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Oral Answers to Questions
(3 years, 1 month ago)
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Mark Eastwood (Dewsbury) (Con)
The Minister of State, Northern Ireland Office (Mr Robin Walker)
Since the start of the pandemic, the UK Government have worked closely with the Northern Ireland Executive to ensure the safety of the people in Northern Ireland. Vaccines are our way out of the pandemic, and the Secretary of State and I continue to hold regular discussions with Cabinet colleagues in the Northern Ireland Executive on this important issue. The Government have procured vaccines on behalf of all parts of the United Kingdom and are working with the devolved Administrations to ensure that they are deployed fairly across the UK. I am pleased to see that vaccine doses have been successfully administered to more than half a million people in Northern Ireland.
Mark Eastwood [V]
In Dewsbury, Mirfield, Kirkburton and Denby Dale, the roll-out of the vaccine has been a huge success thanks to the amazing work put in by North Kirklees and Greater Huddersfield clinical commissioning groups, and we appear to be well on track to hit the mid-April target for vaccinating cohorts 1 to 9. Will the Minister reassure the people of Northern Ireland that the target will also be met there, ensuring that we come out this pandemic as one United Kingdom?
Mr Walker
My hon. Friend is right about this being a United Kingdom effort, and I congratulate his local clinical commissioning groups on what they are doing. When I visited the Worcester vaccination centre, I was pleased to be met by an ex-military logistics officer from Belfast—that shows the contribution that Northern Ireland is making to the UK roll-out. As of Monday 1 March, 558,000 vaccines have been administered to more than 29% of Northern Ireland’s population, including 525,000 first doses. Every step of the way, the UK Government work closely with the devolved Administrations, and I thank and commend those in the Department of Health, the local health trusts and the Executive who have helped to deliver such progress.
Jim Shannon (Strangford) (DUP)
The vaccine roll-out is a great achievement, not just for the Minister here but for all the Ministers from the devolved Administrations, because we are part of the United Kingdom of Great Britain and Northern Ireland—better together. In less than two weeks, at 16:40 on 15 March, I will receive the vaccine at the Ulster Hospital when my opportunity on the list comes round.
On supply, will the Minister further outline what discussions have taken place with regard to the needs of rural isolated communities, which will need dedicated clinics because they will find it difficult to make it to the centralised locations for the vaccine roll-out?
Mr Walker
We all welcome the news that the hon. Gentleman has waited his turn and got an appointment to receive a vaccine. He raises an important point. Although of course the delivery of the vaccine in Northern Ireland is primarily a matter for the Department of Health in Northern Ireland, we will continue to work closely with it to support the vaccine roll-out to all communities, including those in remote and rural areas.
Mr Philip Hollobone (Kettering) (Con)
Jo Gideon (Stoke-on-Trent Central) (Con)
The Secretary of State for Northern Ireland (Brandon Lewis)
My Cabinet colleagues and I continue to work together closely to ensure that we meet our protocol obligations in a pragmatic and proportionate way. We have heard the concerns raised by people and businesses in Northern Ireland and are sensitive to the economic, societal and political realities in Northern Ireland. That is why we are taking forward a series of further temporary operational steps that reflect the simple reality that more time is needed to adapt to and implement new requirements as we continue our discussions with the EU. The steps include the new operational plan for supermarkets and their suppliers, committed to at the Joint Committee. I will lay a written ministerial statement detailing the steps later today.
Mr Hollobone
After the EU’s outrageous abuse of the Northern Ireland protocol in relation to its failing vaccine programme, is it not clear that, as it stands, the operation of the protocol is not working? There is far too much disruption to businesses and families in Northern Ireland and it needs urgently to be either reset or scrapped altogether.
Brandon Lewis
There were already challenges in the operation of the protocol in early January this year that were having a direct and often disproportionate impact on citizens. The EU’s decision to invoke article 16 has compounded those issues—there is no doubt about that—and significantly undermined cross-community confidence. That action was not in the spirit of the protocol, which is partly why we are taking the actions that I will outline in a written ministerial statement later today.
Jo Gideon [V]
It took just shy of three years to leave the European Union but only 29 days for the EU to threaten to trigger article 16 of the Northern Ireland protocol, without discussions with Great Britain or Northern Ireland—an apparent “oversight”. Will my right hon. Friend please reassure my constituents that confidence in the protocol will be restored? Does he agree that the EU urgently needs to resolve the issues faced by people and businesses in Northern Ireland?
Brandon Lewis
My hon. Friend makes an important point, which was why I was pleased to hear that Vice-President Šefčovič had recently agreed to meet businesses across communities and civic society in Northern Ireland to hear directly from the people who are being affected by some of the issues that we are seeing, particularly the impact that the EU’s decision to invoke article 16 had in terms of compounding these issues and of undermining cross-community confidence. That is why we will take forward some further temporary operational steps, which I will outline in the written ministerial statement, to ensure that people in Northern Ireland are able to continue to have access to products in the way that the protocol envisaged.
Louise Haigh (Sheffield, Heeley) (Lab)
May I take this opportunity to thank my hon. Friend the Member for Bristol South (Karin Smyth) for her years of service on the Front Bench? I know that she will continue to champion the people of Northern Ireland from the Back Benches.
While we will study the detail that the Secretary of State is set to announce in his written ministerial statement, any more time will be welcomed by businesses across Northern Ireland which simply were not prepared for the changes that took place on 1 January. He admitted last week that he did not envisage the disruption that we have seen as a result of the protocol, despite businesses shouting from the rooftops for months. Given this lack of awareness and the shambolic preparation for the end of the transition period, what confidence can the Secretary of State give to businesses in Northern Ireland that this extension will be used properly to prepare businesses for the changes to come?
Brandon Lewis
I join the hon. Lady in her thanks to her colleague the hon. Member for Bristol South (Karin Smyth) for the work that she has done. Both my hon. Friend the Member for Worcester (Mr Walker) and I have worked with her and know that her compassion and her passion for the issues of the people of Northern Ireland are without question, and huge credit goes to her for that.
On the issues that the hon. Member for Sheffield, Heeley (Louise Haigh) has just raised, I would say to her that, genuinely, we have been working with businesses and across communities in Northern Ireland over the past year on the development of the guidance notes. In fact, we have been working with businesses since the end of the transition period to ensure that things are delivered in a way that works for them. Our work is informed by businesses so that we can deliver what they need on the ground to deliver for their customers and our constituents right across Northern Ireland.
Louise Haigh
Any extra time will of course be welcome and is important, but it is not the long-term solution that businesses and the people of Northern Ireland need. Can the Secretary of State confirm that he is demanding within Government practical solutions, such as a veterinary agreement, that would reduce the barriers down the middle of our Union that his Government insisted on?
Brandon Lewis
The hon. Lady will have seen the correspondence between the Chancellor of the Duchy of Lancaster and the EU Commission outlining some of the things that we are looking at implementing. I point out that it is worth all businesses looking at and taking advantage of the Trader Support Service and the movement assistance scheme, which are specifically there to help businesses and to support them entirely at the cost of the UK Government. We have put several hundred million pounds of support into those businesses through those schemes, and they are working exceedingly well. Some businesses are hugely positive about the impact they will have.
Sir Jeffrey M. Donaldson (Lagan Valley) (DUP) [V]
As we approach the end of the three months’ grace period under the Northern Ireland protocol, many businesses and individuals in Northern Ireland are very concerned about what this will mean for them, in particular in relation to their ability to order goods and receive parcels from suppliers in Great Britain. Without further disruption to this trade, what will the Secretary of State and the Government do to address these concerns?
Brandon Lewis
The right hon. Gentleman makes a very good point. As has been the case since January, our focus will remain on supporting the effective flow of goods between Northern Ireland and Great Britain, avoiding any unacceptable disruption to the critical flow of goods on which lives and livelihoods rely. I absolutely agree that it is important that businesses and citizens across Northern Ireland do not see their lives or their livelihoods unacceptably disrupted as they adapt to new requirements. I can advise him that further guidance will be provided later this week on parcel movements from Great Britain to Northern Ireland.
Sir Jeffrey M. Donaldson
I thank the Secretary of State for that response. He will also be aware that agrifood businesses and others in Northern Ireland are very concerned about the potential imposition of charges on goods that are brought into ports in Northern Ireland at the behest of the European Union. This will add significantly to the cost of doing business with the rest of the United Kingdom. Again, what does the Secretary of State intend to do to ensure that businesses in Northern Ireland are not required to pay these additional charges?
Brandon Lewis
I know that the right hon. Gentleman, along with the First Minister and other party colleagues, have been strong in their determination to highlight this and other issues associated with the protocol—I absolutely recognise that. I can confirm today that it is our intention that no charging regime is required for agrifoods, and I will be outlining that in the written ministerial statement later today.
Simon Hoare (North Dorset) (Con) [V]
May I echo the thanks to the hon. Member for Bristol South (Karin Smyth) and welcome the hon. Member for Pontypridd (Alex Davies-Jones) to her Opposition Front-Bench duties? I welcome the general attitude of the Government towards resolving the issues on the protocol: they are right, and the Secretary of State will have our support as he goes forward. However, I urge him to really put some pressure on the Department for Business, Energy and Industrial Strategy to better explain to GB businesses what they need to do, how they need to do it and when they need to do it in order to sell their goods into the very welcoming market that is Northern Ireland?
Brandon Lewis
I thank my hon. Friend for outlining this issue. My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy is very keen to ensure that GB businesses have all the information they need. My hon. Friend is right to highlight the fact that a number of the issues we have found relate to companies in Great Britain not appreciating what they can do in order to continue their smooth supplies to people in Northern Ireland. We want to ensure that that is the case. I encourage businesses to engage particularly with the trader support service, which is there to help businesses and, as I say, has phenomenal response and success rates in helping them to ensure that they can deliver. We as a Government will continue to fund it to ensure that it is there to support business and the people of Northern Ireland.
Richard Thomson (Gordon) (SNP) [V]
There is considerable anecdotal evidence from food producers that exports continue to be below pre-Brexit levels. With the retailers’ grace period ending this month, export health certificates will be required for imports of chilled and processed meats. How do the UK Government plan to ease specific concerns of the agrifood industry over this requirement ahead of the end of that grace period?
Brandon Lewis
In classic House of Commons terms, I refer the hon. Gentleman to an answer I gave a few moments ago: he will see our position in a written ministerial statement later today that deals with that very issue.
Colum Eastwood (Foyle) (SDLP)
As the Secretary of State knows, we did not want Brexit, but we do have the protocol and the protocol is here to stay, despite what anybody else might say. It does give us a competitive advantage. Will he work with me to make the most of that competitive advantage by getting rid of the maximum student numbers cap and the historical under-provision of university places for Northern Ireland?
Brandon Lewis
The hon. Gentleman makes a really important point that is worth highlighting. We have two great universities in Northern Ireland that are globally leading, with one of them recently winning the award for the most entrepreneurial university and one of them being among the best nursing provision universities in the UK. That is something we should be proud of. We should look at how we can develop and grow that work for the benefit of the universities, the wider economy and their phenomenal input, and the huge competitive advantage, that, yes, Northern Ireland has, not least because of the amazing skill sets across Northern Ireland. I am happy to work with him to ensure that we develop, promote and take advantage of that for the benefit of people in Northern Ireland.
Graham Stringer (Blackley and Broughton) (Lab)
Matt Western (Warwick and Leamington) (Lab)
Alex Cunningham (Stockton North) (Lab)
Bill Esterson (Sefton Central) (Lab)
The Secretary of State for Northern Ireland (Brandon Lewis)
The Government are committed to meeting our obligations in a proportionate way, taking account of the Belfast-Good Friday agreement in all its dimensions—north-south and, of course, east-west. As I stated in previous answers, we have heard the concerns raised by people and businesses in Northern Ireland, and we are sensitive to the economic, societal and political realities of Northern Ireland. While we have made good progress in line with this pragmatic approach, we will be taking forward a series of further temporary operational steps, details of which, as I say, will be in the WMS that I will lay later today.
Graham Stringer
The EU has approached the protocol with a malign and hostile attitude. Would it not make sense to renegotiate it to an agreement of mutual enforcement or trigger article 16?
Brandon Lewis
My focus is on ensuring that colleagues across Government ensure that we are able to deliver for the people of Northern Ireland in the most effective, efficient, flexible and fluid way. It was good, as I said, that Vice-President Šefčovič met businesses and civic society in Northern Ireland and has committed to continuing to do that so that he can hear directly on the ground the impact that some of this is having, not least the action that the EU took in its movement towards activating article 16 and the impact felt across communities regarding people’s confidence around that. It is right that the EU understands the impact this has on people’s everyday lives in Northern Ireland.
Matt Western [V]
Many businesses in Warwick and Leamington and across the country have already opted out of supplying to Northern Ireland due to the complexities. Does the Secretary of State accept that the Government’s denial over the reality of an Irish sea border has actually hampered efforts to prepare British businesses for trade with Northern Ireland and led to the disruption we are seeing today?
Brandon Lewis
What I would say to businesses is that I would encourage them to engage with the trader support service that the Government have put in place and which we are funding. It works for businesses, and the businesses that have used it have had great success in continuing to be able to move their products, with advice, smoothly and fluidly. We have worked with businesses continually through the process—as we were in the transition period and since we have left the transition period—to ensure that businesses across the United Kingdom can trade across the United Kingdom, but I recognise there have been issues in how the protocol has been implemented since the end of the transition period, and that is why we will be outlining measures in a written ministerial statement later today.
Alex Cunningham [V]
Hard-liner Back Benchers in the Secretary of State’s own party want to tear up the deal they voted for and place our border on the island of Ireland. Will the Secretary of State today publicly reject the demands of the European Research Group, with all the damage and instability those demands could cause?
Brandon Lewis
The hon. Gentleman may well have voted for the deal as well. I will be very clear with him: my focus is on ensuring that we deliver exactly what the protocol said, which is to ensure that it does not disrupt the everyday lives of people in their communities in Northern Ireland. We have to make sure that is the case. That is what the protocol set out to achieve. We have also got to make sure that it respects all the peace and prosperity that has been found in Northern Ireland as a result of the Good Friday/Belfast agreement, and that means respecting not just north-south relations, but east-west relations as well.
Bill Esterson [V]
Trade groups say that the trader support service is simply not good enough for the 12,000 traders who need its help. Businesses report that the scheme is providing confusing and conflicting advice. Why on earth is the Northern Ireland Secretary saying that disruption was not envisaged? The problems with the trader support service were known about well before the end of transition, including by the then Department for Exiting the European Union, which warned of problems with additional documentation as long ago as October 2019.
Brandon Lewis
At the end of the hon. Gentleman’s question, he was talking about a period of time before the transition period ended and before the trader support service was outlined and in place. What I would say is that the trader support service now has more than 34,000 registered users. On average, calls to the service are handled in six seconds and 98% of declarations are processed within 15 minutes. That sounds like a pretty good record of success to me.
If the hon. Gentleman has some examples that are different from that, I will very happily engage with him directly if he wants to let me know, but that is a track record of success that the people involved in the trader support service should be proud of. More businesses can engage with that service and benefit from it, for the benefit of those businesses and the people of Northern Ireland.
Sammy Wilson (East Antrim) (DUP)
Even with the grace periods in place, which give exemptions from many of the EU checks that will eventually be required in Northern Ireland, there has been massive disruption of trade as a result of the implementation of the protocol. Does the Secretary of State accept that if the Prime Minister’s promise and the protocol’s assurance that there will be unfettered trade between GB and Northern Ireland are to be delivered, something more than an extension of the grace periods is required? Really, there needs to be a reset or a rethinking of the agreement so that we have an alternative arrangement, such as the mutual enforcement of regulations, that would exempt Northern Ireland from being subject to EU laws and from the European Court of Justice making judgments about this part of the United Kingdom.
Brandon Lewis
I respect the right hon. Gentleman, who has been consistent in his views on this issue at all times. I have also been very clear: we were always determined to ensure that we were able to deliver unfettered access for Northern Ireland businesses to the rest of the United Kingdom, and we have done that. We have also been very clear that we want to ensure that free flow and flexible trade across the United Kingdom so that GB businesses can trade into Northern Ireland properly, while accepting and acknowledging the reality of the single epidemiological unit of the island of Ireland, as the sanitary and phytosanitary situation does. That has been there, as I said before, in some form or another since the 19th century. It is something that was acknowledged long ago, and I absolutely accept, as we have always outlined, that it does have an impact.
The right hon. Gentleman is absolutely right that we have to ensure that the people of Northern Ireland can continue to enjoy products, their commercial activities and their day-to-day lives in the way that they always have done as members of and part of the United Kingdom.
Alex Davies-Jones (Pontypridd) (Lab)
If businesses had had their voices listened to over the last year, disruption could have been avoided. The joint consultative working group offers a real opportunity for businesses, civic society and politicians in Northern Ireland to have their voices heard, but at the moment, all we know about it is that it merely exists. This is a missed opportunity, so will the Minister commit to giving these groups a formal role and an input into how the protocol works? Without them, there can be no decision about Northern Ireland.
Brandon Lewis
I join others in welcoming the hon. Lady to her new role. I am sure she will be able to fight the case for the people of Northern Ireland with great strength and passion, and I look forward to working with her, as does my hon. Friend the Member for Worcester (Mr Walker).
I have been working with businesses throughout this process, including through the business engagement forum, which will meet again shortly. We engaged with businesses with Vice-President Šefčovič a week or so ago, to have that direct input. Ultimately, I am a democrat, and I believe in the democratic system and the way in which Parliament and the structures we have in place work. I know that businesses have a full voice within that, and we have ensured that at every stage of the process.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The Secretary of State for Northern Ireland (Brandon Lewis)
The co-chairs of the UK-EU Joint Committee met last Wednesday to discuss the set of issues with the protocol that need to be addressed to protect the vital links between Northern Ireland and the rest of the United Kingdom. These engagements are supported by regular official-level contact, including via the Northern Ireland/Ireland specialised committee, which met last Tuesday, to ensure that the protocol operates as intended, with minimum impact on the everyday lives of people in Northern Ireland. We will continue to discuss all our implementation efforts through the withdrawal agreement structures, including in giving effect to the commitments made at December’s Joint Committee, and there will be an informal meeting with the EU and Vice-President Šefčovič later today.
Alan Brown [V]
Some Northern Irish companies have been boasting about their dual access to both the British and EU marketplaces for trade purposes. Will the Secretary of State confirm that Northern Ireland businesses do indeed have great opportunities and that this also creates a relative disadvantage for businesses in Scotland?
Brandon Lewis
As I outlined in response to an earlier question, Northern Ireland businesses have a huge opportunity and a huge competitive advantage, not least because of the amazing skillsets across Northern Ireland in technology, hydrogen and advanced engineering. There are a wide range of things that businesses in Northern Ireland have to promote, with the advantage they have in promoting around the world, to develop business and more jobs for Northern Ireland.
Stephen Farry (North Down) (Alliance)
The Secretary of State for Northern Ireland (Brandon Lewis)
In my engagements with businesses, I have heard directly about the importance of ensuring that processes are streamlined to the maximum extent, and we are working with businesses to ensure that we are delivering on that. More than £200 million has been put into the trader support service, the movement assistance scheme and the UK trader scheme to support those businesses. The newly established digital assistance scheme, when fully operational, will provide a simplified digital process for the certification and verification of goods moving from Great Britain to Northern Ireland. We will continue to address issues that arise, and that will be part of the subject of my written ministerial statement later today.
Stephen Farry [V]
Businesses also need stability and legal certainty. In the past few days, we have seen the Northern Ireland Agriculture Minister stress that he may unilaterally breach commitments under the protocol. Can the Secretary of State give an assurance that the UK Government, as a sovereign party to the withdrawal agreement, will, in the last resort if necessary, ensure ongoing legal compliance and that any changes to the protocol are agreed with the European Union?
Brandon Lewis
As I outlined earlier, I can confirm that our intention is that no charging regime is required for agrifoods, and my written ministerial statement will confirm that later today. At all times we will be focused on ensuring that we are acting in a fully legal manner and delivering for people in Northern Ireland.
Greg Smith (Buckingham) (Con)
The Minister of State, Northern Ireland Office (Mr Robin Walker)
This Government will always do what they can to champion Northern Ireland tourism, which in normal times includes major sporting events. I know that the Northern Ireland Economy Minister was giving consideration to hosting the world rally championship, for which the hon. Member for North Antrim (Ian Paisley) has been a strong champion in the House. The Government will happily support the Executive should they decide to proceed with funding the event, but ultimately, this is a matter for the Executive.
Greg Smith [V]
I thank my hon. Friend for that answer. The United Kingdom proudly sits at the heart of global motorsports, having hosted a round of the world rally championship virtually every year since its inception in 1973. Does my hon. Friend agree with me that it is important that the UK continues to host a round of that championship, and will he do everything possible to work with the Northern Ireland Executive and all parties involved to see a round of the WRC hosted in Northern Ireland in the coming years?
Mr Walker
I wish my hon. Friend a happy birthday, and I welcome the points he makes about the UK’s leadership in the space of motorsports. I think Northern Ireland would produce an excellent backdrop for hosting an event of that sort, and I would be very happy to continue to work to support the Executive in that regard with any future bids.
John Spellar (Warley) (Lab)
The Minister of State, Northern Ireland Office (Mr Robin Walker)
The Secretary of State and I have regular conversations with ministerial colleagues regarding transport connections, which are particularly important for Northern Ireland given its unique position. Connectivity across the UK is vital to fuel Northern Ireland’s economic recovery and strengthen the Union. The Prime Minister commissioned a Union connectivity review to consider these important connections, including the feasibility of a fixed link between Northern Ireland and Great Britain.
John Spellar
In those discussions, could the Minister not get together with the Department for Transport and point out the huge cost, the geological problems and the inconvenient reality that Britain and Ireland operate on a different rail gauge? Is it not time to dump this project at an early stage, along with the garden bridge, into the bin and save a lot of money, effort and probably a few column inches in articles?
Kim Johnson (Liverpool, Riverside) (Lab)
The Prime Minister (Boris Johnson)
It will be three years tomorrow since a chemical weapon was deployed by Russian military intelligence on the streets of Salisbury. All our thoughts remain with those affected, their families and loved ones, and we will continue to seek justice for them. I am sure this House will want to pay tribute to the people of Salisbury and Amesbury, and wish them well for the future.
This morning, I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall have further such meetings later today.
Kim Johnson [V]
Liverpool is a welcoming city, with the oldest Chinese community in Europe, but in 1946 the British Government ordered the forced repatriation back to China of thousands of Chinese seamen who were living in Liverpool with their British families, causing lasting emotional trauma. Many of their descendants still live in my Liverpool, Riverside constituency. Will the Prime Minister take steps to acknowledge these events, and provide the descendants with a formal apology and the justice they deserve?
The Prime Minister
I have happy memories of my own visits to Liverpool, and I can tell the hon. Member—[Interruption.] I can tell her that we are certainly very grateful across the country to the Chinese community for their amazing contribution. Her message has been heard loud and clear.
John Stevenson (Carlisle) (Con) [V]
The Prime Minister
Of course, I am very grateful to my hon. Friend for what he says. He will hear more in just half an hour or so—let us try to keep it to half an hour, Mr Speaker—from the Chancellor about how exactly we intend to make sure we build back better across the whole of this country and unleash the tremendous potential of the whole of the United Kingdom, including of course Carlisle, which he so well represents.
Keir Starmer (Holborn and St Pancras) (Lab)
I join the Prime Minister in his comments about the Salisbury atrocity.
Does the Prime Minister agree with President Biden that the sale of arms which could be used in the war in Yemen should be suspended?
The Prime Minister
Ever since the tragic conflict in Yemen broke out, this country has scrupulously followed the consolidated guidance, of which the right hon. and learned Gentleman will be well aware.
Keir Starmer
The trouble is that, while President Biden has suspended arms sales that could be used in Yemen, the UK has not. In fact, we sold £1.4 billion-worth of arms to Saudi Arabia in three months last year, including bombs and missiles that could be used in Yemen. Given everything we know about the appalling humanitarian cost of this war, with innocent civilians caught between the Saudi coalition and the Houthi rebels, why does the Prime Minister think it is right to be selling these weapons?
The Prime Minister
The UK is part of an international coalition following the UN resolutions, which the right hon. and learned Gentleman will know well and which are very clear that the legitimate Government of Yemen were removed illegally. Those are the resolutions that we follow, and we continue scrupulously to follow the humanitarian guidance—among the toughest measures anywhere in the world—in respect of all arms sales. He talks about humanitarian relief, and actually I think the people of this country can be hugely proud of what we are doing to support the people of Yemen: almost £1 billion of aid contributed in the past five years.
Keir Starmer
The Prime Minister says the system is very robust in relation to arms sales. It cannot be that robust: the Government lost a court case just two years ago in relation to arms sales. The truth is that the UK is increasingly isolated in selling arms to Saudi Arabia, despite what is happening in Yemen, despite Saudi Arabia’s human rights record, and despite the brutal murder of journalist Jamal Khashoggi—a murder the US has concluded was approved by the Saudi Crown Prince. So I have to ask: what will it take for the Prime Minister to suspend arms sales to Saudi Arabia?
The Prime Minister
We condemn the murder of Jamal Khashoggi. We continue to call for a full independent investigation into the causes of his death, and indeed we have already sanctioned 20 people in Saudi Arabia. I repeat the point that I have made that the UK Government continue to follow the consolidated guidance, which, by the way, was set up by the Labour party.
Keir Starmer
To make matters worse, the Government decided this week to halve international aid to Yemen—to halve it. The United Nations has said that Yemen faces the worst famine the world has seen for decades, and the Secretary-General said on Monday that cutting aid would be a “death sentence” for the people of Yemen. How on earth can the Prime Minister justify selling arms to Saudi Arabia and cutting aid to people starving in Yemen?
