is a matter for the usual channels to determine. For my own part, I always welcome discussion with anybody on this important matter.
Lord Wigley (PC) [V]
My Lords, I wish to press the Minister further on the relationship between the devolved Administrations and Westminster. If the terms of reference include looking at this interrelationship, as they most certainly should, can he guarantee, or at least press the Government to ensure, that voices from Cardiff, Edinburgh and Belfast are on both sides of the argument —with regard to the nationalist community in the three countries—as a central part of the commission to ensure that it has credibility in those three nations?
Lord Howell of Guildford (Con) [V]
My Lords, further to the question put by my noble friend Lord Strathclyde, will the proposed commission look at the relationship between the Supreme Court and Parliament? If so, will it look in particular at the recent controversial court judgment on interim custody orders in Northern Ireland and exactly who signed them back in the 1970s, given that the judgment seemed to ignore completely the clear wishes and intentions of Parliament, to misunderstand the normal workings of ministerial and departmental government and to take no account of the practicalities of direct rule administration in Belfast at the time?
Lord True
My Lords, my noble friend has great and direct experience of this issue. Obviously, the Government will look closely at the outcome of that judgment. I regret that, as far as the commission is concerned, I cannot add anything to my prior answers on its scope and composition. I assure the noble Lord that the Government will proceed with care and consideration.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, I am sure that the Minister is aware of the YouGov survey conducted last month, which showed that less than half of people said that the Government are “relatively trustworthy” or better. If we look around the world, to countries such as Germany, New Zealand and Iceland, levels of trust are high. That suggests that the underlying problem may be our system of an uncodified, opaque and unwritten constitution. Will the terms of reference consider why our system is trusted so little by the people?
Lord True
My Lords, I strongly disagree with the noble Baroness in her view that the people of this country distrust our governance and the Government. I remind her that the British people had an opportunity only last December to say what their view was on who should govern them.
Baroness Hayter of Kentish Town (Lab) [V]
My Lords, I appreciate that the Minister cannot tell us what is already going on but I wonder whether he could use his good offices—we know that he has a lot of influence—to ensure that, if the commission is to restore or enhance public confidence, it is taken forward on a cross-party basis and with a focus on excluded or disenfranchised groups, particularly BME groups, as we have heard, as well as the charity sector and civil society. Unless we all have confidence in the process, we will not have confidence in the outcome. Can the Minister assure us that he will use his influence to put the views he has heard today to those who are drawing up the terms of reference and membership?
Lord True
My Lords, I have the privilege of coming to this Chamber to hear the views of Members from all sides of the House; I do that, of course. We will continue to promote the United Kingdom’s interests and values, including freedom of speech, human rights and the rule of law.
Lord Bruce of Bennachie (LD) [V]
Given the stress of the combined impact of Brexit and Covid-19 on the devolution settlements, may I urge the Government to consider how a federal constitution could share fairly the powers, resources and decision-making allocated to and shared between the devolved Administrations and local authorities?
Lord Caine (Con)
My Lords, is my noble friend aware of the damaging impact of the retrospective application of the Human Rights Act on legacy cases in Northern Ireland, particularly in respect of former members of the Armed Forces and the police? Could the commission consider legislating to limit the scope of that Act?
Lord True
My Lords, I regret to say to my noble friend what I have said to other Members: I cannot answer that specifically. The Government are still considering these matters but, as with the other noble Lords I have answered, I will take close notice of what my noble friend says.
The Deputy Speaker (Lord Bates) (Con)
My Lords, all supplementary questions have been asked so we will move on to the next Question. I will allow a few moments for the Front-Bench teams to change places.
Social Housing
(3 years, 10 months ago)
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Baroness Sanderson of Welton
To ask Her Majesty’s Government when they plan to publish the social housing White Paper.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, we will publish the social housing White Paper later this year. It will set out further measures to empower tenants and support the continued supply of social homes. This will include greater redress, better regulation and improving the quality of social housing.
Baroness Sanderson of Welton (Con) [V]
My Lords, last Sunday marked the third anniversary of the Grenfell Tower fire, which highlighted the great need to address social housing. Meanwhile, coronavirus has shown the importance of having a home that is a decent, safe and secure. For many, this will mean social housing. Will my noble friend the Minister come forward with a clearer timeline than the end of the year as to when the White Paper will be published?
Lord Greenhalgh
I cannot add to the timeline that I have already provided. However, I will say that we are a matter of weeks away from publication of the new building safety Bill, which will transform the safety of many of those who are currently living at risk of similar events to Grenfell. That will form a new regulatory oversight for all tenants, including those in social housing.
The Lord Bishop of St Albans [V]
My Lords, these Benches welcome the upcoming White Paper, but we are still losing tens of thousands of social housing units annually, with a net loss of 17,000 in 2019 alone. Can the Minister confirm to your Lordships’ House that increasing social housing will be addressed in the White Paper, and is he able to give us some indication as to the steps that Her Majesty’s Government will implement to address this worrying decline?
Lord Greenhalgh
It is fair to say that the record of this Government is quite impressive when compared with the previous decade under Labour. Some 450,000 affordable homes is considerably more than the 399,000 built during the years 2000 to 2010. Of course, the Chancellor has already set out a considerable sum of money—an unprecedented sum of £12 billion—for the affordable homes programme and, by lifting the housing revenue account borrowing cap, many local authorities are now building council homes again. Although we are waiting on the social housing White Paper, a lot has been done to ensure the continued supply of affordable housing and social rented housing.
Baroness Neville-Rolfe (Con) [V]
With more and more demand for accessible homes for the elderly and the disabled—a need that has been highlighted by Covid—has the Minister seen Habinteg’s analysis of local plans? It shows that, of the 2.4 million homes already planned for by 2030, only 20% are expected to meet the Part M4(2) accessible and adaptable standards and that a mere 2% will meet the needs of wheelchair users in Part M4(3). What steps will my noble friend the Minister be taking to remedy this, either in the White Paper or perhaps more broadly?
Lord Greenhalgh
My noble friend makes an important point about the accessibility of social housing, and I will write to her about the specific measures we will be taking. I can say that, as well as accessibility, it is of course important that we continue to build supported housing for the elderly, and the supply of that should feature as a very important part of local plans.
Lord Alton of Liverpool (CB)
My Lords, has the Minister seen the report published by the Affordable Housing Commission which says that 13% of adults surveyed claimed that their mental health was being adversely affected by their housing situation? Does the Minister accept that behind the stress, and despite the significant strides which have been made, there is still a shortage of more than 1 million homes and places to live? We need to do more to target people in low-income groups, people who are poor and people who are young and still living in their family homes.
Lord Greenhalgh
There is no doubt that we need to see more homes of all types and tenures to house vulnerable groups, in particular those who have been mentioned by the noble Lord. It is important to recognise, however, that the amount of money which has been set aside for affordable housing—£12 billion—is an unprecedented sum, with which we seek to build 250,000 affordable homes, including those for social rent which the noble Lord has pointed out are so needed.
Baroness Warwick of Undercliffe (Lab) [V]
My Lords, I declare an interest as the chair of the National Housing Federation. It has been three years since the tragic fire at Grenfell Tower, and we owe it to the families and friends of the victims to ensure that this never happens again. The tragedy revealed the urgent need to rebuild trust between landlords and residents. Housing associations have been working, through the “Together with Tenants” initiative, to strengthen those relationships, and it is vital that the Government should support such initiatives to protect the rights and interests of residents. The earlier Green Paper emphasised the need to renew our commitment to social housing and to tackle stigma. Coronavirus has reaffirmed the value of having a safe place to call home. Will the Minister commit to using the White Paper to restate the value of social housing to our society and to invest in it?
Lord Greenhalgh
My Lords, it is important to recognise the points outlined by the noble Baroness about the stigma around social housing and that we do what we can to ensure that so-called “poor doors” are a thing of the past. In addition, we should continue to invest money in building affordable housing, including social rented housing, so that we have mixed and balanced communities. One of the points that is always raised is the need to ensure that there is no concentration of deprivation, and having a mixture of types and tenures of housing is critical for all communities.
Baroness Grender (LD) [V]
Does the Minister agree with the Conservative-majority housing Select Committee, which only last week stated that the building safety fund is an inadequate response to the current “cladding nightmare” and has too many restrictions, including against social housing providers? This White Paper was promised by Boris Johnson before the last election—originally, it was to be an urgent response to the Grenfell tragedy. Three years on, does the Minister accept that this is a promise which has not been met?
Lord Greenhalgh
Noble Lords will not be surprised to hear that I do not agree with that analysis. The sum of £1 billion to the building safety fund is to ensure that more high-rise buildings are remediated, and in particular to provide a recourse for those who cannot use any other means than public money. The provision of £1 billion is an unprecedented sum to discharge that, and of course we are delighted that so many people had already registered with the fund within several weeks of its opening.
Baroness Altmann (Con) [V]
My Lords, I welcome the £12 billion expenditure announced for social housing, but can I ask my noble friend whether there are any plans to encourage the use of pension fund assets, including local authority funds, to fund extensive social housing investment, which could ease the pressures on public expenditure?
Lord Greenhalgh
My noble friend has made a very good point, which is that we could use the returns from housing in order to increase investment. I shall have to write to her on the specifics of her point, but it should be noted that the removal of the caps on the housing revenue account was done precisely to enable more money to flow into the building of affordable housing.
Lord Best (CB) [V]
My Lords, a core characteristic of social housing is that its rents are genuinely affordable to those on modest incomes, but defining “affordable” is not easy. Will the White Paper cover this, and does the Minister agree with the Affordable Housing Commission—which I have the honour to chair—that a sensible yardstick is for social housing rents to absorb no more than a third of the take-home pay of those for whom social housing is intended?
Lord Greenhalgh
My Lords, the definition of “affordable” is certainly not an easy one. While the Government have not set a specific percentage of the incomes that people in social housing should be spending on rent, as suggested, the formula is such that it is typically around 50% to 60% of market rents.
Lord Kennedy of Southwark (Lab Co-op) [V]
My Lords, I declare my relevant interest as a vice-president of the Local Government Association. The cost of rent in the social housing sector has more than trebled over the past 40 years. This has pushed up the cost of living and made family finances harder. The Joseph Rowntree Foundation has previously discovered a strong link between the cost of rents in the housing sector and levels of poverty. What assessment have the Government made of the actual affordability of the limited social housing which remains and levels of poverty?
Lord Greenhalgh
It is fair to say that the differential between social and private rents has narrowed over a considerable number of decades. The policy of rent restructuring was started under the previous Labour Administration. However, as I said in response to a previous question, social rents continue to be at or around 50% to 60% of market rents. We are seeing a rise in rents overall, whether in the private or social sector. At this stage, we can say that being at around half the private sector level is a considerable discount in rent, although rents have risen dramatically overall.
The Deputy Speaker (Lord Bates) (Con)
My Lords, the time allowed for this Question has elapsed. Before calling the next Question, I will take a few moments to allow the Front-Bench teams to change place.
Manifesto Commitments
(3 years, 10 months ago)
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Lord Young of Cookham
To ask Her Majesty’s Government what plans they have to review their manifesto commitments as a result of the COVID-19 pandemic.
The Minister of State, Cabinet Office (Lord True) (Con)
My Lords, the coronavirus pandemic is an unprecedented crisis. The Government have rightly focused on providing stability and support to the people, families and organisations most affected by the outbreak. However, as the Prime Minister confirmed at the end of May in his evidence to the Liaison Committee in another place, this Government are still fully committed to meeting all commitments made in the 2019 manifesto.
Lord Young of Cookham (Con) [V]
I am very grateful to my noble friend for that reply, but one of the commitments in the manifesto said:
“We will not borrow to fund day-to-day spending”.
Another promised that the national debt
“will be lower at the end of the Parliament”.
Sticking to these commitments in circumstances that no one could have foreseen, as my noble friend just said, would prevent the Government continuing on their commendable path of doing what it takes to mitigate the recession. Will my noble friend encourage the Prime Minister to modify that statement?
Lord True
My Lords, my noble friend recognises that we are living through un unprecedented crisis at the moment but, as he will well know, the Chancellor of the Exchequer has said that later this year there will be a Budget Statement, which will address a number of the concerns raised by my noble friend.
Lord Hunt of Kings Heath (Lab) [V]
My Lords, another manifesto promise was for
“a long-term solution for social care”,
but we have been here before. Last July the Prime Minister, standing on the steps of Downing Street, said he had prepared “a clear plan” to
“fix the crisis in social care”,
but nothing happened, and the palpable neglect of the care sector during the current crisis has been all too evident. Where is the plan that the Prime Minister had so carefully prepared last summer, and how is it to be financed?
Lord True
My Lords, on social care, the noble Lord himself has a long and distinguished record as a health Minister. He will know that discussions about and consideration of this vital question have been going on for many years. I assure him that the question of long-term social care remains at the heart of the Government’s objectives.
Baroness Uddin (Non-Afl) [V]
My Lords, in February this year my noble friend Lady Kennedy of The Shaws launched in Parliament a report called Empowered Employment: Unlocking the Workplace for Muslim Women. With support from Oxford, Yale and SOAS universities, Dr Suriyah Bi surveyed 500 women at work, 84% of whom were highly qualified. They nevertheless face barriers to progression, including discrimination, Islamo- phobia and challenges from families and partners. In the light of the emerging information on socioeconomic disparities, in particular among Bangladeshi women, will the Minister say whether the Government will consider the economic empowerment of Muslim women in any reviews of their manifesto commitments?
Lord True
My Lords, the noble Baroness makes powerful points. The Government campaigned on commitments to tackle prejudice, racism and discrimination of all sorts and to improve the quality of evidence and data about the types of barriers faced by all people from different backgrounds, to help drive effective and lasting change. I undertake to the noble Baroness that this will remain an important and central aspect of the Government’s work.
Baroness Eaton (Con) [V]
My Lords, the manifesto committed Her Majesty’s Government to a review of children’s social care. In a Written Statement in February, the Secretary of State said it would be independent, broad, bold and undertaken at the earliest opportunity. Given the significant additional pressures faced by the vast majority of families and social workers during Covid-19 restrictions, this review is needed now more than ever. Can my noble friend the Minister confirm that its terms of reference, independent chair and launch will be announced soon?
Lord True
My Lords, I regret that the timetable of some government action has obviously been interfered with by the Covid emergency, but I think all noble Lords will agree that there is a vital social need to ensure that all sectors of society are protected during the Covid crisis. I repeat what my right honourable friend the Prime Minister said recently: the Government currently intend to proceed with all their manifesto commitments.
Baroness Thomas of Winchester (LD) [V]
My Lords, in April the Government said that in the light of the pandemic they were reviewing the development of the manifesto commitment to establish a national strategy for disabled people. Disabled people badly need some good news. Can the Minister give us some about the strategy?
Lord True
My Lords, I can add little to the previous answers I gave to the noble Baroness, Lady Uddin, and my noble friend Lady Eaton. Of course, the Government attach the highest importance to tackling diversity and disadvantage of all sorts, and that remains our objective.
Lord Balfe (Con) [V]
My Lords, the world has changed enormously since the election. The Conservative Party held power for two-thirds of the last century. John Maynard Keynes is reported to have said: “When the facts change, I change my mind.” Will the Government continue to support the working-class and trade union votes that got them into power through most of the last century and, when they adapt their policies, as they must, bear in mind the need for trade union and working-class people to continue—I stress the word “continue”—their support for the Government?
Lord True
My Lords, the Government intend to be and are a Government for all people and respect every person in this country, not only the many who—as my noble friend rightly said—voted for them. The Government have made a major change in the face of the Covid crisis in giving unprecedented help to people at disadvantage. That in itself is a manifest of this Government’s intent and spirit.
Lord Russell of Liverpool (CB) [V]
My Lords, I follow up and reinforce the point made in the pertinent question from the noble Baroness, Lady Eaton, and the Minister’s answer. Can the Minister please give an undertaking that during the review of the care system, careful attention will be paid to some of the innovative approaches that have evolved directly as a result of the lockdown and ensure that these are built into that review?
Lord Livermore (Lab) [V]
My Lords, to follow on from the question asked by the noble Lord, Lord Young of Cookham, in addition to promising not to
“borrow to fund day-to-day spending”,
the Government’s manifesto promised not to
“raise the rate of income tax, VAT or National Insurance”,
not to increase any taxes on small businesses and to “keep the triple lock” on pensions. Is the Minister able to guarantee that these commitments remain unchanged in light of the Covid-19 pandemic?
Lord True
My Lords, I am absolutely delighted that the noble Lord is such an avid reader of the Conservative manifesto; I hope he found it improving reading. I repeat that my right honourable friend the Chancellor of the Exchequer will make a financial statement later this year.
Baroness Randerson (LD) [V]
My Lords, even at the time of the general election, the haulage industry was seriously worried about the additional bureaucracy that a potential no-deal Brexit would bring. It has now suffered the crisis of the pandemic, and the Government are no nearer to getting a deal. Does the Minister accept that our haulage industry will not be able to cope with any further challenges this year? Do the Government accept that the transition period needs to be extended, as the haulage industry has requested?
Lord True
I pay tribute to the haulage industry; it has been an outstanding performer, and not just in this crisis. However, the answer to the noble Baroness’s question is no. The transition period will not be extended. That has been accepted by the European Union, and I suggest it is about time that it was accepted by your Lordships’ House.
Viscount Waverley (CB) [V]
My Lords, I have listened carefully to the Minister’s responses, but would it not be prudent, at this time of unprecedented national and international uncertainty, for the Government to adapt to these new circumstances, or are they to follow an end game, irrespective of the consequences? How can the repeatedly professed line of seeking a deep and special relationship with the EU, on the one hand, be reconciled with walking away from negotiations, on the other—and that is before a probable downgrading in relations and a global trade war with China, together with an untested strategic trade relationship with individual Commonwealth members?
Lord True
My Lords, we have moved slightly away from the manifesto. I do not know whether the noble Viscount saw the very friendly discussions yesterday between the Prime Minister and representatives of the Commission. There is a commitment on both sides to intensify negotiations to produce a satisfactory outcome. I remain confident that that is possible.
The Deputy Speaker (Lord Bates) (Con)
My Lords, the time allowed for this Question has now elapsed.
Covid-19: Mental Health
(3 years, 10 months ago)
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Baroness Tyler of Enfield
To ask Her Majesty’s Government what assessment they have made of the report The mental health effects of the first two months of lockdown and social distancing during the Covid-19 pandemic in the UK, published by the Institute for Fiscal Studies on 10 June; and what steps they plan to take in response.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Bethell) (Con) [V]
My Lords, the noble Baroness raises an important issue, and I am grateful to the IFS for this thoughtful report. It is too early to know for certain the mental health consequences of Covid, but we are deeply concerned about those who suffer from isolation, young people, those who have fears of economic uncertainty, and those with existing mental health vulnerabilities. I give thanks to mental health professionals, who have worked hard during the epidemic, despite difficult circumstances.
Baroness Tyler of Enfield (LD) [V]
My Lords, last week’s report by the IFS reveals how Covid-19 and the lockdown has had a major negative impact on mental health across the population, with women and young people particularly badly hit. Pre-existing inequalities in mental health have widened yet further. The report states that the scale of deterioration in mental health is of a magnitude unlike anything seen in recent years. What immediate steps are the Government taking to prevent this looming mental health crisis turning into an epidemic in its own right?
Lord Bethell [V]
My Lords, the report is extremely helpful and throws a spotlight on an issue that we are deeply concerned about. Immediate help includes a £4.2 million support fund for mental health charities, and a £5 million fund for Mind, specifically to support charities dealing with Covid-related mental health issues. We will continue to invest in mental health in the long term, to support this important area.
Baroness Thornton (Lab) [V]
My Lords, four in 10 pupils are not in regular touch with their teachers, there is a sharp educational divide between the rich and the poor, one in eight children and young people already has diagnosable mental health conditions, and the IFS research now reveals that those groups with the poorest mental health pre-crisis will see the largest deterioration. Does the Minister agree that the Government should put the same amount of resource, energy and imagination that they put into the development of the Nightingale hospitals, for example, into getting our children and young people back to school? Will the Minister commit to the YoungMinds five-point plan, which includes additional support for young people’s mental health as we move out of the pandemic, to meet rising demand, including recommitting to the measures outlined in the NHS Long Term Plan, in full, and funding additional early intervention services?
Lord Bethell [V]
My Lords, the noble Baroness, Lady Thornton, raises an important point on the mental health of young people. A primary concern is the effect that the epidemic has on young people, at a delicate stage of their development. However, the return to schools is a very delicate matter. It requires the confidence of both parents and young people. We do not want to create further distress or concern. Therefore, we are taking steps in a thoughtful and measured fashion, to ensure that both pupils and parents are confident about the journey back to school.
Baroness Brinton (LD) [V]
My Lords, research led by Louisa Codjoe at King’s College London on tackling mental health inequalities found that BAME people are less likely to contact their GP about their mental health, to be prescribed anti-depressants or to be referred to a specialist mental health service. Any failures by the professional health services lead to fear and mistrust among the community, perpetuating a cycle of poor access. How do the Government plan to prioritise access for BAME communities and training for GPs to overcome these barriers?
Lord Bethell [V]
The noble Baroness, Lady Brinton, is entirely right to raise the issue of attendance. One of the greatest concerns during the epidemic is the declining attendance at mental health services, at primary care level and in hospitals. We are working hard on that. Last week, we launched the first aid kit for psychological first-aiders. Public Health England has launched this important resource, and it is indicative of the kinds of measures we are putting in place to address the inequalities of which the noble Baroness speaks.
Lord Lilley (Con) [V]
My Lords, although it is strange to describe people who are, not surprisingly, worried about the current situation as suffering mental health problems, we should be concerned that so many young people are worried and stressed at present. Will my noble friend reassure any young people who have exaggerated fears of Covid-19 that they are more likely to be killed by lightning? I expect that many more young people have justified worries about the threat to their education and future job prospects. Will he abandon the physical distancing rule in schools and colleges, where it is unnecessary, and cut it to one metre elsewhere to enable the economy to recover?
Lord Bethell [V]
My noble friend is entirely right that the fears described as mental health issues are about not only Covid itself but the economic and social consequences. The impact on mental health of the financial crisis 10 years ago was profound, and largely driven by fears of economic hardship. That is paramount. Reducing the distancing is not currently government policy, but we have that under review and news is expected.
Baroness Campbell of Surbiton (CB) [V]
My Lords, the CQC reports that deaths of patients detained under the Mental Health Act have doubled in one year, to 122; 56 of these patients died with either confirmed or suspected Covid-19. In the same period, we have also seen the increased use of restraints and seclusion within secure units. What plans do the Government have to address and help reduce inequalities, to prevent further tragic deaths? What steps have they taken to review these questionable restraint and seclusion practices in psychiatric hospitals?
Lord Bethell [V]
My Lords, the investment we are making in mental health is profound. Our commitment is to £2.3 billion of extra funding by 2023-24. This is the sort of money necessary to provide the resources that will lead to a kinder, gentler type of mental health provision. I hope it will address the issues that the noble Baroness raises.
Lord Haskel (Lab) [V]
Has the Minister made any assessment of the effect on women of the ending of the self-employment income support scheme, since the inequalities report says that women still earn less, save less and are overrepresented in low-income insecure self-employment, notably in hospitality and leisure?
Lord Bethell [V]
The noble Lord is entirely right that the burden on women during an epidemic such as Covid is probably more profound in some instances than on men. Women carry a huge amount of the domestic burden and of the financial concerns for the family. The IFS report puts a spotlight on the huge pressures placed on women. That will be a focus for our study and work.
Lord Purvis of Tweed (LD)
My Lords, the Minister said that young people were the Government’s primary concern, but the Government’s waiting times and standards guidance of 2015 said that by 1 April 2016 more than 50% of young people would be treated within two weeks of referral. NHS England’s statistics for 2019 said that only 15% were receiving treatment within zero to four weeks and a shocking 25% were still waiting after 12 months. If this is the record before the crisis, what faith will there be in the Government’s addressing the problem after the crisis? Will the Minister apologise for this record of letting so many vulnerable young people down?
Lord Bethell [V]
My Lords, supporting children and young people’s mental health during and after the pandemic is absolutely a priority. Mental health providers are offering support using digital and remote approaches to continue assessment and treatment during social distancing measures. This is part of the wide range of support that we are providing. The noble Lord is entirely right that this area requires a huge amount of investment; we have committed to making that necessary investment.
Lord Reid of Cardowan (Lab) [V]
My Lords, the Covid pandemic has often been referred to as the invisible enemy. That is all too often true of mental health issues as well. Is the Minister aware that the campaign group Beyond Tomorrow has estimated that 83% of young people have said that the coronavirus pandemic has made their mental health worse? Will he guarantee that all young people and families who need immediate mental health support can get it to prevent the pandemic having long-term consequences for young people’s mental health?
Lord Bethell [V]
The noble Lord is entirely right to focus on the impact of the pandemic on young people. It is not yet clear how that mental health impact will take effect. The natural concern is that it will be long standing. One thinks back to the major economic shocks of the past, which often led to long-term mental health issues for those who found economic insecurity. The struggle to find jobs left them with damaged confidence and concerns about the future. With that in mind, we are very much focused on addressing young people’s mental health and the impact of the epidemic.
The Deputy Speaker (Lord Bates) (Con)
My Lords, I am afraid that the time allowed for that Question has now elapsed. That also concludes the hybrid proceedings on Oral Questions.
Arrangement of Business
The Deputy Speaker (Lord Bates) (Con)
My Lords, we now come to questions on the Answer to a Commons Urgent Question on the probity of the planning process. The Answer itself will not be repeated. For Members participating remotely, microphones will unmute shortly before they are to speak. Please accept any on-screen prompt to unmute. I remind the House that our normal courtesies in debate still apply in the hybrid way of working. Please keep questions and answers short.
Planning Process: Probity
(3 years, 10 months ago)
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Lord Kennedy of Southwark (Lab Co-op) [V]
My Lords, can the Minister confirm that he believes in the principle of the rule of law that everybody is subject to the law and no one is above it? How is it justifiable that Mr Jenrick is in his post, having acted so blatantly and having accepted that he acted unlawfully?
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, my right honourable friend the Secretary of State followed entirely the planning guidelines that were set out by the MHCLG. I do not accept the way that this has been put to me —that he in any way broke the law. He sought to ensure that there was no inference of bias and that the planning decision would be redetermined. That was agreed with the local planning authority in Tower Hamlets and the Mayor of London.
Baroness Pinnock (LD) [V]
My Lords, I declare my relevant interests as a councillor and vice-president of the Local Government Association.
Failure to declare lobbying, failure to provide reasons for planning decisions and failure to make such decisions in a public session by local planning committees could result in allegations of maladministration. Does the Minister agree that those requirements should also apply to the Secretary of State—and, if so, will the Government disclose all such documents in the Westferry decision process?
Lord Greenhalgh
Of course these requirements apply to the Secretary of State, but it is absolutely clear that at every step of the way, he disclosed all that he needed to disclose to the department, and that he followed the rules set out in the MHCLG’s propriety planning ethics.
Lord Lansley (Con)
My noble friend will be aware that public confidence in planning appeals and called-in decisions on appeals depends on speedy and independent reports from the Planning Inspectorate. Considerable progress was made last year, following the Rosewell review, in speeding up Planning Inspectorate decisions, but we may have lost quite a lot of that in the last few months. How might the Planning Inspectorate speed up its decisions in the months ahead to give greater confidence in these decisions being made?
Lord Greenhalgh
My Lords, probity in the planning system is absolutely critical to its function. We are also aware of the delays in making decisions on the part of the Planning Inspectorate. The Secretary of State and Ministers have insisted on the Planning Inspectorate responding to the current environment and delivering decisions from mid-June by virtual means.
Baroness Deech (CB) [V]
Is the Minister aware of another example of what appears to be a breach of the guidance on planning propriety, and less than impartial behaviour by the department? There have been a number of meetings between Ministers and representatives of the UK Holocaust Memorial Foundation, who are in effect appealing to the Minister to permit this controversial project. On 29 October, Mr Jenrick met with the co-chair of the foundation and its QC. The very next day, the foundation, without consulting Westminster City Council, wrote to the department to ask that the project be called in—and, within a week, it was. Was there, at this meeting, any discussion of the application being called in for the Secretary of State’s own determination?
Lord Greenhalgh
I do not feel that it is appropriate to comment on a live planning application. I am sure that the Secretary of State followed the MHCLG guidance on propriety matters in planning absolutely to the letter and disclosed all that he needed to, in this application and in all the others that he determined.
Baroness Andrews (Lab) [V]
My Lords, does the Minister agree that the probity of the planning system and its integrity rest on the integrity of the Secretary of State? Will he therefore urge his right honourable friend Mr Robert Jenrick to explain why he took the very controversial planning decision on Westferry Printworks on 14 January, the day before the CIL came into force in Tower Hamlets, thus saving the developer £40 million? Why did the Secretary of State then decide to quash his own decision, and why will he not fully and publicly—not just to the Cabinet Office—disclose all correspondence relating to that development?
Lord Greenhalgh
Let us be clear. It was the letter from the department that was sent out on 14 January. The determination by the Secretary of State was made a considerable time before that—certainly before the end of the year—and the planning application went on to his desk with the planning casework in December. As the noble Baroness will know, only a small proportion of decisions have ministerial involvement. Of the 447,000 applications, we are talking about 26 ministerial decisions, which is a tiny fraction. There are many occasions when the Secretary of State will decide to go against the planning inspector or the local planning authority to encourage the supply side of development—so I do not recognise what the noble Baroness says.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, I declare my position as vice-president of the Local Government Association.
Does the Minister agree that cases such as this, in which the judge found apparent bias and ruled against the Government, fuel fears that the country is not being run for the common good, and that the underlying problem is large private political donations? Is not the only way to protect Ministers to ban large private political donations?
Lord Greenhalgh
This is about the probity of the planning system. It is quite right that currently we do not have taxpayer funding for political parties. All the fundraising by the Conservative Party adheres to the guidelines around donations. Ministers have no part in that. That is a topic for another day, but, regarding probity in this matter, it is absolutely clear that my right honourable friend the Secretary of State followed the guidance on planning propriety, as outlined by the department, every step of the way.
Lord Robathan (Con) [V]
Following on from the question asked by the noble Baroness, Lady Deech, I pay tribute to the Holocaust Educational Trust that some dozen years ago took me on an inspirational yet horrifying visit to Auschwitz. However, Victoria Tower Gardens is the wrong place for an educational centre. Again, there is huge local opposition. It would cause congestion and pollution and destroy a precious green space in central London. Will the Minister take back to his department the message that the planning application should be sent back for local decision-making?
Lord Greenhalgh
I note my noble friend’s point about the strength of feeling locally about the location of this memorial, although I will not comment on a specific planning matter. I am sure that the decision will be determined entirely appropriately and in line with the department’s guidelines on ministerial involvement in planning decisions.
Lord Thurlow (CB) [V]
For our planning process to work effectively, it must be transparent, and decisions balanced and fair. However, for the public to read that both the Prime Minister and Mr Jenrick had private discussions with Mr Desmond or his team to sponsor a development worth hundreds of millions of pounds shortly before consent was granted is unacceptable, regardless of any questions of probity. Does the Minister not agree that this case should be reopened and reviewed?
Lord Greenhalgh
To be absolutely clear, those discussions over the development simply did not occur. My right honourable friend the Secretary of State was seated next to Mr Desmond. That was not of his choosing. The matter was raised by Mr Desmond and the Secretary of State refused to comment on the planning application. The position that we are now in is that to ensure that there is no inference of bias, as I said in a previous answer, this matter will be determined, as agreed, with the Mayor of London and the planning authority for Tower Hamlets.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, with respect, the Minister has not answered any of the questions put by my noble friends and others. Unless he does so now, will the House and the public not be justified in considering that the £12,000 that Richard Desmond gave to the Tory party at that Carlton Club dinner will be seen as cash for influence?
Lord Greenhalgh
With respect, I have been absolutely clear that fundraising by political parties is currently highly regulated and all the fundraising issues associated with this have entirely been followed. The Secretary of State was not aware that he was going to be sitting next to Mr Desmond, but made that fact and the fact that he refused to engage in a discussion on that specific planning application known to the department. Therefore, I can guarantee that the Secretary of State behaved with absolute probity and takes his duties as Secretary of State responsible for these planning matters seriously.
The Deputy Speaker (Lord Bates) (Con)
My Lords, the time allowed for the Urgent Question has now elapsed.
Arrangement of Business
The Deputy Speaker (Lord Bates) (Con)
My Lords, we now come to the repeat of a Commons Urgent Question on Covid-19 two-metre social distancing. For Members participating remotely, microphones will unmute shortly before they are to speak—please accept any on-screen prompt to unmute. I remind the House that our usual courtesies in debate still apply in this new hybrid way of working.
Social Distancing: Two-metre Rule
(3 years, 10 months ago)
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Baroness Wheeler (Lab) [V]
My Lords, the National Audit Office is the latest in a long line of independent organisations and care bodies to conclude that people and staff in care homes are an afterthought in the Government’s planning for Covid-19. We know that hundreds of thousands of vulnerable people who are shielding from the disease were not warned or included in the last-minute government decision on 30 May to lift shielding. Will the Minister please reassure the House that the impact of any change to two-metre social distancing in care homes, social care and for people whose shielding periods are coming to an end will be fully considered in the review and that advice to them will be a key part of the revised guidelines in good time for any 4 July announcement?
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Bethell) (Con) [V]
The noble Baroness highlights an incredibly important consideration in the review on the two-metre rule. Clearly, those who are vulnerable or in social care deserve the best protection necessary. SAGE has been extremely clear that two metres provides emphatically more protection than one metre, and the protection of our vulnerable people will be an important consideration in any review.
Lord Rennard (LD) [V]
My Lords, yesterday a Health Minister in the Commons repeated the mantra that advisers advise and Ministers decide. But trust in government has diminished greatly in recent weeks, so people need to know what is advised before accepting what Ministers decide. Can the Minister assure us that the advice to be provided by the Government’s scientific and medical advisers to this review will be published as it is written and submitted by them, independently of any government pressure, so that we will know whether or not any proposed change really is based on scientific and medical advice? There is a consensus that the Government were late on lockdown, late on face masks and late on testing and tracing, so we do not want to be premature in reducing the two-metre distance rule. Should we not be sure that we have a full track and trace system in place before considering easing the distance rules?
Lord Bethell [V]
I do not recognise the contention of the noble Lord. Having been in many meetings with our scientific advisers, I deny the suggestion that scientists are open to being pressured by politicians. The advice that they have given is clear-cut and it is for us to consider its value. The noble Lord does scientists no favours by implying that they might be changeable under pressure.
Lord Bowness (Con) [V]
There is a reluctance to give specific dates and targets, although targets on their own are not precluded in that reluctance. I am sure that my noble friend is aware that subjecting businesses, especially in the holiday and travel area, to this great uncertainty is giving rise to many problems, including among the general public, who do not understand why more specific dates or targets cannot be given. That means that there is a considerable lack of confidence. We have been told today that travel insurance companies are talking about not covering people unless they can show that they have complied with local social distancing rules. What efforts are being made by the Government to get a Europe-wide agreement on social distancing, especially at airports and on aeroplanes, and in restaurants and hotels?
Lord Bethell [V]
My Lords, I completely and utterly share my noble friend’s frustration about the lack of clarity, but a fact of this epidemic is that the Covid germ is incredibly unpredictable. We have fought really hard to apply the best and most up-to-date science possible, which has meant that there has been a real struggle to lay out the kind of clear framework that he and the public would like to see. We remain guided by the science; we work closely with our foreign neighbours; and we are working hard to put in place a clear plan to take us out of lockdown.
Baroness Meacher (CB) [V]
My Lords, does the Minister anticipate that the two-metre social distancing rule will in fact be reduced following the review? I might be wrong but I think that it will be, in which case access to masks on high streets and at stations will become absolutely urgent. What plans do the Government have to ensure ready access to masks across the country? Would the Minister like me to send him details of one company that provides and installs dispensers of masks and hand-sanitising gel free of charge? I declare that I have no personal interest in this company but I believe that it and others like it, if they exist, will have a vital role to play in tackling Covid-19 if the social distancing rule is in fact changed.
Lord Bethell [V]
My Lords, social distancing has without doubt been the most effective tool in the battle against Covid. That is why the Prime Minister has appointed the Permanent Secretary, Simon Case, to undertake a review, which will include the Chief Medical Officer and the Chief Scientific Adviser. The use of masks might offer some protection but in no way will it ever replicate the impact of social distancing. That is why we are not prejudging any review or making any assumptions about any changes.
Lord Reid of Cardowan (Lab) [V]
My Lords, some of the Government’s own scientific advisers have said that being one metre apart carries up to 10 times the risk of being two metres apart. Are the Minister and the Government willing to take that risk? If so, will any changes to the two-metre rule be reviewed, assessed and changed if necessary, and how often would such further reviews take place?
Lord Bethell [V]
The noble Lord’s maths is entirely right. That is why we are moving cautiously in this area, despite many people’s concerns and despite the profound effect on industries such as the hospitality industry, which we regret enormously. However, the main focus is to drive down the infection rate. If we can get the prevalence levels down sufficiently, social distancing will not be required any further, and it is on that target that we are focusing.
Lord Forsyth of Drumlean (Con) [V]
Do the Government accept that each day’s delay in reducing the two-metre rule will result in needless redundancies, that many of these jobs will go in the next few days and will not be replaced in the short term, and that we cannot wait weeks for a review? Failure to act now will see the loss of hundreds of thousands of jobs, and that will hang like an albatross around the neck of the Administration.
Lord Bethell [V]
No, I do not accept my noble friend’s analysis. In fact, social distancing, which is central to our strategy, has had an incredible impact on saving lives and protecting the NHS. You have only to look at the spike that is occurring in places such as Texas, Florida and, according to today’s news, Beijing to see what happens if you do not tackle the underlying prevalence of the disease and you allow the lockdown to end too early.
Baroness Finlay of Llandaff (CB) [V]
My Lords, do the Government recognise that if the blanket rule is relaxed for some, such as most primary school children, who appear to have a lower rate of infecting others, people who are shielding someone will be terrified that reducing the distance will endanger the life of the person they are protecting? Their need to maintain a greater physical distance will need to be clearly signalled—for example, through an officially issued lapel badge or lanyard, as I suggested yesterday—and they will need to have antibody testing.
Lord Bethell [V]
The noble Baroness is entirely right. The kind of differential shielding that she suggests may well play an important role in what we do going ahead. We must do our utmost to protect those who are shielded. However, we are also aware of the challenge of having confusing regulations. That is why we are currently holding the line. We are aware of the effects on the economy, and that is why a review is on the horizon, but until then we are focused on reducing the prevalence rate and protecting those who are most vulnerable.
Lord Mackenzie of Framwellgate (Non-Afl) [V]
My Lords, most people in my area of Durham appreciate Dominic Cummings for putting Barnard Castle on the tourism map—for the wrong reasons—but does the Minister accept that the prime ministerial adviser’s breach of the self-isolation rules, with the hypocritical support of members of the Cabinet, was a major cause of the loss of faith in the Government’s credibility regarding continued acceptance of the distancing rules in England?
Lord Bethell [V]
My Lords, I pay tribute to the British public, who have remained sensible and thoughtful to others, have largely borne the cost of social distancing and have abided by the rules of the lockdown. I express gratitude to all members of the public who have gone along with this incredibly impactful regime—a regime that continues to have a huge amount of support among the broader general public.
The Deputy Speaker (Lord Bates) (Con)
My Lords, I am afraid that the time allowed for questions on this Urgent Question has now elapsed. I call on the Whip to move that the House be adjourned until 1.30 pm for the Committee stage of the Corporate Insolvency and Governance Bill.
Corporate Insolvency and Governance Bill
Tuesday 16th June 2020
(3 years, 10 months ago)
Lords ChamberRead Full debate Corporate Insolvency and Governance Act 2020 View all Corporate Insolvency and Governance Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 113-I Marshalled list for Committee - (11 Jun 2020)
The Deputy Chairman of Committees (Baroness Henig) (Lab)
My Lords, a limited number of Members are here in the Chamber, respecting social distancing, and if the capacity of the Chamber is exceeded, I will immediately adjourn the House. Other Members will participate remotely, but all Members will be treated equally, wherever they are. For Members participating remotely, microphones will unmute shortly before they are to speak—please accept any on-screen prompt to unmute. Microphones will be muted after each speech. I ask noble Lords to be patient if there are any short delays as we switch between physical and remote participants. I should remind the House that our normal courtesies in debate still very much apply in this new hybrid way of working.
I shall begin by setting out how these proceedings will work. A participants’ list for today’s proceedings has been published and is in my brief, which Members should have received. I also have lists of Members who have put their names to the amendments or expressed an interest in speaking on each group. I will call Members to speak in the order listed. Members’ microphones will be muted by the broadcasters except when I call a Member to speak. Interventions during speeches or before the noble Lord sits down are not permitted, and uncalled speakers will not be heard.
During the debate on each group, I will invite Members, including Members in the Chamber, to email the clerk if they wish to speak after the Minister. I will call Members to speak in order of request and will call the Minister to reply each time. Debate will take place on the lead amendment in each group only. The groupings are binding and it will not be possible to de-group an amendment for separate debate. A Member intending to press an amendment already debated to a Division should give notice in the debate. Leave should be given to withdraw amendments. When putting the Question, I will collect voices in the Chamber only. If a Member taking part remotely intends to trigger a Division, they should make this clear when speaking on the group.
Clause 1: Moratoriums in Great Britain
Amendment 1
Lord Stevenson of Balmacara (Lab) [V]
My Lords, in moving Amendment 1, I shall speak also to Amendments 2, 5, 6, 10 and 14, which are either in my name or in the name of my noble friend Lord Lennie. As I am afraid is true perhaps of all our proceedings this afternoon, this is quite a wide group. A lot of issues are raised, and I hope that we will have appropriate time to ensure that the points made are recorded and responded to by the Minister.
Amendment 1 concerns the question of whether the new post of monitor should have an appropriate set of regulations and, if so, what they should be. The amendment makes a rather narrow proposal for qualifications from a UK chartered accountancy body. As a member of the ACCA, I should of course declare an interest in this discussion. I would have expected there to be a broad interpretation of this issue, and this is just a probing amendment to try to get a response on the record. It raises the wider question of whether the persons likely to be involved in acting as monitors should be restricted to those with an accountancy background, because in many cases we are trying to develop a new approach to company rescue and relaunch in this country. It does of course happen in many ways, but the Bill perhaps provides a focus for a new mission on this. Of course, over the years, those who were involved in this have grown up from a number of different backgrounds, including lawyers and other professionals, as well as accountants, and we should be alert to that.
A wider question is raised. There is very little in the Bill about what the Government have in mind for those who will occupy this key role. Maybe the Minister can put a little more shade into the detail of this. Perhaps he could offer that notes might be published at some future date relating to the post of monitor, or regulatory provisions put into the Bill in relation to points that might be raised on later amendments. Those are all important considerations. We do not want to hold back the Bill because it is important that we get it in play but, if this initiative to provide breathing space and time for companies to rethink what they are doing is to work in practice, we will need people with real additional skills to those that are available more generally within the IP profession at the moment. We will need to encourage them to develop those skills, bring forward their version of what we find works, and build on those.
Amendment 1 is perhaps rather narrow in its application when seen in print, but there is a broader resonance behind it, and I hope the Minister will be able to respond to that in kind. Amendment 2, which I will speak briefly to, is a question about independence of the postholder of the position of monitor. It was raised on Second Reading and in the other place. We assume that there is no question but that those appointed to the post of monitor will be truly independent and able to exercise judgment in relation to the future of the companies with which they are involved. But again the Bill is silent on this, and perhaps I can again ask the Minister to speculate on how he might bridge the gap there in relation to guidance or regulation itself if required.
Amendment 5, in the name of my noble friend Lord Lennie, touches on an issue that will come up in a number of groups today: the role of the employees involved in companies which might be considering the use of the breathing space, the consideration of a reorganisational restructuring or, if it goes down that route, going into administration to preserve the assets held within a company for the creditors who are due to be repaid. In the latter case where we go into formal procedures, the law already is very solid on the role that must be played by employee representatives of particular trade unions, and particular aspects of consultation are brought into it. But the Bill is silent on what would happen in relation to these new initiatives about breathing space and the idea of trying to restructure in the time provided for it.
Could the Minister mention, when he comes to respond, whether he is minded to think further about these issues? It may not be necessary to do it on this Bill, but I think it would give comfort to those who have this amendment and other amendments to be discussed later this afternoon if he could say something at this stage about the Government’s overall position towards union employee representatives in relation to ongoing companies’ works. Any of us who have worked in business know that a tremendous role is played by employee representatives in the business of companies. Anybody who denies that is either unsighted or is just being provocative. In a good company, it is as natural as the air we breathe to consult and discuss issues of substance in relationships within the company with your employees. If you do not do that, you will suffer. It therefore makes no sense to arbitrarily dismiss that as a possible way forward in this legislation. I look forward to hearing the Government’s response on that. Only good can come from any movement in this area.
Amendment 6 concerns an issue that was also raised at Second Reading and is worthy of further consideration. The Bill correctly places a limit on the aspirations for recovery in relation to the monitor and their work by suggesting that they must have in mind the idea that a company rescue would be a possibility. However, this amendment asks: does that not make that a little tight; and would it not be better to use a different word, such as “could”? If it is only a requirement for the monitor to have regard to the fact that there could be a rescue, that seems to me—and to others, perhaps—a better way of opening up the possibilities for how and in what form a company might be rescued. If we are in the business of making sure that companies carry on and saving them, we should not kill them off too early. It would be wrong if the Bill, perhaps through infelicitous phrasing, gave too much away at this early stage of the process. “Could” would be a better word. I look forward to the Minister’s response.
Amendment 10 deals with the timescales for the legislation, as do many other amendments on our agenda that will come later. This amendment is narrow in relation to the timings required by companies to get themselves through the first early stage of consideration on whether a rescue is possible and, if so, how it might be managed. At the moment, 20 working days is provided although there is a possibility for extension. We pose the question, in a probing way, as to whether 30 days may be better. It would be good to get the Government’s response to that. Perhaps we can return to this issue later.
Amendment 14, which is the last one that I will speak to at this point, returns to the rather more complex issue of how long a company or, in practice perhaps, a monitor has to review the state of play in relation to the company, identify its creditor problems, talk to those who are involved in the whole process of the company—including employees, as will often happen —and think through the implications for pensions and other internal commitments. The timing is deliberately left open but when we raised this at Second Reading and the Minister read it out, it seemed that there was effectively no stop on the time limit that could be applied to companies seeking this form of redress in relation to the moratorium. If it is the case that the moratorium could be extended permanently and that that is meant here, perhaps how that happens in practice should be more explicit than simply having to work it out from what the Minister says. This issue was also raised in reports from the Delegated Powers Committee and the Constitution Committee, so we may well come back to it later. Again, it would be helpful if the Minister could clarify this when he responds.
There are a number of other amendments in this group, which we will need to debate. In particular, I want to focus on Amendments 83, 84 and 85 in the names of my noble friends Lord Hendy, Lord Hain and Lord Monks. They are in themselves important but they are also important for the long-term future of the way in which the Government, and indeed the country, deal with company organisation in relation to the points that I have already made, for example about the treatment of workers. I hope that we will have some good debate and discussion on these amendments for future work if we do not see them passed today.
I beg to move.
Baroness Altmann (Con) [V]
My Lords, I have added my name to a number of amendments in this group. If I may, I will leave it to those who formally move the amendments to expand on their thinking and I will give just an overview, in the interests of time.
I support the Bill’s aims. Clearly, it is vital to protect as many jobs and businesses as possible during the pandemic, as the noble Lord, Lord Leigh, rightly says, but due to the speed with which the Bill was introduced, some of the novel ways in which individuals are introduced into the potential insolvency process or the corporate rescue process may need further strengthening. Indeed, further checks and limitations to reduce the risk of the moratorium being abused and more explicit duties on the monitor to ensure their independence are needed. The Bill does not impose any statutory requirement for the monitor to be independent of the company directors, who appoint the monitor.
Lord Mendelsohn (Lab) [V]
My Lords, I will speak to Amendment 3 and make some general observations.
Amendment 3 relates to the recognition of the appropriate debts of creditors. In particular, one must be concerned about smaller businesses, which may well suffer as creditors and unsecured creditors from such a transaction. While these may be smaller crumbs of comfort than the overall Bill, it is absolutely right that businesses that fall into this process properly recognise the full extent of the debts that they owe so that statutory interest is recognised as a cost and a consequence for them. It is right that these debts should be appreciated and recognised in the statements that the monitors have to put forward. I hope that the Minister will consider the Government introducing this measure, not just to make sure of the full amount that is owed to a company because of late payment and late settlement of their debts but also because it sends an important cultural message.
I support some of the measures introduced by other Members of this House. In particular, it is very important that we probe the Minister for much more detail about the role of the monitor. We must look at the qualifications, skills and independence of the people who will occupy those posts, as well as the costs.
Here I am concerned that the impact assessment itself shows that very little work has been done on the likely operating mechanisms of the Bill. The figures that it uses are from a study in 2010, and I hasten to add that in the last decade we have seen a significant increase in the rise of professional service costs, and the costs in the impact assessment do not fully recognise those.
We do not have a full appreciation of what skills are required for this, and I strongly support the notions expressed by my noble friend Lord Stevenson that there are many others who we might want to introduce into this area who have appropriate skills that are recognised by professional accountancy bodies. Many people who have been involved in the turnaround industry would do very well at this task—much better than qualified insolvency practitioners. I would be interested to hear the Minister’s comments as to how the Government will look at the appropriate skills that are required for someone to successfully be able to carry out the role of a monitor, including the measures to try to ensure the proper independence of the monitor, that they have a real view for the potential future success of the business and that they are not beholden to any particular class, but particularly those who are connected parties.
However, I strongly support the amendment, which addresses the difficult question about the time for a monitor. This process should be given an extended period, and it would be worth while in the first instance extending the first period to ensure that we do not go through a quick cycle to make sure that it is there.
On the amendment in the name of the noble Lord, Lord Leigh, while many people will consider this to be a difference without a distinction, he will be able to express the nature of his interpretation.
It is important also to probe the Minister on the fact that we have seen that many businesses, particularly at latter stages, like to structure themselves in such a way that they can move a variety of the different connected parts of the business through different processes, and will disaggregate the overall enterprise and take individual companies to be able to crush suppliers or deal with the dispensing of staff during that period. It is important that the application of a company’s business helps us ensure that companies do not act inappropriately and section off parts of their businesses, as we saw just a couple of days after Second Reading, with one of the most disgraceful pre-packs of all time. A connected part of a business was crushed in order to eliminate the full suppliers, and it isolated a particular business rather than the whole enterprise. It will be important for the Minister to give us some reassurance that the definition of a company does not allow businesses to game the system, or allow some form of recourse or interpretation that makes that possible.
Lord Hope of Craighead (CB) [V]
My Lords, I will speak to Amendment 4 on the Marshalled List, which is in my name.
The context for what I propose is to be found in new Section A8, which requires the monitor, as soon as reasonably practicable after the moratorium comes into force, to notify every creditor of the company of whose claim he is aware, giving notice of when the moratorium came into force and when it will come to an end. The importance of this duty is highlighted by the fact that the monitor commits an offence if he fails without a reasonable excuse to comply with it. That is as it should be, as the creditors need to know about the moratorium as soon as possible, because it has such an obvious effect on them and their interests. Their right to recover the debt is effectively frozen for the duration of the moratorium. That may have significant adverse effects, which may need to be provided for urgently to avoid the creditors’ financial embarrassment. But the monitor’s duty to notify the creditors extends only to those of whose claims he is aware. There is no suggestion anywhere in the Bill, so far as I can see, that the monitor is under a duty to make inquiries. Therefore, the provision, as it stands, is a rather weak protection for the creditors, whose interests will inevitably be disadvantaged by the moratorium, against which they are being given no right to object.
In that context, I am proposing an addition to the list of relevant documents in new Section A6. These are the documents that must accompany the directors’ application for a moratorium. The amendment seeks to add to the definition of “the relevant documents” in Section A6(1) a list by the directors of all known creditors of the company. The aim of the amendment is to ensure that the monitor has access to this information as soon as possible. That is because he really does need it, if the performance of his duty to notify is to be effective for the protection of the creditors. The directors are, of course, in a much better position to say who the creditors are than the monitor, who is a newcomer to its affairs. Adding this list to the definition will greatly strengthen the effectiveness of the duty to notify in new Section A8. It will enable the performance by the monitor of his duty to notify to be much more effectively scrutinised, and enforced, if necessary, than it would be if all that can be done is to rely on what he happens to be “aware” of.
I should explain that the need for a provision of this kind was drawn to my attention by the Law Society of England and Wales. The wording of it has its support, and I invite the Minister to look at it very carefully. I appreciate, of course, the pressure the Minister is under to get the Bill through as soon as possible, and that the time he may need to get clearance for any amendments to it is also very limited. I would therefore be content if the Minister would give an assurance that he will indeed look at this matter and at the gap in the creditors’ protection that it exposes, perhaps with a view to an amendment by regulation under the power provided by Clause 18(1)(a), as R3 suggests, once the way these measures are working out in practice has been tested in the marketplace.
The Deputy Chairman of Committees
I understand that the noble Lord, Lord Lennie, does not wish to speak, so I call the noble Lord, Lord Hodgson of Astley Abbotts.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I have Amendments 8, 21 and 42 in this group. I remind your Lordships’ House of my entry in the register of interests.
The amendments are of a practical nature and are drawn from my experience as an investor in and director of private equity funds and small companies over many years. Before I turn to them, I will just repeat to the Minister how unsatisfactory is the way the Bill is being dealt with. We are mixing coronavirus amendments —which we all understand have to happen quickly—with permanent changes to our insolvency law, and this is a rushed job that may well rebound to cause more trouble for the Government than they like. The reason I want to repeat the points that I made at Second Reading is that since that debate on a Bill littered with Henry VIII clauses took place, we have had a report from the Delegated Powers and Regulatory Reform Committee. I do not think I have ever read a report that is quite so critical of a Bill. I have to say to my noble friend that if Members of your Lordships’ House are inclined to push amendments to restrict those Henry VIII clauses today or at future date, I shall feel obliged to support them, because we have a very bad mix here.
The purpose of Amendment 8 is to facilitate and encourage the use of moratoriums. Events leading to a company’s collapse proceed at two speeds. It first happens at a slow speed, while the directors think, hope and pray that something will turn up—that a contract will be won, some money will come in, or an investor will appear. Inevitably, when Mr Micawber does not turn up, things have to move very quickly indeed. Then, if they decide to appoint a monitor, the time for him to make his decision is very limited indeed. As we know from the wording of the Bill, he has to make a statement that it is likely that a moratorium would result in the rescue of the company as a going concern.
The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)
Lord Hendy? No? Then I call the noble Baroness, Lady Kramer. We will then try to get the noble Lord, Lord Hendy.
Baroness Kramer (LD) [V]
My Lords, I will speak to Amendment 22 in my name and that of my noble friend Lord Fox. I will also make a few comments on Amendments 25 and 40, to which I have added my name.
Amendment 22 seeks to achieve fairness for small entities which are creditors to a company entering a moratorium. Most small entities are very vulnerable if a major customer fails to pay on time. They do not have the volume of other customers to offset cash-flow problems; even in the good times nearly all of them find it very difficult to borrow from banks to cover cash flow, never mind in a situation where a major customer is entering a moratorium or, potentially, insolvency. So Amendment 22 adds these small entities to a list of priority creditors that are not subject to the moratorium delays. I would point out that the moratorium, while initially about 20 days, could stretch on to a year and beyond, so this is absolutely critical for small suppliers.
The second part of the same amendment—I admit that the language is extremely clumsy—deals with the problem that small entities are often strong-armed by their large customers into accepting excessively long payment terms compared to those that a large supplier would insist on. I spoke at Second Reading about the failure of many large companies to make prompt payment to small suppliers; the numbers are quite shocking. What I am attempting to do here is to right this underlying wrong by deeming that any payment due to any small supplier be treated as if, from the first day, it was an agreement for payment within 30 days, regardless of what is actually down on the piece of paper. In a sense, I am trying to move small companies on to an equal footing with the large suppliers to the company that is entering the moratorium, so it is two different ways. I hope that the Minister in replying will talk about this problem for small suppliers; it is very different in character to the problems for a big supplier who has many other customers, very good banking relationships and, potentially, access to the capital markets.
As I said, I have also added my name to Amendments 25 and 40. The noble Baroness, Lady Altmann, made the key points here, and I just want to reinforce them slightly. Indeed, the noble Lord, Lord Hodgson, in describing the behaviour of banks when speaking to Amendment 21, was in a sense also describing the kind of behaviour that one could anticipate that is relevant to Amendments 25 and 40.
Banks understand very well how to improve their position in a moratorium; it is quite possible to gain advantage by shaping the terms that are attached to new borrowings that take place from a bank during the moratorium—those are almost inevitable if a company is to keep functioning—and potentially to build into those new arrangements a mechanism that affects the acceleration of other payments and that levies fees and interest rates that are essentially well above market. This is, in a sense, another way of drawing more money out of the company ahead of other players. It is a way of gaming the system. I note that R3, the insolvency trade body, has written in support of the purpose of these amendments, so this is not paranoia on my part. I am a former banker and I know very well how I would have been encouraged to handle a situation like this; it is a much more broadly recognised problem. Again, I hope that we will hear from the Minister on this issue.
Lord Hendy (Lab) [V]
My Lords, in speaking to Amendments 83 to 86, I will begin with an introduction and then make two points, which will also shorten my contributions to amendments in later groups. The Government rightly foresee that, in consequence of the pandemic, many companies will run into or are already in financial difficulty. Companies become insolvent all the time; we all know the fates of Woolworths, Bernard Matthews, Mothercare, Thomas Cook, Wrightbus, Jamie’s Italian, Carillion, Flybe and many more. There were 17,196 company insolvencies in 2019 alone, but Covid-19 will make it worse.
Hundreds of thousands of workers are directly engaged by the companies in danger. There are hundreds of thousands more in their supply chains. Many will find themselves among the 2 million unemployed workers estimated by the Office for Budget Responsibility to join the 1.36 million unemployed before lockdown—a total of 3.36 million unemployed: a catastrophe. Not only are livelihoods at risk, but the terms and conditions, and the pensions, of those whose jobs are saved are also at risk. We have already seen this in companies that are not insolvent: pay cuts of 10% at the Daily Mirror; of 20% at BAM Construct; of 20% at Ryanair, with a loss of possibly 3,000 jobs; and up to 60% at British Airways, with 12,000 jobs to go.
There can be no doubt that the opportunities offered by the Bill, though generally welcome, will be utilised, as in Chapter 11 proceedings in the USA, to scrap jobs, cut pay and dump pension liabilities. I understand that the Minister has recognised the risk to pensions, yet the remarkable fact remains—and this is the first of my two points—that, in the 234 pages of the Bill, the workers, even those directly engaged, are not mentioned. They are at risk, but not protected.
Most strikingly, the Bill provides no requirement for workers and their representatives to be involved in the decisions that follow the recognition that a company is in financial difficulty and the consequences of such decisions—decisions that are profoundly likely to affect their futures. In the other place, it was said that, in court approval for restructures, the court will have regard to the workers and pensioners in its duty to ensure that the outcome is just and equitable. That will not wash. There is no duty to have regard to the interests of workers and pensioners, and no provision requiring workers or pensioners to be represented in or heard by the court.
It is true that Section 172(1)(b) of the Companies Act provides that among the considerations that directors must take into account are the interests of the employees. But the directors are not obliged to ask them for their views or discuss with them the possible consequences of an application under the Bill. Still less is there any requirement to bargain collectively over these matters. Directors commonly ignore the interests of workers when a company is in financial difficulty. Often, the workers first learn that the company has gone into liquidation on the TV, well after all key decisions have been taken—for example, at Carillion, or Flybe earlier this year.
Section 188 of the Trade Union and Labour Relations (Consolidation) Act requires consultation before redundancy. We know that too often, that does not happen, even where administrators have been appointed. It is often cheaper to liquidate the company than to keep it going while consultation takes place. In the administration of Woolworths, £67.8 million was paid in compensation for failure to consult. For Comet, it was £26 million. But the companies, directors and administrators that choose to break the law by not consulting do not pay. Where there are insufficient funds, the burden falls on the taxpayer, under Part XI of the Employment Rights Act, by which the National Insurance Fund pays—capped at £538 a week—up to eight weeks’ unpaid wages, wages in lieu of statutory notice, holiday pay and basic awards for unfair dismissal. Why does the taxpayer pay? Insolvency law distributes the risk of economic failure in a grossly unfair manner.