The Prime Minister
It is under this Government that we have increased aid spending to the highest proportion in the history of our country, and, yes, it is true that current straitened circumstances, which I am sure the people of this country understand, mean that temporarily we must reduce aid spending, but that does not obscure the fact that when it comes to our duty to the people of Yemen we continue to step up to the plate: a contribution of £214 million for this financial year. There are very few other countries in the world that have such a record and that are setting such an example in spending and supporting the people of Yemen.
Keir Starmer
This week the Government halved our international aid to Yemen. If this is what the Prime Minister thinks global Britain should look like, he should think again, and if he does not believe me—if he does not like it from me or the UN Secretary-General—he should listen to his own MPs. Just this morning, the Conservative MP the right hon. Member for Bournemouth East (Mr Ellwood) said:
“Cutting support to starving children is not what Global Britain should be about. It undermines the very idea of the UK as a nation to be respected on a global stage.”
The right hon. Member for Sutton Coldfield (Mr Mitchell) said this was “unconscionable”. Will the Prime Minister now do the right thing and reconsider this urgently?
The Prime Minister
I repeat: we have given £1 billion since the conflict began; we are in support of UN resolutions; this year we are contributing another £214 million to support the people of Yemen. There are very few other countries in the world that have that kind of record. In these tough, straitened circumstances, bearing in mind the immense cost of the covid epidemic that has affected our country, I think the people of this country should be very, very proud of what we are doing.
Keir Starmer
Britain should be a moral force for good in the world, but just as the US is stepping up, the UK is stepping back. If the Prime Minister and Chancellor are so determined to press ahead with their manifesto-breaking cuts to international aid—cutting the budget to 0.5%—they should at least put that to a vote in this House. Will he have the courage to do so?
The Prime Minister
We are going to get on with our agenda of delivering for the people of this country and spending more than virtually any other country in the world—by the way, spending more, still, than virtually any other country in the G7—on aid. It is a record of which this country can be proud. Given the difficulties that this country faces, I think that the people of this country will think that we have got our priorities right.
The right hon. and learned Gentleman cannot work out what his priorities are. One minute he is backing us on the road map; the next week he is turning his back on us. He cannot even address a question on the issues of the hour. He could have asked anything about the coronavirus pandemic; instead, he has consecrated his questions entirely to the interests of the people of Yemen. We are doing everything we can to support the people of Yemen given the constraints that we face. We are getting on with a cautious but irreversible road map to freedom, which I hope that he will support. Very shortly, Mr Speaker, you will be hearing a Budget for recovery.
Dr Liam Fox (North Somerset) (Con)
The Prime Minister
I thank my right hon. Friend, and of course we will support all civil servants. By the way, I thank them for the work that they have done up and down the country throughout the pandemic. I think everybody in this House would agree that now is the time, really, for our civil service to focus on working together to build back better together, rather than on measures that might divide our country.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
May I associate myself with the remarks of the Prime Minister on the terrible atrocity three years ago in the town of Salisbury?
The situation in Yemen has been called the world’s worst humanitarian crisis. One hundred thousand people have been killed, 16.2 million are at risk of starvation, and 2.3 million children, Prime Minister, are at death’s door, facing acute malnutrition. The UK Government’s response is not one of compassion; instead, it is to impose cuts. That is what you are doing, Prime Minister—a 50% cut to international aid to Yemen, a move that the UN chief, António Guterres, has described as “a death sentence”.
Since the start of the war, the Tories have shamefully backed the Saudi regime through billions of pounds of arms sales and support, despite evidence of war crimes and of the targeting of civilians. Will the Prime Minister confirm that today’s Budget will force through the devastating cuts to international aid?
The Prime Minister
I think anybody listening to this debate will have heard me say that this country—this Government—in the last five years has given £1 billion to support the people of Yemen. I can tell the right hon. Gentleman, in case he thinks there is any diminution of our efforts, that on Monday we are going to provide cash support to 1.5 million of the most vulnerable Yemeni households, support 400 health clinics and treat 75,000 cases of severe malnutrition. That is the continuing effort of the British people and the British Government to help the people of Yemen.
Ian Blackford
The reality is a 50% cut to Yemen aid at a time of a global pandemic. The coronavirus has hit poor and vulnerable countries the hardest, threatening decades of hard-won gains while exacerbating existing inequalities. During his leadership race, the Prime Minister made a commitment to stand by 0.7% for aid spending, a position he reaffirmed in June last year at that very Dispatch Box. What followed was yet another U-turn—another broken promise. Why is the Prime Minister breaking his own manifesto commitment, and why are his Government breaking the promises they made to the world’s poorest?
The Prime Minister
I think most people in this country will know that the Government have given £280 billion to support the people, the economy, the livelihoods and the businesses up and down the whole of the United Kingdom. That has, as you will hear from the Chancellor, Mr Speaker, placed strains on our public finances. In the meantime, we continue to do everything we possibly can to support the people of Yemen, including, by the way, through a massive vaccination programme, to which the people of this country have contributed £548 million—the second biggest contributor in the world.
Mike Wood (Dudley South) (Con)
The Prime Minister
Indeed. We will protect our vital green belt, which I think constitutes 12.4% of our land. We can build our homes as my hon. Friend rightly suggests—300,000 of them on brownfield sites across the country.
Sir Jeffrey M. Donaldson (Lagan Valley) (DUP) [V]
We are now in the third month of the Northern Ireland protocol and we are fast approaching the end of the three-month grace period. The Prime Minister will be aware of the disruption the protocol is causing to trade between Great Britain and Northern Ireland, and the damage it is doing to the stability of the political institutions established under the Belfast agreement. What action does the Prime Minister intend to take to deliver on his promise to protect Northern Ireland’s position within the UK internal market and provide us with unfettered access to goods from Great Britain?
The Prime Minister
The position of Northern Ireland within the UK internal market is rock solid and guaranteed. We are making sure that we underscore that with some temporary operational easings in order to protect the market in some areas, such as food supplies, pending further discussions with the EU. As I have said to the right hon. Gentleman and his colleagues, we leave nothing off the table to ensure that we get this right.
Sarah Atherton (Wrexham) (Con)
The Prime Minister
My hon. Friend is completely right. I thank her again, by the way, for her amazing service in the NHS in Wrexham and in returning to the frontline. It was at Wockhardt in Wrexham that I met young female scientists who are helping to make the vaccine that will not only free our country, we hope, from the captivity of covid, but help to liberate the entire world. It was wonderful to see it happening in Wrexham. We want to see many more young female scientists growing up in that part of the world.
Grahame Morris (Easington) (Lab) [V]
The Prime Minister
With great respect to the hon. Member, what the country needs are councillors who charge you less while delivering better services. If we look across the country, we can see that it is overwhelmingly Conservative-run councils that do that. The right hon. and learned Member for Holborn and St Pancras (Keir Starmer) laughs. Westminster has kept council tax low. In Camden where he lives, it is three times as high. That is the difference.
Sir David Amess (Southend West) (Con)
The Prime Minister
I sympathise very much with Luke’s family and his friends, and there is nothing I can say that will alleviate their loss. But what we are doing is recruiting many more police officers to fight crime, rolling up the county lines drugs gangs wherever we can and setting out plans to keep serious sexual and violent offenders behind bars for longer. I can tell the House that we now have 6,620 of our target extra 20,000 police already recruited.
Patrick Grady (Glasgow North) (SNP)
The Prime Minister
I was delighted to hear a sort of acceptance there that the hon. Gentleman is running a nationalist party, if that is what he was saying, because I am afraid I agree with that; they are not in respect of the whole of this country. But I think that most people will think it extraordinary that they are talking about another referendum—the Labour Chief Whip is nodding quite rightly—when, actually, what the people of this country want to see is us working together as one United Kingdom without further constitutional upheaval, to get through the pandemic and build back better.
Sara Britcliffe (Hyndburn) (Con)
The Prime Minister
I congratulate my hon. Friend on her campaign. It was great to be in Accrington and I hope that she will be hearing even more shortly from my right hon. Friend the Chancellor about what we can do to support the towns fund and other measures to help Accrington and places across the whole country.
Mr Speaker
We are now heading up to Amy Callaghan, who I welcome back again—good to see you.
Amy Callaghan (East Dunbartonshire) (SNP) [V]
Thank you, Mr Speaker, and I would like to thank you and Members across the House, including the Prime Minister, for your well wishes during my illness.
The Prime Minister previously guaranteed that there was no threat to the Erasmus scheme as a result of Brexit. We now know that charities such as STAND International in my constituency that participate in the programme are set to lose 96% of their funding as a result of the UK Government’s decision to pull the plug on Erasmus+. Can the Prime Minister guarantee that charities will receive match funding under the new Turing scheme, and will he agree to meet me and representatives from STAND International to ensure that no young person in East Dunbartonshire gets left behind as a result of Brexit?
The Prime Minister
I am sure I speak for everybody when I say how much I welcome the hon. Lady back to PMQs—it is great to see her back. I do give her that assurance, and I think the Turing scheme will be better and will deliver exactly what she wants. If there was a criticism of the Erasmus scheme, it tended to favour higher-income households. We will do everything that we can with the Turing scheme to reach out to give opportunity to people from disadvantaged backgrounds. That is what we intend to do.
Andrea Leadsom (South Northamptonshire) (Con)
The Prime Minister
My right hon. Friend is completely right to continue to raise the case of Harry Dunn, and we sympathise deeply with his family. It is a case that we continue to raise with the highest level, and I know that my right hon. Friend the Foreign Secretary has only just raised it with Tony Blinken, the US Secretary of State.
Beth Winter (Cynon Valley) (Lab) [V]
Rhondda Cynon Taf, where my constituency is located, has the third highest covid death rate in the UK, due mainly to inequality, poverty and chronic underfunding. This UK Government have an appalling record on providing Wales with even a fair share of UK spending, let alone the funding needed to level up. Eleven years of Tory austerity cuts have destroyed the capacity of our public services to withstand the pandemic, and now they plan to bypass the democratic structures in Wales. My constituent Lyndon has a question for the Prime Minister. What will it take for him to stop ignoring the south Wales valleys?
The Prime Minister
I am afraid I disagree profoundly with the implication of what the hon. Lady is saying—and indeed with what her constituent Lyndon is, by implication, asking—because this Government continue to give massive support through the Barnett formula and elsewhere. I think through Barnett alone it is £2.4 billion, and there is now more coming through the levelling-up fund and other means. It is thanks to the UK Government that the furlough scheme has supported 3,400 jobs in her constituency alone. That is one of the advantages of the United Kingdom.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con) [V]
The Prime Minister
I congratulate my hon. Friend on his last-minute lobbying. He has only a few minutes to wait before he may hear something to his advantage.
Carla Lockhart (Upper Bann) (DUP) [V]
Prime Minister, in an interview with Sophy Ridge broadcast on 8 December 2019, you pledged that there would be no checks on goods going from NI to GB or from GB to NI. While this has proven more challenging to deliver in practice, would you wish to take this opportunity to encourage Ministers in Northern Ireland to do all they can—
Mr Speaker
Order. Unfortunately, I am not responsible and “you” is not something that we should be using.
Carla Lockhart
My humble apologies. Can the Prime Minister make this aspiration a reality and ensure that they act in accordance with section 46 of the United Kingdom Internal Market Act 2020, which stresses the importance of facilitating the free flow of goods between Great Britain and Northern Ireland?
The Prime Minister
Yes, I certainly can do that. As I said in answer to the right hon. Member for Lagan Valley (Sir Jeffrey M. Donaldson), we leave nothing off the table in order to make sure that we get that done. There is unfettered access NI-GB and GB-NI.
Andrew Percy (Brigg and Goole) (Con) [V]
The Prime Minister
My hon. Friend is absolutely right. He has mounted an excellent campaign and my right hon. Friend the Chancellor will say more about that shortly.
Mike Kane (Wythenshawe and Sale East) (Lab)
HS2 reduces journey times from Manchester airport to London from two hours 24 minutes to 59 minutes. With the carbon capture that we would generate and the increased capacity to the west coast main line, what prevents the Government from putting shovels in the ground in the north now?
The Prime Minister
The answer to that is, as anybody who gets a project done on their home or wherever knows, that starting again midway through I am afraid greatly multiplies the cost, but we will go as fast as we possibly can.
Danny Kruger (Devizes) (Con)
The Prime Minister
My hon. Friend has long been a campaigner for the wonderful benefits of social enterprise. I visited some of his own, and if he just waits a little longer, he will receive an update on social investment tax relief.
Mr Speaker
I am suspending the House for three minutes to enable the necessary arrangements for the next business to be made.
Petition
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab) [V]
I am pleased to be able to present this petition on behalf of my constituents who support the reopening of the Leamside rail line, which runs through my constituency. This petition is along the same lines as another petition that has been signed by 1,800 people over three weeks.
The petition states:
The petition of residents of the constituency of Washington and Sunderland West,
Declares that petitioners support the reopening of the Leamside rail line in full as the town of Washington needs a rail link; further that the rail line will bring economic and connectivity benefits for the North East; and further that it will bring infrastructure benefits for the East Coast Main Line.
The petitioners therefore request that the House of Commons urge the Government to ensure that the forthcoming Integrated Rail Plan allows for the re-opening of the Leamside Line in full and the re-introduction of rail services to Washington; to recognise the support of a forthcoming Restoring Your Railways bid to promote this; and calls on the Secretary of State for Transport to consider this proposal.
And the petitioners remain, etc.
[P002650]
Ways and Means
Financial Statement
(3 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Madam Deputy Speaker (Dame Eleanor Laing)
Before I call the Chancellor of the Exchequer, I remind hon. Members that copies of the Budget resolutions will be available from the Vote Office in Members’ Lobby upon the Chancellor’s statement being finished, and of course online. I also remind hon. Members that interventions are not taken during the Chancellor’s statement, nor during the replies of the Leader of the Opposition and the leader of the Scottish National party. British Sign Language interpretation will continue until the end of the speech of the leader of the Scottish National party, and it is available to watch—quick advert here—on parliamentlive.tv.
The Chancellor of the Exchequer (Rishi Sunak)
Madam Deputy Speaker, a year ago, in my first Budget, I announced our initial response to coronavirus. What was originally thought to be a temporary disruption to our way of life has fundamentally altered it: people are still being told to stay in their homes, businesses have been ordered to close, thousands of people are in hospital. Much has changed, but one thing has stayed the same. I said that I would do whatever it takes. I have done and I will do so. We have announced over £280 billion of support, protecting jobs, keeping businesses afloat, helping families get by.
Despite this unprecedented response, the damage that coronavirus has done to our economy has been acute. Since March, over 700,000 people have lost their jobs, our economy has shrunk by 10%—the largest fall in over 300 years—and our borrowing is the highest it has been outside of wartime. It is going to take this country, and the whole world, a long time to recover from this extraordinary economic situation. But we will recover.
This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people. First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis. Secondly, once we are on the way to recovery, we will need to begin fixing the public finances, and I want to be honest today about our plans to do that. Thirdly, in today’s Budget we begin the work of building our future economy.
Today’s forecasts show that our response to coronavirus is working. The Prime Minister last week set out our cautious but irreversible road map to ease restrictions while protecting the British people. The NHS, deserving of immense praise, has had extraordinary success in vaccinating more than 20 million people across the United Kingdom. Combined with our economic response, one of the most comprehensive and generous in the world, this means that the Office for Budget Responsibility is now forecasting, in its words, a
“swifter and more sustained recovery”
than it expected in November. The OBR now expects the economy to return to its pre-covid level by the middle of next year, six months earlier than previously thought. That means growth is faster, unemployment lower, wages higher, investment higher, household incomes higher.
But while our prospects are now stronger, coronavirus has done, and is still doing, profound damage. Today’s forecasts make it clear that repairing the long-term damage will take time. The OBR still expects that in five years’ time, because of coronavirus, our economy will be 3% smaller than it would have been. Before I share the detail of the OBR’s forecasts, let me thank Richard Hughes and his team for their work.
The OBR forecasts that our economy will grow this year by 4%, by 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast. The OBR has said that our interventions to support jobs have worked. In July last year, it expected unemployment to peak at 11.9%. Today, because of our interventions, it forecast a much lower peak: 6.5%. That means 1.8 million fewer people are expected to be out of work than previously thought. But every job lost is a tragedy, which is why protecting, creating and supporting jobs remains my highest priority.
Let me turn straightaway to the first part of this Budget’s plan, to protect the jobs and livelihoods of the British people through the remaining phase of this crisis.
First, the furlough scheme will be extended until the end of September. For employees, there will be no change to the terms. They will continue to receive 80% of their salary, for hours not worked, until the scheme ends. As businesses reopen, we will ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July, when we will ask for a small contribution of just 10%, and 20% in August and September. The Government are proud of the furlough, one of the most generous schemes in the world, effectively protecting millions of people’s jobs and incomes.
Secondly, support for the self-employed will also continue until September, with a fourth grant covering the period February to April, and a fifth and final grant from May onwards. The fourth grant will provide three months of support at 80% of average trading profits. For the fifth grant, people will continue to receive grants worth three months of average profits, with the system open for claims from late July.
But as the economy reopens over the summer, it is fair to target our support towards those most affected by the pandemic, so people whose turnover has fallen by 30% or more will continue to receive the full 80% grant. People whose turnover has fallen by less than 30% will therefore have less need of taxpayer support and will receive a 30% grant. I can also announce a major improvement in access to the self-employed scheme. When the scheme was launched, the newly self-employed could not qualify because they had not all filed a 2019-20 tax return. But as the tax return deadline has now passed, I can announce today that, provided they filed a tax return by midnight last night, over 600,000 more people, many of whom became self-employed last year, can now claim the fourth and fifth grants. Over the course of this crisis we will have spent £33 billion supporting the self-employed, one of the most generous programmes for self-employed people anywhere in the world.
Thirdly, we are also extending our support for the lowest paid and the most vulnerable. To support low-income households, the universal credit uplift of £20 a week will continue for a further six months, well beyond the end of this national lockdown. We will provide working tax credit claimants with equivalent support for the next six months. Because of the way that system works operationally, we will need to do so with a one-off payment of £500.
And over the course of this year, as the economy begins to recover, we are shifting our resources and focus towards getting people into decent, well-paid jobs. We reaffirm our commitment to end low pay, by increasing the national living wage to £8.91 from April—an annual pay rise of almost £350 for someone working full time on the national living wage.
My right hon. Friends the Education Secretary and the Work and Pensions Secretary are taking action to give people the skills they need to get jobs or get better jobs. The restart programme—supporting over a million long-term unemployed people. The number of work coaches —doubled. The kickstart scheme—funding high-quality jobs for over a quarter of a million young people. The Prime Minister’s lifetime skills guarantee—giving every adult the opportunity for a fully funded level 3 qualification. And we want businesses to hire new apprentices, so we are paying them more to do it.
Today, I am doubling the incentive payments we give businesses to £3,000—that is for all new apprentice hires, of any age. Alongside investing £126 million of new money to triple the number of traineeships, we are taking what works to get people into jobs and making it better.
One of the hidden tragedies of lockdown has been the increase in domestic abuse, so I am announcing today an extra £19 million, on top of the £125 million we announced at the spending review, for domestic violence programmes to reduce the risk of reoffending and to pilot a network of respite rooms to provide specialist support for vulnerable homeless women.
To recognise the sacrifices made by so many women and men in the armed forces community, I am providing an additional £10 million to support veterans with mental health needs.
On current plans, the funding to support survivors of the thalidomide scandal runs out in 2023. They deserve better than to have constant uncertainty about the future costs of their care, so not only will I extend this funding with an initial down payment of around £40 million; I am today announcing a lifetime commitment, guaranteeing funding forever. I thank the Thalidomide Trust and my hon. Friend the Member for North Dorset (Simon Hoare) for their leadership on this important issue.
As well as supporting people’s jobs, incomes, the lowest paid and most vulnerable, this Budget also protects businesses. We have been providing businesses with direct cash grants throughout the recent restrictions. These grants come to an end in March. I can announce today that we will provide a new restart grant in April to help businesses reopen and get going again. Non-essential retail businesses will open first, so they will receive grants of up to £6,000 per premises. Hospitality and leisure businesses, including personal care and gyms, will open later, or be more impacted by restrictions when they do, so we will give them grants of up to £18,000. That is £5 billion of new grants on top of the £20 billion we have already provided, taking our total direct cash support to business to £25 billion. I pay tribute to my right hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) for highlighting the particular needs of the personal care sector.
With my right hon. Friend the Culture Secretary, we are making available £700 million to support our incredible arts, culture and sporting institutions as they reopen: backing the UK and Ireland’s joint 2030 World cup bid; launching a new approach to apprenticeships in the creative industries; and extending our £500 million film and TV production restart scheme.
Even with the new restart grants, some businesses will also need loans to see them through. As the bounce back loan and coronavirus business interruption loan scheme programmes come to an end, we are introducing a new recovery loan scheme to take their place. Businesses of any size can apply for loans from £25,000 up to £10 million through to the end of this year, and the Government will provide a guarantee to lenders of 80%.
Last year, we provided an unprecedented 100% business rates holiday in England for all eligible businesses in the retail, hospitality and leisure sectors—a tax cut worth £10 billion. This year, we will continue with the 100% business rates holiday for the first three months of the year—in other words, through to the end of June. For the remaining nine months of the year, business rates will still be discounted by two thirds, up to a value of £2 million for closed businesses, with a lower cap for those who have been able to stay open—a £6 billion tax cut for business.
One of the hardest hit sectors has been hospitality and tourism: 150,000 businesses that employ over 2.4 million people need our support. To protect those jobs, I can confirm that the 5% reduced rate of VAT will be extended for six months to 30 September. Even then, we will not go straight back to the 20% rate; we will have an interim rate of 12.5% for another six months, not returning to the standard rate until April of next year. In total, we are cutting VAT next year by almost £5 billion.
The housing sector supports more than half a million jobs. The cut in stamp duty that I announced last summer has helped hundreds of thousands of people buy a home and supported the economy at a critical time, but due to the sheer volume of transactions that we are seeing, many new purchases will not complete in time for the end of March. I can announce today that the £500,000 nil rate band will not end on 31 March; it will end on 30 June. Then, to smooth the transition back to normal, the nil rate band will be £250,000, double its standard level, until the end of September, and we will return to the usual level of £125,000 only from 1 October.
Even with the stamp duty cut, there is still a significant barrier to people getting on the housing ladder—the cost of a deposit. I am announcing today a new policy to stand behind homebuyers: a mortgage guarantee. Lenders who provide mortgages to home buyers who can afford only a 5% deposit will benefit from a Government guarantee on those mortgages. I am pleased to say that several of the country’s largest lenders, including Lloyds, NatWest, Santander, Barclays and HSBC, will be offering these 95% mortgages from next month. I know that more, including Virgin Money, will follow shortly after. This is a policy that gives people who cannot afford a big deposit the chance to buy their own home. As the Prime Minister has said, we want to turn “generation rent” into “generation buy”.
So, the furlough—extended to September; self-employed grants—extended to September; universal credit uplift—extended to September; more money to tackle domestic violence; bigger incentives to hire apprentices; higher grants for struggling businesses; extra funds for culture, arts and sport; new loan schemes to finance businesses; kickstart, restart and a lifetime skills guarantee; business rates cut; VAT cut; stamp duty cut; and a new mortgage guarantee. This is the first part of a Budget that protects the jobs and livelihoods of the British people.
And, Madam Deputy Speaker, as you can see, we are going long, extending our support well beyond the end of the road map to accommodate even the most cautious view about the time that it might take to exit the restrictions. Let me summarise for the House the scale of our total fiscal response to coronavirus. At this Budget, we are announcing an additional £65 billion of measures over this year and next to support the economy in response to coronavirus. Taking into account the significant support announced at the spending review, this means that our total covid support package this year and next is £352 billion. Once you include the measures announced at the spring Budget last year, including the step change in capital investment, total fiscal support from this Government over this year and next amounts to £407 billion.
Coronavirus has caused one of the largest, most comprehensive and sustained economic shocks that this country has ever faced, and by any objective analysis, this Government have delivered one of the largest, most comprehensive and sustained responses this country has ever seen.
We are using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people, but the damage done by coronavirus, combined with a level of support unimaginable only 12 months ago, has created huge challenges for our public finances. The OBR’s fiscal forecasts show that this year, we have borrowed a record amount: £355 billion. That is 17% of our national income—the highest level of borrowing since world war two. Next year, as we continue our unprecedented response to this crisis, borrowing is forecast to be £234 billion, 10.3% of GDP—an amount so large it has only one rival in recent history: this year.
Without corrective action, borrowing would continue at very high levels, leaving underlying debt rising indefinitely. Instead, because of the steps I am taking today, borrowing falls to 4.5% of GDP in 2022-23, 3.5% in 2023-24 and then 2.9% and 2.8% in the following two years. While underlying debt rises from 88.8% of GDP this year to 93.8% next year, it then peaks at 97.1% in 2023-24 before stabilising and falling slightly to 97% and 96.8% in the final two years of the forecast.
Let me explain why this matters. The amount we have borrowed is comparable only with the amount we borrowed during the two world wars. It is going to be the work of many Governments, over many decades, to pay it back. Just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked. When crises come, we need to be able to act, and we need the fiscal freedom to act—a freedom that you only have if you start with public finances in a good and strong place. The only reason we have been able to respond as boldly as we have to covid is because 10 years of Conservative Governments painstakingly rebuilt our fiscal resilience.
When the next crisis comes, we need to be able to act again. While our borrowing costs are affordable right now, interest rates and inflation may not stay low forever, and just a one percentage point increase in both would now cost us over £25 billion. As we have seen in the markets over the last few weeks, sovereign bond yields can rise sharply. This Budget is not the time to set detailed fiscal rules with precise targets and dates to achieve them by. I do not believe that would be sensible, but I do want to be honest about what I mean by sustainable public finances and how I plan to achieve them.
Our fiscal decisions are guided by three principles. First, while it is right to help people and businesses through an acute crisis like this one, in normal times the state should not be borrowing to pay for everyday public spending. Secondly, over the medium term, we cannot allow our debt to keep rising, and given how high our debt now is, we need to pay close attention to its affordability. Thirdly, it is sensible to take advantage of lower interest rates to invest in capital projects that can drive our future growth.
The question is how we achieve that—how we balance the extraordinary support we are providing to the economy right now with the need to begin the work of fixing our public finances. I have been and always will be honest with the country about the challenges we face, so I am announcing today two measures to begin that work. Let me take each in turn.
Our response to coronavirus has been fair, with the poorest households benefiting the most from our interventions, and our approach to fixing the public finances will be fair too, asking more of those people and businesses who can afford to contribute and protecting those who cannot. So this Government are not going to raise the rates of income tax, national insurance or VAT; instead, our first step is to freeze personal tax thresholds. We have nearly doubled the income tax personal allowance over the last decade, making it the most generous of any G20 country. We will of course deliver our promise to increase it again next year to £12,570, but we will then keep it at this more generous level until April 2026. The higher rate threshold will similarly be increased next year to £50,270 and will then also remain at that level for the same period. Nobody’s take-home pay will be less than it is now as a result of this policy, but I want to be clear with all Members that this policy does remove the incremental benefit created had thresholds continued to increase with inflation. We are not hiding it; I am here explaining it to the House, and it is in the Budget document in black and white. It is a tax policy that is progressive and fair.
I will also maintain at their current levels until April 2026 the inheritance tax thresholds, the pensions lifetime allowance, the annual exempt amount in capital gains tax, and for two years from April 2022 the VAT registration threshold, which, at £85,000, will remain more than twice as generous as the EU and OECD averages. We will also tackle fraud in our covid schemes, with £100 million to set up a new HMRC taskforce of around 1,000 investigators as well as new measures and new investment in HMRC to clamp down on tax avoidance and evasion. The full details are set out in the Red Book.
The Government are providing businesses with over £100 billion of support to get through this pandemic, so it is fair and necessary to ask them to contribute to our recovery. So the second step I am taking today is that in 2023 the rate of corporation tax paid on company profits will increase to 25%. Even after this change the United Kingdom will still have the lowest corporation tax rate in the G7, lower than that of the United States, Canada, Italy, Japan, Germany and France.
We are also introducing some crucial protections. First, this new higher rate will not take effect until April 2023, well after the point when the Office for Budget Responsibility expects the economy to have recovered, and even then, because corporation tax is only charged on company profits, any struggling business will, by definition, be unaffected. Secondly, I am protecting small businesses with profits of £50,000 or less by creating a small profits rate maintained at the current rate of 19%. This means that around 70% of companies—1.4 million businesses—will be completely unaffected. And thirdly, we will introduce a taper above £50,000 so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate. That means only 10% of companies will pay the full higher rate. So, yes, it is a tax rise on company profits, but only on the larger, more profitable companies and only in two years’ time. I wanted to announce this now, because I think that, for business, certainty matters. For the next two years, I am also making the tax treatment of losses significantly more generous by allowing businesses to carry back losses of up to £2 million for three years, providing a significant cash flow benefit. This means companies can now claim additional tax refunds of up to £760,000. And because of the current 8% bank surcharge, the implied overall tax rate for banks would be too high. So we will review the surcharge to make sure the combined rate of tax on the UK banking sector does not increase significantly from its current level, and to make sure this important industry remains internationally competitive.
These are significant decisions to have taken: decisions no Chancellor wants to make. I recognise that they might not be popular, but they are honest. And let us consider the alternatives. The first is to do nothing: to leave our deficit problem untreated, our debt problem for someone else in the future to deal with. That has never been the way of a Conservative Government, and nor do I believe it can be the way of a responsible Chancellor. Another alternative would be to try and find all the savings we need from public spending. But when we said at the last election that we were the party of public services, people believed us—and they were right to believe us. And when we said we would be the party that invests in new infrastructure, they were right to believe that too. The only other alternative would be to increase the rates of tax on working people—but I do not believe that would be right either. So I believe that our approach, while bold, is compatible with our duty as a fiscally responsible and business-friendly Government. This is the right choice and I am confident it will command public assent.
I have one final announcement on business tax. With the lowest corporation tax rate in the G7, and a new, small profits rate, the UK will have a pro-business tax regime. But we need to do even more to encourage businesses to invest right now. Business investment creates jobs, lifts growth, spurs innovation and drives productivity. For decades we have lagged behind our international peers. Right now, while many businesses are struggling, others have been able to build up significant cash reserves. We need to unlock that investment; we need an investment-led recovery. So today I can announce the super deduction. For the next two years, when companies invest, they can reduce their tax bill not just by a proportion of the cost of that investment, as they do now, or even by 100% of the cost, the so-called full expensing some have called for; with the super deduction they can now reduce their tax bill by 130% of the cost. Let me give the House an example. Under the existing rules, a construction firm buying £10 million of new equipment could reduce their taxable income, in the year they invest, by just £2.6 million. With the super deduction, they can now reduce it by £13 million. We have never tried this before in our country. The OBR has said it will boost business investment by 10%—around £20 billion more per year. It makes our tax regime for business investment truly world leading, lifting us from 30th in the OECD to first. And, worth £25 billion during the two years it is in place, this will be the biggest business tax cut in modern British history: bold, unprecedented action to get companies investing, creating jobs, and driving our economic recovery.
Let me now turn to duties. This is a tough time for hospitality, so I can confirm that the planned increases in duties for spirits such as Scotch whisky, wine, cider and beer will all be cancelled. All alcohol duties frozen for the second year in a row—only the third time in two decades. And right now, to keep the cost of living low, I am not prepared to increase the cost of a tank of fuel, so the planned increase in fuel duty is also cancelled.
This Budget protects the jobs and livelihoods of the British people. This Budget is honest about the challenges facing our public finances and how we will begin to fix them. And this Budget does one other thing: it lays the foundations of our future economy—the third part of our plan. If we want a better future economy, we have to make it happen. We have to do things that have never been done before.
The world is not going to be any less competitive after coronavirus, so it is not enough to have some general desire to grow the economy; we need a real commitment to green growth. It is not enough to have some general desire to increase productivity; we need a real commitment to give every business, large or small, the opportunity to grow, innovate and succeed. It is not enough to have a general desire to create jobs; we need a real commitment to create jobs where people are and to change the economic geography of this country. And we cannot strengthen our domestic economy without remaining a global, outward-looking nation. This future economy will not be created in any one Budget, but today we lay the foundations.
Our future economy needs investment in green industries across the United Kingdom, so I can announce today the first ever UK infrastructure bank. Located in Leeds, the bank will invest across the UK in public and private projects to finance the green industrial revolution. Beginning this spring, it will have an initial capitalisation of £12 billion and we expect it to support at least £40 billion of total investment in infrastructure. I know that my right hon. Friend the Member for Pudsey (Stuart Andrew) will particularly welcome the location of this new institution.
Offshore wind is an innovative industry where the UK already has a global competitive advantage, so we are funding new port infrastructure to build the next generation of offshore wind projects in Teesside and Humberside. In November, I announced that we would launch a world-leading sovereign green bond. Today, we are going further, announcing a new retail savings product to give all UK savers the chance to support green projects, as my hon. Friend the Member for North East Bedfordshire (Richard Fuller) has campaigned for.
We have also asked Dame Clara Furse to establish a new group to position the City as the global leader for voluntary, high-quality carbon offset markets. Underpinning all this will be an updated monetary policy remit for the Bank of England. It reaffirms its 2% target, but now it will also reflect the importance of environmental sustainability and the transition to net zero.
Our future economy will also address our productivity problem and support small business. Too often, smaller firms do not have the time or resources to acquire the extra skills and training they need to be more efficient, more digital and more productive. Thanks to Be the Business, we have made a good start at supporting these firms. Today, the Business Secretary and I are going further, with a new set of UK-wide schemes, Help to Grow.
First, Help to Grow: Management will help tens of thousands of small and medium-sized businesses get world-class management training. Dozens of business schools across the UK will offer a new executive development programme with mentoring and peer learning, and Government will contribute 90% of the cost—a real commitment to learn more, make more and earn more.
Secondly, Help to Grow: Digital. With the pandemic, many businesses have moved online. This has been a challenge, but we want to turn it into an opportunity. We are going to help small businesses develop digital skills by giving them free expert training and a 50% discount on new productivity-enhancing software worth up to £5,000 each. Both programmes will commence by the autumn, and I would urge interested businesses to register today on Gov.UK/HelpToGrow. That is a real commitment to help over a hundred thousand businesses become more innovative, more competitive and more profitable.
A future economy requires us to be at the forefront of the next scientific and technological revolutions. Becoming a scientific superpower is something we can be; I do not think that is hubristic or unrealistic. Our incredible vaccination programme has shown the world what this country is capable of, so I am providing an extra £1.6 billion today to continue the roll-out and improve our future preparedness.
I want to make the UK the best place in the world for high growth, innovative companies, so I am launching two wide-ranging consultations today to make sure our research and development tax reliefs—and our enterprise management incentives—are internationally competitive.
My right hon. Friend the Home Secretary knows that a scientific superpower needs scientific superstars, so together we are announcing ambitious visa reforms aimed at highly skilled migrants, including a new, unsponsored points-based visa to attract the best and most promising international talent in science, research and tech; new, improved visa processes for scale-ups and entrepreneurs, and radically simplified bureaucracy for high skilled visa applications.
As well as support for innovation and access to talent, high-growth firms need access to capital. To do that, we are taking steps to give the pensions industry more flexibility to unlock billions of pounds from pension funds into innovative new ventures; launching a new Future Fund Breakthrough to help fill the scale-up funding gap; and changing the rules to encourage more companies to list here. Let me thank Lord Hill for leading this landmark review. The Foreign, Commonwealth and Development Office will shortly be consulting on his proposals.
Our future economy depends on remaining a United Kingdom. Millions of families and businesses in Scotland, Wales and Northern Ireland have contributed to and benefited from our coronavirus response. Central to that has been a Treasury that acts for the whole United Kingdom. That is not a political point; it is an undeniable truth. The majority of today’s Budget measures will apply directly to people in all four nations of the UK. I am taking further specific steps with three accelerated Scottish city and growth deals in Ayrshire, Argyll and Bute, and Falkirk; three more in north Wales, mid-Wales, and Swansea bay; funding for the Holyhead hydrogen hub, the Global Centre of Rail Excellence in Neath Port Talbot and the Aberdeen energy transition zone, as well as the global underwater hub and the North sea transition deal, along with the first allocations of the £400 million new deal for Northern Ireland.
Through the Barnett formula, the decisions I am taking in this Budget also increase the funding for the devolved Administrations by £1.2 billion in Scotland, £740 million in Wales, and £410 million for the Northern Ireland Executive.
Our future economy demands a different economic geography. If we are serious about wanting to level up, that starts with the institutions of economic power. Few institutions are more powerful than the one I am enormously privileged to lead—the Treasury. Along with the other critical economic Departments, including the Department for Business, Energy and Industrial Strategy, the Department for International Trade and the Ministry of Housing, Communities and Local Government, we will establish a new economic campus in Darlington. I know my hon. Friend the Member for Darlington (Peter Gibson) will particularly welcome this announcement.
Redrawing our economic map means rebalancing our economic investment. I have already revised the Treasury’s Green Book, and set out the highest sustained levels of public investment across the UK since the 1970s. But we can go further. I am announcing today over £1 billion for 45 new towns deals, from Castleford to Clay Cross, Rochdale to Rowley Regis, and Whitby to Wolverhampton. I pay tribute to local leaders—like the brilliant Mayor for the West Midlands, Andy Street—who are making the case for investment in their area.
We are creating a £150-million fund to help communities across the UK take ownership of pubs, theatres, shops or local sports clubs at risk of loss, putting more power in the hands of local people. I am also launching the first round of the levelling up fund today, inviting applications from local areas across the United Kingdom. I am grateful to my right hon. Friends the Transport Secretary and the Housing, Communities and Local Government Secretary for their support on this crucial initiative.
I have one final announcement that exemplifies the future economy. It is a policy on a scale that we have never done before—a policy to bring investment, trade, and, most importantly, jobs, right across the country, to replace the industries of the past with green, innovative, fast-growing new businesses, to encourage free trade and reinforce our position as an outward-looking, trading nation that is open to the world, and a policy that we can only pursue now that we are out of the European Union: freeports. Freeports are special economic zones with different rules to make it easier and cheaper to do business. They are well established internationally, but we are taking a unique approach.
Our freeports will have simpler planning to allow businesses to build; infrastructure funding to improve transport links; cheaper customs with favourable tariffs, VAT or duties; and lower taxes, with tax breaks to encourage construction, private investment and job creation. It will be an unprecedented economic boost across the United Kingdom. Freeports will be a truly UK-wide policy, and we will work constructively with the Scottish, Welsh and Northern Irish Administrations.
Today, I can announce the eight freeport locations in England: East Midlands airport; Felixstowe and Harwich; Humber; Liverpool city region; Plymouth; Solent; Thames; and Teesside. That is eight new freeports in eight English regions, unlocking billions of pounds of private sector investment, generating trade and jobs up and down the country. I commend Members across the House for their campaigning, but in particular my hon. Friends the Members for Redcar (Jacob Young), for Cleethorpes (Martin Vickers) and for Great Grimsby (Lia Nici), as well as inspiring local leaders like Ben Houchen, the Mayor of Tees Valley.
Let us take just one of those places—Teesside. In the past, it was known for its success in industries like steel. Now, when I look to the future of Teesside, I see old industrial sites being used to capture and store carbon, vaccines being manufactured, offshore wind turbines creating clean energy for the rest of the country—all located within a freeport with a Treasury just down the road and a UK Infrastructure Bank only an hour away. I see innovative, fast-growing businesses hiring local people into decent, well-paid, green jobs. I see people designing, manufacturing and exporting incredible new products and services. I see people putting down roots in places that they are proud to call home. I see a people optimistic and ambitious for their future. That is the future economy of this country.
And so, while this last year has been a test unlike any other, that which we are, we are. The fundamentals of our character as a people have not changed: still determined, still generous, still fair. That is what got us through the last year; it is what will guide us through the next decade and beyond. This time last year, we set out to deliver on the promises we made to the British people. But the most important promise was implicit and, in truth, is made by every Government, irrespective of their politics—and that is to do what must be done when the danger is imminent and when no one else can.
Today, we set out a plan to protect the jobs and livelihoods of the British people, but the promises that underpin that plan remain unchanged from those we pledged ourselves to 12 long months ago: to unite and lead; to level up; to create a world-class education system; to keep our streets safe; to keep our NHS strong; to support the most vulnerable; to reform and improve public services; to grow the economy; to spread prosperity; to extend the awesome power of opportunity to all corners of the United Kingdom; and, yes, to be honest and fair in all that we do.
An important moment is upon us, a moment of challenge and of change: of difficulties, yes, but of possibilities too. This is a Budget that meets that moment and I commend it to the House.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions: —
(a) Repeal of provisions relating to the Interest and Royalties Directive (motion no. 31);
(b) Stamp duty land tax (housing co-operatives etc) (motion no. 44);
(c) Annual tax on enveloped dwellings (housing co-operatives) (motion no. 45);
(d) Customs duty (removal of steel to Northern Ireland) (motion no. 52).—(Rishi Sunak.)
Question agreed to.
Madam Deputy Speaker (Dame Eleanor Laing)
We now come to the motion entitled “Income Tax (Charge)”. It is on this motion that the debate will take place today and on the succeeding days. The questions on this motion and on the remaining motions will be put at the end of the Budget debate on Tuesday 9 March. I call the Chancellor of the Exchequer to move the motion formally.
Budget Resolutions and Economic Situation
(3 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Keir Starmer (Holborn and St Pancras) (Lab)
After 11 months in this job, it is nice, finally, to be standing opposite the person actually making decisions in this Government. The trouble is that it is those decisions that have left us with the mess we find today: the worst economic crisis of any major economy in the last 12 months; unemployment at 5% and, as the Chancellor said, forecast to rise to 6.5%; and debt at over £2 trillion. I am sure this Budget will look better on Instagram. In fact, this week’s PR video cost the taxpayer so much I was half-expecting to see a line in the OBR forecast for it, but even the Chancellor’s film crew will struggle to put a positive spin on this.
After the decisions of the last year and the decade of neglect, we needed a Budget to fix the foundations of our economy to reward our key workers, to protect the NHS and to build a more secure and prosperous economy for the future. Instead, what we got was a Budget that papered over the cracks rather than rebuilding the foundations, a Budget that shows the Government do not understand what went wrong in the last decade or what is needed in the next. The Chancellor may think that this is time for a victory lap, but I am afraid this Budget will not feel so good for the millions of key workers who are having their pay frozen, the businesses swamped by debt, the families paying more in council tax and the millions of people who are out of work or worried about losing their job. Although the Chancellor spoke for almost an hour, we heard nothing about a long-term plan to fix social care. The Chancellor may have forgotten about it, but the Labour party never will.
The British people will rightly ask, why has Britain suffered a worse economic crisis than any major economy? The answer is staring us in the face. First are the Chancellor’s decisions in the last year. This is the Chancellor who blocked a circuit break in September. Ignoring the science, he told the British people to “live with” coronavirus and “live without fear”. A few weeks later, we were forced into an even longer and more painful lockdown. Whatever spin the Chancellor tries to put on the figures today, as a result of his decisions, we have suffered deeper economic damage and much worse outcomes.
That is nothing compared with the decade of political choices that meant that Britain went into this crisis with an economy built on insecurity and inequality. The Chancellor referred to the last 10 years. As a result of those 10 years, we have an economy in which 3.6 million people are in insecure work, wages have stagnated for a decade and over 4 million children are living in poverty. Critically, we went into this crisis with 100,000 unfilled posts in the NHS and after social care had been ignored and underfunded for a decade. Government Members voted for all that. Today’s Budget does not even recognise that, let alone rectify it.
It is clear that the Chancellor is now betting on a recovery fuelled by a consumer spending blitz. In fairness, if my next door neighbour was spending tens of thousands of pounds on redecorating their flat, I would probably do the same. [Laughter.] But the central problem in our economy is deep-rooted insecurity and inequality, and this Budget is not the answer to that. The Chancellor barely mentioned inequality, let alone try to address it.
Rather than the big transformative Budget we needed, this Budget simply papers over the cracks. If this had been a Budget for the long term, it would have had a plan—a plan to protect our NHS; a plan to fix social care. I can tell the House this: a Labour Budget would have had the NHS and care homes front and centre. But this Budget is almost silent on those questions. If this had been a Budget to rebuild the foundations, it would have fixed our broken social security system. Instead, the Chancellor has been dragged, kicking and screaming, into extending the £20 uplift in universal credit, but only for a few months—once again, deferring the problem. As a result, insecurity and the threat of losing £1,000 a year still hang over 6 million families. [Interruption.] They ask what we would do. We would keep the uplift until a new, fairer system could be put in place.
If this Budget was serious about rebuilding our shattered economy, it would have included a credible plan to tackle unemployment. The Chancellor said very little about the kickstart scheme, no doubt because—
Keir Starmer
The Prime Minister says, “Rubbish.” That is no doubt because the kickstart scheme is helping only one in 100 eligible young people—rubbish is the right word, Prime Minister. In six months, it has supported just 2,000 young people, yet youth unemployment is set to reach 1 million. Like so much of this Budget, the Chancellor’s offer is nowhere near the scale of the task.
Of course, the biggest challenge for this country is the climate emergency. The Chancellor just talked up his green credentials, but his Budget stops way short of what was needed or what is happening in other countries. This Budget should have included a major green stimulus, bringing forward billions of pounds of investment to create new jobs and new green infrastructure. Instead, the Government are trying to build a new coalmine, which we now learn might not even work for British Steel. If anything sums up this Government’s commitment to a green recovery and jobs for the future, it is building a coalmine that we cannot even use.
If the Government were serious about tackling insecurity and helping those most at risk from covid, this Budget would have fixed the broken system of statutory sick pay and, at the very least, filled the glaring holes in isolation payments. This is not difficult to fix. The Government should just make the £500 isolation payment available to everyone who needs it. That would be money well spent, and, a year into the pandemic, it is a disgrace that it is not made available.
If the Government were serious about fixing the broken housing market, they would have announced plans for a new generation of genuinely affordable council houses. Instead, 230,000 council homes have been lost since 2010, yet the Chancellor focused today on returning to subsidising 95% of mortgages. I know what Members are thinking: “I’ve heard that somewhere before.” Perhaps it was because the Prime Minister announced it five months ago in his conference speech? No, I do not think anybody heard that. I remember now: it is what Osborne and Cameron came up with in 2013. What did that do? It fuelled a housing bubble, pushed up prices, and made owning a home more difficult—so much for generation buy! I have been saying for weeks that this Budget will go backwards, but I did not expect the Chancellor to lift a failed policy from eight years ago.
This Budget fell far short of the transformative change that we need to turbo-charge our recovery for the decades to come. There was no credible plan to ease the burden of debt hanging over so many businesses, which is estimated at £70 billion. This Budget asks businesses to start paying that money back whether they are profitable or not. That affects millions of businesses. It will hold back growth, because businesses will have to pay back money they never wanted to borrow, instead of being able to invest in their futures and create jobs in their local areas. It is both unfair and economically illiterate.
This Budget also falls far short of what was needed to support the self-employed and freelancers, unless, of course, they are one of the Chancellor’s photographers. After a year of inaction, we will look at the details of what the Chancellor announced, but, from the figure of 600,000 that he mentioned, it certainly looks like millions will still be left out in the cold.
The Chancellor’s one nominally long-term policy was in his references to levelling up, but what does that actually look like? It is not the transformative shift in power, wealth and resources that we need to rebalance our economy. It is not the bold long-term plan that we need to upskill our economy, to tackle educational attainment or to raise life expectancy. It certainly is not a plan to focus Government resources on preventive services and early years. For the Chancellor, levelling up seems to mean moving some parts of the Treasury to Darlington, creating a few free ports, and re-announcing funding. That is not levelling up; it is giving up.
Instead of putting blind faith in free ports, the Chancellor would be better served by making sure that the Government’s Brexit deal actually works: for Britain’s manufacturers, now facing more red tape when they were promised less; for our financial services, still waiting for the Chancellor to make good on his promises; for the small businesses and fishing communities, whose goods and produce are now left unsold in warehouses; and for our artists and performers, who just want to be able to tour.
Turning to other parts of the statement, we will wait for the detail about the so-called super deduction, but it is unlikely to make up for the 10 years when the levels of investment growth have trailed so many other countries. Of course we welcome the creation of the national infrastructure bank, which is something for which we have called for years, although it would have been better if the Government had not sold off the Green Investment Bank in the first place. We also welcome the introduction of green saving bonds. I have to say what a good idea it is to introduce a new set of recovery bonds.
The trouble is that the scale of what the Chancellor announced today is nowhere near ambitious enough. The long-overdue commitments to extend furlough, business rate relief and the VAT cut on hospitality are welcome, but there is no excuse for holding the announcement of that support back until today, and of course we will look at the detail.
There are very few silver linings in this Budget. The IMF and the OECD have said that now is not the time for tax rises. We are in the middle of a once-in-300-years crisis. Our economy is still shut and our businesses are on life support, so it is right that corporation tax is not rising this year or next. In the long run, corporation tax should go up. The decade-long corporation tax experiment by this Government has failed, but no taxes should be raised in the teeth of this economic crisis, so it is extraordinary that the Chancellor is ploughing ahead with a £2 billion council tax rise affecting households across the country. Why is he doing that when every economist would tell him not to? Perhaps we find the answer in this week’s Sunday Times, which quoted a source saying that the Chancellor’s argument was:
“Let’s do it all now as far away from the election as possible.”
The Telegraph on 27 January reported:
“Raising taxes now means they can be reduced ahead of the next election, Rishi Sunak tells Tory MPs”.
The Mail in September reported that the Chancellor was to hike taxes and then lower them before the next election. Let me be crystal clear: the proper basis for making tax decisions is the economic cycle, not the electoral cycle.
Behind the spin, the videos and the photo ops, we all know that the Chancellor does not believe in an active and enterprising Government. We know he is itching to get back to his free market principles and to pull away support as quickly as he can. One day, these restrictions will end. One day we will all be able to take our masks off, and so will the Chancellor, and then we will see who he really is. This Budget sets it up perfectly, because this is a Budget that did not even attempt to rebuild the foundations of our economy or to secure the country’s long-term prosperity. Instead, it did the job the Chancellor always intended: a quick fix, papering over the cracks.
The Conservatives spent a decade weakening the foundations of our economy. Now they pretend they can rebuild it, but the truth is that they will not confront what went wrong in the past and they have no plan for the future.
Madam Deputy Speaker (Dame Eleanor Laing)
We now go by video link to the Chairman of the Treasury Committee.
Mel Stride (Central Devon) (Con) [V]
I broadly welcome this Budget, although I say that being aware that the devil is always in the detail of Budgets. We very much look forward to welcoming my right hon. Friend the Chancellor to the Treasury Committee on Thursday next week to look at that detail in more detail.