Lord Leigh of Hurley (Con) [V]
I will speak to Amendments 12, 13, 17, 18, 30 and 31, all of which are mine. Essentially, they make the same point, but I had to table several amendments to the Bill to cover it. The point is to allow an extension of the moratorium where the rescue of the business, as opposed to the company, is likely. I draw the attention of your Lordship’s House to my register of interests, which includes being deputy chairman of finnCap, a stockbroker, and senior partner of Cavendish Corporate Finance, which specialises in selling businesses. Unusually, I am speaking to an area in which I have some limited expertise, particularly in selling businesses.
I add to the remarks of the noble Lord, Lord Hendy, that private equity firms, banks and others do spread their risk, and insolvency is a devastating experience for the owner of a business, who may have spent years building it up and invested all their family wealth into it. They too need as much protection as possible.
At the moment, there is constant reference throughout the Bill to “the company”, but frequently, if not in the vast majority of cases, the actual limited company, or plc company, will not survive—there is simply no possibility—and there will be no return to the shareholders or equity at all. However, the actual business itself might well survive. For example, in the retail sector, many businesses trade from shops. The companies that have the leases with the landlords will disappear, but the businesses trading in those shops will, hopefully, carry on. Typically, they may be sold to a third party but, to do that, the directors or monitor will need time to negotiate a transaction that preserves the business and the jobs. I thank the noble Lord, Lord Mendelsohn, for inviting me to amplify the amendments, but what they are saying is pretty simple. In many instances, the business that is owned by the company is viable and likely to carry on, but there is no chance of the company so doing. The amendments in my name seek to address this.
Amendments 12 and 13 refer to the situation where a director wants to extend the moratorium with creditor consent, and Amendments 17 and 18 to where the directors apply to the courts. I share the concern of other noble Lords that the courts are going to be very busy as a result of the Bill, and I hope that sufficient resources will be given to them. Again, where the directors apply to the courts, the courts will see that the business may well carry on, even if the company is not able so to do. This will then allow the courts to instruct the directors to carry on the moratorium.
Amendments 30 and 31 refer to the circumstances where the monitor is in charge. I will make a few comments about the monitor in a minute. The Bill states that
“the moratorium is no longer likely to result in the rescue of the company as a going concern”.
This ignores the possibility that the business might well be rescued as a going concern. It is particularly important that the monitor is a person who is able to see that viability and implement it. It would be tragic if the moratorium ends for all the wrong reasons.
I support the noble Lords, Lord Stevenson and Lord Hodgson of Astley Abbotts, in emphasising the importance of who the monitor is. The noble Lord, Lord Stevenson, quite rightly made the point that it need not necessarily be a chartered accountant or an insolvency practitioner. It would be great if the legislation allowed the flexibility for a turnaround professional to be appointed as a monitor, albeit with the appropriate protections, as they really do know what they are talking about in enabling a business to carry on afterwards. The story from the noble Lord, Lord Hodgson, about the investigating accountants telling the directors that they would be back on Monday to carry out receivership is chillingly true; I have seen it in practice. I have also seen much better examples, where the investigating accountants have been told by the bank that under no circumstances will they be appointed as the receiver, or in our case monitor. So they are truly independent and are working to try to ensure that the business carries on, as opposed investigative accountants being appointed, who know that they might be appointed as the receiver, with subsequent huge professional fees.
It is vital that we try to ensure that the monitor is independent not just at the time of appointment, as these amendments suggest, but subsequently, and is not appointed as a receiver without proper investigation that their actions have been in the interests of the business. I will not amplify this point any more but will simply quote from the Insolvency Practitioners Association, which has said:
“Expanding the definition”,
as I have suggested,
“will enable monitors to more broadly assist businesses, working with their owners, stakeholders and directors to give them a greater opportunity to survive the economic strictures of Covid-19 responses”—
which is the purpose of the Bill. Without the amendments I have tabled, the Bill will be heavily emasculated.
Baroness Meacher (CB) [V]
My Lords, I thank the noble Lord, Lord Vaux, for his detailed amendment to Clause 12, and support it most strongly. I apologise to the Committee; I must be responsible for the fact that I am listed ahead of the noble Lord, Lord Vaux, who will move his amendment, but I hope that my brief comments will nevertheless make sense. As it stands, Clause 12 interferes in an unacceptable way in the commercial activities between companies. By restricting the ability of suppliers of goods and services to terminate contracts with a company that has entered a relevant insolvency procedure, the clause puts the viability of supplier companies in jeopardy, particularly if they are small, as other noble Lords have mentioned, or if their client company represents a substantial percentage of their sales.
Along with the noble Lord, Lord Vaux, I am particularly concerned about the provision in Clause 12 to allow the Secretary of State to remove exclusions in Schedule 4ZZA using subordinate legislation. As the Bill stands, small companies are excluded from the restrictions on supplier companies, so they can, at the moment, terminate their contract to supply goods and services to a client company when it enters relevant insolvency procedures. This is surely absolutely essential if we are to encourage new entrants to the supply sector and if we are not to threaten the future of small companies. As I understand it, the amendment in the name of the noble Lord, Lord Vaux, would permanently protect small companies from the effects of Clause 12.
Another control over supplier companies is the restriction preventing them from requiring payment of outstanding charges as a condition of continued supply. Such a restriction surely also risks the financial viability of the supplier. I question the morality of a Government interfering in the marketplace to protect one company, apparently at the expense of others. Will the Minister explain how the Government justify the different treatment of companies involved in insolvency proceedings and their suppliers? Why do the Government appear unconcerned about the future of supplier companies? I agree with the noble Lord, Lord Hodgson, that a major problem with the Bill is that it combines understandable emergency measures to deal with the Covid crisis with permanent Henry VIII powers. This has been the matter of most concern to the Delegated Powers Committee, of which I am a member.
In conclusion, I hope that the Minister will accept the amendment in the name of the noble Lord, Lord Vaux. If not, I hope that the noble Lord will bring it back on Report.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I declare my interests in the register as a company director. There are many good amendments in this group that I support, but I will limit my speech to the ones in my name, relating to creditor priorities and to review, and to a couple related to them. The background to Amendments 25 and 40 is the same as that already raised by the noble Lord, Lord Hodgson, and the noble Baroness, Lady Kramer. The position of financial institutions is uniquely privileged in that they will inevitably continue to be involved but they are not bound by the same conditions of moratorium as others who must continue to supply. They are not bound to normal supply terms or the ipso facto clause, and are free to accelerate and increase their demands, achieving elevation to both the amount and priority of their lending.
As well as the issue of priority, enhanced charges and advancement extract funds from the company, which is counterproductive to the very rescue that is the purpose of the moratorium. The effect of both those possibilities would be to leave unsecured creditors and, notably, pension deficits in a worse position in a subsequent insolvency. Put together, the two effects make the price of the moratorium too high, and the financial institution behaviour pattern is compelled to happen.
I do not need to remind the Committee that the operation of banks is not geared towards benevolence. I wish they had that in their articles but they do not; they are geared towards maintaining their own capital and their own profit, which is encouraged by bonuses and regulation. There have been some appalling examples of banks squeezing SMEs, for example as elaborated in the FCA’s report on RBS’s Global Restructuring Group, which this House debated last June. It is clear from that FCA report that there is no desire to interfere in contractual terms.
Baroness McIntosh of Pickering (Con) [V]
My Lords, I will address Amendments 1, 2, 4, 8, 28 and 42, as they clarify the role of the monitor and include safeguards on that role while ensuring its independence, which was the theme that I spoke to at Second Reading. We are obliged to the Minister and the department for bringing forward the Bill and we do not seek to delay it, but to strengthen its provisions. The aim of the Bill is clearly to support a company rescue. These amendments would strengthen the role and independence of the monitor. I emphasise the gaps that were addressed at Second Reading.
Amendments 1 and 2 to Clause 1, in the name of the noble Lord, Lord Stevenson, go right to the heart of what the role of the monitor should be. Its role is not to displace the existing management but to monitor company affairs during the moratorium, with the purpose of ensuring that in the view of the monitor the moratorium would be likely to lead to a rescue of the company as a going concern. These amendments, and the others I have referred to, would help the monitor by putting him in a stronger position. We must not detract from the fact that if at any stage during the moratorium the monitor believes that the rescue of the company as a going concern is not likely, the monitor must bring that moratorium to an end. Amendments 1 and 2, along with Amendment 4, in the name of the noble and learned Lord, Lord Hope of Craighead, address these points. Providing this list would actually save time in the long term.
A noble Lord spoke to the amendment about extending the time of the moratorium. Will my noble friend the Minister consider, when he responds to these amendments, whether this would add to or reduce the overall cost of the moratorium?
Amendment 8, together with Amendments 28 and 42 in the names of my noble friend Lord Hodgson and the noble Lord, Lord Palmer, further strengthen the role of the monitor. They could help to facilitate the rescue of the company and reduce the period of the moratorium. What is of interest, and key to these amendments, is that they were identified at Second Reading. I hope that my noble friend might look with approval on these amendments, which seem to meet with the approval of industry and the Law Society for England. There does not seem to be any view within the industry that they would do anything other than enhance the Bill.
I have to confess to having some sympathy with the remarks of my noble friend Lord Hodgson about any referral to, and reliance upon, Henry VIII powers. In my view, it is always preferable to address these issues in the Bill rather than leaving too much leeway to regulations that may be interpreted rather loosely and put more onus on the monitor and the courts in the long term. With those few remarks, I hope that my noble friend the Minister will look favourably on all these amendments.
Lord Palmer of Childs Hill (LD) [V]
My Lords, my Amendment 28 is on the definition of the role of the monitor. It also ties in with Amendments 1 and 2, referred to by other noble Lords. I declare an interest as a fellow of the Institute of Chartered Accountants.
There is concern among many fellow noble Lords about the lack of supporting information about the monitor. The monitor is an individual, as is a liquidator; in other words, this is not an appointment of a partnership or a limited company. Can the Minister address what the situation could be in the real world outside your Lordships’ Chamber? It seems that a firm of accountants or one of its partners, referred to by the noble Lord, Lord Stevenson, in Amendment 1, could be consultants to a troubled company; at the same time, the firm could be auditors to the same troubled company; now, it can be appointed monitor to the same entity; and, ultimately, if matters go downhill, the same firm or a member of it can be appointed liquidator. Can the Minister reassure the Committee that these fears of cross-contamination are to be addressed? The noble Lord, Lord Hodgson, gave a graphic example, and there are many others which many of us have experienced in business.
Amendment 2, also in the name of the noble Lord, Lord Stevenson, calls for the monitor’s independence from the company. I agree with that, but he or she surely needs also to be independent of the group of companies and the directors, not mentioned in the Bill.
I raised at Second Reading that the monitor—a newish concept—will, unlike a liquidator, not have control of the company’s assets. Can the Minister clarify what research has been done on what insurance cover is available to a monitor, who has no control of the assets?
Amendment 4, in the name of the noble and learned Lord, Lord Hope, calls for a list of creditors, which I heartily support, but this should also include potential debts hiding in the undergrowth, such as the cost of dilapidations. Is the Minister able to address the creditor who is the elephant in the room? I refer to the preferential status to be given under the Finance Act to HMRC for VAT. I understand that the argument is that the company has collected this and needs to hand it over, but is there not a similarity with the supplier of widgets essential to the business who is destined to be below the salt in the list of creditors requested in the amendment?
The noble Lord, Lord Leigh, raised much the same question as I raised at Second Reading, about the actual business as distinct from the company. There seems to be no recognition in the Bill that a business or the components of a business could be rescued. I am not sure that a monitor will help in that process. My noble friend Lady Bowles said that, in effect, the appointment may do more harm than good—it may do more good than harm; I do not know—but, as she so ably said, it is clearly a work in progress and not completely worked out. We look to the Minister and the Government to fill in the blanks before we feel easy about the Bill before us.
Lord Hain (Lab) [V]
My Lords, Amendments 83 to 86 are in my name and those of my noble friends Lord Hendy—who spoke so powerfully and compellingly earlier—and Lord Monks. Under them, companies would be excluded from moratoriums for not paying tax, for unpaid remuneration to employees and for breaching sex equality or equal pay.
The amendments are about setting standards with which firms in financial difficulty and seeking state support to stave off insolvency must comply. They aim to ensure that the interests of workers are not sacrificed in a blind rush to shore up businesses facing acute short-term financial pressures.
Baroness Burt of Solihull (LD) [V]
My Lords, I will speak briefly to Amendment 6, but I associate myself with the comments of my noble friends Lady Kramer, Lady Bowles and Lord Palmer. Amendment 6 in the name of the noble Lord, Lord Stevenson, to which I have added my name, concerns the threshold that a monitor must believe has been met for a moratorium to be suitable for a company.
Changing “would” to “could” seems on paper to be very small change to such a significant piece of legislation. However, given the relatively short timeframe within which the monitor must satisfy themselves that this criterion has been met, not to mention the difficulties in gathering all the relevant facts regarding the company’s trading, lending and general financial arrangements, it is likely that the cost of doing so will be significant. Under the current threshold these costs could be so high as to prevent the moratorium being used, which is obviously the opposite of what we all want to achieve. This slightly less definitive word could make a significant difference on a practical, working basis. I encourage the Minister to consider seriously this small but significant change.
Lord Vaux of Harrowden (CB) [V]
My Lords, I declare my interest as a chartered accountant. I start by associating myself with the comments of the noble Lord, Lord Hodgson of Astley Abbotts, and other noble Lords about the rushed nature of this Bill. This would be appropriate if it contained only emergency measures, but the Bill introduces important and permanent changes, and the number of amendments we are discussing today rather demonstrates that concern. I thank the noble Baroness, Lady Meacher, for her support for my Amendment 51 to Clause 12. It is to be debated in a later group so I shall speak to it then, but I am grateful to her.
I want to add my support to a number of amendments in this group, and I apologise for having missed the deadline to add my name to them. It is a rather diverse group, so I shall try to sub-group my comments by subject area. I turn first to Amendment 2, in the name of the noble Lord, Lord Stevenson of Balmacara, and Amendment 42, in the name of the noble Lord, Lord Hodgson of Astley Abbotts. Amendment 2 simply makes independence a qualification of the monitor, while Amendment 42 says that the monitor “must satisfy himself” that he is
“free of conflicts of interest”.
These really should go without saying.
The Government seem to be arguing that because insolvency practitioners are professionals, they will do this anyway. I confess that I have a healthy scepticism about the insolvency industry, which has a substantial ambulance-chasing component to it. Conflicts are common- place, and we have been given some good examples by the noble Lord, Lord Hodgson, and the noble Lord, Lord Leigh of Hurley. Making independence a legal requirement in the Bill would seem to be an extremely good thing, and it is hard to see any downside to that.
Secondly, I add my support to Amendment 4, proposed by my noble and learned friend Lord Hope of Craighead. This would simply add a list of creditors to the list of relevant documents that must be provided to the court when applying for a moratorium. This would be a simple and practical way of assisting the monitor to do his job, and in particular, to notify the creditors without delay. It is hard to see any downside to this and really it should be accepted.
Finally, I support Amendment 21, in the name of the noble Lord, Lord Hodgson, and Amendments 25 and 40, in the name of the noble Baroness, Lady Bowles of Berkhamsted. The amendments seek to prevent banks gaming the process by changing the terms of payments and costs during the term of the moratorium. It must make sense to ensure that banks, which will have all the negotiating strength in these situations, are not able to give themselves preferential terms, and so I urge the Minister to consider this matter seriously.
Lord Adonis (Lab) [V]
My Lords, I thought that the noble Lord, Lord Hodgson, made two very powerful remarks earlier in the debate when he said that this Bill seeks to do two separate things. The first is to introduce the emergency provisions in respect of the crisis we are in, and the second is making permanent changes to insolvency law. He also drew attention to the absolutely devastating report on the Bill by the Delegated Powers and Regulatory Reform Committee, which highlights a wider set of Henry VIII clauses than I have ever seen in a Bill of this kind, including the whole definition of which companies are affected by it under new Schedule ZA1, which can be changed by the Government by order, without any primary legislation. I am sure that we will want to return to that.
Even more extraordinary is the Government’s justification for why they have included all these Henry VIII powers, which is
“the undesirability of taking up Parliament’s time unnecessarily.”
Surely it is the job of Parliament to decide whether its time is being taken up unnecessarily, not that of the Government. I draw the particular attention of the Committee to paragraph 8 of the Delegated Powers and Regulatory Reform Committee report, which states:
“In our view, the presumption should be that where something needs changing which Parliament has enacted, Parliament should enact the changes by primary legislation rather than ministers make the changes by secondary legislation.”
That points the way to a number of key amendments that need to be made on Report.
Turning to this group of amendments, it suffers from exactly the same problem that the noble Lord, Lord Hodgson, said the Bill suffers from, which is that it puts together a whole lot of separate things that do not actually go together. Over the past hour and a half, we have debated three completely separate matters: the issue of the independence of the monitor, which is hugely important—my noble friend Lord Stevenson’s amendments in that regard are utterly compelling—along with the issue of wider conflicts of interest in the whole handling of the moratorium arrangements and the people who play a part in them, which again is a wider and separate issue. The third issue, which has been covered comprehensively by my noble friends Lord Hendy and Lord Hain, is the hugely important matter of consultation with the workforce and the priority to be given to employees and workers in these moratorium arrangements and anything that might follow from them. I hope that in his reply, the Minister will be able to pay substantial attention to all three of these areas.
I do not want to go over ground that has already been covered by my noble friends, but I would like to ask the Minister one specific question. In the early stages of the coronavirus crisis, the Government made great virtue of the fact that they were consulting employee organisations, trade unions and the TUC in order to create a consensus on the kinds of measures which would be needed to deal with it. Indeed, in the construction of the furlough scheme, the Chancellor of the Exchequer made great play of the fact that he had been talking to the general secretary of the TUC, Frances O’Grady. It is quite clear that there are concerns among trade unions about the whole way that these provisions will cut across established insolvency provisions and redundancy provisions. Therefore, I want to ask the Minister a specific question—or rather, two related questions.
First, what representations have been made to the Government about the role of employees and their interests in this Bill? Secondly, can he tell us whether he personally or any of his ministerial colleagues have met the TUC general secretary or officials from the TUC to discuss these provisions? I ask that because if we are seeking to proceed by consensus, by the time we get to Report, we will want to know what actual discussions have taken place with representatives of employees and whether we can satisfy ourselves that there has been adequate consultation. If not, the arguments made by my noble friends Lord Hain and Lord Hendy are compelling when it comes to amendments that we will need to make on Report.
Viscount Trenchard (Con)
My Lords, as other noble Lords have mentioned, this Bill is an unusual combination of Covid-related measures that clearly need to be fast-tracked, along with measures to implement the long-held belief that we need an equivalent to the Chapter 11 procedures of the United States.
I do not think that a hybrid House is particularly well suited to scrutinising legislation, especially in Committee. I do not think we will be able to say that this is working well. We are making the best of a difficult situation but it only goes to show that in order to scrutinise the Government’s legislation properly, we need to get back to the proper House as soon as we can.
The only good point I might mention is that, for the first time since we went to Virtual Proceedings, in this Committee we have no time limits. It is so nice and such a relief that we do not have my noble friend the Minister turning round to scowl at us as soon as we have gone 10 seconds over the prescribed one minute or two minutes.
Amendment 1, in the name of the noble Lord, Lord Stevenson, seeks to narrow the definition of persons entitled to be appointed as monitors from “a qualified person” to qualified accountants. I would not support this narrow definition because it may be too restrictive, especially for small enterprises. A monitor should be someone with a professional qualification, issued by a body whose members are carrying on a relevant regulated activity.
I agree with Amendment 2, in the names of the noble Lord, Lord Stevenson, and my noble friend Lady Altmann. It is important that the monitor should be capable of independence and objectivity. The current IESBA—International Ethics Standards Board for Accountants—code of ethics definition of “independence” explains it as being made up of two elements: independence of mind and independence of appearance. The former is defined to include integrity, objectivity and scepticism. The latter is defined as being free from facts and circumstances that would lead
“a reasonable and informed third party”
to conclude that integrity, objectivity or scepticism was compromised.
I ask the noble Lord, or my noble friend, to confirm which definition of independence they would apply and whether it should be a strict, rules-based one, comprising a list of prohibitions of those related by blood, marriage, shareholding, et cetera, or a looser one, based on principles and objectivity. I hope that a sufficiently robust definition of independence could be included, so as to render unnecessary Amendment 42, in the names of my noble friends Lord Hodgson of Astley Abbotts and Lady Altmann, which seeks to ensure that a monitor should not be exposed to any possible conflicts of interest.
As precise amounts can be difficult to assess, I support Amendment 4, in the name of the noble and learned Lord, Lord Hope of Craighead, rather than Amendment 3, in the name of the noble Lord, Lord Mendelsohn. However, I agree that some kind of document showing the number of a company’s creditors would be useful to the court in making a decision on granting a moratorium. As explained by the noble and learned Lord, Lord Hope, that would assist the monitor in his or her duty to notify every creditor.
The noble Lord, Lord Stevenson, makes a case in Amendment 10 for the extension of the initial period in relation to a moratorium from 20 to 30 business days; this means six weeks, rather than four. I think that 20 days should be enough, even for small companies. Obviously, it will not be enough time for a complex restructuring, but that is not the purpose of a moratorium as introduced in this Bill.
I support Amendments 12, 13, 17, 18, 30 and 31, as proposed by my noble friend Lord Leigh of Hurley. Like my noble friend, I also have spent more than 30 years as an investment banker, much of it doing mergers and acquisition business. Like him, I know just a little bit about this. In the case of companies which have both viable businesses and non-viable businesses, it may be that to rescue one or more of a company’s businesses is sensible in cases where a rescue of a whole company may not be realistic. Does my noble friend not therefore agree that his amendments would be improved further if, after “company”, they sought to insert, “or the whole, or some part, of the company’s business”? I understand that this issue was much discussed at the time of the Enterprise Act 2002. There are of course very many companies which contain only one, or one substantive, business. But surely, in other cases, it is the rescue of a business, as opposed to the rescue of a company as a legal entity, that is important.
I also support Amendment 27 in the name of my noble friend Lady Altmann. Where an asset has been pledged to a company’s defined benefit pension scheme, it should not be within the powers of the court to release it for sale without the consent of the pension protection fund, as well as, surely, the trustees of the pension fund itself.
Lord Liddle (Lab)
My Lords, I would like to make three points—briefly, I hope. The first is a point of process. It would be nice if the Minister acknowledged that this is clearly not a normal Committee stage. We are grouping different subjects in a way that we would not do normally, because of the urgency of the Bill. Given that we are moving to a critical economic situation, I accept that urgency, but this is not a normal way of proceeding. As the noble Viscount, Lord Trenchard, and the noble Lord, Lord Hodgson, have just said, the Government are trying to deal with the situation by mixing things that are required for the immediate economic urgency with longer-term reforms, and, at the same time, trying to deal with the uncertainties of what they will face by including lots of Henry VIII powers in the Bill.
This is a classic example of where effective post-legislative scrutiny is needed. We should have a committee to look at how the Bill is implemented, and to bring forward proposals for reform after six months, or a year, or whatever seems reasonable. My first point is that this is not satisfactory, and we need a process of post-legislative scrutiny.
Secondly, I am not an insolvency practitioner and I have never had to deal with anything insolvent. However, I am greatly interested in questions of industrial policy. Prior to the Labour Government coming to power in 1997, I read a lot of academic pieces about our bankruptcy and corporate insolvency provisions which suggested that our law was much tougher than that of the United States, and, as a result, was a barrier to the entrepreneurship that all sides of this House want to see flourish in this country. Indeed, the Labour Government went on to reform the bankruptcy and insolvency laws.
There is of course always a tension in this. The introduction of something equivalent to the US Chapter 11 has also led to abuses, and we have all seen instances of companies going insolvent, where, on the face of it, it looks as though their boards have behaved with a great deal of irresponsibility. It would be nice, therefore, to have a statement from the Government on what they think the responsibilities are to be of the monitor that is being introduced. In whose interests will the monitor be acting? What is the public interest in these legal reforms? This is not a matter for legislation, but rather for a major speech by Ministers, which would then be taken into account in subsequent interpretation of the legislation by the courts. As someone said, I am sure that there will be a lot of that.
On my final point, I have of course a lot of sympathy with my Labour colleagues who have pointed out that the trade unions, workers and employees have not had a fair deal in these matters in the past. I would like to see their rights strengthened in this legislation, but there has to be a balance. One of the most disastrous experiences of a crisis happened in the coal industry in 1926, when the union position of “Not a penny off the pay, not a minute on the day” led to a human tragedy of awful proportions in Britain. To save their company, the workers may be prepared to make sacrifices, but their position needs to be strengthened. Again, I would like from the Government a high-level political statement to say that they accept that our culture of capitalism has to change, that we have to move in a more partnership- driven direction, and that when dealing with the details of things such as insolvency law, we should try to reflect in legislation the need for a balanced set of rights and obligations.
I must apologise to the Minister: I have another engagement, which may mean that I will not hear his reply at the end of this discussion. I will, however, be coming back to the Committee as soon as I can.
Lord Balfe (Con) [V]
My Lords, I begin by endorsing what the noble Viscount, Lord Trenchard, said about the way we are conducting this. We are in a very unusual time, I accept, but I hope that as soon as possible we will get back to a normal House and a normal way of dealing with Committee stages—and with everything else, for that matter.
My second point is for the Minister, who of course comes from the north-east—not a traditional Conservative area, but one that has always had a strong Conservative vote. As we move forward, one thing we need to remember is that the last Labour Government was not exactly the best thing that trade unionism ever saw. They did basically nothing that the Conservatives wanted to repeal when they came in. I ask the Minister to remember that some of the great social legislation of Britain was actually passed by the much-reviled Neville Chamberlain when he was Minister for Local Government and Chancellor of the Exchequer in the 1920s and 1930s: such things as wage councils and some basic rights. The way Stanley Baldwin handled the aftermath of the General Strike contributed tremendously to the fact that the Conservative Party ran Britain for two-thirds of the last century and is well on the way to achieving that again. I make that point in beginning.
My next point is that insolvency is a sad necessity—in a capitalist economy companies go up and down—but it is as much a sad necessity for the workers as it is for the people who own the company, and we should never forget that. The workers in any industry do not go home at night thinking, “My company does not matter”; they are often devoted servants and they are as hard-hit by insolvency as anyone else. I ask the Minister to remember that, as we move forward into the 21st century, we may well need to rewrite the historic deal between the working people and the state in the same way that we did 100 years ago. As such, I will not endorse all these amendments, but I am particularly interested in Amendment 84 tabled by the noble Lord, Lord Hendy, and supported by the noble Lord, Lord Hain, on unpaid remuneration for workers.
One of the great tragedies and wrongs of recent events has been that workers—Thomas Cook is a good example—can put in a month’s work, suddenly their company goes bankrupt and they do not even get the three weeks’ wages for which they have just worked. I ask the Government not necessarily to accept Amendment 84 but to look at a way at least to prioritise the fact that if a company goes into insolvency, wages that are more or less immediately due to the workforce are paid—taken out of the present system, as I understand they are in Germany, and paid to the workers.
I also have sympathy with Amendment 27, in the name of my good noble friend Lady Altmann, which would prevent insolvency practitioners disposing of items that are pledged to a pension fund. If items are pledged, they are pledged and cannot just be taken back and sold off willy-nilly. I think the relationship between company pension funds and company assets needs to be looked at. Certainly, my noble friend’s amendment is well worthy of us having a look at to see what we can do.
I also point to something that will come up in a number of subsequent amendments, which is the need to protect pensions. Pensions are a worker’s deferred wages: it is not some bonus pot in the distance that they can have if they are lucky, but part of their remuneration. In a funny sort of way, one of the advantages of a defined contribution scheme is that at least it generally goes to the workers as it is earned, rather than being held on to by the company, but even that needs further looking at.
My final point is that I think we need to look at how the concerns of workers can be heard by the courts. Although I and many others often refer to trade unions, it is worth remembering that the trade union movement in the private sector is incredibly weak and we have to look well beyond trade unions at ways in which working people can be represented in insolvency situations. They should have some rights to be heard, and I believe that those who judge insolvencies should at least be prepared to, and be required to, listen to what they say and, in coming to their decisions, to make their reactions to their representations part of the response: in other words, workers have a right to be heard and to be responded to.
Having said these things, I welcome the legislation. There is never a right time for a Bill such as this. I have reservations about the Henry VIII powers, but I am prepared to see if this will work. Fundamentally, I think that the Minister, with his background, understand the concerns of working people, particularly working people from outside London, and I am sure that he will do his best to strengthen the Bill in the ways we are urging him to do.
Baroness Kennedy of Cradley (Lab) [V]
My Lords, I shall speak in support of Amendments 2, 42 and 5. Amendments 2 and 42 seek to make it explicit and clear to all relevant stakeholders involved in a moratorium that the monitor is expected to be independent from the company under consideration. The proposed moratorium is intended to give struggling companies breathing space to turn their businesses around and suspend, for example, a number of actions by creditors, such as chasing debts through the courts or enforcing securities, for as long as the moratorium is in force. To build confidence in the system, the monitor, who decides if the moratorium will help rescue the company, has to be independent of the company under consideration.
It is not unreasonable to assume that creditors will be worried that such a moratorium will be subject to abuse. The monitor is a safeguard in this regard, but will the monitor be able to allay creditor fears if they are perceived not to be independently minded and not to have conflicts? Having a high degree of control over which debts can be paid and which properties can be sold means independence is critical, especially as creditors can apply to courts if they disagree with these decisions. Surely, if the Bill is explicit about the monitor’s independence, it will give greater confidence to all concerned. I hope the Minister will support the intention behind the amendments and set out in his response how the Government will ensure that that independence is achieved.
Finally, I support Amendment 5 in the name of my noble friend Lord Lennie. It is right that once a company enters a restructuring process, there are mandatory talks with trade unions and those who represent employees. Having the right to be fully consulted and having access to the same information that goes to the courts will help ensure the protection of workers in the event of restructuring in an insolvency. I hope the noble Lord will address this too in his response.