I totally applaud the measures that the Chancellor has taken in extending the bridge of support—the bridge between the crisis and the recovery. I think the measures he has taken around furlough, support for the self-employed and the extension of the VAT reduction, business rate relief and so on are all most welcome. I also very much welcome, as I and the Treasury Select Committee have been pressing for them for some time, the targeted elements that he has introduced.
As we come through this recovery, there is no doubt that certain parts of the economy will pick up quicker than others. Some businesses will do better than others, so I welcome the 30% turnover threshold that my right hon. Friend has introduced, so that he can more accurately target the relief where it is needed. That goes also for what I understand of his announcements on grants, and of course the VAT reduction extension that will help particularly hard-pressed sectors. I also welcome the investment that he has announced in areas of the country, many of which will have suffered particularly during the crisis. I think that is also welcome targeting.
If I could turn briefly to the so-called excluded—those who have fallen through the gaps of support hitherto—I am a little disappointed not to have heard something by way of support for those directors working through their own limited companies, paying themselves by way of dividend, yet not having those dividends counted towards their entitlement for furlough. There have been new ideas explored by the Committee, and I would hope, even at this late stage, that the Chancellor will consider some of those ideas with the Committee next week. I was, however, extremely pleased to see that the new self-assessment tax information that has been taken on board—right up until, I think the Chancellor said, last night—will be taken into account in helping many of those who would otherwise have fallen through the gaps in support, some 600,000 in total.
I want to focus on three important areas for business and jobs, and comment on what the Chancellor had to say in that respect. The first is corporate debt. The situation is that the data shows that larger businesses have a great deal of cash in the bank, and it is perhaps not surprising that they have been cautious, that they have received quite a lot of support from Government and, of course, that a lot of them have not been investing. However, among small and medium-sized enterprises the picture is less clear. I have a concern that many of those businesses will struggle with the level of the debt that they have, that they will not be growing when we want them to be creating the jobs of the future and that they will be focusing on de-leveraging their balance sheets. I would like to see something from the Chancellor as to how that particular problem might be addressed. If it is not, the risk is that many of these SMEs will go out of business and markets will become more concentrated and less competitive as a consequence.
Secondly, on investment, I was hugely encouraged by what my right hon. Friend said about the super deduction. My own view was that there should be an increase in the annual investment allowance. It seems to me that this goes significantly beyond that. The devil will be in the detail, but certainly, if the kind of projections for investment that he has just outlined by way of the OBR’s figures are correct, as I understood them, this will be a huge shot in the arm for corporate UK and very welcome. I welcome the three-year loss carry-back arrangements—also something the Committee has pressed for.
My third point is around skills. I have been very impressed with all the announcements that have been made around encouraging apprenticeships, and there was more in the Budget statement just now. On the kickstart scheme, it is imperative that we get this right and that we maximise the efficiency of the transfer of parts of the labour force from those parts of the economy and businesses that are contracting to those that are expanding. I think the Treasury needs to play a very proactive role in making sure that those schemes are successful.
One of the big tests I set in my mind for my right hon. Friend’s Budget was to what degree he navigated successfully the requirement not to put up taxes too early and choke off growth, but at the same time making it very clear to the markets that he and the Government are serious about dealing with the deficit and debt in the more medium term. I have to say that, once again, I have been pretty impressed with what I have heard. I want to see the detail. However, it seems to me that the tax increases and the threshold freezes that my right hon. Friend has announced do not kick in straightaway but he has charted a clear road map for how those taxes and thresholds will be dealt with between now and the end of this Parliament.
If I could just say, on the issue of corporation tax, that it is quite a hike from 19% to 25%. However, we still will remain internationally competitive, and I believe that President Biden, during his campaign for the presidency, suggested US rates might rise from 21% to 28%. So I think, on balance, this is a reasonable move, given that none of the possibilities is particularly palatable, and I welcome the carve-out for small businesses through the small profit rate.
It was pleasing to hear from my right hon. Friend that the OBR’s current projections have improved, and that we are hopefully going to get back to pre-pandemic levels of economic output six months earlier than was thought in November. But of course we still, as he has identified, face a huge challenge going forward, not just around covid, but with the issue that we will have a smaller economy and less taxes that will be able to be raised. Of course, we have demographic pressures going way into the future, with an increasingly elderly population and the pressures that will put on our finances. My right hon. Friend knows that it is critical that we deal with these pressures in a timely manner, or interest rates will rise—and, as he has stated, a 1% rise would mean an eye-watering £25 billion increase in the cost of servicing our debt.
That brings me to the principles that my right hon. Friend has set out today: not borrowing to fund day-to-day expenditure at some point in the future; and having an eye to seeing the level of debt as a percentage of GDP decreasing over time. Those are welcome signals from my right hon. Friend.
I want to turn briefly to an issue that I think is an underestimated threat that has not been discussed enough in an economic context: a return of inflation. Andy Haldane, the Bank of England’s chief economist, has pointed to this risk recently. We know that if inflation increases and spikes, the Bank of England would need to tighten monetary policy to try to keep inflation under control. We would have bond markets in which the Government and the Bank of England were potentially both sellers, with increased upward pressure on interest rates and all that would follow.
Inflation might come through increased friction in global trade, and we have seen increased friction in trade with the EU27 as a consequence of Brexit. It could come through the exchange rate, although recent movements have been in a positive direction, as the virus is being clamped down on and our prospects have improved relative to other economies. Inflation could also come through increases in energy costs and the price of oil, or indeed the unwinding of some of the tax cuts, for example those relating to VAT.
But inflation could also come through the interplay between the supply and demand sides of the economy as we recover. On the supply side, it remains uncertain how quickly companies will bounce back. We know that many of them have been severely damaged. On the demand side, it is also the case that we will not know at this stage the extent to which consumers will re-engage with the economy in the way they did before the pandemic, even though the virus is diminishing. We also do not know what will happen to the huge amount of effectively enforced savings as people have been unable to engage in the economy in the usual fashion—perhaps up to £200 billion or £300 billion by the summer, the Bank of England has suggested. If a lot of that goes back into the economy quickly, it will have a huge stimulus effect. If very little does, clearly the opposite will be the case.
It is therefore absolutely right that my right hon. Friend is ready and prepared to use the fiscal levers as appropriate over the coming months. If he comes back to the House of Commons many times to do so, I think that should be seen as a position of strength, rather than weakness. I wish him well. The Treasury Committee will continue to be critical of him where appropriate, but also supportive in our common endeavour of putting the economy back on track.
In conclusion, I broadly welcome this Budget. It comes against the backdrop of one of the worst economic crises outside of wartime. Yet there is hope that springs from the past, and the strength that we held going into this crisis, of strong and stable financial institutions, record levels of employment, and hard-won improvements in our public finances. But now hope springs also, it seems to me, from the future: from the thousands of men and women—our scientists, health workers and volunteers—who appear to be on the brink of little short of a miracle, the wholesale turnaround in our country’s fortunes due to vaccination. Therefore, in broad terms I welcome my right hon. Friend’s Budget today, but I conclude by supporting each and every one of them.
Madam Deputy Speaker (Dame Eleanor Laing)
Before I call the leader of the Scottish National party, I should give a slight warning that there will be an initial time limit on Back-Bench speeches of seven minutes, but that will quite soon be reduced to five minutes, and quite soon after that to three minutes, if we are to have a chance of allowing everyone to speak. For the moment, it will be seven minutes.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
I should thank the Chancellor for advance sight of his statement but, of course, much of it—against the usual protocol—has already been leaked to the media. It is perhaps worth stating that what is contained in the Budget should be announced in this House and should not be pre-announced in the media.
The Budget comes at a critical moment—a moment when people right across these islands can have faith that the end of the pandemic is finally in sight. Just as millions of people are now being injected with the hope of the vaccine, this Budget should have injected the economy with the stimulus package that it desperately needs.
The Institute for Public Policy Research advised the Government to “boost...like Biden”, to generate an investment-led recovery. Instead, the Chancellor has produced a Budget that offers people the bare minimum— a Budget that completely fails to take responsibility for the bollocks that they have made of Brexit. Indeed, when we look at the Office for Budget Responsibility forecasts and the years 2023, 2024 and 2025, we see a forecast of 1.7%, 1.6% and 1.7% growth. Where is the ambition? This is a Budget that has a poverty of ambition.
When we contrast the response of the US Administration in that fiscal stimulus of President Biden and put that in a historical context, what we see, over the course of the last decade, is that US GDP growth has been 10% greater than that of the UK, and it is that failure to deliver growth that is imperilling our national finances. It is that lack of ability to deliver growth that holds back tax receipts. It is that lack of ability to deliver growth that constrains the opportunities for people, that holds back the growth in productivity, that holds back the growth in wages, that leaves so many of our people living in poverty.
Between the lines of the statement today, there were also the surest of signals. The conversion of this Prime Minister and this Chancellor to increase public spending was only ever temporary. Today, we have a Tory Chancellor returning to type. He is clearly itching to turn off the state spending taps. This Budget is carefully laying the ground for more Tory austerity, a decade more of Conservative cuts, because the Tories do not regret—[Interruption.] I can see the Chancellor shaking his head, but he had the opportunity today to continue the £20 uplift to universal credit and make it permanent—and not just make that permanent to give some hope for those who depend on universal credit, but to extend it to legacy benefits. What did we get instead? We got a commitment to contain it—to leave it in place—for a further six months. In other words, when the restrictions on lockdown have come off, the £20 uplift to universal credit comes off as well. Where is the compassion and dignity for those who need that support? They will continue to need that support right after we come out of this crisis. That is the Tory party that has reverted to type.
Of course, the Tories do not regret the austerity that they have inflicted over the last decade. They are nostalgic for it. We are told by the Chancellor that there have to be cuts to spending. We are told that there have to be tax increases, but we know that he is deliberately setting out a false choice, because we heard nothing today about the need not just here, but right around the world to create the circumstances for investment-led growth. Where is the agenda that the UK is going to take to the G7 to make sure that we work collectively to deliver a better future for everybody out of this pandemic? Every credible economist knows that to protect and secure the public finances, we must create the circumstances for recovery for growth and that this has to be investment-led.
As we look forward to the months ahead, we need to deliver a vision of a better future and we need leadership to do this. So, for the people of Scotland this Budget comes at a critical moment of choice. Post-Brexit and post-pandemic, Scotland now has a choice of two futures: the long-term damage of Brexit and more Tory austerity cuts, or the opportunity to protect our place in Europe and to build a strong, fair and green recovery with independence. This May, every citizen will cast their democratic decision on who they trust to rebuild our society and our economy in the wake of the pandemic. It will be a clear choice: Scotland’s future in Scotland’s hands, or in the hands of the Tories and this Prime Minister and Chancellor. Let’s just say that we are looking forward to the verdict of the Scottish people.
Let me turn to the immediate priorities that this Budget should have dealt with. I am sorry to say that the Chancellor stood up today and doubled down on exactly the same mistakes that he has been making throughout the pandemic. Temporary extensions and temporary support can only ever mean a temporary reprieve for those millions who have been crippled by uncertainty for months. The Chancellor’s temporary timelines for pandemic financial support completely contradict his own Government’s policy. On the one hand, the UK Government rightly tell people that they will follow data not dates when it comes to public health, but when it comes to financial support, Tory policy is defined by dates, deadlines and cliff edges.
Businesses and workers on furlough needed certainty last March and last autumn, and they need it now. Frankly, Chancellor, to expect businesses that have been closed to make increasing contributions to furlough is simply unacceptable when they do not have the cash flow to pay for it. More temporary extensions and the tapering off of furlough fall well short of what businesses need. The Chancellor should make the commitment that full furlough support at 80% wage support will remain available to businesses as long as restrictions remain in place—no deadlines, no dates, no ifs and no buts. That is one clear commitment that would immediately stabilise support for every struggling sector.
The cut-off date for entry into job retention schemes should also be revised, ensuring that support is available to the growing numbers who have started new jobs since the end of last October. We welcome the VAT cut, but it should have been retained at 5% for much longer, and it should be extended to businesses such as hair and beauty businesses, which also need the support. While we welcome the ongoing support for rates relief, it does not go as far as the Scottish Government have in providing 100% rates relief for the calendar year across the retail, hospitality, leisure and aviation sectors.
One of my biggest criticisms of this Budget is that it completely fails to recognise the sheer scale of the other pandemic our communities are suffering—the poverty pandemic. After a decade of underinvestment and Tory cuts, the last year has deepened the UK’s poverty crisis and widened gaps in inequality. Yes, many have been in a position to save and build up financial deposits during these lockdowns, but Chancellor, millions more are literally struggling to survive. Some 14.2 million UK adults are now categorised as having low financial resilience. That is an increase of 3.5 million since the beginning of the pandemic. Let me take an example from my own constituency. In January 2020, the community food bank in south Skye and Lochalsh delivered 25 food parcels in one month. In December 2020, that same food bank was delivering 200 bags of food per week.
Last year, this Government were forced into providing a £20 uplift for universal credit. It was literally a lifeline for millions. It was needed then, and it is needed now. Six million people are now claiming universal credit—a 98% increase since the pandemic began. Today, this Tory Chancellor is telling those 6 million people not to get too comfortable with that lifeline, and that in a matter of months it will be gone. Where is the compassion, Chancellor? Where is the support for people? Does he really think that this is good enough and that it is acceptable that so many people—so many families and so many children—have been left in poverty? He can avert his eyes and look away because he does not want to know the harsh reality. The Chancellor does not understand what it is like to be poor in Boris Johnson’s Brexit Britain. Chancellor, do the right thing. This should never be temporary; it should be permanent, and let us make sure, out of this Budget, that that policy is changed. Making the £20 universal credit uplift permanent must also extend to legacy benefits. And Chancellor, while you are at it, finally abolish the cruel benefit cap and end the two-child limit.
The Chancellor should also be using this Budget to support those most impacted throughout the pandemic. The Women’s Budget Group found that women were twice as likely to be key workers as men but are far less likely to be eligible for statutory sick pay. It also found that young women were disproportionately likely to work in the sectors that were hardest hit by previous lockdowns. The Chancellor could support these women by finally introducing a real living wage and a liveable sick pay for all.
We know that after a decade of Tory decisions, child poverty has risen to alarming levels. The Joseph Rowntree Foundation and baby bank charity Little Village found that 4.2 million children are living in poverty, including 1.3 million babies and children under the age of five. This is supposed to be a civilised society. It is supposed to be a caring society. The Chancellor has just congratulated himself on his Budget. Chancellor, where is the plan to get these 4.2 million children and their families out of poverty? Where is the plan to get these young children and babies out of poverty? Where is the sense of responsibility from a Government? What we can see is a Chancellor who is not even prepared to engage; he is looking away—and no wonder, because this Chancellor should be embarrassed by what he has done. This Government need to wake up to the scale of the child poverty crisis, and they could start by matching the Scottish Government’s game-changing £10 child payment.
While we are on the subject of fighting poverty, let me say how disappointed I was by the failure of the Labour shadow Chancellor at the weekend to state her party’s clear support for making the universal credit uplift permanent. In the space of a week, Labour told us that its position on wasting billions on Trident nuclear weapons on the Clyde is non-negotiable but cannot even say what its position is on keeping this lifeline for struggling families. We know we are living in strange times when George Galloway pledges his support for the Tories and the Labour party sits on the fence when it comes to Tory cuts. We would nearly feel sorry for the new Scottish Labour leader, severed at the knees by his Westminster bosses before he even gets started.
Not only does this Budget signal the return of Conservative cuts; it also confirms that the Chancellor continues to snub the excluded. In time, when people reflect back on this period, it will be a damning indictment of this Tory Government that they were prepared to coolly ignore 3 million of their own citizens during a pandemic.
Ian Blackford
Well, well, well, Prime Minister—try telling that to the 3 million people who have had no financial support from your Government over the course of the last year. You should be utterly ashamed of the dereliction of responsibility from a Government who are supposed to provide leadership to all their people. So much for putting your arms around all the people of the United Kingdom! Three million people have been ignored and abandoned by a Prime Minister and a Chancellor who could not care less.
The Exchequer Secretary to the Treasury (Kemi Badenoch)
Nonsense—all nonsense.
Ian Blackford
Well, the hon. Lady should listen to those who have not had financial support.
On the BBC on Sunday, the Chancellor said that his Government had reacted “generously and comprehensively”. Chancellor, tell that to the 3 million freelancers and self-employed who have been left behind without a penny. Not a penny, Prime Minister, of support. A quick search of Hansard shows that the 3 million excluded have been raised in the House around a thousand times since last March. Their plight has been ignored by Ministers on 1,000 occasions in the House and it is a disgrace that the Chancellor has chosen to ignore them today.
I acknowledge and welcome the fact that the newly self-employed have now finally been covered by the scheme, but a whole community of people remains ignored and forgotten by the Chancellor. Yes, 600,000 will now be included, but what about the other 2.4 million who have been discarded, written off and ignored by the Chancellor and the Prime Minister?
The Budget’s failure to stand by and support those who have suffered most during the crisis goes to the very heart of the economic choices made. It should have been the Budget that kickstarted a strong, fair and green recovery. That is precisely why the SNP has been calling for a substantial stimulus package—5% of GDP; at least a £98 billion package of investment, which would give us the opportunity to emerge from the pandemic with investment-led growth. That would follow President Biden’s lead and provide a fiscal stimulus that boosted business, protected jobs and stimulated sustained economic growth. Instead, the Budget falls painfully short of that level of ambition. Instead, the Chancellor wants to drag us back to business as usual, back to the same old failed economics of a decade ago.
There is plenty of evidence that Tory austerity cuts are already making a comeback. In November, the UK spending review set out plans to reduce non-covid-related spending by up to £13 billion a year. There is already a public sector pay freeze, including for those key workers who have protected us through the crisis. That is the thanks from this Government.
There has already been a reduction by Westminster in Scotland’s capital budget. The Tory choice to impose austerity is also holding back opportunities to truly build back better beyond the pandemic. A huge number of those opportunities are in the green economy, whether in energy, housing, transport or waste. I acknowledge the £27 million announced for the energy transition zone in Aberdeen, which matches financial commitments that the Scottish Government made in June 2020, but it still falls well short of the wider £62 million energy transition package from Holyrood. Let us not forget that the North sea oil industry has contributed a massive £350 billion to the Exchequer in the last few decades.
The Tories have reneged on promises to support carbon capture schemes in the past, so the Chancellor will forgive oil and gas sector workers in the north-east of Scotland who have developed a healthy scepticism about Tory promises. Chancellor, to really stimulate the green economy, you need finally to reform contract for difference to deliver support for wave and tidal generation and guarantee that Scottish suppliers will be used.
The Chancellor and the Government need to give Ofgem a strategy objective to support the delivery of net zero. Transitioning to net zero is an economic imperative, but it is also a moral imperative. Last week, the United Nations Secretary-General warned that
“2021 is a make or break year to confront the global climate emergency.”
I genuinely say to all hon. Members that COP26 in Glasgow this November offers the chance to unite around an ambitious agenda to tackle the climate crisis.
It is possible for us to look forward to those opportunities only because of the actions of those who have protected us through the last 12 months. Our NHS has been on the frontline in the fight against covid-19. Our workers have been nothing short of heroes with their efforts to save people’s lives and provide care. If we are truly grateful for those efforts, we must secure the financial future of the NHS by introducing long-term investment and rewarding those who work for it. A good start would be matching the Scottish Government’s £500 thank-you payments and making them free from tax and benefit deductions. That also means matching Scotland’s current per head funding for the NHS, which would deliver an extra £35 billion for the NHS in England and £4 billion for NHS Scotland in Barnett consequentials. That, Chancellor, would be a fitting tribute to the institutions and the people who have bravely led us through the worst days of this pandemic.
This is the second Budget delivered by the Chancellor, and it is also very noticeable how little reference he made to Brexit compared with the first. Brexit is now the mess that the Tories and the Labour party dare not speak of, and it is little wonder why. The bad Brexit deal that the Prime Minister forced through the House in the final days of December is already proving more disastrous than predicted, and Scottish businesses, from fishing to farming, are losing millions of pounds every day as a direct result of red tape. This threatens to get worse, with grace periods and some food exports ending in April. Instead of taking responsibility for the Brexit mess they have made, the Tories have washed their hands and walked away.
The same is true for this Budget, which fails even to recognise that the very survival of thousands of food and drink exporters is now at stake. In December, the EU put in place a compensation package for those countries most affected by Brexit. Ireland alone got €1 billion. Chancellor, where in this Budget is a similar compensation package for Scottish businesses that are losing out every single day? Where in this Budget is a guarantee that the so-called shared prosperity fund will match the loss of EU structural funds? Today’s Budget gives no commitment, no clarity and no compensation. It only adds to the ever-growing list of broken Brexit promises.
Of course, the real agenda behind the Brexit betrayal is now emerging. For a year now the Tories have been in panic, privately planning for an independence referendum that they publicly say will not happen. The purpose of the internal market Bill, the Union unit and, now, the so-called levelling-up fund is crystal clear: they are all an attack on devolution.
The Chancellor is undermining our Parliament and centralising resources and decision making at Westminster. It is a naked power grab to bypass the devolved Parliaments and take control of funding in devolved areas. Oh, the irony: take back control. They are taking back control from our Scottish Parliament. That is not only the opinion of the SNP; it is the verdict of the former First Minister of Wales—[Interruption.] We hear Tory MPs representing Scotland chuntering away. They are supporting this power grab against the people of Scotland and, frankly, they should be ashamed of themselves. They are showing themselves up for what they have always been: the anti-Scottish Tory party.
Carwyn Jones said that the failure to apply Barnett to the new levelling-up fund would
“divert money away from Wales, Scotland and NI and give a greater proportion to England.”
Of course, the Prime Minister has form, because he talked about doing that in days gone by.
These attacks on devolution show what is now fundamentally at stake. As I said at the beginning of this speech, post Brexit and post pandemic, Scotland has a choice of two futures. At the heart of that choice is a simple question: who is best placed to lead Scotland’s recovery and build a better future? Is it Westminster Governments we did not vote for or independent Scottish Governments, of whatever party, chosen by us and with Scotland’s best interests at heart?
As we look ahead, we have every confidence in what is possible if we take our future into our own hands. We have the resources. We have the wealth. We have the talent. As an independent country, we can decide how best to use all those resources, all that wealth and all that talent. We will be the decision makers. We will be able to chart our own course and build our own future. The Tories can try to deny democracy all they like, but the inalienable right to self-determination cannot and will not be subject to a Westminster veto. There is no Boris veto on Scottish independence. We keep faith in the right and the power of the people to bring about democratic change. That choice is in the hands of Scotland’s people. It is they, and they alone, who will now decide that future.
Madam Deputy Speaker (Dame Eleanor Laing)
We proceed with a maximum time limit of seven minutes. That does not mean that Members have to take seven minutes; they can take fewer, but no more than seven minutes. I call the Father of the House, Sir Peter Bottomley.
Sir Peter Bottomley (Worthing West) (Con)
It is tempting to say that I will not waste time on the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), but I think I will. He excited us all by the way in which he put down his beaker of water; we were not sure whether it was going to survive his speech, as he got over-excited. We enjoyed what he read, but he did not have time to look at the Office for Budget Responsibility, whose headline reads:
“Budget extends rescue measures, stokes economic recovery, and begins fiscal repair job”.
It continues:
“The economy is set to rebound thanks to rapid vaccine rollout, getting back to its pre-pandemic peak by the middle of next year. Extending rescue measures takes support for households, businesses, and public services to £344 billion. Generous tax incentives for business investment stoke the recovery over the next two years. Then medium-term tax rises and cuts to spending plans all but balance day-to-day spending with revenues and see underlying debt fall relative to national income. But risks remain from the virus, legacy costs for public services, and future interest rates.”
I think that balances what was said by the right hon. Member for Ross, Skye and Lochaber, the leader of the SNP in this House.
I have not had time to read all the Budget documents, but I think I am right in saying that there is no mention of leasehold, commonhold, cladding, cladding loans or ways of coping with the excess property insurance premiums being faced by leaseholders. There has been no attention yet to the Association of Residential Managing Agents, who asked for a scheme to cover the excess costs. With premiums going up by 400% to 600%, action is needed.
May I just interrupt myself to take an opportunity to pay tribute to Canon Jane Sinclair, the first woman rector of St Margaret’s in Parliament Square, who died in January? She was greatly loved in this House. She worked to re-establish the parliamentary links with the Speaker’s Chaplain, and had a reputation for liveliness, humour and effectiveness. I understand that she was once nominated to be the Rotherham businesswoman of the year. We miss her, and send our sympathy to her partner, Gillian Cooper.
Returning to the Budget, I am glad that the Chair of the Treasury Committee, my right hon. Friend the Member for Central Devon (Mel Stride), spoke about the dangers of inflation. The Chancellor will be aware of this. There are two groups who matter a great deal when considering this, besides the question of who can get jobs.
By the way, it would have been kind if the SNP and the Leader of the Opposition had welcomed the news from the Chancellor that the number of people who were out of work did not rise to the levels predicted at the height of the pandemic. This is in part a reflection of Government measures, but in large part because of the way that people buckled down and got on with life as much as they could, and because of the Government’s courage in keeping things such as the construction industry open, which made a great deal of difference to the supply side as well.
Mortgage holders are one group affected by inflation, and the second are the elderly, many of whom are on fixed incomes. Although their incomes during the pandemic may have kept up, in real terms they will drop if inflation returns, so I hope that we do not get to the 2% inflation that is part of the Government’s instructions to the Bank of England.
Let me turn to leaseholders. I believe that, under the coronavirus powers, the Government should put a temporary stop to forfeiture of residential leaseholds. During that time, they ought to make sure that any substitute arrangements do not let the landlord—or freeholder, as it may be—take the whole of the equity in a forfeited lease.