Baroness Neville-Rolfe (Con) [V]
My Lords, I shall be brief. I agree with the question of the noble Lord, Lord Stevenson, about the need for clarity on timing and other issues on the moratorium. I was very interested in the comments of the noble and learned Lord, Lord Hope, on how we might proceed. I look forward to the Minister’s response on all the issues raised in this vast group, including on the interests of small business and on the notion of my noble friend Lord Leigh that we focus on businesses, and saving trading businesses, rather than on companies. I think we should listen to those with real experience of the market.
As my noble friend the Minister knows, I support the Bill and look forward to helping to get it through in a way that does not have unacceptable, perverse consequences, including addressing the concerns rightly articulated by my noble friend Lord Hodgson on the use of delegated powers.
Lord Bourne of Aberystwyth (Con) [V]
My Lords, I refer the House to my interests as published in the register. I thank the Minister for introducing this legislation, which has many valuable facets to it. I also thank the Law Society for its helpful briefing. I will particularly talk about the amendments that relate to the independence of the monitor, which are extremely important. The point has been well made that this is a simple matter to put right, and I hope that the Minister has been listening. It is clearly right that the monitor should be independent of the company. That runs to the very heart of company law.
I also very much welcome the amendment of the noble and learned Lord, Lord Hope of Craighead, relating to the provision of a list of creditors from directors for a monitor to work from. That is necessary for ensuring that the moratorium process works effectively, and deserves our backing too. I also welcome Amendments 42 and 28, which again relate to the independence of the monitor and ensuring that there are no conflicts of interest—matters that are easily put right, and I hope that we can do that.
It has been a long debate on this group of amendments so I will not detain the Committee long, but I share with my noble friend Lord Hodgson of Astley Abbotts a concern about the two different halves to this legislation. There is the half—no doubt very important—relating to insolvency procedures, which centres on the moratorium and is very welcome, and then there is the other half, which has an urgency about it and which we need to push through very quickly to protect businesses during the Covid crisis. It is as if we have two halves of different cars welded together, as might have been the case with Del Boy and Rodney in “Only Fools and Horses”, with predictable consequences. That is not to say that it cannot be put right, but we need to push through some important amendments to ensure that this works effectively. I hope that the Minister has been listening and will take on board some of the important points made as we have progressed through this group and, no doubt, as we continue throughout the other groups.
Lord Fox (LD)
My Lords, I draw noble Lords’ attention to my interests as set out in the register. The noble Lord, Lord Stevenson, in his understated way, called this a wide group of amendments and we have heard a wide and knowledgeable group of Peers speaking to it. I agree with the noble Viscount, Lord Trenchard, that we need proper scrutiny of this Bill. Whether we are here virtually or physically, cramming so many amendments into one group is symptomatic of trying to rush this Bill through. That will have unintended consequences, whether the noble Baroness, Lady Neville-Rolfe, believes it or otherwise. We are suffering from undue haste in trying to do in one day what should have been done over at least two or three days.
I will speak to a small number of amendments. On Amendment 10, the noble Lord, Lord Stevenson, queried 20 days and suggested 30 days. My question for the Minister is: why 20? What was the science and evidence that suggested that 20 was correct? The noble Lord, Lord Leigh, spoke about the courts being busy. Well, one way of relieving the courts of work would be to have a slightly longer period, because that would mean that the monitor would not have to go back to the courts so often to renew the process. Why 20 days and why not 30, or indeed some other number of days?
Amendment 2, to some extent Amendment 1 and certainly Amendment 28 ask the perfectly reasonable question of what the monitor’s role is. What is the correct qualification for the monitor? It is perfectly reasonable in a Bill such as this, with the role of monitor so central to this process, that we understand what that monitor is and who it might be. I look forward to the Minister’s comments on that.
This group, among others, contains a whole load of amendments that address what I call the creditor waterfall. Amendment 21 and, in different ways, Amendments 25 and 40, talk about the role of the banks and financial institutions and seek to restrain the advantage that those institutions can get from their special position within the creditor landscape. It is not in the Government’s interests to continue to allow these organisations the freedom of the remaining resources of a failing business. What was going through the mind of the Government when those decisions were made to set out this level of access and give financial institutions the run that they seem to get from the Bill?
My noble friends Lady Kramer and Lady Bowles and others talked about the role of small and medium-sized businesses, and Amendment 22 adds small entities to the list of those with preferential treatments. Amendments 37 and 40 call for a review after 18 months of how a moratorium is dealing with SMEs. This is an entirely different review from the other reviews that crop up on later groups. It is very much about how this is really affecting businesses. I am proud to put my name to Amendments 98 and 99, proposed by my colleague and noble friend Lady Bowles, which makes wages and salaries rank alongside continuing supplier and not below them. That seems entirely reasonable and I thought that she set that out very well.
All these issues set up the central point: the Bill is not a fully formed piece of legislation. The Government have recognised that, as my noble friend Lady Bowles pointed out, by granting themselves an almost unprecedented ability to rewrite it. They know that it is not the finished article. We will have an opportunity in later groups of amendments to discuss a better way of doing that and a way of giving Parliament the power to assess and possibly rewrite the rules, but I look forward to the Minister’s reply.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
I thank all noble Lords who have spoken in this debate. Yet again, the contributions have demonstrated the breadth of expertise that exists in this House. I must say to my noble friend Lord Trenchard that I would never scowl at him. This is entirely the job of the Whips and not my fault. While there is of course no overall time limit on speeches at Second Reading, there is an overall time limit on the debate in Committee. With that, I will address as many of the points as possible. I apologise to noble Lords if there is not enough time to address all their points, but I am happy to have individual correspondence or a meeting with anyone who does not feel that their concerns have been addressed.
The moratorium was a subject raised by many noble Lords. It is built on two pillars: that the directors believe that the company is insolvent or likely to become so, and that an insolvency practitioner thinks that the company is liable to be rescued having been in a moratorium—finances on one hand and viability on the other. The intention of the moratorium is not to make the creditors’ position worse nor to allow a company to delay an inevitable administration or liquidation. On the contrary, the intention of the moratorium is to rescue the company, and a rescue of the company will be better for creditors, better for suppliers and of course better for employees.
I say in response to the noble and learned Lord, Lord Hope, that, although I fully understand the intention behind his amendment, we are concerned that it would add another burden on to the directors of the company at a time when the company needs to enter into the procedure as quickly as possible. It has never been our intention that the moratorium should be used to “line up the ducks” for a pre-pack administration. Although they are subject to some criticism, we believe that pre-packs are a useful tool that allows businesses and jobs to be saved. However, as with all administrations, the likelihood of a substantial return to unsecured creditors is of course small.
The amendments tabled by noble Lords who seek to lower the barrier to entry into a moratorium to focus on the rescue of a company’s undertakings, rather than the company, could, in our view, lead to increased losses to creditors. The new moratorium provides protection for a company, perhaps further upstream than when administration is the only route open to it. If the company or corporate vehicle can be saved, the outcome for unsecured creditors will almost certainly be better than it would be through the form of insolvency that results in the sale of the company’s undertaking and its ultimate dissolution.
As has been said, the moratorium lasts for an initial period of 20 business days, although it can be extended relatively easily for a further 20 business days. In response to a point raised by the noble Lord, Lord Fox, and my noble friend Lord Leigh, we do not believe that it will lead to an increased burden on the courts. The moratorium is intended to be light touch as far as the court is concerned. Entry is by administrative filing, other than where overseas orders file a winding-up petition, rather than through judicial scrutiny. The courts get involved in longer moratoriums only if the monitor requires court direction or if there is a challenge to the monitor or to the directors’ actions. I hope that that resolves those issues.
Although, in my view, the amendment in the name of the noble Lord, Lord Stevenson, that seeks to permit small businesses an initial period of 30 business days is laudable, it does not appreciate the position that the company’s creditors are in. In our view, the moratorium balances creditor interests with those of the company.
The noble Lord, Lord Fox, asked why the period proposed is 20 days, and that of course is a good question. We consulted on what the period should be, and the clear view was that it should not be left for too long before creditors’ views are considered. The Government are confident that a moratorium with one extension lasting 40 business days is the right length. There is of course always a balance to be struck, and the company should seek the views of its pre-moratorium creditors on whether a moratorium should or should not continue.
A number of amendments have been tabled on the role and status of the monitor, including by my noble friend Lady Altmann, the noble Baroness, Lady Kramer, and my noble friend Lord Hodgson. It is important to say that only licensed insolvency practitioners—a highly regulated profession—are permitted to be monitors of company moratoriums. Practitioners are subject to very high ethical and professional standards. The insolvency code of ethics sets out five fundamental principles of ethics for insolvency practitioners. These include the need for objectivity and a duty not to compromise professional or business judgments because of bias or a conflict of interest. We believe that this strong regulatory framework underpins the independence of insolvency practitioners from those who appoint them.
Many of the amendments proposed by noble Lords, with good intention, seek to strengthen the independence of the monitor, but in our view they would in practice add nothing to the regulatory framework that monitors will already be subject to. Creditors benefit from strong protections. If they think that their interests have been unfairly harmed by the action, or indeed inaction, of the monitor or the directors during a moratorium, it is always open to them to challenge that behaviour in court. This specific right to challenge builds on the strong foundations of the regulatory framework.
In addition, employees are well protected. Requiring a statement from a trade union, alongside documents filed in court when a moratorium commences, as proposed by the noble Lord, Lord Lennie, would in our view add an unacceptable layer of bureaucracy. It might also risk a company’s financial problems being publicised before it is protected from creditor action, leading to unnecessary company failures. I repeat the Government’s view that the greatest support that we can give workers is to keep their businesses afloat, thereby saving their jobs.
The Deputy Chairman of Committees (Lord Bates) (Con)
I have received a request to speak after the Minister from the noble Baroness, Lady Falkner of Margravine. After the noble Baroness, we will hear a response from the Minister.
Baroness Falkner of Margravine (Non-Afl)
My Lords, for clarity, I did not request to speak after the Minister; it was due to an inadvertent error that I ended up not being on the list to speak when I should have spoken. In fact, as I am speaking after the Minister, I will use the opportunity to make one or two general observations about this process that conform to what the noble Lord, Lord Hodgson of Astley Abbotts, and the noble Viscount, Lord Trenchard, have said.
This is the second Bill in which I am involved in legislative scrutiny. The first one was when we had a virtual House, and with this one we have a hybrid House. I can only concur with everything that has been said about how a hybrid House cannot work for any kind of complex or contentious piece of legislation.
These are pieces of legislation with implications that, as several noble Lords have said, go beyond the immediate health and economic emergencies. They should not be passed by this House unless and until we have the capacity to undertake proper scrutiny. Normally, my only excuse for speaking at this point would be if the Minister had said something on which I needed further clarification; I would then have spoken before he had sat down.
The idea that one is still continuing to speak to amendments in this manner is regrettable, but there is a broader point, also raised by the noble Lords, Lord Liddle and Lord Adonis: this is complex legislation, we do not know when we will revert to normal procedures, and a vaccine may not be found. I hope that this situation does not continue for very long, but it could continue for some time. In that case, do the usual channels deal with the legislation that is pertinent to the health and economic emergency that we face in this House through these proceedings, as a necessity, and therefore, park legislation that has very long-term implications for all kinds of governance in this country, until this is over? I do not blame the Government. They are trying their best to deal with an emergency facing the country. However, I wonder whether there is some level of complicity—I use that word with care—in the usual channels, that they so comfortably settle into these extraordinary arrangements. If people were truly aware of what was happening, of how we are passing legislation and how we are conducting scrutiny, even in terms of Oral Questions, they would be quite astonished.
Turning to the Bill, I am not going to use the notes that I would have used for this speech, but there are one or two things it is important to put on the record. I declare an interest as set out in the register, concerning the Bank of England, and that I am speaking in a personal capacity on this Bill. I have already spoken about the inappropriateness of doing this in this manner in Committee, but I also want to say a word or two about fast-track legislation. I sat on the Constitution Committee when it did a report on when and how Governments should use fast-track legislation. In all candour, and with the highest regard for the Minister, there are measures in this Bill that are simply inappropriate for fast-tracking through the Chamber in this way. These longer term and permanent changes should not be discussed today.
In light of that, I completely support Amendment 37 in the names of the noble Baronesses, Lady Bowles of Berkhamsted and Lady Altmann, for the Secretary of State to conduct a review of the provisions for a moratorium, and to lay a report before Parliament. They indicate that the review should be done in 18 months, which is a fair timescale.
I also support Amendments 2, 4, 8, 28 and 42, in the names of the noble Lords, Lord Stevenson, Lord Palmer, Lord Fox and Lord Hodgson, the noble and learned Lord, Lord Hope, the noble Baronesses, Lady Bowles and Lady Altmann, concerning all aspects of the independence of the monitor. The danger of the Bill not making clear the separation and independence of the monitor is a perception that there was a closeness between the directors of the company and a lack of transparency for creditors. I support those amendments essentially to assist the monitor, those insolvency practitioners. I hear what the Minister says about their own regulatory framework and the onus upon them to behave in an upright manner, but as he noted in his closing remarks, there are enough safeguards built into the regulation of insolvency practitioners whereby these amendments are otiose. I argue that by having them in this Bill—which is subject to review if Amendment 37 passes on Report—if they were entirely redundant, we could do away with them in 18 months. The Secretary of State could then lay before us the report that says that these amendments are redundant. I argue that this helps the monitor at this point, and on that basis, I intend to support them on Report.
Lord Callanan
I thank the noble Baroness. I am sure she understands that her comments about the hybrid House are not a matter for me. I have responsibilities in a number of areas, but the operation of this House is not one of them, so I will allow her to take those up with those Members who are responsible. I am merely a servant and am prepared to operate in whatever way the House sees fit.
Addressing the noble Baroness’s points about the Bill, it is important to recognise that permanent provisions have not been developed just in the short time since Covid-19. Some of the temporary provisions have, but the permanent provisions were the subject of a considerable period of consultation and engagement dating back to 2015. The process included the then Government’s review of the corporate insolvency framework, a public consultation in 2016 and an extensive period of engagement since then with a wide range of stakeholders. Additionally, the Bill includes regulation-making powers to enable changes to be made as and where necessary, so there has been extensive consultation. The intention to legislate in this area was announced in 2018, but this crisis has made it imperative. The Bill offers important new flexibilities and rescue opportunities that may help many businesses to continue trading during this crisis, which I hope the whole House would agree is the ultimate objective
Lord Stevenson of Balmacara [V]
I thank all noble Lords for the huge range of points that have been brought to bear in this debate. It was inevitable, given the way that the amendments are grouped, that we would range far and wide over the Bill. It was not a repeat of the criticism at Second Reading, because we were drilling down into important areas which in other times might have been picked up for further consideration during the later stages of the Bill, but cannot be because of the short timescale we are talking about.
The Minister made only two substantial points in his response. He is going to bring forward amendments to protect the way that debts are accrued during the moratorium period. I very much look forward to seeing those—we welcome the news. There is a concern around the House about this particular area, where we step into uncharted territory with the idea of a moratorium, and we want to protect it as much as we can. More statutory-based procedures on this will be helpful.
I disagree with the Minister that workers and employees are well looked after in this Bill. The evidence does not support that. I leave it to others to judge from the contributions that were made by my noble friends Lord Hendy and Lord Hain; they made an unanswerable case for further consideration, but if it is not to be, it is not to be and we will just have to wait for another opportunity. However, the Government are well out of step here, and that is going to cause trouble further down the track.
My original amendment, which headed the group, was not the only point raised, as I made clear, but it was about an issue that picked up a lot of support. I am grateful to those who spoke in support of it, particularly those who also had amendments down which were spoken to during the debate. This is the question of how we are going to support the new position of monitor. During the debate I was alerted to the fact that the Government had published their draft guide for monitors. It is a pity that it was not available before this debate, but at least it is now. On a quick read-through, it is interesting that it is based very much on the current IP regulations, and goes so far as to suggest some formal amendments to those regulations, to allow for the role played by the monitor to be given a backing. However, it also makes it clear that these are very temporary statements by the Government, pending further work through statutory instruments, and I am sure that is right.
The Deputy Chairman of Committees
We now come to the group beginning with Amendment 7. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or any other amendment in this group to a Division should make that clear in the debate.
Amendment 7
Lord Leigh of Hurley
Lord Leigh of Hurley [V]
My Lords, this amendment is broadly similar to my earlier amendments—I am not quite sure why it is in a different group, to be honest, but so be it. It applies to the circumstances not of an extension but of an appointment of a monitor, and requires the directors to get the proposed monitor to state that it is likely that the moratorium would result in the rescue of the company as a going concern. The word “would” has been helpfully and sensibly addressed by the noble Lord, Lord Stevenson—it should be “could”—and again, the word “company” should have after it, as my amendment proposes, “or the company’s business”. I would very much like the Minister to specifically address this issue of the difference between company and business; unless I missed it, I do not think it was. If it is not possible to do so in his closing remarks, perhaps he would oblige me with a letter.
I am sure that the Minister will not be able to resist Amendment 62, in the name of the noble Lord, Lord Stevenson, as he is so confident that the courts will be able to cope. I am sure that he will find it most helpful to have a clause that requires a review of how the courts have coped. I beg to move.
Baroness Northover (LD)
I will speak to Amendments 71, 76, and 145, which are in my name and that of my noble friend Lord Fox.
These amendments all derive from the conclusions of the Delegated Powers Committee and relate to the often-unchecked powers the Government are seeking to take in the Bill. I thank that committee for its careful scrutiny of this and other Bills. As the noble Lord, Lord Hodgson, said, its report is devastating. There is clearly huge concern about the powers that the Government are proposing to take in the Bill, and most of the amendments in this group address those points. For example, the noble Lord, Lord Stevenson, by seeking to amend numerous places where the Government are taking powers, is challenging the Minister in each instance to justify that, and we will have to see what case the Minister makes. I also look forward to hearing what the noble Lord, Lord Blencathra, who chairs the Delegated Powers Committee, says.
The Government have argued that they need to act with speed because of the urgency of the coronavirus pandemic. However, many measures here will persist indefinitely, as the noble Lord, Lord Hodgson, made clear. We are proposing three specific changes, recommended by the Delegated Powers Committee. As all noble Lords here will know, although it may be less well known should people outside be following these proceedings, the committee’s particular concern is with so-called Henry VIII powers, named for his supposed preference for legislating by proclamation rather than through Parliament. These powers enable Ministers to amend or repeal provisions in an Act of Parliament using secondary legislation, which is subject to very limited parliamentary scrutiny. These powers thus transfer power from Parliament to the Executive: the Government.
Thus, for example, the Delegated Powers Committee notes that Clause 23 confers extremely wide powers on the Secretary of State:
“The powers include the power to make provision amending, or modifying the effect of, any Act of Parliament ever passed—including the Bill itself.”
That is an astonishing statement. The committee describes this as something that
“might be called a ‘super-Henry VIII power’.”
We therefore propose in Amendment 71 the affirmative procedure, where regulations under Clause 23 amend primary legislation, as recommended by the committee.
Amendment 76 addresses Henry VIII powers in Clause 37. The Delegated Powers Committee does not accept the Government’s argument that they need to act with speed and recommends
“that the affirmative procedure should apply where regulations … amend primary legislation.”
It outlines ways in which speed can be delivered, for example through a “made affirmative” instrument, which could come into force pending approval by both Houses within a specified period of time. Our Amendment 76 delivers the affirmative procedure.
In relation to Amendment 145, the Delegated Powers Committee notes:
“Each of paragraphs 2, 4 and 6 of Schedule 14 confer Henry VIII powers.”
It emphasises that the “made affirmative” procedure could be used and points out that the Government acknowledge this in other instances elsewhere. It recommends
“that the affirmative procedure should apply.”
Our Amendment 145 delivers that.
I am sure that, as ever, the Government will pay close attention to what the Delegated Powers Committee said, especially since these powers cause such disquiet across the House. They are also an especial target of those three notable lawyers, the noble and learned Lords, Lord Hope and Lord Judge, and the noble Lord, Lord Pannick, whose names often seem to represent not the stages of grief but the stages through which Governments proceed when they defend, then amend, such powers. I am sure that the Government will pay close attention to the committee’s report; I trust, therefore, that they will find all three of the amendments I have outlined here acceptable.
Lord Blencathra (Con) [V]
My Lords, I will move that Clause 1 do not stand part of the Bill but I have no intention of seeking to delete the whole clause. I use this mechanism to draw attention to the Delegated Powers Committee’s recommendations on the excessive Henry VIII powers in the Bill. I am honoured to chair that committee.
Last Wednesday afternoon, we published our report. We drew the House’s attention to a number of concerns about the use of the delegated powers in the Bill. I am grateful to my noble friend Lord Hodgson, who referred to our report with great approbation in speaking to his amendments in the first group. I am also grateful to the noble Lords and noble Baronesses who high- lighted other parts of our report and some of our recommendations.
In our report, we draw attention to
“New Part A1 of the 1986 Act, inserted by clause 1 of the Bill”.
That clause alone contains 10 Henry VIII powers allowing the Bill to be amended when it becomes an Act. I will not list them today; the noble Baroness who just spoke mentioned three of them in particular. There are also further Henry VIII powers in Clauses 23 and 27 and Schedule 1. As we reported, the powers in proposed new Part A1
“are all designed to be permanent changes to insolvency law. The justifications offered by the Government involve: ensuring that the provision remains ‘fit for purpose’; the need to act quickly; the undesirability of taking up Parliament’s time unnecessarily.”
We say in our report:
“Ensuring that something remains ‘fit for purpose’ means little more than that the Government want to be able to change the provision by regulations if their policy changes. In our view”—
it has always been Parliament’s view—
“the presumption should be that where something needs changing which Parliament has enacted”
in an Act of Parliament,
“Parliament should enact the changes by primary legislation”
in another Act of Parliament
“rather than ministers make the changes by secondary legislation … As for legislating quickly, this is often best avoided”,
as we have seen time and again that urgent legislation usually needs amending sooner rather than later to plug gaps or correct mistakes.
The report continues:
“And where legislation is needed quickly, the coronavirus outbreak has shown that Parliament is capable of legislating quickly”
when necessary. It goes on:
“As for not taking up parliamentary time unnecessarily, this is a matter primarily for Parliament. Parliament’s task is to scrutinise the Government, including the scrutiny of major legislation that has been drafted in haste and which confers wide-ranging powers on the Government.”
I have heard the criticism today that our hybrid procedure is not the perfect way to do Committee or Report work, but no one has said that we do not have the time to do some scrutinising. I believe that in our hybrid procedures we still have ample time to do more scrutiny of Bills before Parliament.
My committee concluded that
“the Government have not demonstrated the need for the Henry VIII powers”
we identified, adding:
“We recommend that they be removed from the Bill.”
But we did not stop there. We also recognised the need for speed and flexibility and recommended that many of the regulations the Government may need to make should be done using the “made affirmative” procedure. We all know that all Governments under all Administrations prefer to bash things through on the negative procedure with no scrutiny; it is great if you can get away with it, and I did it myself when I was a Minister. The justification is always speed and that they cannot wait for an affirmative resolution. That is sometimes true, but the “made affirmative” procedure allows for exactly the same speed as the negative procedure but also allows parliamentary scrutiny afterwards.
We said in paragraph 22 of our report:
“However, another procedure exists under which an affirmative instrument may be made and come into force before it is approved by both Houses. This is known as the ‘made affirmative’ procedure. Under this procedure, the instrument is able to come into force as soon as it is made, but it will automatically cease to have effect if it is not approved by both Houses within a specified period of time. The period specified for approval is usually 28 days or 40 days, subject to extension for periods of dissolution, prorogation or adjournment for more than four days.”
We said in paragraph 23:
“Regulations under the ‘made affirmative’ procedure can be made and laid as expeditiously as regulations subject to the negative procedure.”
I suspect that many government departments are simply fixated on affirmative and negative and do not know that the “made affirmative” procedure exists. If they know it exists, they will still try to get away with the negative procedure.
None of these are a proper substitute for a real Act of Parliament to amend another Act of Parliament, but at least the “made affirmative” procedure is far better than changing any Act of Parliament without any parliamentary scrutiny at all. I therefore conclude by asking my noble friend to remove these excessive Henry VIII powers from the Bill.
Baroness Taylor of Bolton (Lab) [V]
My Lords, I share many of the concerns that the noble Lord, Lord Blencathra, has just outlined. I will say a few words as chair of the Constitution Committee. I thank the Minister for calling and arranging to listen to some of the concerns that I thought the committee might have before Second Reading. He will therefore not be surprised by the amendments tabled, particularly Amendments 66 and 70.
First of all, I think everyone on the committee, myself included, recognises that there is an urgent need to protect businesses during this current pandemic, as other speakers have said today. As a committee, we are of course always concerned about the fast-tracking of legislation, but these are exceptional circumstances and we understand why things have to be done in an emergency.
However—and this is a big “however”—the problem is that the Government are fast-tracking not just the emergency measures required but the permanent measures. This is where the main difficulties arise, which are extremely problematic for everyone in the Committee. It is the reason that we have tabled Amendments 66 and 70. I will say a few words about each.
Baroness Fookes (Con) [V]
My Lords, I am delighted to support the noble Baroness, Lady Taylor, in the two amendments she has tabled, to which I have added my name. I speak not only as a member of the Constitution Committee but as a former member and chairman of the Delegated Powers and Regulatory Reform Committee. I was delighted to hear my successor speak so robustly and correctly. Over the years, I have become increasingly concerned by the way the Government take on to themselves more and more delegated powers. It is important, even when we have a serious problem with coronavirus, that we make our case firmly.
The noble Baroness, Lady Taylor, discussed the two amendments in detail, so I will not go into them, other than to say that Clause 18, which we are trying to soften, is an immensely powerful one. It gives the Government unrivalled powers to take whatever powers they think they need in this emergency, without much restraint.
I regard Clause 18 as King Henry VIII at his most obese, and it is time he was slimmed down; the two amendments standing in our names try to do just that. I thought we had got there with Clause 23, which was the expiry one, but, when you look at it closely, you find that it is not a sunset clause at all because it is possible to renew the power to make these amendments. So I regard it as a pseudo-sunset clause, and it is high time that we all make sure that the Government do not get away, whenever they want, with whatever they want. We must bear in mind too, that it will not always be the present Government; some of the powers would remain for other Administrations, who might not be as enlightened as I am sure the present Government think they are.
Lord Wallace of Tankerness (LD) [V]
My Lords, I am very pleased to follow the noble Baronesses, Lady Fookes and Lady Taylor of Bolton, who are both my colleagues on the Constitution Committee. I have added my name to the amendments that have been spoken to in the previous two contributions, and that carry on the theme of both my noble friend Lady Northover and the noble Lord, Lord Blencathra, about the wide powers in the Bill. As indicated by the noble Baroness, Lady Taylor, the Constitution Committee accepts that there is a need for temporary emergency arrangements to protect business and the economy in the current pandemic crisis. But the committee also stresses, in its seventh report, published last Friday, that:
“During times of crisis and emergency it is all the more important to be vigilant about constitutional principles, such as the rule of law and parliamentary accountability. The need for an urgent response to COVID-19 does not justify Parliament neglecting its duty to consider the constitutional implications of the legislation presented to it.”
As speakers have already mentioned, there are very wide Henry VIII powers in the Bill, not least in Clause 18, which Amendments 66 and 70 seek to address. The Constitution Committee in a report in the 2017-19 Session specifically looked at the use of delegated powers, and said that Henry VIII powers are
“a departure from constitutional principle. Departure from constitutional principle should be contemplated only where a full and clear explanation and justification is provided”.
One looks in vain here for some full and clear explanation. Rather, we are told, in the delegated powers memorandum:
“There are no specific plans to use the power to make temporary changes at present, but it is likely that its use will be considered where representations have been made by industry or where discussions with key stakeholders have identified areas where urgent legislation could help save otherwise viable businesses or mitigate the impact of the pandemic otherwise.”
That is not exactly what one would call an intimation of specific intent.
Notwithstanding these misgivings, Amendments 66 and 70 are relatively modest, so I hope that they will commend themselves to the Government. The noble Baronesses, Lady Taylor and Lady Fookes, have already explained how they will work. In Amendment 66, we seek that a review should take place and report to Parliament. We have reviews of the current emergency regulations, and we find that they are more often shared with the Downing Street press briefing than with Parliament, but this modest amendment would require a report to Parliament. Amendment 70 would see a sunset clause in effect no later than 30 April 2022. The amendment probably to be spoken to later in this group by the noble Baroness, Lady Neville-Rolfe, would have an earlier sunset clause, and I must say I find that somewhat attractive. In the Government trying to take powers like this, they should adhere to constitutional principle. When such widespread powers are sought, they should be well and truly limited in their effect.
Baroness Neville-Rolfe
My Lords, I am glad to follow my noble friend Lord Blencathra, chairman of the Delegated Powers Committee, and other experts on delegated powers. I am sure that we will get a helpful response from my noble friend the Minister on these wider powers. As has been said, I will speak on Clause 39 stand part and the Northern Ireland equivalent, Clause 40.
I tabled these amendments with the help of our excellent Bill clerks, alongside my Amendments 68 and 74, which I may not now need to move as my questions are exploratory in nature; that may help us to make progress. I want to open up a discussion on time limits, particularly of the emergency measures. As I said at Second Reading, I support all these measures, but they change the balance of corporate law and can make life more difficult for the lenders and investors that businesses need for success.
I am very concerned about the powers of extension, which I do not believe will be properly scrutinised if used. Some are more contentious than others; the noble and learned Lord, Lord Hope, raised a good point about wrongful trading, and, as I said, even delays in annual general meetings and corporate filings are unwelcome. These provide vital transparency and the opportunity for probing questions to be asked of companies. If the Opposition’s proposal to extend the emergency measures to the end of September is accepted, I see no need for an extension to the various emergency powers, and certainly not of the easy kind proposed. So that I can consider my position on Report on the various amendments that we are discussing, I would like more details from the Minister on the use of the powers of extension; more of an analysis of the downsides of the emergency measures, as well as their obvious advantages; and details of the criteria that will be applied if and when an extension of power is used, how any costs will be assessed and when the arrangements will sunset completely.
Clauses 21 and 22 seem very elastic—a pseudo-sunset clause, as my noble friend Lady Fookes said—which is not what we are looking for on these emergency measures.
Baroness Anelay of St Johns (Con) [V]
My Lords, I would like to speak to Amendments 87 and 88 in this group, which are in the name of the noble Lord, Lord Stevenson of Balmacara. I notice from the speakers’ list that he is due to speak just before the Minister responds to this debate.
I am very pleased to follow others who have talked at length about Henry VIII powers and their dangers and to hear from my noble friend Lord Blencathra, who chairs the Delegated Powers Select Committee. The noble Lord, Lord Stevenson, seeks to amend the Bill to reflect some of the criticisms in the delegated powers report, particularly regarding the Henry VIII powers, which would give the Secretary of State the power to change the circumstances in which a company can be eligible for a moratorium—by presenting an affirmative instrument to the House—and, in that way, avoid having to go back to primary legislation.
Amendment 87 removes the whole power; Amendment 88 circumscribes its use. I believe it is a very brave Government who ignore entirely the recommendations of this House’s Delegated Powers Committee. When the Minister responds, he may suggest one or two courses of action. Perhaps he will offer the House a more plausible justification for a definition of the need for speed that is mentioned—the need for speed for the wide powers that are currently drafted in paragraph 20 of new Schedule ZA1—and press ahead with the current drafting of the Bill. I believe that he may find that too difficult a mountain to climb.
On the other hand, he might say that, while the Government hold to their belief that it is in the interest of businesses that the Government should have the power to make swift changes to these provisions on the extendable 20-day moratorium, he and his department are considering how best to adopt Amendment 88, tabled by the noble Lord, Lord Stevenson of Balmacara, which follows a recommendation of the Delegated Powers Committee that, if the House were prepared to consider the “need for speed” a sufficient justification, the exercise of that power should be subject to a precondition under which the Secretary of State is required to be satisfied that significant damage would be caused to business were the power not exercised.
Lord Thomas of Cwmgiedd (CB) [V]
My Lords, I will speak briefly on the rulemaking powers. I first draw attention to my interests in the register, in particular that I am chairman of the Financial Markets Law Committee, which is interested in clarifying and making certain the law.
It seems that there is a clear dilemma. The Bill is needed very urgently. It is sensible to make the changes to insolvency law that have been consulted on for some time and to provide for a new form of reconstruction, but these are needed now and they cannot sensibly be left to a later time. However, the Bill is of such complexity and, in some areas, of such novelty that more time is needed to sort out the many technical points that continue to arise, despite all that is being done by the Minister, his department and the insolvency services.
Points are being identified all the time. I will give just one example that possibly illustrates the interrelationship between new points and the scope of the delegated powers. It is unclear whether financial service creditors with super-priority have a claim on assets charged to secure debts without super-priority. The Minister might say that these can be dealt with under new Section 174A(3) to the Insolvency Act on page 108 of the Bill, but it is not clear that that power is wide enough. I take that illustration because it shows two points: first, that areas of uncertainty remain, and, secondly, that it is not clear that the delegated powers are drafted in wide enough terms.
Normally, I would absolutely deprecate extensive Henry VIII powers, but I really feel that these are needed in the circumstances of the Bill. It is absolutely essential that uncertain points can be clarified, I hope while the Bill goes through its remaining stages over the next week, but if not by swift rulemaking changes or regulatory changes to it. Points will go on being spotted—some have already been spotted and not rectified—but certainty is essential if we are to weather the problems that will undoubtedly arise over the coming months. We obviously need safeguards. I do not wish to add to the length of what I wish to say by going through the various solutions put forward by the Delegated Powers Committee and the Constitution Committee, so ably explained by my noble friends Lady Taylor and Lord Blencathra.
However, I will emphasise that we cannot escape the need for delegated powers, we cannot escape the need for speed and we should make sure, because it is the reality, that we can iron out points of uncertainty as quickly as possible.
We might say that the courts can do this. I have no doubt that they can, but there are two things that one should say. First, there are issues of policy here which ought to be decided either in this House or by the Executive, and, secondly, there are bound to be mistakes which it is not possible for the courts to rectify.
The courts will of course have extra work, as people have acknowledged, and they may require additional resources. Amendment 62 suggests that there be a report on how the courts are managing and whether training is under way. My understanding is that a significant amount of training has taken place, but the adequacy and the scope of it is under the Constitutional Reform Act a matter for the judiciary and not for the Executive or for this House.
Lord Howarth of Newport (Lab) [V]
My Lords, as a fellow member of the Constitution Committee, I am delighted to follow my noble friend Lady Taylor of Bolton, the noble Baroness, Lady Fookes, and the noble and learned Lord, Lord Wallace of Tankerness. I also endorse warmly the powerful points made by the noble Lord, Lord Blencathra, and the noble Baroness, Lady Northover.
Amendment 66 would enable Parliament to “keep … under review”—a phrase we hear endlessly—the manner in which the Secretary of State keeps under review the use of the very broad Henry VIII powers to change the law on corporate insolvency by regulations which Clause 18 empowers him to make. As many noble Lords have said, if we are to have Henry VIII powers, which are in principle constitutionally offensive, a special and convincing case must always be made for their creation by the Government. If they are to be legislated for, they should be as narrow as possible to meet their specific purpose and they should not last a minute longer than—as far as this legislation is concerned —the emergency requires.
As has been noted, the powers in Clause 18 expire on 30 April 2021, but regulations already made under that power can be extended. Moreover, the Henry VIII power itself can be extended by regulations under Clause 22 for another year, and again and again thereafter. That being so, these clauses give the Government a blank cheque. So Amendment 70, which sets a final expiry date, is the very least that is required.
I am very attracted to the robust and no-nonsense approach of the noble Baroness, Lady Neville-Rolfe: simply abolish the clause. Clause 39, to which she spoke, is a wicked piece of legislation in constitutional terms. It creates a power for the Secretary of State to change the duration of temporary provisions and to keep on doing so, ad infinitum. It is the most self-indulgent of Henry VIII powers. It is constitutionally offensive, and it really should not stand part of the Bill.
I accept, as do members of the Constitution Committee and, I think, all other noble Lords, that there is an emergency which needs urgent legislative action and that, as long as the emergency persists, we will need provisions in place to protect as far as we can businesses that are vulnerable to the coronavirus crisis and of course the jobs of those employed by them or dependent on them indirectly. However, as has been noted also by the noble and learned Lord, Lord Wallace of Tankerness, in an emergency—and this applies especially in a prolonged emergency—the more important it becomes for Parliament also to be vigilant and to protect the principles of the constitution.
The Bill, which the Government are fast-tracking, is huge. It has 47 clauses, 14 schedules and 234 pages. Like Henry VIII clauses, fast-tracked legislation should be rare. It should be specifically and convincingly justified and its scope should not extend beyond the minimum necessary to achieve its purposes, although the scale of this legislation makes even more questionable the appropriateness of the fast-track process.
The Government are tracking the Bill so fast that the House of Commons barely saw it. Its Second Reading and remaining stages all took place on the same day; the remaining stages were transacted in half an hour. The Bill was gone in a blink and the House of Commons did not perform its proper responsibility, I regret to say, of scrutinising it. If the House of Lords steps in where the House of Commons fears or has failed to tread, and if we seek to advise and to do so by way of passing amendments, Ministers and even Back-Bench Members of Parliament are wont to express some resentment. But we have a responsibility to scrutinise and improve important legislation. What else is Parliament for? Noble Lords have made a large number of important observations and criticisms of flaws in the Bill today, particularly in the very long debate on the first group. What we need to do, I suggest, is to separate policy for the emergency from policy for the long term.
This brings me to my second objection, beyond the inappropriate fast-tracking of some of this legislation. As many noble Lords have noted, the Government should not smuggle in permanent changes to policy and law via fast-track emergency legislation. There are three sets of permanent changes, as I understand it, in the Bill. There is a procedure for a new moratorium on enforcement action against companies in financial distress, even though this procedure may be detrimental to creditors and investors, and therefore be potentially as damaging as allowing the debtor companies to go to the wall. The Bill also provides for permanent new arrangements for restructuring companies that are in financial distress, and for restrictions on contractual supplier termination clauses.
In winding up on the first debate the noble Lord, Lord Callanan, argued that the Government had previously consulted on the permanent measures. Indeed they did, but that is no excuse for seeking to bypass full parliamentary scrutiny of important changes to the law on insolvency. We are not making a fuss about the dignity of Parliament. We are complaining about the Government outflanking a process which actually enables them to get difficult changes right and give democratic legitimacy to changes in the law. In another context, the Minister was very keen to restore full law-making rights to this Parliament. I wonder how he justifies what I would regard as this two-fold abuse of Parliament: fast-tracking such a vast law and using emergency legislation to enact permanent changes.
If the Covid-19 effects should, unfortunately, persist in a very damaging form, Parliament should return in new primary legislation to the question of what emergency powers the Government should continue to be able to exercise. I was attracted by the proposal made earlier by my noble friend Lord Liddle: that there should be post-legislative scrutiny of the Bill. The noble and learned Lord, Lord Thomas, put it to us that delegated powers are essential in the emergency. Yes, they may be, but there should be proper sunset clauses attached to all the powers that the Bill creates, and especially the ones that are intended to be permanent, which should never have been in a Bill creating powers for an emergency. At the least, as the DPRRC has recommended, these powers should be amended to limit their use to a period only so long as the Secretary of State judges that the effects of Covid-19 require them.
Lord Mann (Non-Afl) [V]
My Lords, it seems that there are different rationales for why amendments can be put forward and supported. It is often because of the poor drafting of legislation; sometimes, of course, it is for political point scoring or, often, where there is a clear difference of opinion. Sometimes they are intended to save the Government from themselves and, having heard the arguments of the noble Lord, Lord Blencathra, and others, it appears that these amendments sit within the latter category if they are to have any validity. I note that the Law Society is rather supportive of some amendments, in contrast to the noble and learned Lord, Lord Thomas, although I found his arguments logical and persuasive.
Lord Fox
My Lords, the amendments in this group, along with those coming up in group six, are designed to pull back a Government seeking to overreach themselves and take on powers that should remain vested in Parliament. The Committee has heard strong arguments from the noble Lord, Lord Blencathra, and many members of the Constitution Committee, to back up this point. Amendment 66 hardens the requirement for the Secretary of State to keep the regulations under review by setting a timetable for those reviews and reporting them back to Parliament. This does not meet the idea of post-legislative scrutiny suggested by the noble Lord, Lord Liddle, but it does at least give Parliament the ability to review what is happening. Amendment 70 prevents the Clause 18 power being renewed on more than one occasion. In other words, it sets a hard stop of 30 April 2022.
Amendments 71, 76 and 140, tabled by my noble friend Lady Northover, to which I have added my name, seek to address the Henry VIII issues that were thrown up in such stark relief by the Delegated Powers and Regulatory Reform Committee. I do not need to add to the wisdom given by other noble Lords. It is absolutely clear that these could be transferred to an affirmative process. Were they to be so, this would not remove the Government’s ability to make the changes they think necessary to deliver the flexibility we may need in the crisis as it develops. The Government do not need to be frightened of this amendment. They can take it on board. It would calm down a lot of Peers.
Lord Stevenson of Balmacara [V]
My Lords, I am grateful to all noble Lords who have spoken in this interesting and wide-ranging debate. In contrast to that on the first group, it was quite well focused. There are only a couple of things that escaped the broader consideration of the two advisory committees we have been hearing from: the DPRRC and the Constitution Committee. Amendment 62, in my name, is oddly grouped in this debate but was meant to be helpful. I hoped that the Minister could reassure the Committee that all that needed to be done was being done to make sure the courts played their part appropriately—it is nothing to do with Parliament and, as the noble and learned Lord, Lord Thomas, said, nothing to do with the Government either.
Nevertheless, the funding needs to be there and the resources need to be available to ensure that the work is done properly to support the legislative attempts that have been made within the Bill. If it is of any interest, we tried in our amendment to add not just the judiciary but the staff of the courts, because they too have a part to play, but we found that that was out of scope, so the amendment focuses purely on the judiciary. But it should be understood to be about the court system as a whole helping and supporting the legislation moving through.
The noble Baroness, Lady Anelay of St Johns—who should know a thing or two—said very clearly that only a brave Government would ignore the DPRRC or Constitution Committee reports, and I am sure that it is not in the mind of the Minister to take them on at this stage. Our amendments are largely an attempt—and I acknowledge considerable assistance from the Public Bill Office—to put the aspirations of the DPRRC into a form that could be considered as amendments. They are not meant to be a statement of where we want to get to. They are probing amendments to provoke a response from the Government. I also think that the recommendations of the Constitution Committee, as outlined by my noble friend Lady Taylor and her supporters in Amendments 66 and 70, are exemplary because they quickly get to the heart of what we are about. They contrast slightly with the approach taken by the noble Lord, Lord Blencathra, whose excellent speech belied the fact that his way was simply to delete the clause. That would not achieve very much except make this Committee very happy but it would obviously remove the impulse which has led to where we are.
We are obviously in a situation where we need clear agreement between the various interests displayed in this debate. It really is up to the Government to assure the Committee that, in the words of the noble Baroness, Lady Neville-Rolfe—and I agree with the line she is taking—the analysis has been done properly. We need to better understand the interaction between the lengths and temporary measures—how long the temporary parts of the Bill will last and under what arrangements they can be sunset. If they are not to be sunset, what assurances and safeguards are available to this House and to Parliament as a whole? We need a full and mature consideration, but all that has to be done in a matter of days because the date for the final submission of amendments for Report is looming fast. Indeed, it will have to be the end of this week so that we can debate them in the middle of next week.
We are in a quandary. The Government need to give us an assurance about that, but I make it clear that we are happy to discuss with the Government any way in which we can help, and I am sure that others who have contributed would also do that. We are clearly at a bit of an impasse if we do not find a way out of this, but there seem to be solutions on the ground. The amendments tabled by my noble friend Lady Taylor are attractive and the idea, as the noble Lord, Lord Blencathra, put it, of taking up sensible safeguards such as making the “made affirmative” procedure the default position on this is probably the right way to go. We will need assurances that the Government will not attempt to ride straight through the long and distinguished history of Parliament trying to make sure that abuses are not perpetrated within legislation which it then cannot involve itself with. I look forward to hearing from the Minister on this and hope that he is able to reassure us.
Lord Callanan
I thank all noble Lords for their contributions on this group. I will make a few general comments before I look at the detail of the amendments tabled.
I shall comment first on what I thought was the most important contribution to the proceedings, which of course was the noble Lord, Lord Mann, making a football analogy, which is more important than this legislation. I joke, of course, because it is not, but many of us are looking forward to the recommencement of the Premier League season tomorrow. I suspect that we support different clubs, but nevertheless I am sure that we will both welcome the resumption of football. The serious point is that many of these provisions will apply to football clubs. We hope, as is the purpose of this legislation, that it will enable any of them which are struggling to be saved. The Government have already announced a substantial package of aid and support for many businesses, including football clubs; I think that the Premier League has announced a package of £125 million that is to go to other clubs. We welcome that, and of course many clubs have taken advantage of our other business support measures.
The noble Lord, Lord Howarth, asked why there are so many delegated powers and Henry VIII provisions in the Bill. It is important to address this issue directly. We introduced new procedures to help companies in financial difficulties, in particular the moratorium which we debated earlier, and the new restructuring arrangements, and there are considerable powers to enable these provisions to be reviewed and adjusted if necessary. This point was recognised by the noble and learned Lord, Lord Thomas, and I am grateful for his support. Insolvency legislation is indeed very complex. The Bill has been drafted at pace to respond to the Covid-19 emergency and it contains powers to enable its provisions to be adapted to different types of corporate body or bodies which are subject to special insolvency procedures. It will also ensure that the detail of such procedures can be amended swiftly in the light of these reforms.
My noble friend Lord Blencathra opposed the Question that Clause 1 should stand part, in order to facilitate a wider debate on the Bill’s delegated powers. I know that he wishes to understand the Government’s position across the amendments related to delegated powers and I hope to be able to respond to his points throughout my response. I note that many of these amendments have been drawn from the report on the Bill by his committee. The Government are carefully considering that report, which we received following Second Reading. I have considered the report and I have listened carefully to the views of noble Lords throughout the debate.
My noble friend Lady Neville-Rolfe opposed the Question that Clause 39 should stand part of the Bill. I will explain. The clause enables the Secretary of State to make regulations either to extend or to curtail the periods during which the temporary provisions in the Bill operate. This is important to ensure that the temporary provisions are not in place for longer than necessary, but also that they do not expire at a time when they are still needed to protect the economy from the impact of the coronavirus emergency. Clause 40 makes similar provisions for Northern Ireland. Clause 41 ensures that where regulations are needed urgently as a result of the insolvency measures being introduced by this Bill, they can be made using the negative procedure for a six-month period after commencement. I therefore commend that these clauses stand part of the Bill.
I turn now to the amendments which seek to remove the powers to make secondary legislation conferred on the Secretary of State in relation to the moratorium. These powers enable the Secretary of State to amend, for example, definitions, defined lists and the circumstances in which the monitor can bring the moratorium to an end. In our view, these powers are required because in the future, it is possible that the Government may wish to address any unforeseen issues efficiently to ensure that the conditions for entry into a moratorium remain fit for purpose and to keep definitions up to date as new activities and entities come within the relevant regulated regimes.
Amendment 52, tabled by the noble Lord, Lord Stevenson, seeks to remove the power conferred on the Secretary of State to amend the list of exclusions set out in Schedule 4ZZA. The Government must retain this power in order to be able to react quickly to evolving situations in business and the financial world and to maintain legal certainty. Without the ability to do this, there is a risk that the Government would not be able to keep pace as new firms or types of contract emerge.
Amendment 62 would require the Government to review the impact of certain measures in the Bill on the High Court and to publish a plan to ensure that judges are appropriately trained in their implementation. I hope that it will reassure noble Lords if I confirm that we have engaged extensively with the judiciary in the course of developing these measures with the aim of ensuring that the impact on the courts is minimised. As always, the Government are extremely grateful to members of the judiciary for sharing their insights into these matters.
The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)
I have received a request to speak after the Minister.
Baroness Northover
My Lords, I thank the Minister for that reply. He is saying two things: one, that he will be listening to the Delegated Powers Committee and the Constitution Committee; and two, that he has rebutted the various amendments. So it would be very helpful if he would consider those reports and the various amendments in this group and come forward with his own proposals well before the deadline for amendments for Report, so that noble Lords can see the extent to which he has, as he has promised, taken into consideration what those two very significant reports say.
Lord Callanan
We will, of course, issue a formal response to the DPRRC report, hopefully by Friday—but, since Report is next Tuesday, we will need to act more swiftly than that in terms of considering amendments. However, as I have said, I have listened carefully to the points that have been made.
Lord Leigh of Hurley [V]
My Lords, I thank the Minister for his remarks and all noble and noble and learned Lords from all sides of the House for a really interesting debate, agreeing on much. I think my noble friend did address the concerns raised. However, I do not feel that he addressed the concerns raised in respect of Amendment 7 at all, so I would be very grateful if, before Friday, he can communicate with me his remarks in respect of this important point. On the assumption that he will be able to do that, I beg leave to withdraw my amendment.
The Deputy Chairman of Committees
My Lords, the House is again in Committee on the Corporate Insolvency and Governance Bill. We now come to the group of amendments beginning with Amendment 20. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or any other amendment in this group to a Division should make that clear in the debate.
Amendment 20
Baroness Drake
Baroness Drake (Lab) [V]
My Lords, I refer to my entry in the register of interests. I shall speak also to Amendments 39, 63 and 64.
I fully support the Government’s desire to assist companies in bouncing back from Covid-19, but it is neither necessary nor desirable that such a policy should seriously weaken the position of defined benefit pension schemes and the Pension Protection Fund in the event of an insolvency or restructuring. The Bill does this in several ways: by granting super-priority status to unsecured banking and finance debt, ranking it above pension scheme debt if a company is not rescued, which introduces material detriment to the level of recoveries the PPF, acting as creditor for a scheme, can achieve through insolvency proceedings; by finance debts getting preferential treatment over pension scheme liabilities by continuing to be payable during a moratorium; and by the new moratorium and restructuring plan processes not triggering a PPF assessment period or a pension scheme’s Section 75 debt, weakening the position of the scheme and the Pension Protection Fund, which would not have a seat at the table for key creditor and restructuring plan discussions and would be denied a meaningful voice on employer liability to the scheme.
The Minister wrote yesterday and indicated that the Government will bring forward amendments on a number of matters, for which I thank him. We have yet to see the text of those amendments, but I will seek to reference the Minister’s letter in what I say.
Amendment 20 removes amounts payable in respect of pre-moratorium debts and other liabilities
“arising under a contract or … instrument involving financial services”
from the exemption from the payment holiday during a moratorium and the super-priority provisions in the event of an insolvency process. Amendment 39 does the same in Northern Ireland.
There is nothing in the Minister’s letter that indicates the Government’s intention to give further attention to their decision to give such a wide range of finance debts elevated status and preferential treatment over pension scheme liabilities. We have today heard his statement on accelerated finance debt, but I will continue to press my amendment.
It is difficult to comprehend the Government’s reasoning for liabilities under financial services contracts, extremely widely drafted in the Bill. It would include unsecured lending such as shareholder loans and intercompany loans, including from a director or parent company, as well as arm’s-length regulated activities and bank debts, all getting preferential treatment over pension scheme liabilities. Others have asked similar questions in respect of SMEs and workers.
As drafted, it would allow finance parties to accelerate all debt so that the entirety of the lending would be payable under these provisions and benefit from super-priority on insolvency. There is a real risk of gaming. The noble Lord, Lord Hodgson of Astley Abbotts, and the noble Baroness, Lady Bowles of Berkhamsted, articulated such examples so brilliantly in the first group debated. From what I heard during that debate, I welcome the Minister’s statement that accelerated debt will not now have super-priority status, which addresses in part—but certainly not in whole—the purpose of my amendment.
During a moratorium, these financial debts would continue to be payable, pension scheme deficit contributions would not and the trustees could not call on any contingent assets that would otherwise be triggered by non-payment of deficit contributions. Priority for finance debts would remain. The Law Society has said:
“the Bill would create an incentive for lenders without effective security to allow the rescue of a company through a moratorium to fail, so as to force it into administration or liquidation and achieve super-priority.”
I say this without sight of the Government’s amendments, but there may remain a perverse incentive that undermines any preference the trustee or PPF may have to rescue the company.
Worryingly, liabilities imposed by the Pensions Regulator on the company for breach of moral hazard rules, such as contribution notices and financial support directives, also rank behind these financial debts. This is not addressed in the Minister’s letter. Will the government amendments address this concern?
Amendment 63, through an amendment to the Pensions Act 2004, provides that both the start of a moratorium and an application for a meeting of creditors to consider a restructuring plan would trigger a PPF assessment period and a scheme’s Section 75 debt. Amendment 64 applies similar provisions to Northern Ireland. This would enable the PPF to act as the creditor of the scheme, which would have an improved standing and vote. These are key protections that currently exist.
In his letter yesterday, the Minister advised that the Government will bring forward amendments that will: during a moratorium, give the PPF rights to information and the right to challenge the actions of the directors and/or the monitor; on a restructuring plan, provide that both the PPF and the Pensions Regulator will be entitled to receive copies of all the information sent out to creditors; and, on both procedures, grant the ability to provide creditor rights to the PPF, subject to appropriate constraints.
I welcome that the Government have recognised that the pension trustees, the PPF and regulator need the rights and authority to engage effectively during the moratorium and restructuring plan discussions, but it is unclear how meaningful those engagement powers will be without seeing the actual amendments and to what extent they will be broadly comparable with or weaker than the current safeguards available.
It will also be important to understand how any government amendments address the serious risk that the new restructuring process could give rise to the systemic dumping of DB pension schemes by companies that are financially underperforming. The restructuring plan procedure can compromise creditors’ claims and standing. It allows for a cross-class cram down and there is much speculation that this could be used to cram down the pension scheme. I ask the Minister how the government amendment would address that concern.
The relevant legislation, which gives the PPF creditor rights, is chiefly the Pensions Act 2004, which puts in place a careful framework that supports action to rescue distressed companies, while protecting the interests of pension scheme members. It does this by triggering a PPF assessment period at the start of the insolvency proceedings that aim to rescue an employer. The PPF steps into the shoes of the trustees by acting as creditor for the debt owed to the scheme. This legislation has proven effective and has delivered better outcomes.
As drafted, the Bill directly undermines that carefully structured framework. It will be important to understand how and to what extent the Government’s amendment rows back from that consequence. The 2004 Act provisions were a product of the failure of successive Governments to protect pension scheme members under UK insolvency laws. It would be regrettable if, through this Bill, history repeated itself.
The Minister’s letter sent yesterday and his statement on accelerated finance today are a significant step forward, but they do not eradicate all the key risks that many noble Lords are so deeply concerned about. I ask the Minister if, before Report, he will reflect further on the concerns that I, and no doubt others, will express today. I beg to move.
Baroness Warwick of Undercliffe (Lab) [V]
My Lords, until recently, I was a member of the board of the Pension Protection Fund. I will speak to Amendments 20 and 63. Like my noble friend Lady Drake, I have yet to digest the contents of the Minister’s letter from yesterday evening and we have yet to see the actual amendments, but I want to set out my concerns, so that they can be tested against the concessions he has made.
I fully support the policy intention behind the Bill: to help otherwise financially viable companies avoid the prospect of failure, as a result of the unprecedented disruption that Covid-19 has caused. However, alongside its temporary measures, the Bill includes permanent measures—the moratorium, the restructuring plan and changes to creditor status—that will be far-reaching. On the current drafting, there will be consequences that have the effect of reducing the protection and rights of underfunded pension schemes and the Pension Protection Fund when companies are in financial distress—protections that have been carefully built up and developed over 16 to 17 years.
Amendment 20 removes financial debts being exempt from the moratorium payment holiday and the granting of super-priority to those debts in the event of a company entering into an insolvency process. Amendment 63 provides for the triggering of PPF creditor rights and a scheme Section 75 deficit at the start of a moratorium and of restructuring plan discussions.
We cannot overestimate just how serious this is. For many years, the covenant position of defined benefit pension schemes has been based on unsecured pension debt ranking side by side with debts owed to other unsecured lenders. This has underpinned all valuation, funding and covenant discussions. The super-priority status granted to finance debts in an insolvency following a moratorium removes that base. It weakens valuations and funding arrangements and is detrimental to members of pension schemes and to the role of the PPF acting as creditor. It also affects the scheme trustees. The liabilities of the scheme—the pension promise—are usually significant and payable over a significant number of years. Unlike other unsecured creditors, trustees are not in a position to manage the exposure to the scheme’s debt by ceasing to deal with their employer. Therefore the Bill dramatically enhances the interests of the finance lenders and weakens the interests of the pensioners and future pensioners in an insolvency situation.
Lord Balfe [V]
I will be brief. One good thing is that there is no time limit today so people have tended to speak on a bit, shall we say?
First, I endorse everything that was said by the noble Baronesses, Lady Drake and Lady Warwick. I hope that there might be an opportunity for a meeting before the final publication. My only point in addition to that is that we seem to imagine that the PPF is safe for ever. I have always—or at least over the past year or so—said that, one day, this lifeboat is going to sink unless someone puts some effort into making it float and keeping it alive. I suppose that BEIS and the DWP are separate departments but we run the danger of ignoring pension schemes to a point where the levy will become unsustainable and the whole edifice will come crashing down on us. I ask the Minister to look carefully at this.
In closing, I repeat the point that I have made ad nauseam: pensions are deferred earnings of the workers in the company, often stretching back over many years, and they deserve priority. That remains my fundamental position.
Baroness Altmann [V]
My Lords, I will speak to Amendment 27, which is in my name. I support whole- heartedly Amendments 20, 39, 63 and 64, as well as Amendment 118, to which I added my name.
I echo the wise words of the noble Baronesses, Lady Drake and Lady Warwick, and my noble friend Lord Balfe. It is of deep concern that the Bill did not originally encompass provisions to protect the deferred pay of workers in an insolvency or restructuring situation. Indeed, as it stands, the Bill drives a coach and horses through the protections that, as the noble Baroness, Lady Drake, so rightly outlined, were carefully crafted and put in place in 2004 to ensure that workers’ pensions were protected, having been through several years during which it was discovered that many members of defined benefit pension schemes had lost much, or even all, of the pension that they had been relying on for their retirement.
The Bill is a significant change to the usual priority order for unsecured creditors in an insolvency or a restructuring situation. It is an existential threat to defined benefit pension schemes in the UK to give super-priority status to unsecured financial debt over that of other unsecured creditors—including the associated pension scheme and the rights of the Pension Protection Fund, which protects all other defined benefit pension schemes in the UK. I urge my noble friend—I thank him for at least recognising that this is an issue and saying that the Government will table amendments—to listen carefully to the concerns expressed in the debate on this group of amendments and ensure that consultation is put in place, as other noble Lords have requested, so that we can try to get this right.
The pension promises are so important for workers but, as it stands, this legislation would appear to legitimise the actions in connection with pensions that have been considered egregious over the years. The Pensions Regulator’s reports on the pension schemes of BHS or Carillion, for example, make it clear that the pension funds were at risk of being gamed by other financial creditors passing the parcel or elevating themselves ahead of the interests of the pension schemes.
Amendment 27, for example, would ensure that if an insolvency was in the offing and the monitor applied to the court to remove protection from assets that were previously secured, such consent could not be given without the approval of the Pension Protection Fund. That is really important. With the provisions proposed in, for example, Amendments 63 and 64, the PPF would already have been involved because a PPF assessment would have been triggered. After a PPF assessment period is triggered, the PPF can come in and protect its own position and that of the pension fund; that is, the creditor rights.
At the moment we have a system whereby trustees carefully work out integrated risk management proposals to ensure that the contributions to the pension scheme demanded of employers are reasonable and proportionate in terms of helping the company to survive and thrive, but also protecting the scheme should the company not do so. In that regard, many schemes have been pledged assets belonging to the company so that, if insolvency occurs, they will be available to boost the pension scheme. Under the current proposals in the Bill, without Amendment 27 the assets pledged to the scheme would potentially disappear and the banks would potentially secure themselves a win-win situation while jeopardising the interests not only of the pension scheme attached to the company in question but of all other defined benefit schemes protected by the Pension Protection Fund and the millions of members in those schemes. I hope that my noble friend will listen carefully and take seriously the concerns expressed across the Committee that banks should not be given preferential status.