That is scandalous. It is going back to William I in the worst possible feudal way. If a home or a leasehold has to be repossessed, any excess equity should and must in justice go to the person who is losing their home. I hope that officials will take note of that, discuss it among the Government and take action.
As the right hon. Member for Ross, Skye and Lochaber said, we all recognise that the Government have done more to bring some of the self-employed into the support schemes, but it is not enough. I do not want to use all my time reading out all the points made on the website of ExcludedUK, but I do recommend that website to people.
In the same way, in the hospitality sector, I commend the website of CAMRA, the Campaign for Real Ale, which asked for a number of things that the Chancellor has given in whole or in part, and we are grateful to him for that.
I know that motorists will be grateful for the fact that, with the cost of petrol and diesel going up, the Chancellor is not adding to that with extra taxation at the moment. As someone who drinks—I try not to do it when I am driving—my prediction is that the revenues from spirits, wine and beer are likely to go up. I believe that freezing duty rates is therefore a better way to get in extra revenue.
We ought to pay attention to what the tax rate is as well as what the tax take is. This is one of the curiosities of our national economic discussion. My former supervisor Professor Sir James Mirrlees—I was his worst pupil—did a calculation of what he thought the appropriate tax rate was: when he was young, he thought it was around 27%; by the time he got older, he had become a bit more socialist and thought it was around 33%. We are now running at 38%. Both the level of taxation and the rate of taxation deserve better public discussion, and I hope that the Chancellor can encourage forums for doing that.
One of my constituents suggested that the Chancellor should consider having separate tax codes for different key workers, as a way of recognising their contribution. I said, “You will always have a boundary problem, but then you always have a boundary problem, whatever you do in life.”
On one particular matter, my constituents have been my eyes and ears. A couple who ran a hospitality business on a river had to pay high fees to the Environment Agency for the ability to run their business. They do not pay business rates, but the Environment Agency and the Department for Environment, Food and Rural Affairs have not yet managed to discover who can say that they can have a rebate on the licence fees because they have not been able to use their business for most of the past 12 months. Just because someone does not have a shop front, that does not mean that there are not costs that could be waived by the Government or by Government agencies.
I know that many people want to speak in this debate, so I shall finish by making the point that if we can recognise the contributions that people are making in their enterprises, we are more likely to have a hospitality sector in particular in which landladies and landlords, who have put their hearts into their businesses and broken their hearts by throwing away stocks and gallons of beer twice in the past 12 months, will be able to come back into operation. I ask all my constituents not to have a drink on me but to go out and have a drink, whether alcoholic or not, with their friends when they can and put this country back on its feet in respect of our social lives as well as our business lives.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I welcome parts of this Budget because if it works, it will prop up the system for a bit longer, but I am worried that we have seen announcements about the extension of furlough, for example, at a point at which many workers will have already been hit by decisions taken by employers who were worried that such an announcement would not be made today.
The country is crying out for change. It is in debt and there is an uncertain future for many individuals and businesses. Brexit, which I do not think I heard mentioned in the Chancellor’s speech, is hitting businesses and individual consumers very hard and proving costly to the economy, certainly in the short term. The bit that was missing from the Budget is the vision for a country that should be supporting people into decent, affordable homes; that should be properly tackling net zero, on which I will touch in more detail; and that should have a plan for social care, the sector that was abandoned in the early stages of covid.
We should also be tackling the challenging issues in respect of different employment statuses that have caused so much difficulty for so many. In my constituency is represented everything from zero-hours contracts to IR35, self-employment, people employed for tax purposes and people on short-term contracts. Covid has had different impacts on different groups of people.
The Chancellor said he will do whatever it takes but, structurally, the inequalities remain. The poorest get a welcome prop-up with the extension of the uplift to universal credit, but only to September. I am not sure that I can see—I am sure the Chancellor would agree that he does not have a crystal ball—what will suddenly change in September that will mean that people do not need the extra £20 a week.
Structurally, there are real issues. A few figures have been announced today on green initiatives—I have not had a chance to go through the detail in the Red Book—but there is no clear plan. We have targets on net zero and other environmental targets, including on things such as electric or net zero cars, yet there are not enough milestones along the way to the targets, which are coming upon us really fast. I will look in detail at the little bits of money announced today, as my Committee, the Public Accounts Committee, is examining issues relating to the green economy in a series of inquiries.
I welcome the fact that there is finally a bit more support for some of the self-employed people in my constituency—we need to see the detail on that—but it is a whole year late. Like many Members, I have constituents who have lived for a year without a penny of income and did not qualify for universal credit, and sometimes they were in exactly the same position as somebody else who lost their job only a day later. Lives have been put on hold and future plans shredded, and there is no prospect of work for many people in many sectors for many months.
I welcome investment in Her Majesty’s Revenue and Customs and the Department for Work and Pensions to look at fraud and error. These are small amounts. But it was this very Government who pushed bounce back loans through, as the National Audit Office has said, with very little regard to risk. A slight delay of 24 or 48 hours would have put less risk on the taxpayer for the guarantee on those loans. With regard to some of the furlough schemes, at the early stages it was right to get this out the door, as my Committee has acknowledged, but later, more safety mechanisms could have been put in place. That money is good money chasing bad, in many respects. The risk appetite was high.
Mr David Davis (Haltemprice and Howden) (Con)
The hon. Lady mentions the risk in bounce back loans. Her Committee—our Committee—has done sterling service over the years on the whole question of tax evasion and the investigation of that. Does she have anything to say to the Chancellor about that, because it is a very large, lucrative area that the Government could pay attention to?
Meg Hillier
I have hopes for some of the £100 million that HMRC has been given. In fact, having scanned the Red Book, I see that other money is being added to HMRC. As a Committee—as the right hon. Gentleman, a former Chair of the Committee, will know—we are very keen for HMRC to get money because with every £1 it gets for compliance it brings back a lot more to the Exchequer. We need to look closely at this because there is a challenge in the tax system—for example, as regards high street businesses versus online businesses. It is a complex matter and no one should imagine that there is a simple solution; I know he does not think it is simple. It is something we need to continue to engage with.
On housing, once again we have seen a focus on fuelling demand, not increasing supply. The Chancellor seems to have got off the hook on leasehold issues for constituents of mine, and those around the country, who had dangerous cladding by taking the announcement from the Ministry of Housing, Communities and Local Government last week as though that is the matter closed.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My hon. Friend makes a powerful point about leaseholders, as did the Father of the House, and she knows that many are affected in my constituency. Does she agree that it is absolutely crucial that we get clarity from the Chancellor as soon as possible about the consequentials for Wales—he talked about funding across the Union—of those announcements? There needs to be work with the Welsh Housing Minister to sort out the issues around the levy and the tax that have been proposed that are supposed to fund dealing with these fire and building safety issues. It is absolutely urgent that that is done as soon as possible.
Meg Hillier
I completely agree: it is absolutely urgent for the people living in those homes whose lives are on hold, but it is also important for the Exchequer. If the Chancellor’s announcements do fuel demand for buying housing, that is stymied by the fact that so many people are stuck in homes that are unsaleable and worth nothing, so they are mortgage prisoners. The whole supply system is not working and the demand system is being fuelled in the wrong direction. We have seen homes in my constituency that were being sold at just below the last threshold for this.
My Committee has looked at the Government’s housing policies over many years now. One million new homes in England were promised between 2015 and 2020 and 500,000 more by the end of 2022. Even taking into account the pandemic, we saw, for example, the starter homes project fail completely after nearly £200 million was spent on land remediation alone, with £2.3 billion in total set aside for that in the 2015 spending review. Yet this did not happen because the Government did not even manage to enact the secondary legislation necessary to get it off the ground. Five years later, they finally announced that it was the end of the starter homes project and introduced First Homes, a discount for first-time buyers, and now we are seeing a loan guarantee on 95% mortgages. It is a very muddled policy. I cannot yet see who will benefit, and we will be looking at this in detail.
On net zero and the environment, the Government are setting big targets, but our detailed work in the Public Accounts Committee raises many concerns. This is on top of failures on the green deal, the privatisation of the green investment bank, three competitions for carbon capture and storage—one more was recently announced, but so far the first three have failed—and real inertia on developing proper, long-term commitments to really tackling climate change.
Meg Hillier
I will not give way as I have already taken two interventions.
It is easy to make announcements; it is much harder to get the system to deliver on them. There is a will in this House, I think, to deliver on this, but the Government have to stop making cheap headlines.
On jobs, only one in 100 young people aged 16 to 24 is benefiting from kickstart. Again, it is a nice headline, but unless it delivers for our constituents, it is not working. We need to act now on making sure that further education is properly funded so that it can plan ahead as, hopefully, we come out of lockdown and into more normal life, and make sure that people are able to be reskilled.
Finally, I welcome the movement—as far as I have read the detail, which is not in full yet—on visas for tech entrepreneurs. This has been a brake on progress in Shoreditch in my constituency. However, we have young people in this country who were brought up in the UK, for whom it is their home and the only country they know, and they are struggling to buy citizenship at over £1,000 apiece, because families cannot afford it. They may pay for citizenship for the main householder, but not for the family. This is something that I feel is viscerally unjust. We have these talented people in our communities, in our constituencies, in our country, who are essentially British but priced out of citizenship. So if we are going to have visas for tech entrepreneurs at an easy rate, why not do that for the young people already in our country who are willing, able and capable of contributing?
Sajid Javid (Bromsgrove) (Con)
Over the course of the past year in countries not too dissimilar to our own, people have been asked to choose between protecting their livelihoods and protecting their lives. That has not been the case in our country, and for that we have my right hon. Friend the Chancellor to thank. He said, right at the very start of this pandemic, that he would do whatever it takes to protect jobs, to protect businesses and to protect public health, and he has delivered on every count, and this nation has rightly given him its gratitude.
Despite his success, the Chancellor will be in no mood for a victory lap. Comprehensive support, as he has said today, has come at unprecedented pressure on our public finances. To date, as we have heard, the Government have already spent more than £300 billion, every penny of that borrowed. While low interest rates have certainly helped, we cannot expect such a benign lending environment to last forever. With national debt already close to national output, as we have heard, just a 1% rise in gilts would mean an additional yearly cost in debt servicing of £25 billion by 2024. That is more than half of the annual defence budget. Indeed, we are already seeing rising pressure, especially because of rising global inflation expectations, so we cannot allow the inflation tiger to prowl unchecked.
The faster our economy can bounce back, the easier it will be to manage our debt in the future. Thankfully, I believe that our prospects for a sharp, strong recovery look very promising. Thanks to the Government support, the vast majority of businesses are ready for the shutters of the economy to be lifted. The Bank of England has shored up confidence with monetary easing. Households are sitting on some £100 billion of excess savings and, unlike in wartime recessions, there has been no physical destruction of capital. Above all, the Government are delivering on their vaccination programme—a programme that is the envy of Europe and that will lead this continent out of the lockdown. For these reasons, I am very optimistic about the recovery, and I think it will happen rapidly.
Andrew Griffith (Arundel and South Downs) (Con)
My right hon. Friend was of course part of the legacy that has put us in a strong position to make the support packages of my right hon. Friend the Chancellor. Does he agree with me that small businesses are the absolute lifeblood of our recovery, and that my right hon. Friend the Chancellor has brought forward, in the Help to Grow package today, two really insightful schemes that will support the nation’s smallest businesses?
Sajid Javid
I thank my hon. Friend for his comments, and I very much agree with that. I think there are actually more than two schemes, if we are honest. There are a number of schemes that will help businesses, not least the speed and the scale of the recovery that I have talked of. I especially welcome those measures, but also the super deduction and the support through grants for businesses.
In the medium term, we will put our country back on to a firmer financial footing by tackling some of the systemic issues that were around long before this pandemic hit, such as low productivity and regional inequality. That is why I also welcome the Chancellor’s emphasis on infrastructure investment. Not only will this provide an immediate increase in economic activity, but it will drive long-term productivity improvements and will make sure that growth is even better distributed across the entire United Kingdom.
However, I would urge the Chancellor not to take his eye off delivery. Successive Governments have had a poor history of delivering infrastructure projects on time and on budget. I therefore hope my right hon. Friend will consider complementing his very welcome changes to the Green Book and the new national infrastructure investment bank with a comprehensive cross-government delivery strategy.
While grants and support schemes have been consumed by our generation, they will be paid for by the next. That is why the Chancellor was absolutely right to level with the British people and to set out so candidly the pressure on the nation’s finances. While slamming the brakes on spending now would be self-defeating, the Government should be drawing up medium to long-term plans to manage debt. That is why I welcome many of the initiatives the Chancellor set out today, including his commitment to try to avoid borrowing for day-to-day spending. That commitment starts with new fiscal rules. The Chancellor should ensure that those rules are in place by year end, ideally alongside the next Budget and the comprehensive spending review. Having run four spending Departments and the Treasury, I am left in no doubt that a fiscal anchor is essential to control spending and to control debt.
Lastly, in the long term, putting the country back on a firm financial footing means that we need to build resilience against future disasters, as the Chancellor recognised in his Budget speech. Of course, not every disaster is a black swan and it would be foolish to prepare for crises we cannot foresee while we ignore those that we can. In terms of their potential impact on the future economy, few crises are more existential than climate change and declining biodiversity. That is why, as Chancellor, I set Professor Dasgupta very ambitious terms for his independent review on the economics of biodiversity. It makes clear that biodiversity is declining faster than at any other time in human history. If we continue to undermine the resilience of the natural world, we will introduce new sources of serious financial uncertainty, not least the increased spread of infectious diseases. While of course it will take time for the Treasury to digest Professor Dasgupta’s review, the Treasury should make a start on one of his most central recommendations: the need to recognise the value of the natural world in our national accounts. I urge the Chancellor to formally ask the UK Statistics Authority to review how that might be done. The Office for National Statistics is one of the most widely respected economic institutions in the world. If it can lead by example, it can make such a difference in trying to persuade other countries and financial institutions to do the same. We can lead on this, not least because of our chairmanship of the G7 and the COP26 conference this year.
This has been a long hard winter and we have all been hibernating for many months, but, as case rates fall and the vaccination programme continues at pace, the frost has begun to thaw and we are beginning to see the first signs of spring. The Government have been given a precious opportunity not just to resurrect our economy but to reinvigorate our entire country. I am in no doubt that the Chancellor will rise to the occasion with the energy that this moment requires and the sense of purpose that history demands. I am pleased to say that his Budget is the first step to doing just that.
Jeremy Corbyn (Islington North) (Ind) [V]
I am delighted to be able to speak in this Budget debate, but sadly this Budget does not reflect the reality of people’s lives. Just this morning I have come from a local food bank where people were queuing up to try to get enough food to get by. They are people who thought they would always be okay and have enough money to live on, but they do not and they therefore rely on food banks. To the tens of thousands of people who have volunteered in mutual aid groups all over the country, I think we should say a huge thank you. They have contributed, in a way that the Government have not, to the lives of so many people who would be in such great difficulty if those food banks were not there.
The Chancellor talks about extending the furlough scheme and protecting people on those wages. I point out to him that the scheme includes no floor and that 80% of minimum wage is a lot less than the money people need to live on. It was my right hon. Friend the Member for Hayes and Harlington (John McDonnell) who proposed a year ago that we should have a furlough scheme. He sent substantial papers to the Treasury in order to bring that about. Sadly, I do not believe that the Chancellor read all of them.
The scheme proposed by my right hon. Friend would have guaranteed everybody’s income and jobs, it would have had a floor, and it would have gone on to protect people’s conditions and wages, as well as those of people in all aspects of self-employment, including in the artistic sector. There are many people in work at the moment who are being threatened with fire and rehire, and there are companies trying to dismiss the whole workforce and rehire them on lower wages and with worse working conditions. British Gas and British Airways tried it on, and so many other companies are trying to do the same thing. Where is the protection for people’s living standards and jobs in this Budget? Sadly, it is desperately missing.
On public sector pay, many are going to be hit by the pay freeze and by a stealth income tax rise through the freezing of the tax allowance. I remind the Chancellor that a previous Government—a Labour Government in the 1970s—came a cropper on that one when the Rooker-Wise amendment was passed to prevent the Chancellor from the freezing the tax-free allowance.
Millions of public sector workers have contributed so much to dealing with the covid pandemic. Those working in our national health service, our care services and our local government have made super-human efforts to try to help people get through a desperate time, helping people through the mental health crisis and so much else. Their reward is going to be frozen pay and, for those working in local government, a continued underfunding of local government services.
For pretty well everyone across the country, there will be a 5% rise in council tax, as local councils desperately try to balance the books and deal with the increased demands on their services because of the covid pandemic. I hope that the Chancellor will recognise that we need a proper funding formula for local services across the country, and not just claps for the NHS, the care service and delivery workers, but actual pay increases to recognise the massive contribution that they are making to our society.
The Budget said a great deal about corporation tax and other business taxes, but it did not say very much about tax evasion or tax avoidance. From the Government’s statements, they propose to raise around £2.2 billion between now and 2025—in the next four years—from tax avoidance and tax evasion, yet the real figure is that something over £30 billion a year is lost to our public services through tax avoidance and tax evasion. If the Government were serious, they would have included measures in the Budget to deal with tax avoidance and tax evasion.
I hope, by contrast, that the Government will recognise that not increasing statutory sick pay while at the same time doing nothing about tax evasion and tax avoidance says it all about Tory priorities. Statutory sick pay is £95 per week. The Secretary of State for Health and Social Care himself said he could not live on that; I do not think that any Member would want to try to live on that, so why are we expecting anybody else in our society to do so? It has to be increased, and we need a guarantee of at least the £20 rise in universal credit, which at the moment is still a temporary measure.
The Chancellor had obviously read quite a lot of the proposals made by my right hon. Friend the Member for Hayes and Harlington before the last election, in which he pointed out that he wanted to move jobs to the north and ensure that the increase in public spending that we were proposing would help people across the north. The Chancellor made a big deal of about 750 jobs going to Darlington. Sadly, all that is cancelled out by the huge number of job losses in transport authorities across the north of England, particularly in Greater Manchester and Merseyside City Region. That is because the Government have not provided them with the funding package to support transport systems that they have in London and other places. This degree of unfairness between the north and the south will continue, and the degree of unfairness between the richest and poorest in our society will increase under this Budget.
Towards the end of his speech, the Chancellor managed to provide a great deal of greenwash for his proposals. Of course, we all support a green industrial revolution. It was central to Labour’s manifesto at the last election, but where is the commitment to net zero emissions by 2030? Where is the commitment on protection of biodiversity to protect us all for the future? This Budget is such a lost opportunity. At the end of it, our society will be more divided than it is at the present time, there will be greater stress and uncertainty in so many people’s lives because of this Budget. We can, should and must do much better than this.
Sajid Javid
On a point of order, Madam Deputy Speaker. At the start of my contribution, I should have reminded the House of my entries in the Register of Members’ Financial Interests. I hope that I can put that on the record now.
Madam Deputy Speaker (Dame Eleanor Laing)
I thank the right hon. Gentleman for his point of order. It is essential that he should have drawn the House’s attention to that, and he has done so in an almost timely fashion. I thank him for it.
Katherine Fletcher (South Ribble) (Con)
Last year, I asked the Prime Minister, on behalf of the good people of South Ribble, to throw the kitchen sink at supporting the British people through this awful pandemic. Today, this Conservative Chancellor has continued to do just that: kitchen sinks are being thrown. The scale of the financial support that we are offering is massive. We are extending our spending to help people and businesses right through to September and beyond, which is much further than many expected. We are helping businesses to survive with furlough and VAT cuts and supporting them to get back on their feet with restart grants. Costing £407 billion, it is a lot of money to help this country in its time of need.
It was the Conservatives who spoke a decade ago of getting the nation’s finances sorted. We were fixing the roof while the sun was shining. Well, this once-in-a-century global pandemic is the weather equivalent of it raining stair-rods. Cats and dogs have fallen from loaded dark grey clouds on the British people during this pandemic. Businesses have been forced to close, or to work in different ways, to save our lives. Our existential British right to talk a load of nonsense down the pub on a Friday night with friends and strangers has been curtailed, not to mention what has happened to the brilliant people who run these businesses. This Chancellor and Government know what they are doing. We get that we could not have a situation where people lost their jobs or their hard work for businesses just because some bat in China got a nasty cough a couple of years ago. That is not their fault, and this Government have done eye- wateringly massive things quickly to protect people, their families and their work from the consequences of bats and biology.
It is also honest to say that this help has cost us a fortune. This Conservative Government have been fair in protecting people when the awful things happened, but the sums of money required are—wow—massive. It is our money. When I say that it is costing us a fortune, I do mean “us”. It is not Government money or some nebulous concept; it is our money raised by our taxes on our hard work and our business innovation. At some point, we will have to pay this massive support back— not all in one go and not at any price. I commend the Chancellor’s honesty today in setting out two broad themes on how to keep us on an even keel with our money and the nation’s finances.
As individuals, we will have to push back some potential gains to future years, such as freezing salaries, paying a bit more tax, and asking the bigger businesses to contribute a bit more without making us as a country too different from our international peers in the G7. As the Government, we will have to continue to be careful about how we spend our money, but when we do spend money, we should spend it to invest. This statement shows that we will focus on areas that will help us grow our businesses and our communities. We are putting in place the foundations for a future economy to boing back, never mind bounce.
Today’s announcements of investments, super deductions and capital investment plans will boost business investment by enormous sums with world-leading measures. This Government are supporting people to invest to grow their business, creating good jobs across the country. Measures today such as the UK infrastructure bank in Leeds—it is the wrong side of the Pennines, but still amazing—and the levelling up fund will make the UK and Lancashire the best place in the world for innovative businesses to set up and grow. Freeports will help us get our goods to the world, and Help to Grow is brilliant. It will give everyone access to new skills and technologies and boost their businesses, no matter how small they are. I would have run with open arms to these measures when I was running my business.
On a personal note, the people of Leyland want me to thank the Chancellor hugely for the announcement today of the £25 million investment in our town. For too long, Leyland has not seen its fair share of investment. Recently, local businesses, local officials, elected people like me and experts from the Government have been working really hard together in the town board to put a bid together to transform our town centre. I am so chuffed it was successful. Thank you. We cannot wait to get spades in the ground and get started.
It is also important to note that I have the honour in today’s debate of following the right hon. Member for Islington North (Jeremy Corbyn), if only to point out where his crazy spending plans would have put us in the middle of this crisis—in short, a mess. The plans, which the Opposition Front Benchers supported in their manifesto, would have dug a black hole bigger than this pandemic has done in our nation’s finances, which the pandemic would have then deepened. The Labour party is just not being honest or straight with the public when it suggests we can just borrow our way out of this. When Labour Members are a bit vague about what they would actually do to fix this problem, that is because they are not being honest about the consequences of having too much debt for the safety and security of our country.
Not committing to anything and being a bit vague is fine as a political strategy, but it is not the way to do the right thing by the great British people. This Chancellor and this Government are doing the right thing to support us—responsible, grown-up, practical and fair. They are being honest about what we have been facing and are still to face. They are looking to the future and investing for growth in Leyland’s town centre, in Lancashire’s businesses and across the nation. It is what we need to build back better, and I support this Budget wholeheartedly today.
Christine Jardine (Edinburgh West) (LD) [V]
It is an honour to follow the hon. Member for South Ribble (Katherine Fletcher). I think we all appreciate that the Chancellor’s statement today comes at a time when the covid-19 virus has had far-reaching and, in some cases, life-changing and even life-ending consequences for far too many of our constituents. People have seen the well-planned, well-financed future they had built for their families swept away by the virus. Businesses are now on the brink because they followed responsibly the rules laid down by the Government. While there are some steps in the Budget that I am sure will be welcomed, it does not go far enough for the many who have suffered the most, such as those on lower incomes, for whom the freeze on the tax threshold will mean a real- terms loss in their income.
Today, a million small businesses and small-business owners who have been fighting desperately to stay afloat and protect jobs and livelihoods were looking to the Chancellor to extend a lifeline—something to get them through the next few months and out on the other side of this pandemic. While there will be changes to corporation tax in two years’ time, that is two years’ time. What about tomorrow, next week and next month? I am sorry, but what we have heard today falls far short of what those small businesses needed. We need to get shops, tradesmen, hairdressers and florists, who are the backbone of our economy and the heart of our communities, through the next few months and they needed changes now. They have lost income and revenue to pay the rent costs, which are building up, and they are accruing debt.
Five billion pounds for small businesses is not enough. What the Chancellor has announced does not even touch the sides of the problem. What we need, and what Liberal Democrats have been calling for, is a £50 billion recovery fund to help small businesses meet their costs and replace their lost revenue until they are able to trade properly again, until the economy is open—£25 billion over three months, totalling £50 billion. We have seen in Germany that it can succeed.
We have also called on the Chancellor to implement a zero business rates policy for all small businesses in 2021-22. While maintaining the VAT cut for hospitality is essential, we would have liked to see that stay in place until the end of the financial year, not just until September, and not just for hospitality but for all businesses. VAT deferral would allow them to free up capital to invest in their business.
The extensions to furlough, to self-employment support and to the universal credit uplift all needed to go much further. Furlough should be extended for as long as we need it, and all the self-employed and excluded should be brought into it. Too many people who have been left out will remain so after this Budget. There are 3 million people who have had no financial support at all in this crisis, and only 600,000 of them, according to the Chancellor’s own figures, will be helped. The gaps in support all-party parliamentary group gave the Chancellor a plan that would have helped those left out. Why did he not take it?