I would also like to pick up on what my noble friend the Minister said in the debate on the first group of amendments: that the intention behind the moratorium is not to make creditor positions worse. However, in the context of a defined benefit pension scheme, should the Bill’s measures not be amended in line with the types of amendments proposed here, there will be a fundamental change if an insolvency winding-up or administration takes place within 12 weeks of the moratorium, and the moratorium and pre-moratorium debts take priority over creditors such as those with Section 75 unsecured pension debt.
I welcome my noble friend the Minister’s comment that the Government plan to bring forward their own proposals to address some of the concerns covered by my Amendments 94 and 95, and I thank the Law Society very much for its help and support in addressing these inconsistencies or insufficiencies in the Bill. I hope that my noble friend will bring forward amendments to ensure that pension schemes are protected, that contribution notices and financial support directions are not overridden, and that the pensions of scheme members across the country—pensions on which they rely for their retirement security—are not significantly jeopardised by this well-intentioned and important Bill.
Lord Fox
My Lords, I rise with some trepidation following four experts on pensions. I shall speak to Amendment 118, which bears my name alongside those of the noble Baroness, Lady Altmann, and my noble friend Lady Bowles. Before that, I want to pick up on the point just made by the noble Baroness, Lady Altmann, on asset pledges in her Amendment 27.
That is important for two reasons. First, if the asset pledge falls in the case of an insolvency, pensioners will of course miss out, but, secondly, it is a challenging time for pension trustees even if they are operating within solvent companies today. Asset pledges have been used so that companies do not have to funnel direct cash flow into their pension funds, leaving that cash flow available for them to invest in the expansion of the business. If the Bill stays as it is and I was a pension fund trustee, I would go back to the company funding the pension and say, “That asset pledge is no longer worth the paper upon which it is written. I need more cash”. It is not in the interests of that business and, frankly, nor of this country for that cash to be siphoned off and taken out of investment for growth. That is an important point and the noble Baroness was wise to have raised it.
As the Minister knows, if a business goes bust with an underfunded DB scheme, the pension debt ranks alongside other unsecured creditors such as banks. This Bill dramatically changes that.
We all received an email late yesterday that seems to indicate movement on the Government’s part, and about that we should be very pleased, but it is difficult to tell how far and to what level that movement is going without the relevant amendments. Today, a second rabbit was pulled from the Minister’s hat and we were told that there will movement around banks and financial institutions. It is difficult to see what is going up and what is going down in terms of the movement, so we shall have to wait to see what the amendments say. The Minister could probably say today whether the Government intend to restore the level of access that the PPF and therefore pensioners had as creditors, at the very least to what it was before the Bill was drafted, or whether we are going to be somewhere between that and where we are now.
The email that we received yesterday uses fairly passive words. We are told that under a moratorium the PPF will be given rights to “information”; we are told that, under restructuring, it will receive “copies of”—it sounds like they are added to the “cc” list of the email going round—subject to appropriate constraints. I concede that, under a moratorium, the PPF is given the right to challenge the actions. I have the right to challenge actions, but will it have any powers to make that challenge stick? There is an awful lot of haze in this. It is clear that there has been some movement in the Government’s position. The sooner the Minister can table the relevant amendments, and the sooner he can clarify whether pensioners will be as well off as they are now or better off or worse, the better.
Baroness Neville-Rolfe [V]
My Lords, I have not yet seen the email or of course the amendments, so I have nothing to add at this stage but look forward to studying them.
Lord Thomas of Cwmgiedd [V]
I put my name down to speak on these amendments because of the very wide terms in which they were drafted. From the perspective of legal certainty and the importance of the London financial markets, it seemed that the Government’s overall policy of excluding financial service contracts was completely the right one, and the suggestion of these amendments was to remove part or all of that protection. However, from what has been said in this debate, it is clear—at least, I hope it is clear—that what gives rise to the concern really relates to the position of pension funds. It seems to me that this is a much narrower subject and it turns on the question of the priorities that will need to be clearly spelt out in the event of an insolvency.
Earlier, I raised the rather difficult issues that relate to priorities. This debate seems to underline the importance of that. I hope the Minister will have the opportunity to clarify precisely the way in which the priorities as between financial service contracts and a pension fund are to be resolved in the event of an insolvency.
Baroness Bowles of Berkhamsted [V]
My Lords, it is a pleasure to follow many speakers with great experience in the pensions world. As the Minister said in speaking to the first group of amendments, the objective of moratoriums in this legislation is that they will succeed and that companies with a hope of surviving will do so. But that will not always be the case. Insolvencies or other arrangements may follow. The moratorium structure rewards those who continue to supply, with an enhanced priority in a subsequent insolvency. It rewards financial institutions in a particular way that is identified as giving priority to creditors, including those who would have just ranked alongside pensions as unsecured creditors but are promoted above them.
As has already been mentioned, the Minister said in responding to the first group of amendments that some change will be made to exclude accelerated debt from super-protection. That does not sound like even as much as was covered in the group 1 amendment of the noble Lord, Lord Hodgson, which I signed, but it is a start. Nevertheless, I am still concerned that it elevates all financial debt above pensions, as explained by the noble Baroness, Lady Drake. If I heard the Minister correctly, he implied that without being given priority, in return for none of the things that bind other companies, banks would not play ball—I paraphrase what was actually said. The reason why the banks will play ball is to get benefits. That still means that they will make greater demands and ask for bigger fees. They will still accelerate payments even if they do not get priority, but that will still suck funds out, because banks do not have a payment holiday.
I am attracted somewhat to what the noble Lord, Lord Balfe, said on whether the PPF will survive. I note that having to stand behind pensions actually comes from European legislation. I believe the UK was taken to court on this subject. Do the Government still stand behind legislation protecting pension benefits, or is that a piece of EU legislation headed for the dustbin of broken promises?
Like other noble Lords, I think that the Government need to think further about the legislation’s effects on pensioners, the Pension Protection Fund, the Pensions Regulator, pension trustees, companies contributing to the PPF, which will face elevated contributions, and those self-same companies facing deficit repayment schedules that will need to be greater to compensate for the actions in this legislation, as well as the fact that many schemes are much further in deficit because of the current crisis situation that we are in.
Also, what does this blackmail change—I call it “blackmail” because that is what it sounded like when the Minister explained it—to the insolvency waterfall say about the stability of legal agreements and contracts in the UK, if securities that have been pledged to pension funds can be sold from under them through a retrospective law change made without any warning or notice? That is what this priority change is. “Moratorium” might have been trailed, but “moratorium” means delay, not a change of priorities and the inclusion of financial institutions in special arrangements for no consideration—for that is what it is: no consideration. It is more than simply consequential to the running of a moratorium.
Various amendments in the group aim to prevent harm to pensions, and my probing Amendment 118 suggests that the PPF should be consulted in any compromise arrangement. It could or probably should be made stronger and require consent, but then I do not really need to speak to it because the noble Baronesses, Lady Drake and Lady Altmann, have come up with extremely sound, detailed amendments. I support them and commend them to the Government.
I realise that the Minister indicated in his email last night that some movement in this direction will happen. He has also said that the Government will give creditor rights, which is the issue covered by Amendments 63 and 64 in the name of the noble Baroness, Lady Drake, but the extent and effect of those rights is important. I therefore remain concerned. Changing the ranking of creditors also opens up questions about, “Why just that change?” There are arguments, with which I have a lot of sympathy, that say pension deficits should have a higher ranking in insolvency anyway, given their origin as deferred pay. We will come to other provisions on that in the next group.
I am now quite glad that we have not finished the pensions Bill because, if these new priorities are enacted, they will take a wrecking ball to the difficult consensus that was being reached on the speed of paying down deficits, and other provisions coming from the regulator regarding its powers and what it would do to make sure that deficits were paid down. We will certainly have to take into account these new circumstances in this Bill and seek follow-on protections if it proceeds largely in the format it is in at the moment.
In summary, this group has four sensible proposals, independently made from across the House, that have significant overlap: scrap the financial institution priority, which weakens the position of pensions; ensure that pledged securities are not sold without the consent of the PPF; amend the Pensions Act 2004 so that a moratorium is an insolvency event and triggers a PPF assessment period; and have the PPF involved, with vetoes, in restructuring arrangements. I commend a composite of those arrangements to the Minister and I hope that productive discussions can follow because, welcome though the moves already flagged are on the PPF having creditor rights, we need to make sure that they fit the bill and that pension deficits do not still face significant losses.
Lord Lennie (Lab) [V]
My Lords, I had rather thought that the Minister would speak at the beginning of this debate, as that might have obviated some of the discussion that we have had to have; he has not yet fulfilled what the Report stage amendments will be, based on the letter that he produced last night. There seem to be shared concerns among all speakers about the relative position of debt—finance debt, pension debt—and the weakness of the PPF. Does it or does it not have a seat on the discussion body? Would that be at the beginning of the discussions or, as someone put it, just a cc or copying in of the PPF into the information? Will the risk of gaming through acceleration of a company into insolvency by those who seek to gain from that position be guarded against? And so on.
At this stage, we should at least thank the Minister for his reconsideration in advance of signalling that there will be moves at Report stage. Whether they will be sufficient moves we will have to wait and see. This may not be the last word on these matters, but it may go some way towards putting in place a sensible, if not ideal, position for the PPF and the defined benefit pension scheme trustees, in the event of insolvency moratorium or restructuring plans. It is not yet clear how far he is prepared to go and it is a complex issue, as we have heard from all the speakers.
Secondly, I want to express my huge appreciation and admiration for the noble Baronesses, Lady Drake and Lady Warwick, from the Labour Benches, assisted by the noble Baroness, Lady Altmann, and the noble Lord, Lord Balfe, from the Conservatives, in their pursuit of this matter. It is hugely important to everyone that we get this right. The 2004 protection fund legislation was profound, important and lasting. It should not be put at risk by what we are attempting to do in response to the Covid crisis, whether on a temporary or permanent basis. They deserve our thanks and praise for the thorough way in which they have conducted themselves. There is much more to come but, for now, we will have to await the amendments and judge on Report whether those intentions have been fulfilled.
Finally, I urge the Minister in the meantime to take up the offer of discussions made by the noble Baronesses, Lady Drake and Lady Warwick, in advance of Report stage, to see if they can iron out any creases that there may be in what he may propose.
Lord Callanan
I thank all noble Lords for tabling amendments on this important topic. I first clarify to the noble Lord, Lord Lennie, and others that I thought it would be helpful to email noble Lords last night to inform them of my intention to table an amendment on Report because, under the new procedures, I was not able to stand up at the start of this grouping to tell people in advance. I thought it would be helpful to give people advance notice of this to stop them asking for all the things that we were going to do anyway. I thought that it might have played some part in curtailing the debate on this.
I start by reminding the House that both the moratorium and the restructuring plan are not insolvency events—they are company rescue procedures. Where the company itself can be saved as a going concern, obviously, the returns to all creditors and stakeholders of the company will be better.
I turn specifically to Amendment 20 for Great Britain, tabled by the noble Baroness, Lady Drake, and others, and Amendment 39 for Northern Ireland. I do understand the intentions behind these amendments. However, removing financial services contracts from the list of liabilities for which a company does not have a payment holiday when it enters a moratorium would mean that the company does not have to pay these liabilities during the moratorium.
The purpose of excluding these contracts from the payment holiday is to ensure that the moratorium does not affect existing financial services legislation or the operation of the financial markets, and that financial markets participants continue to have legal certainty to facilitate the efficient functioning of those markets. Not excluding them could have potentially severe consequences for the operation of the markets and, in turn, the stability of the financial system and the availability and cost of these products.
In addition, it is important to recognise that financial services firms are a key part of making the moratorium provisions work. Critically, they are not excluded from the moratorium, as I said on the last grouping, where they are a creditor to a company in distress so that they continue to support those companies. It is recognised that not excluding financial services contracts from the payment holiday definition could remove the incentive for these firms to continue to provide finance. That could leave companies in financial difficulty in a far worse-off position than they would otherwise be.
I understand the purpose of these amendments, and the concerns that many noble Lords raised during this debate and at Second Reading on the super-priority of financial services debts in the moratorium. In discussions with the various stakeholders, it has become clear that unpaid financial services debts that have been accelerated for payment during the moratorium receive this super-priority status. We would not want this to provide an incentive for financial services firms to jeopardise the rescue of businesses during a moratorium by accelerating financial services contracts for payment, so as to benefit from this super-priority of their debt in a subsequent insolvency. I will therefore table an amendment on Report to address this issue, and I thank noble Lords who have raised it with me.
I turn to Amendments 27, 63, 64 and 118. Again, I understand the intentions of these proposals. We can all agree that recent high-profile insolvency cases that featured large deficits owed to the defined benefit pension scheme were worrying. We all recognise the uncertainty that this brings for employees, both past and present, in such cases. Again, I assure the Committee that the Government recognise the need for safeguards around these pension schemes and have been working closely with key stakeholders over the last few weeks on these issues. We have reflected on the concerns raised, so I confirm that it is our intention to table amendments on Report to ensure a greater role for the Pension Protection Fund and that pension protection is made clear in the Bill. Again, I am grateful to noble Lords for their engagement on this issue. Both the amendments that I have mentioned will be tabled tomorrow to give noble Lords the opportunity to study them in advance of Report.
Let me address some of the points made. Initially, the noble Baroness, Lady Drake, and I think the noble Lord, Lord Fox, asked—he may not have done so—whether pension schemes can be crammed down. The protections that apply generally will cover a pension scheme included in a restructuring plan proposal. There are strong protections, including a high threshold for class support of 75%, and where cross-class cram down is requested and none of the members of a dissenting class are worse off than they would have been under the next most likely outcome. Importantly, even if all the statutory requirements are met, the court can refuse to sanction a restructuring plan if it is fair and equitable for it so to do.
My noble friend Lady Altmann and, on this occasion, the noble Lord, Lord Fox, asked about the debt priority of pensions and whether the current ranking is appropriate. When insolvency occurs, there is a balance to be struck in considering the order in which those owed money are paid out of the available assets. There are seldom enough funds to pay all creditors in full in an insolvency. To ensure fairness, the law requires that available funds be distributed in a certain order. Unsecured creditors are paid once the secured creditors and preferential debts, which of course include employees’ hard-earned wages and salary, have been dealt with; they share the funds that are then left over. Any deficit owed to a pension scheme ranks alongside all other unsecured creditors, which will inevitably include trade suppliers, some of which will be small and micro companies. I confirm to the noble Lord that this legislation has not changed the existing provision and that it carries on.
With those explanations, and with the notice I have given of the proposed government amendments on Report, I hope that I have provided sufficient justification for the noble Baroness to withdraw her amendment.
Baroness Barker (LD)
I thank the Minister for his reply. I had the pleasure of taking part in the legislation that set up the Pension Protection Fund in this House many years ago and I remember that we spent a considerable amount of time—much more than we have done today—looking at the issue of moral hazard and questions of timescale and decision-making. Whatever the Government come up with in the context of this Bill, people will be forced to make decisions that in ordinary circumstances they would take over several months in which they could weigh up competing claims for priority. They will have to do that very quickly.
I recognise that the Minister said that he intends to publish his amendments tomorrow, but will he undertake to have a virtual meeting with the many Members of your Lordships’ House who are clearly well versed in this subject, perhaps on Thursday, in order for there to be time for considered amendments from the Opposition on Report? The Minister is likely to find that there is not a great distance between his Benches and ours on this matter, but there may be some questions of nuance and technicality, and it would be good, for better legislation, if there could be a discussion on Thursday.
Lord Callanan
Without giving a specific commitment about Thursday, because I have a number of things in my diary, not least because I am answering further Questions in this House, I will attempt to ensure that the forum mentioned by the noble Baroness takes place before Report. Noble Lords who take an interest in this matter will get the opportunity to talk to me and the various Bill officials who are handling what is, I am sure she will accept, a complicated area of law.
Baroness Drake [V]
I thank the Minister for his reply and I am grateful for the advance notice from him yesterday evening, which I took in the spirit in which he gave it. It allowed us to make our contributions more relevant, so I thank him for that.
As my noble friend Lady Taylor of Bolton observed in the previous debate, the fast-tracking of emergency measures in the light of Covid is combined in the Bill with radical, permanent changes to the status and rights of creditors and stakeholders. This House and indeed Parliament have not had time to address the consequences of that and their significance, and we are beginning to see quite serious consequences—maybe unintended consequences—being revealed.
The moratorium is not an insolvency event, but it is the start of a process that moves towards insolvency or restructuring and it does trigger a change of creditor status. While I completely accept that a strong UK economy needs a strong, functioning financial market, there is also a question of balance. The definition of finance debt in the Bill, which is given superior status, is drafted very widely, way beyond being a simple issue of banks. On the arguments that noble Lords have put today, that balance between protecting the pensioners, on which the insolvency laws were changed back in 2004, as opposed to the interests of the financial markets, is tilted in the Bill against the pensioner and risks us going back to the position that existed in 2004 where pensioners were not protected sufficiently—or in that case, not at all—under UK insolvency laws.
I thank noble Lords who have spoken in this debate. Throughout Second Reading and Committee, we have put our concerns very clearly about how this Bill impacts the framework of protection for pensioners that has been finely crafted and built up over 60 years. I welcome the Minister’s statements because they are a recognition of the concerns that we have all been expressing.
I look forward to seeing the government amendments but hope that the Minister will reflect on the seriously held views expressed today across the House on protecting pension schemes, their members and the lifeboat scheme. If it is possible to have any discussion so that these could be considered further, that would be helpful. In view of the significance of this matter, I may wish to return to it on Report, but I beg leave to withdraw Amendment 20.
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
We now come to the group beginning with Amendment 23. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate, and that any Member wishing to press this or any other amendment in this group to a Division should make that clear in debate.
Amendment 23
“( ) the prescribed part of a company’s net property available for the satisfaction of unsecured debts under section 176A of the Insolvency Act 1986”Member’s explanatory statement
This is a probing amendment to discuss the effect of priority advancing on unsecured creditors and in particular pension fund deficit, notwithstanding the power for rules to rank the order in inserted section A18.
Baroness Bowles of Berkhamsted [V]
My Lords, I will also speak to the other amendments in this group. In some ways, I see this group as a continuation of the previous debate concerning the effect of the moratorium on pension funds and small companies. Amendment 23 inserts the prescribed part for unsecured creditors into the A18 priority. It should in fact have had an extra condition to it that said “when there is a pension scheme” but, in the amendment rush, that somehow got left off. Noble Lords will see that in the explanatory statement I did reference pensions as being of particular relevance.
This was an idea I had as part of the continuing story of the adjusted insolvency waterfall and the damage that can be done to pensions. My objective was to probe how else the prescribed part could not be diminished or how there could be some form of compensating balance. Another way could be by putting an extra or reserved part into the higher priority, designated as a first tranche reserved towards pension deficit, with any remaining pension deficit still sharing in the later general pool of the prescribed part. For example, if the prescribed part is raised to 30% so that there is more available in general for pension deficits, as other noble Lords have suggested, could the extra 10% be moved to be given a higher exclusive priority reserved for pension debt alone?
As I said before in the group on pensions, the Government have lifted the lid on changing priorities, and what has to date been accepted as an uncomfortable compromise regarding the position of pension deficit is now open to challenge. Why should there not now be some extra reserved part or special preference in the mix, especially given the point made more than once already that pensions really belong with wages and salaries? They should never have been demoted to unsecured creditors.
As a generality, I see the raising to 30% as beneficial, not just for making more available for pension deficits but also for SMEs. Irrespective of whether there is any changed priority as part of the compensating measures that one will have to start looking at, the rise to 30% —which has been proposed before—is given more impetus in the light of what is happening in the Bill. I beg to move.
Lord Hendy [V]
My Lords, my contribution dovetails with that of the noble Baroness, Lady Bowles, whose remarks I support. I speak to Amendment 56, the purpose of which is to preserve for the unsecured creditors a larger share of the assets available for distribution than the legislation currently provides. The legislation recognises that something must be preserved for them, but the question is: how much?
The first part of our amendment seeks 30% of the “prescribed part” of the company’s property. This is an arbitrary figure, intended to be reasonably fair. The problem is that the “prescribed part” is fixed by a formula and is capped. I understand it to be £800,000, or thereabouts, but I confess that I am no expert on this. Consequently, 30% may be a very small sum and spread very thin. The second part of the amendment therefore proposes that, in any event, if assets are being sold to pay debt, as is usual, at least 30% of the proceeds should be reserved for the unsecured creditors, leaving 70% for the secured and other creditors.
I add a word about unsecured creditors. Included in this, for reasons I touched on earlier, will be much of the debt owed to employees of the company, which falls outside that preserved for preferred creditors. The unsecured creditors also include all the workers for the company who are not classed in law as employees but who are nominally self-employed or engaged through a personal company. This is a significant sector of the workforce—over 5 million people in total.
As I mentioned earlier, it is right that workers should have priority because, unlike secured creditors, they cannot diversify the risk of the company becoming insolvent, and their stock of labour is ever-diminishing. There is another reason that they should be given preference: they spend their remuneration; they do not put it in hidden bank accounts in the Cayman Islands. They spend it because they and their families have to live on it. This creates demand and is good for the economy and for business.
Also included among the unsecured creditors are the many SMEs in the company’s supply chain. This may involve dozens of suppliers who have supplied materials, items or labour on credit, but cannot recover them. In turn, they may employ hundreds or thousands of workers. It is right that, in a complex and interconnected economy, unsecured creditors and their workers should be guaranteed an appropriate slice of the cake.
Lord Mendelsohn [V]
My Lords, I reinforce my support for Amendment 56, in my name and those of my noble friends Lord Hendy, Lord Hain and Lord Monks, and Amendment 59, in the name of my noble friend Lord Stevenson of Balmacara. I had intended to introduce amendments in these areas, but these are far better crafted than I could ever have achieved.
I would like the Minister to address the operation of these arrangements, the changes to the status of different creditors and how these will be properly balanced to operate as intended, rather than to allow abuse and preserve value in the deal, and how changing creditor status provides for a successful rescue of the company.
We have to appreciate that monitors, moratoriums and restructurings under this legislation are still likely to be in a minority of cases, especially if the comparisons for evaluations, or evaluating the condition of the business, provide both a high bar and ample scope to game the outcome. The majority of cases will still be covered under a going concern administration, whether that leads to a pre-pack liquidation sale or a scheme of arrangements to maintain the company. In many circumstances, the need for protections is even greater.
The new restructuring regime, which should be significantly more attractive, has created a lot of complications by relying on the model of creditor-in-possession financing rather than debtor-in-possession financing. The crucial difference is that this means that external financing is encouraged and given super-priority status, while unsecured creditors can be further disadvantaged by both existing debts and further trading risks. Debtor-in-possession arrangements generally encourage existing shareholders, creditors and finance holders to participate in the future rescue of the business. The amendments would ensure that in this layering of priorities, the weakest in line are not the ones that the system continues to place at a disadvantage. It is important that the Minister should indicate whether the Government are willing to provide extra protections for unsecured creditors and workers who have an unsecured credit with the business.
Have the Government considered a debtor-in-possession financing model and will they consider allowing this in the future? In the spirit of providing a floor to support unsecured creditors, what flexibility can they look for in the system and how are they expected to operate, so that they can participate in the future upside, be that an equity upside or an arranged scheme, thereafter?
Finally, I support the amendments tabled by the noble Baronesses, Lady Bowles and Lady Neville-Rolfe. Can the Minister make it clear how these decisions will be reviewed and what role the Government expect the Insolvency Service to play in order to make sure that abuses can be dealt with and that all forms of creditor can be properly balanced and ensured?
Baroness Neville-Rolfe [V]
My Lords, as time is short, I will focus on my Amendment 60. A court of administration normally involves pre-packs, and that is why, with the support of my noble friend Lady Altmann, I want to provide a quick and easy way of ensuring that the power we gave HMG in the Small Business, Enterprise and Employment Act 2015 can be restored. This power was the victim of a sunset clause and a delay in making the necessary regulations. There are later amendments that we may reach today on pre-packs and the encouragement of the pre-pack pool. All of them reflect the fact that a group of us across the House who spoke at Second Reading, including the noble Lords, Lord Vaux and Lord Mendelsohn, think that we need early action on pre-packs. I imagine that we are all rather disappointed—although the usual opportunity for a discussion in the Bishops’ Bar is not available—by the Minister’s response at Second Reading. His suggestion was that strengthening professional standards and existing regulation would be adequate, and if not, there could be legislation at a future date —a sort of mañana.
My amendment is very simple: it would give the Government back the power to make the necessary regulation on pre-packs but it would sunset that power after a year, both to provide the incentive for speedy resolution of this issue and to avoid any unwelcome use of the delegated power for other purposes down the line. I would obviously be delighted if the simple sunset clause I have used in Clause 62 might also help us to consider and find a path to resolving some of the important delegated powers issues we were discussing earlier; I am very hopeful that the Government will be listening in that regard.
I hope that my noble friend the Minister and his department will listen to those of us who have concerns and agree to amend the Bill to deal with the pre-pack issue, perhaps in the way that I have proposed.
The Deputy Chairman of Committees
The noble Lord, Lord Adonis, does not seem to be in his place in the Chamber, so we will go to the noble Baroness, Lady Altmann.
Baroness Altmann [V]
My Lords, I will be brief. I support the amendments in this group. Amendment 23 from the noble Baroness, Lady Bowles, and the noble Lord, Lord Fox—which the noble Baroness, Lady Bowles, explained very well—helps to explain the importance of increasing the protection for unsecured creditors being pushed further down the list of priority by the measures in this Bill. Following on from some of the remarks by the noble Baroness, Lady Bowles, I suggest to my noble friend the Minister that the Government could even consider offering super-priority for less than a Section 75 debt but still recognise the debts owed to the pension scheme, if it has a deficit. That could be in the form of Section 179 debt, which would at least cover the PPF level of benefit, or even for technical provisions, so that at least that has some extra security, especially in light of the current level of annuity rates following extensive quantitative easing and the extra cost of Section 75 debt.
The Deputy Chairman of Committees
The noble Lord, Lord Hain, has had to withdraw, so I call the noble Lord, Lord Palmer of Childs Hill.
Lord Palmer of Childs Hill [V]
I did not realise someone was withdrawing. I asked to speak mainly to support Amendment 60, but also to inquire whether this will achieve what the movers want to achieve. With sale to connected persons, there is always a worry in any liquidation or moratorium as to whether those connected persons are getting a benefit, to the detriment of other creditors. It is also a fact that very often a sale or arrangement with connected persons is a way of saving a company by connected persons taking some of the business out of the company. If there is a situation in which that company can survive enough to pay all its creditors, sales to connected persons could be a valuable tool. I just want to ensure that the Minister says this is an open book and can help in some ways and police in others.
Lord Fox
My Lords, we have heard descriptions of a series of power imbalances. There are two large, powerful entities on the scene; one is covered by this Bill and the other is not. One is the banks and financial institutions, and the other is of course HMRC, which is covered in the Finance Bill but not in this. My noble friend Lord Palmer referred to that as the elephant in the room. Those two wield the power, and then we hear the tale of small creditors, small businesses, pensioners and workers eking out a return.
In proposing this Bill, the Government have destabilised what had been a static relationship. Things are moving, and we need to understand in detail how the Government see all this movement shaking out. The Bill, letters and now assurances from the Minister have moved everything around. It is still not clear to me—perhaps it is clear to others—where the power has moved in the end. At the moment, it still looks as if the financial institutions will get increased power as a result of this Bill and HMRC will get increased power as a result of the Finance Bill. If that is not the case, I am happy to be surprised by the Government.
I will say just one other thing. I welcome the suggestion from the noble Baroness, Lady Altmann, to perhaps look at different levels of pension fund debt below that of the Section 75 debt. That could be one way of alleviating some of the concerns. I hope the Minister is able to catch up on what the noble Baroness, Lady Altmann, had to say just now, because there was some wise suggestion there.
The Deputy Chairman of Committees
I call the noble Lord, Lord Stevenson of Balmacara. Is he there? No? I call the Minister, the noble Baroness, Lady Bloomfield of Hinton Waldrist.
Baroness Bloomfield of Hinton Waldrist (Con)
I thank noble Lords for their amendments on these important issues and their comments in this short debate. The amendments include making additional changes to insolvency legislation in the provisions regarding the prescribed part, which is the amount of a company’s net property that must be reserved for the benefit of unsecured creditors when a company enters insolvency. There is what I take to be a probing amendment, which will provide the opportunity to discuss the effect of priority on creditors, such as pension fund deficit, as flagged by the noble Baroness, Lady Bowles. There is also an amendment in this group from my noble friend Lady Neville-Rolfe to enable the regulation of pre-packs and connected sales in administration. As this matter is being dealt with in group 10, I hope my noble friend will not mind if her amendment is spoken to in full in that group.
The measures in the Bill are intended to help companies maximise their chances of survival during the Covid-19 emergency, to protect jobs and to support the recovery of the economy. That is why other measures that would not alleviate the impact of the current emergency have not been included in the Bill.
I shall first deal with the probing amendment from the noble Baroness, Lady Bowles, and the noble Lord, Lord Fox. It is correct that the priority rules, which apply to some debts when a company enters insolvency following the end of a moratorium, change the way in which a company’s assets are allocated among different types of creditor, but the Government consider there to be compelling reasons why the moratorium provisions should give priority to certain types of creditor. These relate to rent and goods and services supplied during the moratorium, which will enable the company to pull through as a going concern.
For example, they include amounts owed to employees —which, as I am sure noble Lords agree, should rightly be considered a special category—and liabilities involving financial services, where default could result in the company facing a demand to repay a much larger amount, which would prevent the rescue of the company as a going concern. For the moratorium measure to operate successfully, it is essential that providers supplying these types of goods and services during the moratorium have some level of assurance that they will receive payment for those supplies.
The amendments from the noble Lords, Lord Hendy, Lord Hain, Lord Monks and Lord Stevenson, would change the value of the prescribed part and alter the way in which an insolvent company’s property is distributed between different categories of creditor. The rules for calculating the prescribed part were recently amended by statutory instrument in April this year. The noble Lord, Lord Hendy, asked how this was calculated: the proportion set aside for payment to unsecured is calculated at 50% of the first £10,000 of assets plus 20% of the rest up to—he was correct—a current cap of £800,000. This amendment was as a result of a consultation that ran between March and June 2018. As a result of these changes, the maximum amount of the prescribed part was increased from £600,000 to £800,000.
When this issue was consulted on, respondents expressed concern that further alterations to the rules for calculating the prescribed part were likely to have an adverse effect on lending, as floating charge holders may not be able to accurately assess their level of risk and anticipated recovery in the event of the debtor’s insolvency.
The noble Lord, Lord Mendelsohn, asked why the Government have not introduced measures to support the provision of debtor-in-possession rescue finance for distressed companies, in line with other jurisdictions, such as the Chapter 11 arrangements in the US. While the current UK restructuring framework does not provide explicit debtor-in-possession finance provisions, it allows rescue finance to be used to help rescue a financially distressed company. The Government previously consulted on various ways in which rescue finance could form a more prominent part of the restructuring package but, at that time, feedback from stakeholders was that the new measures would still allow for rescue finance with all the features found in other jurisdictions. I hope that answers the noble Lord’s question.
Lastly, the noble Lord, Lord Fox, mentioned the Finance Bill and HMRC taking precedence. I am not sure that he is aware that its precedence relates only to moneys it holds on behalf of employees, such as national insurance. For the reasons I have set out, the Government are not able to accept these amendments. I hope the noble Lords will therefore withdraw their amendments.
The Deputy Chairman of Committees
I have received a request to speak after the Minister from the noble Lord, Lord Stevenson of Balmacara. We were unable to hear him earlier due to a technical error.
Lord Stevenson of Balmacara [V]
My Lords, I want to make a brief point. The Minister’s response was interesting but very much couched in the existing paradigm. We seem to be in a situation where, as somebody said, the Government have lifted the lid on the debate over how we work out what goes into the insolvency waterfall, as it were, and how to compensate those who lose out as a result of that compression. Pensions should be part of wages and salary; they should not be where they are. Small businesses always seem to suffer. Thirty per cent is just a figure; it is beneficial but it does not go to the heart of the problem of how we deal with creditors and who comprises the neediest in terms of the analysis of what must be paid back and how that should be organised.
As the Minister was trying to argue, I think, there may be a short-term fix to get this thing back on the road, but these reforms will not be sufficient to resolve the inadequacies of the present arrangement. Does she agree that the time has come—but perhaps it is already too late—to review this area critically, with particular reference to issues such as debtor-in-possession financing? Obviously, there is a crisis because of Covid-19; that crisis provides an opportunity to say that we need to look at this issue again. This would be a good time to do so.
Baroness Bloomfield of Hinton Waldrist
I take the noble Lord’s point. The point of the Bill is to provide emergency relief in the current crisis. The restructuring planned provisions that we have tabled and are taking forward in the Bill are flexible and will permit complex funding arrangements to be used in a company rescue. This will bring our regime more in line with other jurisdictions where debtor in possession rescue finance is well established. These measures will add to the UK’s existing first-class restructuring and insolvency framework and ensure that it keeps pace with developments in other highly regarded international jurisdictions.
Baroness Bowles of Berkhamsted [V]
My Lords, I thank everybody who spoke in this wide-ranging debate. We have explored further how the Bill has been a catalyst for looking at some long-standing issues with the fairness of the insolvency waterfall in general. I hear what the Minister says about the April update but that is still broadly based on the original tenets.
As the noble Lord, Lord Hendy, explained so well, the situation is different in modern times, with many more what would have been employees and other workers falling to the unsecured creditors. It is also they who are squeezed in the robbing of Peter to pay Paul that goes on in the adjustments to provide the impetus for a moratorium. We heard an interesting suggestion from the noble Baroness, Lady Altmann—one she has made before, perhaps in connection with the Pensions Bill—that, instead of looking at Section 75 debt, which tends to make you throw up your hands in horror and run away, we should look at technical provisions or the amount that would go to the PPF; that is another part that could be preserved.
I thank noble Lords. We have more food for thought. I accept that new Clause A18 is perhaps not the place to introduce new priority protection—that probably belongs more in Schedule 3—but these matters are serious enough that they must be brought back at a later date. For now, I beg leave to withdraw the amendment.
The Deputy Chairman of Committees
We now come to the group beginning with Amendment 26. I remind noble Lords that anyone wishing to speak after the Minister’s reply should email the clerk during the debate. The Minister should allow me to call these Members before seeking a decision on Amendment 26, and anyone wishing to press this or any other amendment in this group to a Division should make that clear in the debate.
Lord Callanan
“(7) This section does not apply in relation to a floating charge that is—(a) a collateral security (as defined by section A27);(b) a market charge (as defined by section A27);(c) a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));(d) a system-charge (as defined by section A27).”Member’s explanatory statement
This amendment ensures that section A22 does not apply to a collateral security, market charge, security financial collateral arrangement or system-charge.
Lord Callanan
My Lords, these are a number of technical amendments tabled by the Government in my name to ensure that financial collateral arrangements, charges and securities are carved out from the effects of the moratorium. This is part of the Government’s intention to exclude certain financial services contracts from the moratorium.
I am conscious that time is getting on. I have an extensive speaking note and I can go through it in great detail if noble Lords wish me to do so, but it probably best serves the interests of the Committee if I stop at this point and let noble Lords who wish to contribute on this matter come in. I can respond at the end, rather than go through a lot of technical detail that might not be of interest to those present. That might be to the benefit of the Committee, given the late hour and the fact that we are pressed for time.
Lord Mendelsohn [V]
My Lords, I am encouraged by the Minister’s indication during the debate that the Government are open to amendments and it is useful to hear that they have published material relating to insolvency practitioners, even though I am yet to find out where we can get hold of it. However, I am not entirely satisfied by the Government’s assurance that they appreciate how to deal with some of the complexities that they have put forward. That is not least the case in this group of amendments. I would like to understand not the entire effect but the assumption of which particular cases and how many of them these amendments are likely to affect, and whether they are just technical or do in fact change some of the current core financing arrangements for larger companies.
While I welcome the progress towards a more flexible insolvency regime and appreciate the need for temporary arrangements to help to navigate the current emergency, this legislation, as necessary as it may be, ends up asking a lot more questions than it answers. The truncated process is of course, as many noble Lords have mentioned, wholly unsatisfactory not just for scrutiny but to allow the Government to consider these matters and others as they should. It defies logic that the process was done fully in one day in the other place.
It is not just that the impact assessment is based on out-of-date data and contradictory calculations; the permanent provisions were consulted on, although in their previous form they were never going to be implemented in such a piecemeal fashion. It appears to be widely accepted that it is not just the flaws but the time required to adjust this regime that will be complicated. The permanent measures will take longer to implement, and it will take time for people to get used to how they operate. The temporary measures are a bit too limited to operate in their own guise.
However, the Government cannot have it both ways. They cannot claim that these measures are to get things working in an emergency and at the same time widen the number of options, the required skills, the number of participants and the variety of arrangements required where practitioners or courts will need to be trained or practised in. And, of course, this omits some of the most significant elements that will still need to be addressed, such as whether HMRC will have a preference or take an active role in this, as well as the role of the pre-pack regime and others. It is not just a question of all the delegated powers that noble Lords have spoken so eloquently and raised such meaningful and compelling objections and warnings about. It is also that the regulatory regime is weak and unclear, and so much of this should be in the Bill.
However, we are where we are, and the Government are going to do this whatever we say. Bluntly, this is not this House’s first rodeo, but it is our job to be realistic. This legislation will require further regulation and change, and much work is already taking place in a number of the agencies or in other places that is likely to lead to measures being added to the legislation at a later date. Therefore, we should address how this will work best in the future.
The most important element here is to receive proper reassurance from the Minister of an enhanced process to deal with the implementation, review, secondary legislation and regulation of this legislation, so any clear statements and undertakings in this regard would be important, whether given here or on Report. Will the Government create a post-legislative scrutiny process or, for example, would they be keen for this House to establish a process or a committee that could provide a meaningful role? Will the provision of information be sufficient, and what sort of information will be provided to this House? What will be measured by government, so that we can properly evaluate the operation of the legislation?
What other reviews or agencies, from the professional bodies to the Insolvency Service or the courts, are currently being consulted? What part of these discussions can we be told now, and what will be made available in the future to help resolve concerns or help us to have a debate prior to legislation or regulation being brought forward? Can clearer statements be made by Ministers about how they expect it to work, so that the courts have a clear indication on what to make rulings on and how they should do so? I suspect that the courts will be slightly busier than the Minister anticipates, not least because financial indemnity insurance will provide a very adequate target for people to exercise some degree of accountability in the courts.
Of course, the affirmative procedure for regulation is all that we have, but will the Government look at how this process can be enhanced with a greater provision of information, and possibly consultation, prior to the regulations being tabled? Any such assurances on how we will deal with where we are, and how we might deal with what might evolve into a better and more robust system, would be gratefully received.
Lord Thomas of Cwmgiedd [V]
In view of the course that the debate has taken and the statements by the Minister, I can be very brief. I welcome Amendments 92, 104 and 106, which ensure that unsecured bonds are caught by the exclusions of the moratorium and ipso facto provisions. However, there are many other technical issues to address, and I very much hope that this can be done by further government amendments before Report. That would certainly be preferable to making changes and correcting errors through the regulation-making powers. I welcome what the Minister has said so far and very much look forward to seeing the further amendments dealing with these technical problems.
Lord Fox
My Lords, the belated arrival of these amendments is further indication of the half-baked nature of this Bill. We were assured that the insurance for the permanent parts of this Bill was that they had already been through an extensive consultation period, which I guess they have. However, these important amendments have arrived in a lump afterwards, so that consultation process must have been flawed. I was looking forward to the Minister’s piece-by-piece description of each one. I can understand perhaps why he has decided not to do that, but at the very least, to paraphrase what was said earlier, we need to know how Her Majesty’s Government view these measures working. What problem are they intended to solve and what was the process by which these amendments arrived in the Government’s purview?
Lord Stevenson of Balmacara [V]
My Lords, I had the benefit of a brief discussion with the Minister yesterday on these amendments. If we can get a response to the points made by my noble friend Lord Mendelsohn and the questions asked by the noble Lord, Lord Fox, we will be well served.
Lord Callanan
I am grateful for the patience of noble Lords. I propose to deal with the points raised by the noble Lord, Lord Mendelsohn. As for the technical amendments talked about by the noble Lord, Lord Fox, and other noble Lords, if it is acceptable to them, I shall write to them with the details of what we are proposing and how we propose to do it—soon, as the noble Lord, Lord Fox, reminded me. I shall get an email out to them as quickly as possible which I hope will resolve their issues, but there are no issues of principle or policy involved, since these are simply technical amendments that I think reflect the reality that the Bill, and the many temporary provisions, were drafted at pace. It is a long and complicated Bill and these issues have arisen that we wish to correct.
The noble Lord, Lord Mendelsohn, asked about the reporting structures through which the effectiveness of the measures in the Bill can be monitored. I can tell him that the Insolvency Service has for many years published quarterly national statistics, covering both corporate and personal insolvency, approximately four weeks after the end of the quarter. In response to the pandemic, the Insolvency Service now additionally publishes monthly official statistics, covering corporate and personal insolvency, approximately two weeks after the end of the month. Data on the use of company moratoriums and flexible restructuring plans will be published regularly, either by the Insolvency Service or by Companies House through their existing schedules of national and official statistics. Under the Better Regulation framework, the Government are required to publish a post-implementation review of all these measures not more than five years after commencement and the Insolvency Service is currently considering its plans for monitoring and evaluation. We will, of course, publish further guidance as needed.
With that—and I am grateful for the patience of the Committee, I know that time is getting on—I beg to move.
Lord Callanan
“(4) Subsection (1) does not apply to a provision in an instrument creating a floating charge that is—(a) a collateral security (as defined by section A27);(b) a market charge (as defined by section A27);(c) a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));(d) a system-charge (as defined by section A27).”Member’s explanatory statement
This amendment ensures that section A50 does not apply to a collateral security, market charge, security financial collateral arrangement or system-charge.
Lord Ashton of Hyde (Con)
My Lords, due to the broadcasting restraints, the House was due to rise at 7 pm and I am grateful to the broadcasting team for extending this to 8 pm this evening. The usual channels agreed the scheduling of the Bill and that Committee should be completed today, so I urge all noble Lords to be as brief as they can when speaking to their amendments to allow us to finish in the remaining time this evening.
Amendment 38
“Moratoriums in Great Britain: time-limited effect and renewal
(1) Part A1 of the Insolvency Act 1986 (inserted by section 1 of this Act) ceases to have effect on 30 September 2020, subject to the condition in subsection (2). (2) The condition in this subsection is that the Secretary of State has made regulations by statutory instrument providing that Part A1 of the Insolvency Act 1986 should continue to have effect for a specified further period of no more than one year.(3) Regulations under this section may not be made unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of each House of Parliament.(4) The Secretary of State must keep under review the operation of Part A1 of the Insolvency Act 1986 during the period for which it has effect.(5) The Secretary of State must arrange for a report of a review under subsection (4) to be laid before both Houses of Parliament no later than 15 September 2020.”Member’s explanatory statement
This new clause would terminate the free-standing moratorium provision for Great Britain on 30 September 2020, subject to temporary renewal for up to one year.
Lord Fox
My Lords, Hansard will attest that I have been the very spirit of brevity thus far, and I will try to continue. This is about sunsetting. We heard, particularly when debating the second group of amendments, the very deep concerns people have about the permanent nature of this legislation being brought in under an emergency process. Indeed, the very announcement that the Chief Whip has just made underlines the problem we have with this Bill, in that there are very profound changes being proposed and we are trying to rush them through. We are being asked to be brief on issues that could determine the future of people’s pensions, jobs and very livelihoods. It is serious stuff, but I think we all recognise that there is a job to be done and work to do and there is a need for legislation.
One way to do it, and the way the Government to propose to do it, is to take upon themselves really unprecedented secondary legislation powers and to mix and match and make this work over time. For my part, and for the part of the powerful committees of this House, that is the wrong way around: it is for Parliament, rather than for the Government, to change the way in which we structure this legislation. The alternative is to put a time limit on the legislation and that is what Amendment 38 does—and in different ways what the other amendments in this group do.
I shall not labour that point because we have all talked about the inadequacies of the Bill and about the fact that there is too much movement. We do not yet understand the creditor waterfall or where pensions sit here. There is a great deal about this legislation that we do not yet understand, although we understand the need for it and the need for haste. Therefore, putting a backstop of two years on this legislation gives the Government a chance to make some changes, if necessary, and it gives Parliament a chance to draw a line under this matter, to debate it properly, to take its time and to deliver proper legislation that takes us far into the future. I beg to move.
The Deputy Chairman of Committees
I call the noble Baroness, Lady Neville-Rolfe. She is not there, so I shall call the noble Lord, Lord Stevenson of Balmacara.
Lord Stevenson of Balmacara [V]
My Lords, the point raised by the noble Lord, Lord Fox, is self-evident. We have already covered much of its ground, so I do not think that anything else needs to be said. I believe that the best thing is for the Minister to respond directly to the debate.
Earl Howe (Con)
My Lords, I thank the noble Lord, Lord Fox, for tabling these amendments. As he said, they seek on the one hand to time-limit the period within which the moratorium provisions are in force and require a review of the operation of the provisions to be carried out, and, on the other hand, to limit the ability to extend the sunset date of the powers to make temporary amendments to insolvency and related legislation in Clauses 18 and 26. Here, I am referring to Amendments 68, 69 and 74, which I will cover as they are in this group.
I shall start with the moratorium. As the noble Lord knows, the point of this measure is to give financially distressed companies breathing space from their creditors so as to pursue a rescue or restructure. It forms part of a package of rescue tools in the Bill that will help ensure that viable companies do not fail, thereby saving businesses and jobs. This new procedure will of course be useful during the Covid-19 pandemic but it will also have a longer-lasting benefit to the economy after this period. Therefore, making this measure temporary will serve little purpose. Doing so would, instead, create uncertainty. I ask the noble Lord how a financially distressed company could conduct its rescue planning without some assurance that the restructuring tools would still be available after a certain point in time.
All the permanent provisions contained in the Bill, including the moratorium, have not just been developed in the short time since Covid-19 first appeared; rather, they have been subject to a considerable period of consultation and engagement dating back to 2015. This process included the then Government’s review of the corporate insolvency framework public consultation in 2016 and, since then, there has been an extensive period of engagement with a wide range of stakeholders. The measures have been developed and refined over several years against a backdrop of strong calls to introduce them as early as possible to ensure that the UK keeps pace with restructuring reforms introduced in a number of other jurisdictions and to ensure that we remain one of the top restructuring hubs in the world.
Furthermore, I assure the noble Lord that the Government take their role in reviewing legislation very seriously. We will monitor information and feedback from stakeholders and the industry on the effectiveness of the new insolvency procedures generally. In due course, we are likely to want to commission a more formal evaluation of the impact, and a post-implementation review will be conducted in line with Better Regulation guidance. However, it will be important to ensure that the new measures have sufficient time to bed in before doing so.
Turning to Amendments 68, 69 and 74—which, I dare say, my noble friend Lady Neville-Rolfe would have introduced but the noble Lord, Lord Fox, has his name attached to them—I am grateful to both noble Lords for bringing up the matter of the sunsetting of the powers to make temporary changes to insolvency and related legislation in Clauses 18 and 26. As the Bill stands, those powers may not be used after 30 April 2021, but this expiry date may be extended. This would be for a period of no more than a year, although the power to extend can be used more than once. The amendments would either remove the powers to extend the expiry date, which would mean that the powers in Clauses 18 and 26 would sunset for ever on 30 April 2021, or would limit the power to extend so that it would expire two years after this Bill received Royal Assent at the latest.
I hope that it is helpful if I reassure the noble Lord and my noble friend in her absence that the purposes for which the Clause 18 and Clause 26 powers may be used are tightly circumscribed and very specifically set out in the Bill in the clauses that immediately follow in each case. These include helping to reduce the number of entities being forced to use corporate insolvency proceedings and mitigating the impact of Covid-19 on those proceedings, as well as the duties of persons with corporate responsibility.
The problem here is that we just do not know the long-term impact of this dreadful pandemic on business and insolvency, and we need to be able to move quickly to meet as yet unknown and unidentified challenges. Some of these may not become apparent for several months, so for the power to be most effective it must be capable of being extended.
Extension of the expiry date of 30 April 2021 may be made only after proper consideration and scrutiny by Parliament using the affirmative procedure. I hope that the noble Lord will agree that the existence of that parliamentary hurdle is not insignificant and will prevent the power continuing indefinitely if it is no longer needed.
So, for the reasons I have set out, I am not able to accept this group of amendments. I therefore hope that the noble Lord, Lord Fox, will agree to withdraw Amendment 38 and in due course will not press the other amendments in the group.
Lord Fox
I thank the Minister for his response. I did not expect the Government to accept the amendments, but there is an element of cake-and-eat-it here. On the one hand, the Government are saying that there needs to be certainty within the restructuring industry to make this happen; on the other hand, they are taking upon themselves the ability to change everything. It is quite clear that the Government expect to make changes, but they then say, “Well, after two years, Parliament will have had time to produce a replacement piece of legislation, which will have built on the legislation that we are seeing in front of us.” I do not accept the idea that the amendment somehow creates uncertainty because there is enough uncertainty already; it does not make that much difference.
The Government are running this through emergency process. By definition, an emergency has an end. The process of forever renewing things, which is essentially what is there, leaves a bad taste in most people’s mouths. I shall read the debate in more detail in Hansard tomorrow. In the meantime, I beg leave to withdraw Amendment 38.
Lord Callanan
“(7) This Article does not apply in relation to a floating charge that is—(a) a collateral security (as defined by Article 13DI);(b) a market charge (as defined by Article 13DI);(c) a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));(d) a system-charge (as defined by Article 13DI).”Member’s explanatory statement
This amendment ensures that Article 13DD does not apply to a collateral security, market charge, security financial collateral arrangement or system-charge.
Lord Callanan
“(4) Paragraph (1) does not apply to a provision in an instrument creating a floating charge that is—(a) a collateral security (as defined by Article 13DI);(b) a market charge (as defined by Article 13DI);(c) a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));(d) a system-charge (as defined by Article 13DI).”Member’s explanatory statement
This amendment ensures that Article 13HB does not apply to a collateral security, market charge, security financial collateral arrangement or system-charge.
The Deputy Chairman of Committees (Lord Bates) (Con)
We now come to the group of amendments beginning with Amendment 46. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or any other amendment in the group to a Division should make that clear during the debate.
Clause 10: Suspension of liability for wrongful trading: Great Britain
Amendment 46
“, unless the court has reason to suspect the person was in breach of the general duties under sections 171 to 177 of the Companies Act 2006 during the relevant period.”
Lord Stevenson of Balmacara [V]
We now come to a group of amendments that contain a large number of different issues and I will go through them relatively quickly. I hope that that is in order. Amendment 46 in my name goes back to the biggest concern raised with us by people submitting evidence and ideas for the Bill and how we might discuss it as we go through the various stages. In moving to make sure that directors of companies who might be approaching insolvency were not caught by fiduciary duties and attract a personal liability for any act or actions they might take, it was suggested that the Bill should contain a full list of all the existing powers to make sure that directors are not affected by these issues. They are to be found in Sections 171 to 177 of the Companies Act 2006, which specify penalties for not fulfilling the fiduciary duty. My question for the Minister when he comes to respond is: would it not make sense to include within the Bill the powers that will be relied on to ensure that directors are somehow not gaming the system by allowing companies that would otherwise have gone insolvent to carry on little longer for any purpose, whether good or bad? That is all I wish to say on Amendment 46.
Amendment 75 takes us back to the wider context and in particular to the question of how we can help small businesses. The Bill does not specifically pick out any strands for SMEs, although it will be of use to them when it comes into force. But we felt that other things should perhaps be considered at the same time as part of the package. The main idea we came up with was about the prompt payment code, which is a voluntary arrangement under which payments from and to companies are organised, and the Small Business Commissioner, who has particular responsibilities in relation to making sure that the prompt payment code works properly. They could be brought up to a more important role, particularly by making the prompt payment code statutory and by giving real powers to the Small Business Commissioner—we would see a huge difference. Many people out there, including the Federation of Small Businesses, would support this and I know that in previous years the Small Business Commissioner has also supported it, so I would be interested to hear the Government’s response.
Amendments 78 and 79 deal with the wider issue of what to do should the Government have the capacity and interest—I hope they do—to think harder and wider about the whole question of insolvency. It is obvious from the discussions that we have had today and earlier at Second Reading—and no doubt we will return to them on Report—that a lot of work still needs to be done in relation to insolvency. The issues that we have discussed today will help, there is no doubt about that, but, as we discussed in earlier amendments, they have also raised the lid on some of the issues that need further attention.
Within the various things that we know the Government are thinking about, there is work to change the way in which the Financial Reporting Council works. The Secretary of State previously indicated there would be legislation on that, so the amendment suggests that a report should be considered within a reasonable timescale to bring forward issues such as minimum standards for the oversight of auditors and the question about what happens to the big four—although they are named in the amendment, I should make it clear that this is not an attempt to hybridise the Bill—to make sure that standards are properly monitored and that the information reports of audit committees within companies are made more widely available, and various other points listed in the amendment. These are all good and sensible proposals. If they do not fit within this Bill, I am looking to the Government to respond by explaining how they can be brought forward in the future.
In a further look, building on comments made by the noble Baroness, Lady Bowles, when she introduced an earlier amendment about the need to reform Companies House, there are other corporate governance issues that the Secretary of State has previously mentioned. Again, it would be interesting for the Minister to see whether they will look at relevant powers that would bear on insolvency but also have a wider bearing on corporate governance. I look forward to the Minister’s response and I beg to move.
Lord Fox
My Lords, I will speak to Amendments 73, 78, 80 and 144. In previous groups we have discussed the need for the Secretary of State to return to Parliament with an update on the performance of the Bill, and relatively recently we discussed limiting the number of extensions. Amendment 73 moves on to making it mandatory for government to consider the effect the Bill is having on small and medium-sized enterprises, making it a criterion for deciding whether to extend the measures for a further six months. I know that the word “proportional” is in there somewhere, and that may well be how the Minister will explain this. However, it will reassure small and medium-sized businesses to be explicitly picked out by the legislation, saying that the effect on such businesses is important to the Government and central to their decision-making process.
As the noble Lord, Lord Stevenson, said, Amendment 78 adds a whole new clause that very much replaces the regulator. That would make the weather when it comes to regulating the financial industry. It is very unfortunate that, in the process of cherry picking some of the permanent measures that have gone into the Bill, this measure, which has of course had the same level of consultation as some of the measures that made it into the Bill, has not been included. It is the step that people need.
Amendment 80 adds another clause, which is very much about verification and money laundering. Amendment 144 deals with shareholders being able to raise questions in virtual AGMs. It cannot be beyond the wit of women and men to enable that to happen.
Lord Mendelsohn [V]
My Lords, I will briefly speak in support of Amendment 75, which is also in my name, on the Small Business Commissioner. Only in the UK system have we decided to have a Small Business Commissioner to deal with late payments and model it on existing arrangements in other countries. Every other country uses legislation to deal with late payments. However, they have found that the small business administration in America or in Australia, or other types of such agencies, have played a useful role in the insolvency process, building support and confidence for smaller businesses and being a useful vehicle for larger companies and professional services to do a variety of things—from the renegotiation of leases to dealing with supplier contracts, for example. Apart from the measures my noble friend Lord Stevenson described, there are of course other ways in which involving the Small Business Commissioner is a big help in making sure that this legislation works and that it properly protects the interests of smaller operators, ensuring that larger operators and the asymmetry of powers can be adequately addressed and a smoother process can be assured. Enhancing the role of the Small Business Commissioner by adopting this amendment and introducing some sort of formal role or consultative power would be a useful step toward ensuring that this process works smoothly.
Baroness Anelay of St Johns [V]
My Lords, I will speak to Amendment 143, which is in my name. The Bill is of course welcome and gives legal certainty to certain charities about how they can, without any penalty, “disobey” the rules in their own governing document on whether and when to hold AGMs and other meetings and file certain documents. But some charities are excluded from this sensible legal assistance—those established either by Act of Parliament or by Royal Charter. They are mostly long-established and include national museums and leading cultural organisations such as the Royal College of Music and the National Art Collection Fund, as well as some leading universities and colleges. It should also be noted that, even if a charity does not have to hold an AGM during the relevant period, it may none the less be advisable for it to take advantage of the temporary flexibility offered by the Bill to other charities and go ahead with a meeting to consider resolutions which might need to be passed in the next few months—for example, the appointment or re-appointment of board members.
My objective today is to ask the Government to explain why they have excluded certain categories of charities from the flexibilities provided by this Bill. If the Government have decided that the Bill is not the right vehicle for these charities, I would like my noble friend the Minister to explain why. It is important that the Government explain today what other guarantee of certainty they can give to the excluded charities, so that they will not face any disadvantage.
Much earlier this afternoon, in answer to the noble Baroness, Lady Falkner, my noble friend Lord Callanan stated that there had been extensive consultation over a long period about provisions in the Bill. I would be grateful if the Minister said now what discussions she or her officials have had with DCMS and the Charity Commission in deciding what assistance should or should not be provided by legislation to the excluded charities. Did those discussions take place before the pandemic began, or have they taken into account discussions since then with representatives of the excluded charities about the impact of the pandemic on them and how they might be given certainty?
My concern is that there is a group of excepted—excluded—charities which do not have the same benefits as others listed in Schedule 14. I feel that it is unfair to leave them to the vagaries of decisions by the Charity Commission as to whether they can go ahead and break the rules of their own governing document. They are respectable charities; they need to have the respect of being given the flexibility to operate in the same way during this pandemic as charities currently covered by the Bill. I look forward to the Minister’s response.
Baroness Altmann [V]
My Lords, I too will be brief in the interests of time. I echo the wise words of the noble Baroness, Lady Anelay, and I support her Amendment 143, but I particularly want to talk to my own Amendment 144. This amendment deals with an issue whereby the Bill has rightly removed barriers for those companies whose articles do not allow virtual AGMs to be held. It is clearly important to enable such meetings in the current environment, but Schedule 14 has some worrying implications for shareholder capitalism. I ask my noble friend the Minister to consider Amendment 144, and I thank the noble Baroness, Lady Bowles, for her support. The amendment would make a small change in respect of paragraph (b) of Schedule 14 (3)(6), which removes the right of shareholders to ask questions at AGMs and permits them only to vote.
That paragraph would clearly reduce shareholders’ ability to scrutinise, engage with and hold to account a company's management. As ShareAction has pointed out, it would also damage the UK’s reputation for protecting shareholder rights and the interests of both institutional and individual shareholders. My amendment would simply omit paragraph (b), so that ways can be found to allow shareholders to engage in dialogue and question their boards, as is already the case for US and European companies. I would also hope that, after these emergency measures expire, my noble friend might agree that there is a need to develop ways to modernise British AGMs to better reflect the era of modern stakeholder capitalism.
The Deputy Chairman of Committees
I now call the noble Earl, Lord Clancarty. No? I call the noble Lord, Lord Cormack.
Lord Cormack (Con) [V]
My Lords, today’s proceedings have illustrated how impossible it is for a virtual or a hybrid House to hold the Government adequately to account. I ask those who arrange our proceedings to ensure that time is fairly and evenly distributed. We started with no time limits on speeches, and we are now having to gallop through a great many important issues.
I give my total support to what my noble friend Lady Anelay said on her Amendment 143. These charities include some of the most notable in the country, and many of them are connected with heritage and the arts, which is why I was anxious to give my support. It really is crucial, especially when the Bill has not had any real scrutiny in the other place, that adequate time is given to consider the vital points that have been made in this very wide-ranging group of amendments. I would like to go on at much greater length but, in deference to others, I will not. However, I repeat my strong support for my noble friend Lady Anelay.
Lord Palmer of Childs Hill [V]
I will not speak for long, bearing in mind the time constraints. I am concerned by Amendment 75 and the mention of the Small Business Commissioner. I wonder whether, perhaps separate from this debate, the Minister could say what successes the Small Business Commissioner has had. I have made previous speeches in your Lordships’ House on his ineffectiveness.