As for the universal credit uplift, even with it, the UK still has one of the least generous social welfare systems in the OECD, and one that we all know is seriously flawed. The uplift is due to end when unemployment could rise again, as the furlough scheme, which has kept it down, comes to an end. Therefore, when will the Government listen to the voices across the country, and from all political parties, that are calling for pilots and trial schemes of a universal basic income, which would have meant that nobody fell through the cracks during this crisis?
Now we all look to September and wait for the Chancellor’s next batch of patches. I am left today with far too few answers and too many questions. Why is our economic performance so much worse than those of other countries? Why is support for small businesses and the self-employed so little, especially for those so hard hit by Brexit? There is no long-term reform of business rates. Why is there nothing on social care and carers? Why so unambitious on our future green industries? There are no tax incentives for transitioning away from a carbon economy, and there is nothing to replace the green homes grant. But there is a tax hike on the lowest paid, by freezing the threshold next year. Simply mitigating the problems caused by covid will not repair the economy or provide the investment for the growth that we need for recovery.
Small businesses, families and self-employed people up and down this country were watching today, hoping for something to repay their commitment and their sacrifice in fighting this pandemic—a fair response from the Government, not self-congratulations on having done so well. The Chancellor, at the beginning of his statement, promised us a Budget to meet the moment. I am afraid that I do not think he has fulfilled that pledge.
Mr David Davis (Haltemprice and Howden) (Con)
May I start by associating myself with the comments of the Father of the House, my hon. Friend the Member for Worthing West (Sir Peter Bottomley), on ExcludedUK and helping them, and on the leaseholder issue, which also requires help? I also associate myself with those on both sides of the House who have called for the uplift in universal credit to be rendered permanent, which I think in due course will prove sensible.
When I applied to speak in this debate a few days ago, given the headlines in the press I thought that I might be challenging head-on the Chancellor’s strategy, in view of my concern that sudden tax increases would crush any recovery. It is therefore a pleasure today to find that that is not the case, and that I can be much more supportive of my right hon. Friend.
Obviously covid-19 has led to incredibly difficult economic circumstances. The country has suffered the worst peacetime economic shock ever. Indeed, we have the worst outcome in the G7, and the deficit is the worst since 1944—a date that I will come back to—which, in and of itself, is extraordinary. The Chancellor faces quite remarkable economic problems that are worse than any Chancellor has faced in peacetime history, and he has handled it with remarkable sensitivity in the way he has put his policies together. I have a question about one or two, but broadly speaking, he has met this economic challenge of enormous magnitude with great skill.
What do these numbers mean? These billions and trillions that are casually thrown about by supposedly expert commentators are incredibly difficult for ordinary people to understand. In my view, they are best understood when looked at in terms of the impact by household or by wage earner, because that gives a better idea of what they mean. For example, the latest deficit figures published before today were £394 billion a year. That is £14,000 per household—that is the size of the black hole we have to fill. Just looking at the size of the number tells us that no tax policy can solve it. The idea of imposing £14,000 per household of taxes is nonsense; it would be designed to destroy any economic recovery. Only a recovery policy designed to restore the tax base and remove the need for subsidies will close that gap, and I am pleased to see that the Chancellor has essentially adopted that strategy.
The most recent estimate of the debt is well over £2 trillion and may be £3 trillion. Some £2 trillion or thereabouts amounts to £77,000 per household. I remember only a few days ago a BBC commentator talking about paying off the overdraft. I do not have an overdraft of £77,000. This is a big mortgage that is not paid off in one year. To pay off such a debt rapidly would be crippling. Again, the size says it all. It has to be paid off in the very long term—as the Chancellor said, over decades.
Since this is the worst debt and deficit combination since 1944, we should treat it in the same way as they did then: with a 50-year time horizon on the loan—a war loan, if you like. Both the world war one and world war two debts were paid off this century, within the last 20 years, so that gives us an indication of what needs to be done. I have heard a number of people say, “The interest rates might go up.” To a large extent, two things are happening here. Every single country in the world has this issue, and therefore every single Government in the world has an incentive to hold interest rates down, and they now have the mechanisms to do it—they have done it time and again with quantitative easing, even before today.
To close that £14,000 per household deficit, we need to increase growth, increase employment and increase wages. All those things will increase the tax base. The Chancellor said—and I am glad to hear him say it—that his first priority is employment. That is the centre of those aims, and that is exactly right. That requires higher domestic investment to achieve it. It requires higher foreign inward investment to achieve it. It requires higher new company formation and higher research and development, and it will, in turn, generate higher aggregate demand. Tax increases help none of those things.
The issue of tax increases is not a Tory ideological issue; it is about what delivers the recovery. Income tax increases, whether direct or stealthy, reduce aggregate demand; they reduce the amount of money people can spend. Corporation tax increases suppress investment. Capital gains tax increases deter both domestic investment and foreign investment. The one thing I am worried about in this Budget is the proposal to go to 25% corporation tax in a couple of years. That will have precisely the deterrent effect I worry about with respect to inward investment. I am looking at my Northern Irish friend the right hon. Member for East Antrim (Sammy Wilson), who is nodding at me, because of course in the Province that is absolutely a central issue for us all. We have to worry about tax increases from that point of view.
I was very pleased to hear the Chancellor’s emphasis on what he called the science superpower strategy, and, as he said, it is not hubristic; we are the country with the highest number of Nobel prizes per capita in the world and should be able to marshal something out of that. We have already had an announcement on setting up our equivalent of the Defense Advanced Research Projects Agency—the Advanced Research and Invention Agency; we have new strategies and new funding for science, and new tech visas. All those things will help as all—the whole kingdom—in improving our growth rate.
What is a growth strategy worth? It is very difficult sometimes, particularly dealing with the Treasury, which is very difficult about dynamic taxation and indeed does not seem to understand it, despite the fact that the British Treasury under Nigel Lawson created the best dynamic tax demonstrator in history.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I am afraid the right hon. Gentleman has come to the end of his time.
Sammy Wilson (East Antrim) (DUP)
First, may I welcome the Budget, and welcome the reminder that the Chancellor gave at the very end of his speech that this Budget, and indeed the actions taken by the Government over the past year, demonstrate the value of the Union? We can look at the details in the Budget paper: in Northern Ireland, over a quarter of a million people are having their wages paid through the furlough scheme; 200,000 self-employed people are having their income supported as a result of the scheme; £1.5 billion in loans has been made available to businesses in Northern Ireland; and the Northern Ireland Executive have benefited by over £3 billion in Barnett consequentials, which has enabled them to put in place bespoke schemes in Northern Ireland. For anyone listening, this debate serves as a good reminder that being part of the fifth largest economy in the world has economic benefits, and they are economic benefits which cannot be replaced through any other arrangement.
The second thing I want to say is that I welcome many of the measures in the Budget. It is a difficult time for the Chancellor to present a Budget, but I am glad that many of the measures that we as a party had written and spoken to him about have been reflected in the Budget. The hospitality industry, which is very important in Northern Ireland, lobbied heavily for the 5% VAT rate to be maintained, and I am glad to see that it is being maintained, albeit not for the whole year. I represent a rural constituency, and many of my constituents were concerned about the impact that an increase in fuel duty would have on the cost of living, so I am glad to see that duty has again been frozen. Many businesses looking at their overheads wanted to ensure that they would not be subjected to rates again; the business rates relief is important for them.
However, there are many challenges as to how we pay off the debt, and the Chancellor was upfront about that. He made it clear that some painful choices would have to be made. The Budget papers illustrate how painful some of those choices will be. For example, by freezing the thresholds for income tax, over the next five years the amount of money taken from people across the United Kingdom in income tax will go up by 25%. Some of that will be as a result of the 3% increase in employment, but much of it will be through a stealth increase. As thresholds are not moved up, there are inflationary increases on wages, and people pay more.
Like the last speaker, the right hon. Member for Haltemprice and Howden (Mr Davis), I am worried about the impact of the corporation tax increases. While the Chancellor has indicated that they will not come in immediately, over the period for which we have figures the corporation tax take will increase by 112%. That will have an impact on investment, although we hope that the allowances that have been granted will ensure that some of the profits will be ploughed back.
Mr David Davis
Is it not a fact that when you put up corporation tax like that, it does not deliver the arithmetic outcome: you actually get less back and it suppresses your business as well?
Sammy Wilson
That is a real worry. We have had promises that we will become the Singapore of Europe. If we are going to become the Singapore of Europe, it is important that we become a most attractive place for investment, and I believe that low corporation taxes are one of the ways of doing that.
I am also concerned about aviation, which is an important industry for Northern Ireland because of our limited links with the rest of the UK and the importance of international links for Northern Ireland, which is an exporting area. There was no specific mention of the aviation industry today, but I note that, even in the midst of the crisis the aviation industry is facing, the take from air passenger duty is going to go up by 50% over the next year, and by 300% over the period of the Budget figures. If the Chancellor is really aware of the difficulties being faced by the aviation industry, he needs to look again at the whole area of air passenger duty and at how we improve connectivity and improve, sustain and support that industry, which has been one of the hardest hit, after hospitality, by the coronavirus restrictions.
A point I want to make in conclusion is that there are opportunities for tax increases that will not actually hurt businesses or individuals in the United Kingdom. As a result of Brexit, we now have the opportunity to tackle those people who have been avoiding taxes wholesale. I am thinking of the Amazons and the Googles, who use the Irish Republic as a place where they can locate and take all their profits to. They load all their costs into GB and the United Kingdom and then avoid our taxes. I believe that there are important opportunities that the Chancellor needs to take. I am disappointed that, even with the announcement of additional inspections for tax fraud, the amount is so small. We do not just need new inspectors; we need new policies, and we should be getting on with that. But all in all, I think that many people in Northern Ireland will recognise this as a good Budget for the Union, a good Budget for individuals and a good Budget for recovery.
Douglas Ross (Moray) (Con)
I want to welcome the Budget on behalf of my constituents in Moray and of people across Scotland. There is a lot of good news in what the Chancellor had to say today. First, however, I want to pick up on a few remarks in the speech made by the leader of the Scottish National party, the right hon. Member for Ross, Skye and Lochaber (Ian Blackford). He accused members of this Government of not understanding what it was like to be poor. That is quite an incredible statement from someone who earned his fortune as an investment banker in the City of London before he rediscovered himself as a humble crofter.
The right hon. Gentleman went on to say that this Budget lacked ambition, but I thought there was ambition weaved throughout the Chancellor’s statement. It has ambition for individuals, families and businesses in the weeks and months ahead, and ambition for our country in the years ahead. If the leader of the SNP at Westminster wanted to see a statement that lacked ambition, he should have looked at Nicola Sturgeon’s statement last week on her partial route map out of lockdown restrictions for Scotland. That was a document and a statement that lacked ambition, hope and clarity and one that we are seeing unravel at the moment as people in Scotland expect more from their Government.
The final point I want to focus on from the right hon. Gentleman’s speech is his comment about how in Scotland there has been an extension to the freeze on business rates for a further year. That is true, but that further freeze, for another 12 months, was made possible and accepted by the SNP Finance Minister only because of an additional £1.1 billion of support from the UK Government to the Scottish Government. Kate Forbes stood up in Holyrood and said that she was able to do this only because of additional support coming from the UK Government to Holyrood, to the Scottish Government, so that is why we have the extension for a full year of business rates in Scotland.
The right hon. Gentleman mentioned that newspapers were also covered. Of course, the SNP had to be forced to include newspapers in the business rates relief. A vote by the Scottish Conservatives in Holyrood, which the SNP was against to begin with, forced a U-turn. I will leave it to others to speculate why the SNP at this time would not want to support the newspaper industry in Scotland.
Throughout the last year, in dealing with this pandemic, the UK Government have delivered unprecedented support for Scottish families and businesses: the furlough scheme and the self-employed income support, protecting 930,000 Scottish jobs; loans to over 90,000 Scottish businesses and an extension of the reduced rate of VAT for hospitality, leisure and tourism; the £20 a week uplift for universal credit to help those in our society who need it most, which is something I have been calling for since October last year; and £9.7 billion of additional funding for Scottish public services. With this Budget, the Chancellor is continuing those vital lifelines, extending furlough and the self-employed income support until September.
Just as this pandemic has gone on longer than any of us could have imagined back in March last year, so, too, has the broad support delivered by the UK Treasury to the people of Scotland. Yet this is not just a Budget to help the Scottish economy to survive the pandemic. It is also a Budget for our recovery, with investments to support the economy in the north-east in its transition towards green energy, an acceleration of the transformative funding for Scottish growth deals to bolster the local economies in Ayrshire, Argyll and Bute, and Falkirk, and a freeze on the fuel duty to back Scottish drivers, which is crucial to our remote and rural areas. Just look at how that contrasts with the SNP Scottish Government lobbying for an increase in fuel duty. It has gone widely unreported that the SNP is calling for an increase. When we look at the options for fuel duty, how will that go down with voters in rural Scotland in a few weeks’ time? And, of course, as the MP for Moray, representing more Scotch whisky distilleries than any other MP in this place, I warmly welcome the freeze on spirits duty. That is hugely important to the distilleries in my constituency and alcohol producers more widely in Scotland and across the UK.
The Budget shows that the UK Government have a plan to rebuild Scotland’s economy after the immediate health crisis is over, to create jobs and opportunity in every part of our country as we pull together to deliver our recovery. The Chancellor said that the majority of these measures apply across the United Kingdom. We have a further £1.2 billion of spending going to the Scottish Government. We need to see the Scottish Government ensuring that that gets to the services and businesses that need it most. On the stamp duty freeze, we now see that holiday continuing in England until September, but in Scotland it has now ended. We need to see action on that in Scotland as well.
Yet SNP Members cannot welcome this plan—they could not support the Budget because they would rather focus on another divisive independence referendum than our recovery from coronavirus. They say that they want to bring this referendum forward at the earliest opportunity, just when people are renewing their ties with friends and families and businesses are beginning to reopen. Their plan would damage not only our Scottish recovery, but that of the whole of the United Kingdom. That is the last thing we need right now. What families and businesses across Scotland want to hear from the Scottish Government is a full route map for ending restrictions, not a route map for separation. As I said earlier, they are looking for certainty and for hope. This Budget has delivered that by extending the vital lifelines that Scottish families and businesses are relying on. It is now time for the Scottish Government to do the same.
The Chancellor has set out an ambitious programme that will not only secure the survival of many jobs and businesses in Scotland, but provide the basis for our economic recovery in the future. There was just one point that I agreed with the leader of the SNP on. He said that Scotland has a choice of two futures—we do. In the coming Scottish Parliament election, voters will decide whether they want the focus of all the politicians and all the parties within the Scottish Parliament to be on another independence referendum or on rebuilding Scotland from coronavirus. Let us not choose more damaging division. Let us instead rebuild Scotland and the whole of the UK together. Today’s Budget will help us do that.
Madam Deputy Speaker (Dame Rosie Winterton)
We now go via video link to Seema Malhotra, after which the time limit will go down to five minutes.
Seema Malhotra (Feltham and Heston) (Lab/Co-op) [V]
Thank you, Madam Deputy Speaker. The extension of furlough and the maintaining of the universal credit uplift are a relief. Cutting universal credit at this time would have been unthinkable and I thank everyone who joined Labour in making that point. The Chancellor should have announced that sooner. Last-minute changes and U-turns have become the hallmark of this Government, and we now face the worst economic crisis of any major economy.
The Government U-turned last week on the £500 test and trace support payment so that parents who stay at home because their children have to self-isolate are not forced to go without pay or to take annual or unpaid leave. Today, without explanation, the Chancellor has failed to extend the uplift to those on legacy benefits, including many people with disabilities.
The pandemic has exposed a lack of resilience in our economy, in family finances and in our institutions. We have witnessed the struggle of a weakened and poorly equipped NHS and social care system after 10 years of the Conservatives.
Even before the pandemic, a quarter of households had less than £100 in savings. StepChange has said that 1.2 million people now face severe problem debt. That figure has doubled since the beginning of the pandemic. My local food banks are struggling, with stories of children turning up without clean clothes to wear. We need to plan now so that we do not emerge less equal as a society. We saw nothing today that will help with that. There is no pay rise for social care workers; instead, there is a forced rise in council tax.
The increase in the national minimum wage seems to be a U-turn on the 49p an hour promised last March. The increase in apprenticeship incentives comes on the back of widespread criticism of the apprenticeship levy, with millions unspent.
There is a gender impact, too. Before the coronavirus pandemic, women, especially low-paid, disabled and minority ethnic women, were more likely than men to be in debt. Sixty-one per cent. of those getting into debt to purchase everyday necessities are women.
The Chancellor’s speech failed to mention children. Before the pandemic, 4.2 million children were living in poverty—nine in a classroom of 30. Removing the two- child limit and the benefit cap would lift hundreds of thousands of children out of poverty, but the Chancellor chose not to do so.
Half a million people are behind with their rent due to the pandemic. Mortgage prisoners—those trapped with their existing lender on high interest rates—are paying hundreds of thousands of pounds a year extra in mortgage payments to vulture funds and inactive lenders. Forbearance measures are still urgently needed, and a plan to tackle child poverty.
The jobs crisis is hitting the youngest as well as the oldest hardest. Around 600,000 young people are without work, and we risk having a lost generation. Even before the pandemic, there were around 800,000 people aged 50 to 64 not in work who wanted to be. We need a plan for employment to match the scale of the crisis. It is therefore inexplicable that, at the height of the pandemic, work coach hiring almost stopped, with fewer than 15 work coaches hired from April to June, as case loads more than doubled to over 280 people per work coach last summer.
The Chancellor’s kickstart scheme has been more of a false start, with only 2,000 placements to date, and Restart has not started at all. That is why we need Labour’s new jobs promise to guarantee young people aged 16 to 24 who have been unemployed for over six months a training or jobs placement, and to extend the same guarantee to those aged over 24 who have been unemployed for more than 12 months.
We need investment and green growth across every region and nation of the UK. As we recover from the pandemic, we must invest at speed for growth. A jobs recovery needs a green recovery. “Labour’s Green Economic Recovery” report would have been a good read for the Chancellor, with plans to spread job creation across the country, including 400,000 green jobs, with many for young people. Just as Britain led the world in the first industrial revolution, swift and targeted Government investment and co-ordination with the private and voluntary sectors is needed to stimulate the economy and jobs now.
On good jobs, the Mayor of London’s new good work standard represents the kind of thinking we need to tackle the scourge of low-paid, insecure work, along with flexible recruitment and workplace wellbeing plans. We should invest in community-led co-ops, and the employment Bill should come before Parliament.
On aviation, we urgently need a better sector-specific deal, to support jobs, to help airports, airlines and those in the wider supply chain—the ground handlers, caterers and other businesses —critical for aviation and for our economy and trade. Employment in aviation communities like Feltham and Heston has been hit very hard and needs much stronger leadership from the Government right now. We should lead the way in the world on zero-carbon aviation, but this means accelerating R&D investment to support innovation in the future of green transportation and logistics, and for new technologies to be contributing to greater productivity for businesses in our supply chains.
Today’s Budget needed to put in place the strong foundations to support businesses and to give security to all our families, building a base for resilience, a competitive future and shared prosperity for all. Sadly, it fell far short.
Madam Deputy Speaker (Dame Rosie Winterton)
As we are having some trouble getting to Simon Fell, I call Colum Eastwood.
Colum Eastwood (Foyle) (SDLP)
Thank you, Madam Deputy Speaker—and thank you to Simon.
I have to say that I was interested listening to the right hon. Member for East Antrim (Sammy Wilson) talk about the value of the Union as if no other country in the world was investing in businesses and people at this very difficult time. Of course they are doing it in the Republic of Ireland in a very generous way as well. I know he is no longer in his place, but I have heard a proposal, for after a new Ireland comes into place, for a statue to be erected to him for all the work he is doing to encourage the people of Northern Ireland to vote for a very different constitutional future. I look forward to cutting the ribbon on it, and maybe Sammy will join us.
I found it interesting to hear the Chancellor speaking earlier about whatever it takes, and taking lots of credit for the necessary and essential furlough scheme. I do not know if anyone else can, but I can remember him being dragged, kicking and screaming almost, to extend the furlough scheme at Halloween. That left businesses confused and not knowing what they were going to do, and people lost their jobs as a result of it. It is good, of course, that it has been extended, but there should never have been any doubt about that in my view.
I also note very little mention of the B-word: Brexit was hardly talked about in the Chancellor’s speech. I wonder if that is because the OBR has said today that there will be a reduction of 0.5% in GDP in the first quarter alone because of Brexit. Many people, myself included, warned of the impact of Brexit. That was not heard, and pretending that the sunny uplands are coming as a result of Brexit is just beginning to be proven wrong with every passing week. There is that, plus the millions—millions—of pounds of funding from the European Union that is being stripped from the people of Northern Ireland and not replaced at all; not one penny replaced by this Government. It just shows us where this Government’s priorities lie when they relax the rules for the City of London and strip the people of Northern Ireland of unreplaced funds.
We have heard, and I think this will be proven to be fairly empty, a lot of talk about levelling up for the north of England, but where is the levelling up for the north of Ireland? We know that the protocol, despite what some people want to allege, is a benefit to us, as a result of a very hard Brexit, because it allows our businesses to trade into the British market and into the European market unencumbered. That is a competitive advantage that nowhere else on these islands has. Where is the effort to maximise that competitive advantage? Where are the investment hubs, with incentives in places like Derry, which has been stripped and starved of funding from Governments and is at the worst end of all the economic league tables? Where is the support to maximise that benefit and to sell the benefits of the protocol around the world, instead of listening to some of the nonsense we have heard from some of my colleagues about how damaging the protocol is? It is just not the case.
I also note that there is nothing in the Budget on the skills gap in Northern Ireland. We send thousands upon thousands of people away from our shores to study elsewhere, and they do not come back. That strips our communities, our families and our economy of very highly skilled people.
I am not somebody who would normally support low corporation tax, but the fact of the matter is that in Donegal, just across the border, corporation tax is 12.5%. In Derry, a mile away, it will soon be 25%. We take advantage of the protocol, and then we harm it by having a corporation tax double that just across the border. We know that small retailers are on their knees, and there is no mention of a windfall tax on Amazon, which is making an absolute fortune at the expense of those retailers.
The Chancellor says that the NHS is deserving of immense praise. The people in it do not want his praise; they want more money. They want more money in their pockets and they want more money in the system. In Northern Ireland, our population is 30 times smaller than England’s, but our waiting lists are 100 times longer. Where is the investment in our health service to get us through covid and to begin to allow people to get proper access to the health service they deserve? The Northern Ireland Executive have announced a £500 million thank you payment for those workers. Waive the taxes on it and allow them to keep the money for themselves.
Simon Fell (Barrow and Furness) (Con) [V]
Thank you for coming back to me, Madam Deputy Speaker. I hope my internet holds up now.
It is incredible to think that the Budget last year did not even contain the word “furlough.” Twelve months ago, the focus was on levelling up. Now, quite rightly, it is on recovery and how that recovery can drive growth in communities like mine across the country. The scale of Government support is simply staggering: £65 billion in this Budget alone, and close to £407 billion in total. All of us in this place have perhaps become too used to the idea that, if we make the right case, financial support will flow from the Treasury.
Of course, in these challenging times, it is not difficult to find people and organisations who are worthy of support, and that is why I believe this is a truly bold Budget. My right hon. Friend the Chancellor is being honest with the British people about the difficult decisions that lie ahead, while maintaining a clear focus on supporting people through covid and on jobs and growth as we move to recovery.
I hold my hand up and acknowledge that I have been one of those asking, Oliver-like, for a little bit more, please, sir. This has no doubt been wearing at times, and I thank my right hon. Friend and his fantastic Treasury team for being open to colleagues with ideas, and for listening with good grace to those of us with our bowls out. It is that spirit of generosity that rings through this Budget: extending furlough through to the end of September, and ensuring that a further 600,000 self-employed people get support as access to grants is widened. This is the response of a Chancellor and a Treasury team who understand what a lifeline these schemes are and how crucial they will be to recovery and to retaining jobs as we emerge from this pandemic.
Similarly, the extension of the universal credit uplift is very welcome. The uplift has helped so many people through the extreme challenges of this pandemic. Its continuation is not cheap, but for the many people who have been pushed into the category of just about managing in this crisis, it is a lifeline. This hand-up to those who need it is yet another policy compassionately delivered in the face of incredibly challenging circumstances.
Taken together, these measures will protect livelihoods across the UK and provide peace of mind and the ability for firms and families to catch their breath as we leave lockdown.
A person walking down Dalton Road in Barrow cannot get away from the visible signs that our high street is struggling. My local business owners campaigned hard to gain support. They very much want to be part of the recovery, and I am delighted that my right hon. Friend has recognised the important role they have to play. The combination of generous restart grants for retail businesses and greater support still for hospitality and leisure, which have been particularly hard hit by coronavirus restrictions, is very welcome.
If we in Cumbria want to boost tourism, we need our pubs, bars and restaurants to weather this storm. Restart grants, extending the VAT cut and a freeze in alcohol duty will make all the difference. The 100% business rates holiday last year provided a safety net for so many. Seeing that continue, with the vast majority of businesses receiving a 75% cut next year, will help our high streets play the part they want to play in this recovery.
I was elected to represent a community that felt left behind and felt that it had not seen investment for decades. In the past year alone we have seen the corner turned, with £25 million awarded for the town deal and a bypass funded at Grizebeck. I am incredibly grateful to colleagues in the Treasury and across the Government for enabling that.
I am delighted that there is even more in the Budget for Barrow and Furness and communities like mine. The £150,000 of levelling-up capacity funding for Barrow will enable my local council to put forward a good bid for the levelling-up fund, and winning that will make a tangible difference to our town.