The amendment before us now sounds sensible but it does not use the normal term “small and medium-sized enterprises”; it mentions “small business” and “larger businesses”. From my professional life, I know that many firms that consider themselves small I would consider large, and that many firms that are large would consider themselves small. The vagueness that this amendment would introduce to the legislation, if it ever got in, would not be useful.
The Small Business Commissioner was really set up to deal with late payments, which of course affect small companies. Here, the amendment is trying to give the Small Business Commissioner a much wider remit, but I have never seen great success in the small remit it has.
While I am on my feet—in a theoretical sense— I want to mention that another Minister speaking from the Front Bench took issue with my comment on HMRC and VAT. She said that VAT was not being given special priority in the Finance Bill 2019-21. I advise her to look at Clause 95. Perhaps the noble Lord the Minister will write to me on this matter.
Baroness Bowles of Berkhamsted [V]
My Lords, this group deals with a range of issues which I broadly support, but I shall keep to those amendments with my name on.
I am not quite sure what my Amendment 73 is doing in this group, but its purpose was to ensure that the interests of SMEs are specifically taken into account when reviewing amendments to legislation made under Clause 18, the Henry VIII clause. Clause 21, governing the time-limited effect of Clause 18 amendments, states that regulations made under Clause 18 must be held under review, and revoked or amended if they are no longer expedient or proportionate. My amendment adds a third option if they cause harm to SMEs, as I fear that SMEs could fall between the two stools of expedience and proportionality.
I signed Amendment 78, concerning the FRC, because its replacement is long overdue and it is hard to understand why this top recommendation from the Kingman report has not yet come about. I know that there has already been one consultation on it because I replied to it over a year ago, so what happened to that and why is there prevarication? There is still so much more about the unsatisfactory past of the FRC that could come out—it is constantly dribbling out. It will taint ARGA if it is perceived as just the FRC by a new name, which is what the delay is doing.
The Deputy Chairman of Committees
I will now try the noble Earl, Lord Clancarty, again. No, that did not work, so we will go to the Minister, the noble Baroness, Lady Bloomfield.
Baroness Bloomfield of Hinton Waldrist
Can I correct for the record something that I said on the previous amendments? The money that will take precedence from HMRC includes VAT held on behalf of customers, as well as national insurance contributions. What it does not include is things such as corporation tax.
I thank noble Lords for their amendments on a range of important issues in this group. I will try to cover them all, as well as the Committee’s questions, as best I can in the time available. I thank the noble Lord, Lord Stevenson, for highlighting the important matter of directors’ duties under the Companies Act. These duties continue to apply during the period in which personal liability for wrongful trading is suspended. The purpose of this provision is to remove the deterrent of personal liability at the point at which the directors of the company are deciding whether it should continue to trade at a time of great economic uncertainty. At this time, it is important that directors can be certain that their decision to trade on will not result in personal liability.
I reassure the noble Lord that those directors’ duties he refers to in his amendment will continue to operate, including the duty to protect the interests of creditors. I add that directors have legal responsibilities under wider company law; for example, to exercise independent judgment with reasonable care, skill and diligence. These duties will remain in place, as will measures in insolvency law to penalise directors who abuse their position. Therefore, directors will still face the threat of fraudulent trading, coupled with director disqualification from a compensation regime where their conduct merits it.
On Amendment 67, regarding the general power to amend insolvency law, I thank the noble Baroness, Lady Bowles, for raising the matter of ensuring that temporary amendments made using the general powers in Clauses 18 and 26 remain relevant and necessary while in effect and will be removed when they are not needed. Full consideration must be given to the impact of temporary amendments on anybody likely to be affected by them, not just small or medium-sized companies and unsecured creditors, and this consideration must be given before the powers are used. The amendments must then be proportionate to the purpose of making them, which must be one of the purposes set out in Clauses 19 and 27. This might be reducing the number of entities having to use corporate insolvency proceedings or mitigating the impact of Covid-19 on those processes. Further, the powers in Clauses 18 and 26 may not be used to create a provision to impose or increase a fee.
A temporary amendment which causes financial harm to small and medium-sized companies and unsecured creditors is unlikely to meet one of the purposes for which the powers in Clauses 18 and 26 may be used. Temporary amendments must remain under review. In the unfortunate circumstances where an amendment caused unforeseen and unintended harm, this would be addressed during the ongoing review process.
A number of noble Lords mentioned the Small Business Commissioner in relation to Amendment 75. The noble Lords, Lord Stevenson and Lord Mendelsohn, are right to highlight the office of the commissioner as a force for good in resolving payment issues for the smallest businesses which, as we know, are least able to weather the storm of cash flow issues. The Government are completely focused on their manifesto commitment to clamp down on late payment to small businesses. The SBC’s intervention in late-payment disputes has recovered over £7 million in late or unpaid invoices for small businesses since it was created, and its work has been especially important in light of the cash flow issues all sizes of businesses have been facing in the current Covid situation. I hope this also goes some way to addressing the concerns of the noble Lord, Lord Palmer.
We have already pledged to consult on extending the powers of the SBC and we will bring forward that consultation as soon as we are able. The consultation period and engagement with interested parties will bring forward ideas for the extension of scope and powers and will be given consideration. I hope that noble Lords will understand our desire to consult carefully before making important decisions such as this one.
I turn to Amendment 48 on the Financial Reporting Council, tabled by the noble Lord, Lord Stevenson. The Government are committed to strengthening the UK’s corporate governance and audit regime. We are drawing up plans to replace the Financial Reporting Council with a new regulator, as part of a wider programme of audit reform. This programme covers the recommendations of three independent reviews by Sir John Kingman, Sir Donald Brydon and the Competition and Markets Authority. The Government are therefore already considering many, if not all, the specific issues highlighted by this amendment. Our intention is to set out our proposals in the coming months, seeking views on them where the Government have not already done so. The noble Lord will be aware that this Bill takes forward some of the corporate governance reforms related to his amendment, such as a freestanding moratorium and a new restructuring tool.
We were asked why we were not reforming Companies House. The consultation on reform received a significant number of responses. An official government response will be published in due course. We are considering a broad package of reforms to Companies House, to ensure that it is fit for the future and continues to contribute to the UK’s business environment. The proposals amount to the most significant reform of the UK’s company registration framework since the companies register was first introduced in 1844 and it is important to take the time to get it right.
Amendment 80, in the name of the noble Baroness, Lady Bowles, covers the role of the Registrar of Companies. The Government agree that there is a case for introducing further checks to verify the identities of individuals setting up, managing or controlling corporate entities. Last year’s consultation proposed that those with a key role in companies should have their identity verified, and that Companies House should have greater powers to query and seek corroboration on information before it is entered on the register and to remove inaccurate information.
I turn to Amendment 143 in the name of my noble friend Lady Anelay. I will try to allay her concerns, and those of my noble friend Lord Cormack. There have been extensive discussions with DCMS and the Charity Commission, which have been involved in all the measures in the Bill. My noble friend will be aware that a small number of charities is incorporated and regulated by an Act of Parliament or by royal charter. In the limited time available it was not considered proportionate to extend the measures in Schedule 14 to the Bill to this small group of charities. Extending the relevant provisions to these groups of charities in a way that would be effective and avoid unintended consequences would be complex.
In cases where charities are not covered by the Bill’s flexibility on AGMs, the Charity Commission has indicated in its published guidance that it will take a pragmatic and proportionate approach where members’ meetings need to be postponed or held virtually in order to comply with social distancing, even where this may appear to be contrary to the rules of the charity’s governing document.
I am grateful to my noble friend Lady Altmann and the noble Baroness, Lady Bowles, for tabling an amendment on shareholder representation that draws attention to the flexibilities offered regarding meetings of companies and other qualifying bodies. Given that, at present, public health measures preclude mass gatherings, it is right that the Government should temporarily suspend certain members’ rights, the most fundamental being the right to attend a meeting in person. The measures on AGMs and other meetings enable them to be held in a way that is consistent with the coronavirus regulations and the Government guidelines on social distancing. The new measures will not prevent shareholders exercising their right to vote. They will still have the ability to vote by proxy where available.
To minimise the impact of not being able to attend, we expect companies to engage with shareholders ahead of and following meetings, including responding to shareholders’ questions that are sent in by electronic and other means. We have issued guidance to industry that bodies which seek to make use of the range of meeting flexibilities that the Bill provides should explore all alternative avenues to ensure that their members are able to participate in AGMs and other meetings to as great an extent as is reasonably practical.
I turn now to the final point made by the noble Baroness, Lady Bowles, on the Financial Reporting Council UK audit reform in response to the review by Sir John Kingman of the FRC, Sir Donald Brydon’s review of audit and the Competition and Markets Authority’s study of competition in the statutory audit market. The Government have committed to bringing forward proposals for reform, including legislation to establish a new regulator in place of the FRC.
I would like to thank noble Lords for their insightful contributions. I have sought to offer reassurances regarding each of the issues raised, albeit in brevity given the range of issues in this group. I hope that the noble Lord will feel able to withdraw his amendment.
Lord Stevenson of Balmacara [V]
My Lords, I thank all speakers in this short debate. It has been very wide-ranging and we have ended up with what almost amounts to a raft of future changes that we would all like to see in the legislation relating to corporate governance and related matters. I look forward to hearing about progress on that in the near future.
I have one point to make which does not need a response from the noble Baroness at this stage. The noble Baroness, Lady Anelay of St Johns, rightly raised the question of charitable companies. We have been given a response to the effect that it is not felt appropriate to deal with the very small number which fall into the main category. However, I put it to the Minister that these days most charities have trading companies and all of those will be subject to the same rules and regulations that we have been talking about prior to this. Therefore, I assume that any charity which is set up—whether by royal charter or a company set up by Parliament or indeed by any other way in which charities are formed—and has a trading company would be caught by the main tenet of these things. I am afraid that insolvency is quite likely, given the very bad impact of the coronavirus on charities. Tourism numbers are down, and we are likely to see problems and I hope that that will be covered. Perhaps the Minister could drop me a note on this point.
In the same vein, I ask the Minister to confirm that companies which are set up through credit union legislation could have similar issues, so their particular circumstances need to be looked at, as are those companies set up on a social enterprise model for which there is not the same legal framework. However, the same intention lies behind them and they should be able to trade and operate in a way that is effective for their members. I beg leave to withdraw the amendment.
Baroness Barker
Member’s explanatory statement
This amendment would extend the relevant period for the suspension of liability for wrongful trading in Great Britain.
Baroness Barker
My Lords, following on neatly from the noble Lord, Lord Stevenson of Balmacara, those noble Lords who took part in the Second Reading debate will know that my experience is in the field of charitable companies and their subsidiary trading companies, CICs, friendly societies and so on. This amendment would not apply in particular to any one set of companies, but it acknowledges that there are different types of companies and that their incomes are derived in different ways. Given that, the impact of the period of wrongful trading or the relaxation of the wrongful trading regulations will have a different effect on some companies.
I do not want to rehearse the arguments I made at Second Reading, but we know that in the past three months, charities have lost £4 billion-worth of income and a lot of them are staring insolvency in the face. However, for them, as for commercial companies, all may well change within the next four weeks. We know, for example, that in fields such as entertainment, if a change is made to the social distancing rule—the physical distancing rule, as it should be called—that may have a direct impact on the viability of some companies.
Lord Hodgson of Astley Abbotts
My Lords, I have Amendment 129 in this group. It seeks to equalise the different levels of protection afforded to firms in trouble under this legislation. It has been brought to my attention by a firm of solicitors that specialises in insolvency. The two critical dates in the legislation are 27 April, after which general protection is available; and 1 March, just under two months earlier, after which protection is afforded, but only if a statutory demand for payment has been made.
However, a statutory demand is not the only way that a company can be caused to fail. It is possible to go for a default judgment in a county court or a liability order in the magistrates’ court and proceed directly to a winding-up. Firms that are subject to either of these other two procedures do not benefit from protection from 1 March, but from 27 April only.
Firms are able to object and to fight these proceedings but, from 23 March, the country was in lockdown. Understandably, courts have found it more difficult to inform defendants about cases brought against them and, in many cases, smaller companies—where the proprietor is running the business almost on their own —may have been involved in self-isolation. They are therefore unable to access proper legal advice to protect their position. My amendment seeks merely to extend protection for these cases, particularly those affecting small companies, from 27 April to 23 March—the date on which lockdown began and the inequality of legal arms may have commenced.
Baroness Bowles of Berkhamsted [V]
My Lords, I can be brief because my amendment in this group contains a separated half of the GB-Northern Ireland pair of amendments relating to small businesses that I spoke about in the previous group, so I do not need to explain those again, and in the interests of time I will forgo speaking on anything else.
Lord Wallace of Tankerness [V]
My Lords, I will seek to be brief. The point I will make relates to retrospection, which Amendment 129 from the noble Lord, Lord Hodgson of Astley Abbotts, perhaps illuminates; he is trying to make some of the provisions even more retrospective. I will not work through all the detail; suffice it to say that in Schedule 10 we are asked to enact a provision that would retrospectively void a court order that had been legally pursued and granted. In the words of the Government’s Explanatory Notes, this
“may lead to the petitioner becoming liable for the cost of doing so.”
I do not doubt that there are important business and commercial reasons underpinning these provisions. I ask simply that the Committee proceeds with the utmost caution when making retrospective provision. I quote from the Constitution Committee’s seventh report:
“We recognise that the COVID-19 pandemic presents companies with considerable challenges and that the Government is rightly seeking to protect businesses and the economy as a whole … However, measures with retrospective effect are exceptional and undesirable in principle, requiring the strongest possible justification. We do not think the Government has yet made the case for them in this Bill.”
I simply invite the Minister, when he comes to reply, to try to make a justification and, if he is unable to do so in the time remaining in these foreshortened proceedings today, to undertake to make a response to the Constitution Committee’s report before the House meets for Report.
Baroness Bloomfield of Hinton Waldrist
My Lords, if I might take just a couple of seconds of your Lordships’ time, we have 10 minutes left to finish this group. I encourage people to make their comments as short as possible, so that we at least finish this group.
Lord Howarth of Newport [V]
My Lords, I will follow the noble and learned Lord, Lord Wallace of Tankerness, and make my comments in reference to Amendment 129 in the name of the noble Lord, Lord Hodgson of Astley Abbotts. I begin by commending him on the very strong statement of principle he made in the debate on the first group about the constitutional impropriety of too many aspects of this Bill.
His amendment dealing with the “relevant period” provides us the opportunity to touch on the constitutional principle of retrospectivity. The Bill’s provisions are backdated, altering the law on winding-up petitions as it stood after 1 March in some aspects and after 27 April in others. I do not in any way dissent from the intention of the noble Lord, Lord Hodgson, to bring in a further measure to protect vulnerable businesses. None the less, we ought to recognise that it is generally held that retrospective legislation undermines the rule of law.
In this Bill, a legal right that people relied on is ex post facto wiped out, to the detriment of persons who relied on it. Provisions in Schedule 10 operate retrospectively to invalidate winding-up petitions made by creditors, albeit creditors exercising a statutory right. They could even be deprived of the benefit of a favourable court judgment previously made, as the noble and learned Lord just said. It allows the court to undo the effect of winding-up petitions and even to require petitioners to be liable for costs. This is a remarkable provision and appears to be incompatible with the rule of law.
Retrospective legislation should be very rare indeed. It is constitutionally objectionable in principle, so, like the noble and learned Lord, Lord Wallace, I ask: how does the Minister justify it? If he considers it necessary to deal with abuses by creditors, how widespread are these abuses? How many instances have been reported? Why is a change in the law needed to deal with them, and why a retrospective change in the law?
Lord Stevenson of Balmacara [V]
My Lords, I have nothing to add; the arguments make themselves. I look forward to hearing from the Minister.
Earl Howe
My Lords, I am most grateful to noble Lords for these amendments, which seek to extend the period of time that the range of temporary measures contained in the Bill will continue to operate. The temporary measures contained in the Bill are all necessary to ensure that otherwise viable companies are given the space to recover, if that is possible. I entirely understand noble Lords’ desire to ensure that the measures continue for as long as they are needed. As I am sure they appreciate, the Bill contains provisions enabling these temporary measures to be extended, and I can reassure them that the Government have every intention of making use of this provision if the protections are needed beyond their present expiry date.
The temporary measures all have significant impacts on the normal working of various parts of insolvency legislation and the business community. The point that needs to be made here, though, is that the term of extension for one measure may not be desirable, or needed, for another. We therefore think it is right that any consideration of an extension, and for how long, should be done on an individual basis rather than in the round, taking into account all the circumstances and potential impacts.
My noble friend Lord Hodgson’s amendment is slightly different from the other amendments in this group, in that it would extend backwards the period to which restrictions on winding-up petitions and orders apply, to include circumstances where petitions were filed after 23 March 2020, when lockdown began. As currently drafted, the restriction on winding-up petitions applies retrospectively from when the Government announced their intention to legislate. It seeks to avoid unfairness by ensuring that the restriction on winding-up petitions applies only in cases where the person presenting the petition would have known of the Government’s intention to legislate in this area. I hope my noble friend will agree, on reflection, that it would not be appropriate to place such a requirement on anyone before they could have known about it. That is why we have chosen to apply the provisions in respect of windings up from 27 April 2020—the next working day following the Government’s announcement of the change in policy.
I will write to the noble and learned Lord, Lord Wallace of Tankerness, and the noble Lord, Lord Howarth, in answer to their questions on retrospection, but for the reasons I have set out, I am not able to accept these amendments. I therefore hope that the noble Baroness, Lady Barker, will feel able to withdraw her Amendment 47 and that, in due course, the other amendments in the group will not be moved.
Baroness Barker
My Lords, in view of the hour I will simply say that I am not surprised by the noble Earl’s answer. There is something to be said about the winding-up provision specifically running longer than 30 June, but at this hour I will withdraw my amendment.
Lord Callanan
Member’s explanatory statement
This amendment changes the definition of the “relevant period” so that the term is defined by reference to the coming into force of the section rather than by reference to the coming into force of the Act as a whole.
Lord Callanan
Member’s explanatory statement
This amendment changes the definition of the “relevant period” so that the term is defined by reference to the coming into force of the section rather than by reference to the coming into force of the Act as a whole.
Lord Vaux of Harrowden
“(7A) This section does not apply in relation to a contract for the supply of goods or services to a company where the supplier is not in its first financial year at the relevant time and meets at least two of the following conditions in the most recent financial year--Condition 1: the supplier’s turnover was not more than £5.1 million;Condition 2: the supplier’s balance sheet total was not more than £2.5 million;Condition 3: the number of the supplier’s employees was not more than 25.(7B) For the purposes of Condition 1 in subsection (7A), if the supplier’s most recent financial year was not 12 months, the maximum figure for turnover must be proportionately adjusted.(7C) For the purposes of Condition 2 in subsection (7A), the supplier’s balance sheet total means the aggregate of the amounts shown as assets in the supplier’s balance sheet.(7D) For the purposes of Condition 3 in subsection (7A), the number of employees is the number of employees at the most recent financial year end.(7E) In subsections (7A) to (7D), the supplier’s “most recent financial year” is the financial year of the supplier which, at the relevant time, has ended most recently.(7F) This section does not apply in relation to a contract for the supply of goods or services to a company where the supplier is in its first financial year at the relevant time, if the supplier’s average turnover for each complete month in the supplier’s first financial year is not more than £425,000. (7G) For the purpose of subsections (7A) and (7F) a supplier may be a company, a limited liability partnership, any other association or body of persons, whether or not incorporated, or an individual carrying on a trade or business.”Member’s explanatory statement
This amendment introduces a permanent exemption to the termination of supply contracts rules for the smallest companies (set at 50% of the size of small companies that are subject to a temporary exemption in Clause 13).
Lord Vaux of Harrowden [V]
My Lords, I believe that I have a minute and a half and we have 18 amendments to get through, which is not terribly satisfactory. My Amendment 51 seeks to introduce a permanent exemption to the termination of supply clauses for very small businesses. I am very concerned that these clauses could be particularly difficult and burdensome for small businesses. The Government recognise this with a temporary exemption, but the clauses are permanent. Having to supply with uncertainty of payment, possibly on top of overdue debts prior to the moratorium, will be disproportionate at any time, pandemic or no pandemic.
Given the time, I will not go through more detailed arguments than that, other than to say, in response to the point that the Government made in one of the previous meetings we had that making it permanent for all small businesses would render the supply protections less useful, that I have therefore drafted the amendment so that it applies only to much smaller companies that are 50% of the size of the ones the temporary exemption applies to. That is arbitrary and I am very happy to discuss it further.
In addition, my Amendment 54 is a very small technical amendment that would simply reduce the tests that a small company that is less than a year old has to apply to meet the small company exemption. It would have to apply only a turnover test. It is a little, technical thing, but it would make life easier for small companies. I beg to move.
Lord Hendy [V]
Could I ask the Deputy Chairman of Committees how long we have?
The Deputy Chairman of Committees
If the Government Chief Whip would like to make a short statement, he can at this point.
Lord Ashton of Hyde
We will finish this group and then we will have to do the remaining group as first business tomorrow.
Lord Hendy [V]
Thank you. Amendments 107 to 116 seek to add a third condition to the two proposed conditions for the court to approve a compromise or arrangement.
In Amendments 109 to 111, we seek to require that companies pay all outstanding payments of workers’ remuneration et cetera. This is a reflection of the amendments moved in group one, and therefore I will not develop the arguments again.
Amendment 112 would ensure that the company’s obligations to its pension scheme have absolute priority. Again, your Lordships heard the arguments for that in the debate on the first group of amendments, with contributions from my noble friends Lady Drake and Lady Warwick, the noble Baronesses, Lady Bowles and Lady Altmann, and the noble Lord, Lord Balfe.
Amendment 113 is a repetition of the condition that we proposed in the debate on the fourth group of amendments, which is that 30% of the sale of any assets should be used for the satisfaction of unsecured creditors. I will not repeat those arguments.
Amendments 114 and 115 are, in our submission, important. They are intended to redress the striking deficiency in the Bill of failing to include any mechanism of industrial democracy by which workers may have a say in the vital decisions contained in the Bill that are likely to have a profound effect on their lives.
Amendment 114 proposes workers on boards, just as in most of the rest of Europe. Such a proposal has been the subject of discussion since the 19th century and particularly since the 1977 Bullock report. It was proposed by Mrs May when she was Prime Minister. This is a golden opportunity to put it into effect as a condition. Workers being on boards would make the interests of all stakeholders being properly taken into account much more likely.
Amendment 115 proposes an alternative form of industrial democracy: collective bargaining. Our amendment recognises that there are no recognised unions in many workplaces. We therefore deploy the mechanism for workplace representatives to be elected, which is found in the legislation for collective redundancy consultation. The statutory requirement to bargain collectively has a long history, going back to the Trade Boards Act 1909 and, in a different and more limited form, Schedule A1 to the 1992 trade union Act. It is normal in Europe. The Government would also have the satisfaction of complying with their obligations in international law.
Amendment 116 is intended to discourage restructures intended to raise cash simply to pay dividends, buy back shares or pay the directors excessively.
Amendment 117 is intended to extend the benefits of the previous measures to the broader legal category of workers as well as that of employees.
I am disappointed that, because of the time, I cannot develop further any of the merits of these amendments at this point.
Baroness Altmann [V]
My Lords, I will not detain the Committee for very long. I add my support for the protection of workers’ rights that would be achieved by the amendments in this group.
Lord Hain [V]
Current UK company law prioritises the interests of company shareholders over those of anyone else with an interest in the company, such as employees, suppliers and subcontractors or local communities, but everyone involved in a firm in financial distress has something at stake, not just those in the boardroom or whose names appear on the company’s share register. This includes each and every member of the workforce. Whatever happens, they deserve to have their tax, national insurance, redundancy and pension rights and responsibilities acknowledged and protected.
Amendment 112 recognises that pensions are really postponed pay packets and seeks to protect workers’ deferred earnings. Workers who may have invested much of their working lives in the company and thereby have accumulated pension rights vital to the future of their family must not face losing some or all of those rights while shareholders and secured or unsecured creditors help themselves to whatever of value remains in a company that is facing failure.
Amendment 115 requires collective agreements to be reached between firms seeking a compromise or a reconstruction arrangement and representatives of employees affected by such a compromise or arrangement.
Amendment 116 makes it a condition for companies to receive state support under the Bill that they give priority to rebuilding their finances, ruling out for three years dividend payments, share buybacks or payments to any director of more than 10 times the rate received by the company’s lowest-paid full-time equivalent employees.
Amendment 111 provides for any compromise or reconstruction arrangement for a firm in financial difficulty to provide immediate redress for past breaches of the sex equality clause under Section 66 of the Equality Act 2010 or of the sex equality rule under Section 67, and for the possibility of future such breaches to be eliminated.
Amendments 114 and 115 on elected workers on boards and requiring agreements with trade unions seek to take a leaf out of Germany’s book by giving a voice to workers via elected seats on company boards. In Germany, about 90% of private sector workplaces with more than 500 employees elected works councils in 2011. This system of making co-operation at work between unions and employers a matter of routine has helped to deliver high living standards, unparalleled export success, strong manufacturing, world-class training and skills, and social cohesion.
So that we can decide what to do on Report about these issues, I appeal to the Minister to give strong and unequivocal guarantees on the issues we have raised in Amendments 107 to 117.
Finally, my Amendments 120, 121 and 122 on restructuring propose lowering these thresholds from the proposed three-quarters to two-thirds to make it quicker and easier for distressed companies to apply to the court for the approval of their restructuring plans. This would provide greater certainty for all stakeholders in those businesses, including employees. It would reduce the cost to businesses of restructuring negotiations, helping return more value to stakeholders, and would lead to quicker resolutions of corporate restructurings, helping to protect jobs. While the interests of minority creditors and shareholders are important, it cannot be right that their interests can prevail over those of a majority, exposing all to greater likelihood of the business subsequently falling into administration or liquidation.
I therefore hope that the Minister will accept these amendments, or, if he has technical or drafting quibbles, at least come back on Report to amend the Bill as I intend with these amendments.
Lord Monks [V]
I add my support to the contributions made by the three previous speakers on this group. It seems that there is one big gap in the Bill, which is to take account of the interests of the working people, for all the reasons that have been explained by other speakers, which are so essential to the future of the firm and of the country. This is a gaping gap, and I hope very much that the Government will address it. I am told that there are plans in government for perhaps another Bill at some time in the future, where the points that we are raising might be addressed. However, I want a clearer indication from the Government on whether they indeed intend to bring forward some proposals additional to the ones in the Bill at the moment, to improve the position of working people. The Prime Minister said that he wanted to embrace the working people of this country. The Bill and the amendments we have tabled to it are an opportunity to do that. I ask the Government to embrace the amendments and follow what the Prime Minister is apparently talking about.
Baroness Jones of Moulsecoomb (GP) [V]
My Lords, in view of the time constraints, I will limit my comments to just two issues. The first is that Committee has been limited to an afternoon, which I think is absolutely appalling. It is all in line with the way the Government are reducing Parliament to a series of nods that they think they can control. I say to the noble Lord, Lord Monks, that there are, in fact, two huge gaps in the Bill. The first is the environment, which I spoke about at Second Reading. There is an absence of any thought of protecting our environment, when the Bill could play quite a major role in our transition to a net-zero carbon economy.
As the noble Lord, Lord Monks, pointed out, the Bill has another major flaw, which is the lack of protection for workers’ interests in this special insolvency scheme. Without these provisions, the Government will just have to hope that already wealthy people will not take advantage of this emergency scheme, but we all know that predatory capitalists use whatever legal loopholes they can to trash our planet, cheat our workers and strip the assets of companies to extract as much cash as possible. I think we will be able to point to today’s Hansard in six months’ time, when the inevitable happens and people are driven out of their livelihoods while bosses and shareholders are laughing all the way to the bank. I look forward to seeing the Government’s new amendments next week and I hope that Report will perhaps show that this Government have a heart.
Baroness Bryan of Partick (Lab) [V]
My Lords, I have added my name to Amendments 110, 112 and 114, but I shall speak only to Amendment 114, which is a recognition that workers are truly a company’s greatest asset. But how many company mission statements have used those words but gone on to treat their workers as expendable? If a restructuring plan is to work, it will need the benefit of workers at boardroom level. If the company is ready for insolvency, the ability of the current board to turn things around must be open to question. Elected workers’ representatives are uniquely placed to identify improvements and ways to increase productivity, while at the same time assuring workers that their interests will be safeguarded. So, along with the other amendments, I hope that the Minister will reflect on this one in particular and bring some alternative to the next stage of the Bill.
Lord Fox
My Lords, I associate myself with some of the comments of the noble Lord, Lord Hain, around works councils. In my past life, working with works councils, particularly in the Netherlands and in Germany, I found them to be a positive, long-term force within companies. An earlier speaker mentioned that in private sector businesses, unions have low representation, which is why works councils should be important in this country, but on departing the European Union I understand that the Government are going to reduce or negate the need for companies to have works councils, which is something to be regretted. What is also to be regretted is that we cannot have a proper debate on these amendments, which means that Report will inevitably have to go on longer.
Baroness Bowles of Berkhamsted [V]
My Lords, I support the two amendments in the name of the noble Lord, Lord Vaux, that include changes to the definitions of the smallest businesses and a new definition to help first-year businesses. These both seem sensible. We have had a lot of instances in the various coronavirus reliefs where help is not extended to everywhere that might reasonably have been covered; therefore, examination of definitions in the light of that and other experiences seems worth while.
Lord Lennie [V]
I thank my noble friends Lord Hendy, Lord Hain and Lord Monks for bringing forward their amendments on this part of the Bill. Given the constraints on time, I ask the Minister whether the Government intend to bring forward further legislation on this matter. Does this have to be dealt with now, or can it wait for further legislation?
Baroness Bloomfield of Hinton Waldrist
My Lords, these are important amendments, which deserve a proper response. The Government agree with much of the sentiment behind some of the amendments, and so I hope noble Lords will forgive me if I commit to write to them with a proper response tomorrow. Clearly, the Government are not able to accept the amendment, and I hope that the noble Lord will therefore withdraw it.
Lord Vaux of Harrowden [V]
My Lords, given the time, I will not try to sum up the brief debate we have had on these 18 amendments, including one dealing with small companies and one relating to employment situations. I look forward to the letter from the noble Baroness and ask that she has another look at how we might mitigate the impacts on the very smallest of businesses, otherwise we may have to revisit the matter on Report. That said, I beg leave to withdraw the amendment.