Similarly, the £20,000 community renewal fund granted to Barrow will help us to pilot new approaches to tackle some of the most difficult issues that we face, supporting new approaches to tackling poverty and reinforcing our community as a place where people want to live, work and visit.
The huge capital allowance bonus for manufacturing is an incredible boon for the north and will allow us to unlock some of the latent investment that we know is out there for communities like ours with strong manufacturing bases in everything from defence to subsea and with everything from world-class LED lighting firms to global exporters.
This is a remarkable Budget for the north and for the whole of the UK. I am grateful to my right hon. Friend the Chancellor, not only for his honesty about the scale of the challenge that we face but for his determination to support people and businesses through this storm.
Mr Tobias Ellwood (Bournemouth East) (Con)
It certainly has been a year like no other, and when we look back at this point we will of course reflect on the direct consequences of the pandemic—the impact on livelihoods and the loss of life—and the incredible efforts of the NHS, the military and indeed volunteers in getting us through it. We will also look to see how responsible we were in supporting and protecting jobs, businesses and skillsets, carefully anesthetising so much of our economic activity so that it could be revived once it was safe to do so.
With plans to gradually ease lockdown about to start, the Budget has two simple objectives: first, short-term fiscal support that will assist our workforce until June, when the lifting of any final covid restrictions will take place; and secondly, the introduction of responsible measures designed to begin to rebalance the books after a year of record borrowing.
I very much welcome the Chancellor’s announcement of further economic support relating to the pandemic—for example, the extension of the furlough scheme, the continuation of the business rates holiday, the extension of the VAT cut and the freeze on alcohol duties. All will be appreciated in my constituency of Bournemouth East, where tourism and hospitality are critical. There are calls from people who want to see the easing of lockdown move faster, but no general would commit to a date—beyond the aspirational—to achieve the next phase of battle until set conditions were met in order to advance. That is exactly what the Prime Minister is doing now.
Let me turn to the longer-term measures that the Chancellor has announced, some of which have been criticised in relation to the manifesto commitment not to touch the big taxes—income tax, national insurance and VAT—but that commitment was made before this once-in-a-century event. We would be storing up problems for the future if we did not take initial steps to deal with the scale of borrowing that is currently taking place.
We are just starting to lift our heads above the parapet in relation to this pandemic—to think that we can go beyond survival and repair and about what post-covid Britain will look like—so I very much welcome the initiatives in the Budget on national infrastructure programmes, green investment and support for veterans’ mental health. The digital roll-out is also important for services, as digital is taking over from roads and rail in linking businesses together.
I thank the Chancellor for the £21 billion of town deal investment to help regeneration in Boscombe in the core part of my constituency. The council and I have been lobbying on that for a number of months, so we are very grateful.
I mentioned digital, and I do not apologise for raising what has been referred to as the Rockefeller question. Of course, J. D. Rockefeller was the owner of Standard Oil, the company that dominated the oil market in the 1920s. It took the will of President Theodore Roosevelt, the one person more powerful than Rockefeller, to see Standard Oil’s monopoly challenged and subsequently dismantled. I am glad to see the Financial Secretary to the Treasury in his place. We have seen a clash between Google and the Australian Government. With the likes of Google, Facebook and so forth dominating the digital world, and now earning 80% of the advertising market, there are big questions as to how personal data is harvested, how fairer competition is supported, and—pertinent to today—the levels of taxation that are paid. I hope that this can perhaps be raised at the G7 discussions this year.
My final point is in relation to China and the scale of the impact that this economic powerhouse is having on areas of interest that we have across the world. It is a superpower, and there is a geopolitical challenge in the long term as it ensnares many countries in trade deals, and infrastructure and security programmes, that they can ill afford. This is in direct challenge to the very areas that we want to do business with. Again, that is something for the G7 to discuss.
We must recognise that, as we come out of the pandemic, the world is looking very different from when we went in. Our economic security depends on our national security and vice versa. I hope that the forthcoming integrated view will give clarity as to what global Britain means. We have become a little risk-averse in the past few years when it comes to challenging potential threats at source. I hope that the tough economic decisions taken today will lead us out of this unfair and unprecedented financial shock, and that we can appreciate that we now need to address the unstable international context that we face.
Chris Elmore (Ogmore) (Lab)
Almost exactly a year ago on 28 February, Wales recorded its first case of coronavirus. Covid-19 would go on to turn countless lives, livelihoods and communities upside down. In my Ogmore constituency, many families have faced unimaginable loss in unprecedented circumstances. It has not just been the loss of loved ones, often without being able to say goodbye, or of the precious time with friends and family. There has also been a previously unimaginable scale of financial loss, with small businesses destroyed, seemingly overnight, disappearing jobs, reduced hours and some people—the excluded—simply falling through the gaps in support and receiving nothing, even after their income vanished before their eyes. Of course, I welcome the changes that the Chancellor has announced today to support some of the excluded, but there are still far too many people who are missing out on Government support and who have simply been bypassed again by this Conservative Government.
The emotional scarring of the pandemic will be with us for years to come, and we must do all we can to provide the support for mental health and wellbeing that people need. I am very proud that the Welsh Labour Government have already identified the need for this, and have begun to implement this support as they seek to move Wales forward. But we need to recognise that, alongside the emotional burden, there is also an economic burden; and, as so often during this pandemic, the Chancellor’s plans to tackle it are simply not up to the job.
Figures show that 4,415 people in Ogmore are currently furloughed and 2,705 people are claiming unemployment-related benefits. Months ago, I and my Labour party colleagues called on the Chancellor to end the speculation and uncertainty surrounding the continuation of this support and pledge that he would extend the £20 uplift beyond April. I was proud to do the right thing and vote for the £20 a week uplift to universal credit, as I have seen the difference that it has made in people’s lives across my constituency. While Labour was taking action, the UK Government decided to sit on their hands and pretend that no vote was going on. It will come as no surprise that I find it appalling that I have heard Conservative MPs today saying how important the uplift is, when they chose to pretend that there was no vote going on just a few months ago. They are now praising the uplift as if the Chancellor has ridden in on his white steed and rescued those people who receive universal credit.
The Chancellor could have stopped this speculation many months ago. Even this Sunday, he was asked by the press if he would end this cliff-edge approach to people’s incomes, but again he refused to relieve the anxiety that surrounds families’ household budgets. I am pleased that the Chancellor has finally listened and followed Labour’s lead, but I have to ask: why on earth has it taken him this long to make the decision? Has he perhaps been waiting for a new graphic for his social media? Does his Instagram account take some time to change these things? Meanwhile, families across my constituency have been living with this uncertainty, and it simply is not acceptable.
The difference between the Chancellor’s reluctance to extend the support, and the actions of a Welsh Labour Government straining every sinew to support Welsh families, is glaring. From the get-go, Welsh Labour ensured that the full force of our Government was used to support families, businesses and jobs, be that through: the barriers grant, giving up to £2,000 towards the essential costs of starting up a business; the restrictions business fund, giving businesses grants of between £6,000 and £10,000; or releasing £117 million, through rate relief for premises over £500,000, back into the economy. Welsh Labour has targeted everything towards protecting jobs in our communities.
This Budget is about not just tackling the challenges of the present, but laying the foundations for the future. The Welsh Labour Government understand that and have done that in their work every day over the last 10 years of continuous budget cuts. The Minister and the Chancellor have spent the past 10 years cutting, cutting and cutting the essential foundations of the economy; how do they expect now, with very little planning or ideas, to progress and build an economy back for the future? With such limited expectations and hopes for growth, the Budget is hardly the inspiring one that was being briefed daily for weeks before today.
The scale of the challenge we face as we seek to rebuild after this dreadful pandemic is immense. Our Welsh Labour Government recognise that, and have set out the bold and visionary policies we need to move Wales forward. Today’s Budget is sadly lacking in ambition and in the compassion required by the Chancellor and his colleagues. Families in Ogmore and across the UK have made enormous sacrifices in a collective effort to tackle covid-19 and keep each other safe. They need a plan for a recovery that matches the scale of that sacrifice, but they will not find it in today’s Budget.
Madam Deputy Speaker (Dame Rosie Winterton)
I am afraid that after the next speaker the time limit will go down to three minutes.
Mr Mark Harper (Forest of Dean) (Con)
The first thing I want to say, reflecting on the Chancellor’s excellent Budget speech, is that in an emergency—that is what we have faced over the past year—it is right for the state to use its fiscal firepower to support the people of our country and protect jobs and livelihoods. That will be welcomed across the country, but particularly in my constituency. Listening to the Chancellor set out the more than £400 billion-worth of spending that has been put in place to support jobs and livelihoods, we can see the pay-off. The independent Office for Budget Responsibility now thinks that the level of unemployment we will reach at the peak is considerably lower than it was forecasting just last November. That reduction in the level of unemployment and the jobs that have been protected will be welcomed in my constituency and across the United Kingdom.
I also welcome the specific help in the Budget for my constituency. I particularly welcome the £150,000 to help my local authority put in place the capacity to bid for money from the levelling-up fund. As Members of Parliament are integrally involved, I look forward to working with it to put in place an ambitious plan to help improve economic conditions in my constituency. I also welcome the continued reduction in VAT for hospitality and tourism businesses, and the extension of the business rates holiday. I know that that will be incredibly welcome to those businesses in my constituency that are raring to go to get back into business but are not yet enabled to do so.
We have had a big, one-off amount of borrowing to get us through this crisis, so we need to get the public finances back in shape. The Chancellor set out very clearly why that is essential. First, if debt continues to rise, we are very vulnerable to a rise in interest rates. A 1% rise in interest rates, modest by historical standards, would mean our having to find £25 billion a year in debt interest. That would mean making very significant savings elsewhere from important public services. Secondly, we have to get the public finances in good shape to prepare us for the inevitable future crisis. As the Chancellor set out, it was only the difficult decisions that we took on tax and spending from 2010 onwards that allowed him to have the fiscal firepower and borrowing capacity to get us through this crisis. It is right that he wants to leave the public finances in shape, either for himself in the future or for a potential successor, to deal with any crises to come. It is important that that cannot happen immediately, but over time.
I am pleased to see in the independent forecast that we will get the Budget back into balance by 2025-26, by three mechanisms. The first is growing the economy faster, and I welcome the mechanisms that the Chancellor set out today to increase investment, to get businesses firing on all cylinders. However, secondly, it also requires controlling the growth in spending, and I am pleased to see controlled growth in public spending in the numbers. That will mean some difficult decisions in the spending review, and I say to Members on both sides of the House, especially my colleagues, that it will mean making choices, setting priorities and deciding what we think is important. We cannot spend money on absolutely everything we want; as Conservatives, we have to live within our means and make those difficult decisions. I hope that, as those decisions are made by ministerial colleagues and our Treasury colleagues later this year, we can all support them.
Finally, it also means an increase in taxes, which is uncomfortable for someone like me who wants to see lower taxes. I do not think we are undertaxed, because the tax rises in this Budget will leave us with the highest tax burden in my lifetime. However, I hope that they will be temporary and that, once we have got the public finances back into shape, the Chancellor—as he says, he is a low-tax Conservative—will be able to look to continue increasing public spending in line with the growth of the economy, but also to reduce taxes so that people can keep more of their hard-earned income, which is central to being a Conservative.
This is a very well-judged Budget that gets the public finances back into shape, deals with the crisis—the emergency —we have faced, prepares us for growth in the years to come and leaves us in better shape than the Chancellor found the Treasury. I commend it to the House.
Madam Deputy Speaker (Dame Rosie Winterton)
I understand that the hon. Member for Brent North (Barry Gardiner) is having some technical problems, so we will go to David Mundell.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con) [V]
I believe that today’s Budget is good news for my constituency. We still need to focus on defeating the pandemic, and the continuing support for local people and businesses is most welcome.
Thousands of people in my constituency have benefited from the furlough scheme and the self-employment scheme, but I have lobbied particularly hard to persuade the Chancellor to retain the £20 uplift on universal credit so that the most vulnerable people in my constituency and elsewhere receive the support they need. I also lobbied for a VAT cut for the hospitality industry, which so many local businesses were in touch with me about, and that will make a real difference to them as gradually they are allowed to reopen.
The Chancellor announced a range of other measures to help businesses in England. We need to see the equivalent delivered here in Scotland, unlike previously, when the Scottish Government have sat on money that they have received from the UK Government and failed to distribute it quickly to businesses.
I have always argued that a car is a necessity, not a luxury, in our rural communities, and haulage fuel costs contribute so significantly to the cost of living locally. That is why I have always opposed rises in fuel duty, so I am delighted that the Chancellor agrees and has frozen fuel duty yet again.
In the very short time that I have, I shall focus on the issue of access to cash. It was announced this morning that contactless payments would be increased to £100, which I am sure will be welcomed by many, but the Chancellor did not reference this year, as he did in his last Budget, the operation of the UK cash system and his plans to legislate on access to cash.
Our system of cash faces three big issues: the ongoing issue of access; the inverse issue of depositing cash, and the increasingly pressing problem of acceptance of cash. The issue of acceptance of cash has been made more acute by the pandemic. The Bank of England noted in its quarterly bulletin that 42% of people had recently visited a store that would not accept cash, and Which? conducted a survey that found that four in 10 of those who had experienced difficulties paying with cash had left empty-handed when trying to buy groceries.
It is therefore essential that the Government come forward with legislation and plans on this issue. Without that, we risk crashing into a cashless society, where some 17% of adults in the UK—about 8 million—would struggle. Those struggling most would be the elderly, the vulnerable and economically excluded, and those in rural communities such as my Dumfriesshire, Clydesdale and Tweeddale constituency.
Geraint Davies (Swansea West) (Lab/Co-op) [V]
The Chancellor failed to mention that, with 123,000 deaths, the UK has the highest coronavirus death rate in the world and the deepest recession of the G7. He also failed to mention the bungled Brexit that has led to a two-thirds cut in our exports since the new year. The Budget simply continues to increase inequality, which will itself reduce the rate of growth. Although it pumps money into the economy, it will mean council tax rises, pay freezes for public sector workers, benefit squeezes and service cuts, all of which will further increase inequality.
What we need is a healthier, fairer, greener future. We only have to look to the Welsh Government to see how to do that. In England, excess deaths associated with covid over the five-year average are at 20%, while in Wales, the figure is only 13%. If that rate had been applied in England, there would have been 36,000 fewer deaths. That could have been achieved through a more cautious approach to social distancing, travel limits, earlier lockdowns and, of course, contact tracing in public hands rather than in the hands of sponsors of the Conservative party. We are also rolling out vaccinations very quickly.
In Labour-run Wales, we have seen the Government using their money where it is most needed, not to support council tax relief for food superstores, which are making exceptional profits, and not for stamp duty for people buying second homes for their holidays. Instead, we have a £2 billion resilience fund, and the Development Bank of Wales investing in small businesses to secure 141,000 jobs. This is successful devolution, but we do need the tools to do the job, and we only get 2% of the money for rail investment for 5% of the population. We need a high-speed link between Bristol, Cardiff, Swansea and west Wales to help connect the Union. We need the shared prosperity fund to be spent in Wales, for Wales and by Wales. We need the Swansea Bay tidal lagoon that was promised, and we need electrification of the railways. There is much that we need, but we are not getting our fair share and we did not hear anything about that in the Budget.
We need a fairer future in Britain. There are 6.6 million people who are hungry and in food insecurity each day. We need to double the number of co-operatives. We need to target investment to smaller companies, particularly those that are committed to net zero, with local jobs that reduce inequality. We need to invest in children from poorer backgrounds who have lost out the most in terms of education, and we need to invest in sustainable transport. After all, 64,000 people a year are dying prematurely from toxic air. Again, there was nothing about that.
Labour increased the size of the economy by 40% in the 10 years to 2008 and in so doing doubled the health service and the education service. We need a Labour Government to have inclusive growth and to balance the books, and we will not get one until the next election.
Barry Gardiner (Brent North) (Lab) [V]
Today, the Chancellor has been dealing with the economic cost of coronavirus. Coronavirus is a zoonotic disease and, just like SARS and Ebola, it has come about as the result of the increasing stress that human activity has put on the natural world. As a result of coronavirus, the Chancellor admitted borrowing a record £355 billion, and for the first time in more than 50 years public debt has risen above 100% of GDP. Let me say it again: coronavirus is a zoonotic disease; there will be others.
Our species is grappling not just with one global pandemic, but with the two global emergencies of climate change and the destruction of nature through biodiversity loss. Today should not just be about the allocation of money; it should be about the management of our assets. Once we understand that our economy is bounded by nature, natural capital, we will perhaps understand the need to stop consuming each year goods and services that the planet takes 1.6 years to reproduce. Economists call this living beyond our means. The Intergovernmental Panel on Climate Change is clear that we need urgent and unprecedented transformational change. If this Budget had adopted the principles of the Dasgupta review, we would have got that change. It would have set out the basis of a green industrial revolution, full investment in low-carbon infrastructure and the greening of our economy. It could have created a million new jobs.
Protecting jobs and maintaining incomes through furlough is only a baseline. Alongside it, the Chancellor should have put in place incentives for companies that spread employment through job sharing while using non-employed hours engaged in a new, paid national retraining scheme for the zero-carbon industries of tomorrow. That would have been transformational and given people currently in old industries hope and security for the future. Yes, set targets for electric vehicles, but retrain the mechanics. Yes, bring in more solar and wind arrays, but train the new generation of engineers. Yes, retrofit our homes, but where is the skilled workforce to carry out the work?
On the super deduction of 130% tax reliefs on investment, the Chancellor should have said that this could be used only for sustainable green investment, and not to subsidise what could be environmentally damaging infrastructure by oil and gas corporates. No wonder it took him until precisely 37 minutes into his speech before he even mentioned the word “green”—and that, ironically, came just after saying there would be no fuel duty rise. I welcome what he said about changing the remit of the Bank of England to consider environmental sustainability and net zero, but a transformative Budget would have mandated both climate and nature-related financial disclosures by listed companies. He patted himself on the back and said that he would be ready when the next crisis comes. The truth is that the next crisis is already here: it is called the climate catastrophe and environmental destruction, and this Budget has not prepared us to meet it.
Robert Halfon (Harlow) (Con) [V]
I welcome this Budget. It has five core purposes: to balance the books; to help people through covid; to cut the cost of living; to champion education, skills and apprenticeships; and to build back better.
The fundamentals of levelling up must be about cutting the cost of living. Too many of my Harlow residents are working long hours for low pay. That is why the fuel duty freeze, for the tenth year, is such good news. The national living wage rise to £8.91 in April will mean that households are £5,200 better off compared with 2010, and cuts in taxes have put £1,205 more in the average worker’s pocket. The six-month extension to the uplift in universal credit will incentivise work and reduce the welfare poverty trap.
Covid-19 has been a national disaster for education. The Government’s £1.7 billion catch-up fund is a huge step forward. Just as the NHS has a 10-year plan, there should be a long-term plan for educational recovery, investing in early years, establishing family hubs in every town, reforming the pupil premium to give more help to the long-term disadvantaged, and having longer school days, with civil society helping with extra sports, mental health and academic catch-up. I hope the Treasury will hypothecate £150 million raised from the sugar tax to finance school breakfasts in disadvantaged areas. Evidence shows that this increases educational attainment by two months.
The £2 billion kickstart programme for businesses and the lifetime skills guarantee will rocket-boost apprenticeships and jobs. I urge apprenticeship levy reform to benefit companies that invest in the skills our country needs and ensure that those from disadvantaged backgrounds climb on to the apprenticeship ladder of opportunity.
Of course, levelling up means renewing infrastructure. The new hospital plan for Harlow is hugely welcomed by residents, as is our new £81 million junction 7A and planned regeneration funding of up to £76 million. The expected move of Public Health England to Harlow will provide thousands of jobs, boosting skills, health science and economic opportunities across the east of England. The Health Department has already spent over £270 million for the relocation, and this investment shows the Government’s commitment to Harlow.
Building back better must also mean genuinely affordable housing. One million children live in overcrowded accommodation. The £12.2 billion announced by the Communities Secretary is welcome. The Government could incentivise housing associations through a flexible grant rate and making more land available for social housing. Of course Conservatives are for home ownership. The mortgage guarantee is superb, but we should also be the party of quality, affordable housing.
I commend this Budget. I urge the Prime Minister and the Chancellor to ensure that supporting workers, and championing social justice and the ladder of opportunity, continue to be at the heart of Government decision making.
Liam Byrne (Birmingham, Hodge Hill) (Lab)
I am here to speak for the west midlands because we have a Tory Mayor who is failing to use his voice. The truth is that covid has hit our region harder than any other region in our country, and over the last four years, life in our region was getting shorter, getting poorer and getting less safe. That is why what we needed from the Chancellor today was a Budget that genuinely levelled up this country, so that we can level up our region.
I am grateful for the help in the short term that will make a difference, but the truth is that, over the medium term, we saw today £66 billion-worth of tax rises—tax rises that will also fall on teachers, nurses and police officers for the years to come. I think that is the biggest tax rise that we have ever seen in Budget history, and it is so high because the growth rate for this country is coming further and further down. That is why what we needed from the Chancellor today was a meaningful strategy to go from the pandemic to the Paris agreement—a plan to reindustrialise our country and create new green manufacturing jobs, avoiding the perils that the International Monetary Fund is warning about of a K-shaped recovery where the rich go in one direction and the poor go in another.
That is what I want for our region. I want our region to be the green workshop of the world. I want our region—the youngest region in Europe—to be the place with the best life chances for young people. I want our region to be a place where we have police back on the streets, because we have seen violent crime soar by more than 100% over the last two to three years. But that is not what we got today. We have asked for help, but we have been given just 5% of the £3 billion we asked for to get our recovery moving. What did we get today? The grand total of £2 per person per week—that was it. There is £431 billion in the national capital budget. What did we get today? We should have got an extra £7.7 billion, which would reflect our population share. We got just 3% of that money today.
I am afraid that, once again, we have been left behind, looked over and left out. The towns funds that we secured today are just three quarters of what Andy Burnham and Steve Rotheram got up in the north-west and just 39% of what was secured by council leaders in the east midlands. We cannot go on like this. We need a Mayor who is going to stand up and fight for our region, and in May, that is what the residents of our region are going to get.
Huw Merriman (Bexhill and Battle) (Con)
In welcoming today’s Budget, I wish to focus on three themes. The first is supporting restart. The Chancellor is right to ensure that the workforce and businesses are supported as we open up our economy once again. The continuation of furlough, help for the self-employed, business rate relief and extending temporary VAT reduction will give business the confidence to reopen and plough on. We now have to encourage people to turn their backs on the lockdown, get back to their offices and back to hospitality and leisure venues and do their bit for the nation’s economy as we unlock, in the same way that they did for the nation’s health when they locked down.
The second is recovery. The Chancellor is right to invest in our recovery by supporting capital projects that will deliver a yield to UK plc. Over half of the infrastructure spend is devoted to transport. It is vital that this spend goes on projects that deliver the biggest bang for the buck, not white or green elephants.
The third is repayment. The pandemic has seen a Government fiscal injection of £407 billion. Much of that has been supported across the House. As the Chancellor said, it is comparable only with the borrowing from world wars one and two. National debt now stands at £2 trillion—£30,000 for every man, woman and child. We have a record peacetime deficit. I remind those who talk of low levels of Government borrowing that an increase of just one percentage point across all interest rates will add an extra £25 billion a year to the Government’s cost of servicing the national debt—money that could otherwise be spent on investing in education or delivering infrastructure.
With regret, I understand the need for a five-year personal tax allowance freeze, a corporation tax increase to 25% from 2023 and other tax-raising measures. The OBR has stated that these tax rises will take the overall tax take and burden to the highest level since the 1960s. In addition to increasing the tax yield, we need to reduce levels of public spending. That means cuts across the board. I am deeply disappointed that we are reducing our international aid spending, but I cannot just expect spending cuts to apply to those areas less close to my heart.
Thirty years ago, Margaret Thatcher was taking questions from the media on the 1981 Budget. She said this, and it applies as much today as it did then:
“Now what really gets me is this: that it is very ironic that those who are most critical of the extra tax are those who were most vociferous in demanding the extra expenditure. And what gets me even more is that having demanded that extra expenditure they are not prepared to face the consequences of their own action and stand by the necessity to get some of the tax to pay for it. And I wish some of them had a bit more guts and courage than they have.”
The Chancellor has shown today that he has the guts and courage. It is now down to those of us who similarly believe in fiscal responsibility and in not dumping the next generation into an ever increasing pool of debt to be true to the Conservative party’s philosophy and make that same case.
Carol Monaghan (Glasgow North West) (SNP) [V]
I am sure that there will be much chest thumping over this Budget, but the reality is that many of those most in need of support have been ignored. Furlough has been welcome for some, but for others, including the 3 million excluded, who have not received a penny, this Budget offers nothing.
The £10 million for veterans’ mental health is welcome, but many of the veterans and their families who contact me do so because of a lack of support from this Government. The Chancellor could have rectified this situation, which sees payments awarded for injury in service treated as normal income for DWP calculations, but he did not. What message is he sending to veterans who have given their health for this country? The recent National Audit Office report on military housing should have shamed this Government into action. The report talks about “decades of under-investment”, with nearly 2,400 personnel living in such abysmal accommodation, lacking such basics as hot water, that they are not even required to pay rent. This is a Government who profess to stand up for the armed forces, so why are there no funds for this?
Central to any covid recovery plan must be our children. This is a year when disadvantage has been laid bare. Although the Government have rightly provided digital devices and tutoring schemes for learning, children need first to be fed. The Chancellor has agreed to maintain the £20 weekly uplift in universal credit until September, which is of course welcome, but does he really think that the uplift is not required beyond September? He has probably never gone around a supermarket trying to decide which basics he can afford. Well, I have, and I can tell him the difference that £20 a week would have made during those times. In contrast, we see the Scottish Government introducing the Scottish child payment of £10 a week for every child under six. We want a commitment that this uplift will be permanent and that it will apply not just to those on universal credit, but to those on legacy benefits, so that children can be fed. Then we can talk about meaningful learning.
Finally, I want to talk about the children of Yemen. The UN tells us that the humanitarian crisis is the worst in the world, with 80% of Yemen’s population in need of humanitarian aid, 4 million displaced, and 400,000 children under five at risk of dying from malnutrition. Amid this crisis, the Government make manifesto-breaking cuts to international aid. If this is the best that global Britain can deliver, it is no surprise that Scotland is choosing a different path. One of the strengths of the UK was a commitment to international development. The situation in Yemen is critical. A tiny proportion of our borrowed funds must be shared with the world’s most desperate.
Judith Cummins (Bradford South) (Lab)
It is welcome that the Chancellor has committed to keeping key elements of the support packages in place until September, but businesses and families in my constituency need certainty that they will not once again be placed into local restrictions that hurt our local economy, because last week the Prime Minister left open the possibility of returning to local restrictions in order to contain new variants. I urge the Government to deal with this national crisis with national measures.
During the local lockdown in Bradford, we had the perverse situation of people being able to travel to nearby areas to shop, have beauty treatments and go to the gym, all while our local businesses were forced to close. Closing local economies in this way causes permanent economic damage, and many of our businesses may never recover. This unfairness must not be allowed to happen again. Instead, we need a plan for unlocking and recovery; a plan that closes rather than widens the growing gaps in our economy. That is not what this Budget delivers.
On the issue of rebalancing our economy, I was disappointed to see no commitment to Northern Powerhouse Rail in this Budget. Nothing is more critical to Bradford’s long-term economic success than securing the Northern Powerhouse Rail line with a city centre stop in Bradford. In recent years, I have asked Ministers 11 times to confirm that this transformational project will go ahead and, crucially, that it would include Bradford. Time and again Ministers have responded with warm words but no action, and now I worry that we are seeing emerging evidence of this Government backing away from their previous commitments to invest in my region and my city. First, the Government asked Transport for the North not to submit its outline strategic business case, as was planned. Then there are suggestions in the media that the Government are considering a cheaper route that bypasses Bradford, does not include a city centre stop and does not even involve a new line at all. Let me be very clear: upgrading existing lines will not fulfil the manifesto promise that the Government made, nor will it provide the infrastructure improvements that the great cities of the north need. A route that misses out Bradford would be a huge mistake. That matters for opening up our economy, for rebalancing our economy and for the job prospects and opportunities for the people in my constituency. It is time for the Government to deliver.
Mr Andrew Mitchell (Sutton Coldfield) (Con)
I draw the House’s attention to my external interests as set out in the register. I have come this afternoon to praise what I think is an excellent Budget. If you listened carefully, Madam Deputy Speaker, to the two main Front-Bench speeches, it was clear that they do not in truth think that much of it is wrong.
This has been a year in which truthfully the Government have used taxpayers’ funds to protect livelihoods, help business and help the least well off, and it was additional relief today to see that unemployment was not as bad as many of us feared. The first point I want to make is that this is an excellent Budget that will contribute greatly to Britain coming out of recession and out of this crisis over the coming months.
The second point I want to make is that I listened carefully to the speech of the right hon. Member for Birmingham, Hodge Hill (Liam Byrne). He is clearly in campaigning mode, but one of the real winners from the Budget today is the west midlands, and it is a huge tribute to Andy Street, the brilliant mayor that we have. He and I have lobbied the Chancellor together, as have many Members of Parliament in the region.
Andy Street has done a brilliant job, and what today shows is that he is brilliant at getting the Government to deliver for the west midlands. He called for apprenticeships incentives. He called for extending furlough. He called for an extension of the VAT cuts for hospitality and tourism and for cash grants for businesses reopening. There is nearly £100 million for the Black Country town and city centres—a particular issue that he championed—and £59 million for stations to be opened. I express my very strong support for the wise way in which he is delivering for the west midlands, and in particular I support his transport plan. We will of course be looking for more in future as we seek to reopen the Sutton Park line, but the Budget today is a triumph for the efforts and hard work of a brilliant mayor who is delivering for the west midlands and everyone who lives there.
My third and final point is that I was hoping the Chancellor would announce today that this was not the year to cut the 0.7% promise. We have seen vividly over recent days in Yemen what the effect of that cut will be. Launching global Britain post Brexit means it is not the year to do it. Being in the middle of a global pandemic emphasises that it is not the year, and our chairing of the G7—we are the only country in the G7 that is cutting development spending—also shows it is not the year. We would be breaking our promise to the poorest people in the world, were this cut to go ahead.
Every Member of this House was elected just a year ago on a promise to stand by 0.7%. It reflects our economic circumstances, and it has gone down so much, as it must, because the economy has contracted. That is a big enough cut. I very much hope the Government will think again. They must at least check with the House and have a vote in the House. Brexit is about giving more power to Parliament. The law of the land is 0.7% and it needs parliamentary assent for any change.
Caroline Lucas (Brighton, Pavilion) (Green) [V]
This is the last Budget before the UK hosts the COP26 climate summit in November, before it presides over the G7 and before it takes part in the global biodiversity summit. In that context, the Chancellor should have embraced the enormous potential for a fair and green recovery, to create hundreds of thousands of jobs and to shift our economy on to new sustainable foundations.
Climate leadership means deeds, not words. It means following the science on the speed and scale of the investment required to meet climate goals and halt the loss of biodiversity. The question is not whether we can find a climate initiative here or a mention of green spaces there—I welcome the progress on green bonds and the investment bank. The question is whether, as a whole, this Budget addresses the climate and ecological emergency with anything approaching the ambition or urgency required, and it gives me no pleasure to say that it does not. It is alarming and disappointing to see the Chancellor doubling down on economic dogma that is fuelling the fires of the climate crisis and making our society more unequal and less resilient. Because the Chancellor has failed to make space for nature in his Red Box, we are missing out on thousands of jobs that a national nature service could create, for example. More fundamentally, as the Treasury’s own Dasgupta review, “The Economics of Biodiversity”, explains, bio- diversity loss is
“undermining nature’s productivity, resilience and adaptability …fuelling extreme risk and uncertainty for our economies and well-being.”
I say in all seriousness that our nation’s health and prosperity would be better served by a Chancellor who cared rather more about hedges and hedgehogs and less about hedge funds.
I would like to highlight three big omissions from this Budget. First, we needed a climate and nature test so that all spending and fiscal measures could be aligned with limiting global heating to 1.5° and with the UK’s other environmental goals. The idea that the Treasury already accounts adequately for nature is farcical. If that were the case, the Chancellor would at the very least be restoring funding for the green homes grant. It is shameful that this scheme is being allowed to wind down. We need it.
Secondly, we need transformational investment to create green jobs. With unemployment rising and so much needing to be done to create a fair and green economy, we could have been investing millions. For example, £48 billion over 18 months could have created over 1 million good green jobs. In the US, Joe Biden has a $2 trillion plan to address the climate emergency. Maybe there has been some kind of spreadsheet error here in the UK.
Finally, in this Budget and beyond, the Chancellor must act on the conclusions of the Dasgupta review. He must respect the fact that we should be having a wellbeing Budget and shifting towards an economic approach fit for the 21st century that is not fixated on GDP growth but properly puts wellbeing and the health of people and the planet at the heart of the Budget.
Laura Trott (Sevenoaks) (Con) [V]
The first and most important thing that we need to do today is to focus on the real-world impact that the measures in this Budget will have. Jenny Pollard lives in Otford in my constituency. She runs a nail business. She is self-employed, and her first year of trading was 2019-20. The announcement today means that she can access full support for the first time, which will be a lifeline for her and for her business. The Royal Oak pub, Marco’s and the Danish Collection are all brilliant businesses in my constituency whose trading has been affected through no fault of their own in this pandemic. The restart grants are exactly what they need to help them to reopen, and exactly the type of support that we have been asking the Chancellor for.
This comprehensive and welcome package of support comes at a cost, however, and we must be honest with the British people about that. Labour Members talk a lot about fiscal responsibility, but they have not set out anything that is fiscally responsible. In contrast, what we have done today is put forward a clear plan for how we are going to start to pay for this support. It is a plan that provides much-needed certainty for business and protects those who need it the most. I particularly welcome the plan to shelter the smallest companies from the corporation tax rise.
More than that, we know that the best way to recover is to grow. My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) and I have published a proposal for accelerator zones to encourage regional growth. The paper talks about the need for high-skill visas, incentives for investment and networks of support, and I was delighted to see many of those themes being picked up today. We know that this country has a long-term issue with productivity, so these measures will help to address the structural barriers that have been holding our country back.
I was surprised to hear the Leader of the Opposition complain about a lack of a credible plan to tackle unemployment. The OBR has been clear that our interventions have led to 1.8 million fewer people being out of work than would otherwise be the case, but the right hon. and learned Member for Holborn and St Pancras (Keir Starmer) seems to be confused about how to tackle unemployment. It is businesses that create jobs and it is businesses that support employment. To tackle unemployment, we must support businesses and business investment, and with the super deductions, the restart grants, furlough and the business rates holiday, we are doing exactly that—proof, if any more were needed, that this is a Budget for the recovery, now and also beyond.
Karin Smyth (Bristol South) (Lab)
We have learned a lot about the Chancellor over the last few days, beyond the flashy videos. When asked about the eat out to help out and the summer schemes any decent person would have stopped: they would have reflected; they would have said that they had learned and that they had made mistakes. That dreadful graph of the rise in deaths through last autumn into the winter, and after the Prime Minister promised we would not cancel Christmas, is a shameful graph—it is shocking—but we have heard no contrition and, worse, we have heard nothing about any lessons being learned. That is an affront to our country, particularly to those of us who have lost a loved one too early from this virus.
The Chancellor has said that he will be honest; well, let’s be honest. The Tory Government in 2010 choked off our recovery: they cut back the services we depend on, and the productivity problem we had then has got worse. He said today that it is not enough to desire increased productivity. Well, I agree with him on that, but he has done nothing to support it, particularly for young people: the education maintenance allowance was scrapped then, and early-years Sure Start was taken back far too early. We still have lower skills levels, further education is still not properly funded, and the post-16 per pupil level is still, shamefully, too low. Much more is needed to rescue the apprenticeship programme; I welcome the increase, but that is not enough to ensure that that programme gets back on track, and young people have lost so much in this time.
I would like to take a moment to thank an organisation, Youth Moves, in my Bristol South constituency, which has supported those young people. It is up for an award tonight, and good luck to it, but it needs much more help.
What we needed was a fix for those years of under-investment in Bristol’s environment and skills; what we got was a sticking plaster that goes nowhere near what we need to support our problems; no support for the west country. Either they are expecting to win the metro Mayor election or they just do not care.
We needed action; we did not get it. Given the environmental crisis, the green growth we should be pursuing in order to help young people should have been front and centre of this Budget, but it has not been. The City of Bristol College is ready with its advanced skills construction centre but, again, it needs more support to bring people in to help train young people for the jobs of the future. The road map needed to go hand in hand with public health restrictions. People need to be confident about going shopping, about leisure, about getting on the bus, but the Chancellor does not understand the link between the health of the economy and the health of people.
Finally, may I just mention—perhaps the Minister will give an answer on this in his response to the debate—that we were hoping to hear about the Temple Meads development in Bristol today? It is crucial to the development of that part of our city, and it would be helpful if he let us know as soon as possible whether it is part of this or, yet again, whether the west country is to be let down by this Tory Government.
John Penrose (Weston-super-Mare) (Con) [V]
I support this excellent Budget for three main reasons. First, the Chancellor said at the start of his speech that he did not want to set out his fiscal rules right now but was committing to a principle of no borrowing for everyday spending, and that is absolutely essential given where we are at the moment—given the huge amount of extremely generous, much-needed help and support over the course of the last 10 or 12 months during the pandemic. It is clear that in the course of the last 10 or 12 years we have had two once-in-a-century events—external economic shocks—and we have only been able to be as generous as we have and have been able to provide the kind of open-handed essential support to keep jobs and businesses alive because we had fiscal firepower and the Treasury could draw on sound money and the sound Government finances that had been built up over many years. It is absolutely essential, therefore, that we go back to that as soon as we can in order to ensure that when, not if, the next one comes we are equally prepared.
Secondly, I am happy to support the Budget because the Chancellor announced the super deduction for business investment. Economists rarely agree on very much, but one thing they all agree on, whether from the political left or right, is that Britain invests too little in its economic growth; we live as a high-rolling economy, basing our economic growth far too much on domestic spending and not on investment. Therefore, measures to try to improve that and change it permanently and forever are absolutely essential. The Chancellor rightly pointed out that we languish down at 30th place in most international tables of business investment. This measure will vault us up in to the top few, perhaps even to the very top spot, in international investment in long-term growth. That is one of the fundamental things that will not just drive economic growth, but make those jobs that I was talking about permanently competitive and safe for the long term. That will ultimately be the only thing that allows us to have an economy that pays for the public services that we all want.
The final reason why I am happy to support this Budget is that it is given by a Chancellor who understands that it is about not just tax and spending, but competitiveness. Why do I know that? Because he, together with the Business Secretary, recently commissioned me to produce a report on competition, competition policy and making our economy more competitive. It is that kind of supply-side reform that we will also need to make sure that we have an economy fit for the future.
Alex Sobel (Leeds North West) (Lab/Co-op)
This Budget is made in the context of the UK having the worst economic performance during covid of any major economy and the highest death toll per capita. The Government have failed to protect the nation’s health or its economy. However, as the chair of the net zero all-party group, I have called for an infrastructure bank and, as a Leeds MP, I have called for that to be in Leeds, so I am pleased that one thing that I have lobbied for has come to fruition. My experience on the Environmental Audit Committee in looking at the performance of the Green Investment Bank, sold to Macquarie in 2017, means that I will scrutinise the detail of the bank’s capitalisation, mission and governance very closely to ensure that it supports net zero and biodiversity, and is not greenwash.
Tourism supports 3.1 million jobs in the UK, and I am pleased that the Chancellor has announced measures to support the tourism industry, including the extension of furlough and the extension of the reduced rate of VAT. That will be of some comfort to the sector after months of uncertainty and last-minute announcements. However, these announcements were again made at the 11th hour, with the current measures running out in just a few weeks. The Chancellor’s announcements fall short of Labour’s calls for 100% business rates relief for retail, hospitality and leisure to be extended in England for at least a further six months from July. We need more support for our tourism sector than has been offered today.
Although I am trying to take the positives from the raft of measures today, the reality is that many of the Chancellor’s previous announcements, promises and funds have been sorely lacking, with money promised but never arriving. I hope that this Budget does not repeat those mistakes. A glaring example is the zoo animals fund. Only £5 million of the £100 million promised has been spent. It is hard to know whether this is wilful penny-pinching or unbridled incompetence. Either way, it has meant that zoos have had to make painful cuts to their operations, including conservation, education and research work, in order to prioritise animal welfare. This is putting the lives of our zoo animals at stake, but it is not just about animals. The same goes for the green homes grant, where vouchers have been issued very slowly or not at all, and installers have not been paid in a timely way, risking that industry as well.
People have been left suicidal by a lack of support. The Chancellor may remember receiving a letter from Stephen Liddell, one of the 3 million taxpayers excluded from meaningful support during the pandemic. He said:
“I paid my taxes for 2019-20 in May as I am a good person. Yet I have received zero help and support, absolutely nothing.”
Will the support announced today reach Mr Liddell, as only 151,000 people out of the 3 million excluded, according to the Office for National Statistics, will receive any support? I hope so and I am sure that we will hear from Mr Liddell in due course.
At a time of crisis, those in charge have a duty to act. They also have a duty to listen, understand and admit when the tack needs to change, and, on some of these measures, that is what needs to happen.
Andrew Jones (Harrogate and Knaresborough) (Con)
The Chancellor has one of the hardest tasks that any Chancellor has faced in decades, with economic circumstances more typically associated with wartime, but with this Budget, he has shown vision and I congratulate him.
The first key theme was the welcome and necessary extension to the support given to families and businesses. It is huge in scale and I would like to put on record the fact that I am very pleased that this support will continue. The extension of furlough, business rates holidays, self-employed grants and universal credit are all very welcome.
Harrogate and Knaresborough has a significant hospitality and tourism sector, which has been badly affected by the pandemic. High-quality businesses have been utterly unable to trade, so I was very pleased to see the VAT cut to 5% extended to 30 September and will then be down at 12.5% for a further six months after that. That reduction will boost demand. Boosting domestic tourism will certainly help, but there is also significant pent-up local demand that the measure will help to unlock, thereby underpinning thousands of jobs.
Rather than comment on the Budget as a whole, I wish to comment on just two areas. First, I was pleased that the north has been chosen as the base for a UK first: the national infrastructure bank, the creation of which is very positive. We knew it was coming, but I did not know it was going to be based in Leeds. It is great news for the city and will bolster its established financial services and legal hubs. As the bank will serve the rest of the UK, we need the eastern leg of HS2 to connect to Leeds and must make sure that can happen more easily. As the Chancellor said, the bank will have an initial capitalisation of £12 billion. We will see investment in public and private projects and it will be a driver of green growth, which leads me to the second area on which I wish to comment.
On environmental initiatives, I like the Budget’s continued focus on offshore wind and the investment hubs in Humberside and Teesside, but what also caught my eye was the launch of a green savings product—a retail product of which we can all take advantage—and I look forward to the detail on that. The people of Harrogate and Knaresborough want to see progress on the environment.
I conclude by commending the Chancellor on his Budget. The scale and speed of the response to the crisis has been astonishing—£407 billion is a remarkable figure—but I also welcome the clarity on the longer-term position of our public finances. Conservative Members know that the Chancellor is in a position to respond as well as he has done because of the repair work done over the past decade. A moment ago, my hon. Friend the Member for Weston-super-Mare (John Penrose) highlighted the fact that we have had two supposedly once-in-a-century events in just over 10 years. The lesson is that financial responsibility allows Governments to respond to crises, and to respond at scale. It will be a tough job to repair the public finances after this pandemic, so it was good to see the focus on growth in the short, medium and long term.
Ben Lake (Ceredigion) (PC)
We were promised levelling up—a Budget that would stimulate our recovery and lay the foundations for an economy fit for the future. The Chancellor is to be commended for listening to several of Plaid Cymru’s calls to extend the emergency support for businesses and families. It would have made no sense to withdraw that support while we were still in the throes of the pandemic, so I welcome the extension of many business-support measures. However, I am concerned that despite the changes to the self-employment income support scheme, hundreds of thousands of people are still deprived of any support. Although welcome, the delaying of the cut to universal credit will still lead to 26,000 families in Wales not being able to afford essentials in six months’ time. This was a chance to protect families’ budgets by making the uplift permanent.
The Budget raises further questions about the gap between the Government’s rhetoric and reality. According to the Government, the shared prosperity fund and the levelling-up fund are going to turbo-charge the Welsh economy and empower our communities, yet only £220 million is allocated to the shared prosperity fund pilot—to boost the entire UK. Wales alone received around £375 million a year in needs-based funding from the EU schemes, yet now it will be expected to compete for a much smaller pot of money.
What is worse, the prospectus for the levelling up fund suggests that the number of MPs will determine the number of bids that can be made from Wales. Given the fact that the Government have reduced the number of Welsh MPs by a fifth, how on earth are we to believe they can keep their 2019 manifesto promise to give Wales at least as much funding as we have received from European structural funds? With no reference made to the Welsh Government, we must conclude that the decisions on how the funding will be spent—the power, if you like—will again be centralised in the Treasury. That strikes me as yet another example of a “Treasury knows best” mentality, despite the fact that it has delivered an economy riven with some of the worst regional inequalities in the western world.
Of equal concern is the Budget’s underwhelming green measures, as the UK joins rather than leads the green transition. For Wales to achieve our net zero commitments, we urgently need to start by retrofitting more than 100,000 homes, to expand and electrify our rail network and to provide gigabit broadband connection throughout Wales. If the Government are serious about their levelling up agenda, they must act on their rhetoric by decentralising power from Whitehall. Given the right economic tools, Wales can deliver a truly transformational low-carbon infrastructure stimulus package itself, and pave the way for an economy that is truly fit for the future.
Damian Collins (Folkestone and Hythe) (Con) [V]
I welcome this Budget, which has sought to strike the right balance between helping businesses and individuals that have been badly affected by the coronavirus, providing support as we transition this year through the lifting of the covid social contact restrictions, and setting out a plan for how the burden will be shared as the Treasury seeks to reduce the Government’s annual borrowing requirement. I know that many retail, leisure and hospitality businesses in my Folkestone and Hythe constituency will welcome the extension of their tax reliefs and the announcement of the restart grant scheme. It is also right for the Chancellor to extend the uplift in universal credit and working tax credit that was introduced last year.
In looking to reform business taxes, it is important that any increases over the next few years are borne fairly and that those who can most afford them pay their fair share. However, we know today that that is not always the case, and the lever of increasing corporation tax, which may have worked in the past, may not work quite so well when we have major companies, particularly in the technology sector, which avoid paying a level of taxes commensurate with the value of the business that they do.
In this year of coronavirus, some of the biggest winners have been the major online retailers—companies that pay relatively little in corporation tax and in business rates compared with the high street businesses that increasingly they compete against. I welcome the super deduction for business investment, but we may see that some of these companies were already planning to make big investments—companies such as Amazon investing in new warehouses and facilities—and will do so now and recoup even more off their tax bills. We need to think about how we can effectively tax businesses that operate online and through multiple jurisdictions, so that they pay a level of tax that is relatively fair for the business that they do and is on more of a level playing field with the businesses in our communities with which they increasingly compete.
We also need to reform the way business rates work, taking into consideration that the size of premises in a town centre is not always a good indication of the value of the business that is done. We need to look in the future to reform workers’ rights, particularly following the ruling by the Supreme Court about Uber, so that businesses that are in effect employing people are also paying the sort of employer contributions, taxes and employer national insurance that other businesses are asked to make.
As this year the Competition and Markets Authority establishes its digital markets unit, we need to make sure that big companies such as Google, Facebook and Amazon are not abusing their market power, and therefore creating inbuilt costs for consumers through charging advertisers too much. We also need to ensure that workers get their fair share. Fair competition for British businesses looking to compete in the tech sector is important, and we need to reform our competition law to make sure that is possible. That will be an important part of making sure that we can build back better after the year of covid.
Dame Angela Eagle (Wallasey) (Lab) [V]
Since the Chancellor’s first Budget last year, this country has suffered a brutal pandemic and a severe economic crisis. He now presides over an economy that is 10% smaller than it was last year—the largest fall in 300 years—with a deficit that has ballooned close to 100% of GDP, the largest ever amassed in peace time, and the biggest squeeze on wages since the Napoleonic wars. Tens of thousands of businesses are teetering on the brink, not knowing whether they can even survive till the end of the current lockdown. Investment is plummeting, and unemployment is predicted to rise to nearly 7% this year and not recover its pre-pandemic level until 2024. One quarter of people in this country now live in poverty, as does one in three children. Food bank use is soaring, and destitution has doubled.
The Chancellor has presided over a horrific double whammy: the largest fall in GDP in the G7 and the highest per capita death toll in the world—123,000 dead and rising. This is not a record to be proud of, but the Chancellor thinks it is appropriate to issue self-congratulatory, glossy propaganda films, patting himself on the back for his success. Using this sombre moment to burnish his own brand and declare his leadership ambitions to his own Back Benchers just shows how out of touch with reality he really is, and it leaves a bad taste in the mouth. It is almost as bad as having a Prime Minister who thinks it is appropriate to set up a charity and ask rich donors to pay the costs of a lavish refurbishment of his Downing Street flat. For him, it seems, charity really does begin at home.
This is not a Budget as we know it. The Chancellor has announced no fiscal rules against which we can judge his performance. He has created a tax day later this month, so that he does not have to spoil his big day in the sun announcing all the giveaways. We cannot even take him at his word on his past announcements. Take kickstart—the Chancellor wore a fetching branded sweatshirt at the press launch in September, but we have since learnt that the scheme has created just three jobs a day to replace the 293 jobs lost daily. The Government have also announced major transport infrastructure plans for the north 60 times so far, without one single spade touching the ground or one single job being created.
We know that this Government want to return us to the same insecure economy and unequal country that has been thrown into such sharp relief by the virus. The Opposition know that the only way forward is to create a more socially and environmentally sustainable economy —a fairer country. We also know that, despite the gloss and the PR, the Chancellor has not grasped this fact, so he cannot and will not be able to build a society and a future fit for all.
Sir Edward Leigh (Gainsborough) (Con)
I cannot agree with the hon. Member for Wallasey (Dame Angela Eagle). I personally believe that, faced with the most severe challenge for any Government since the second world war, this Chancellor and his Budget are entirely realistic. We are and must remain the party of sound Budgets, and we must return to borrowing only to pay for investment. That is our long-term aim, but faced with this pandemic, we have to make accommodations.
Although I commend the Chancellor for his Budget, the most important thing, of course, is to get the economy moving again and get us out of lockdown. The success of the vaccine roll-out, which will get the economy moving, has been absolutely staggering. Only this morning, I went to Lord’s cricket ground—probably the only time I shall ever be invited there, to the executive suite—for my second jab. I was in and out literally within 10 minutes. Like all the wars we fight, perhaps we do not perform very well at first, but we exit well; we have exited this war against the virus more effectively than any other country in Europe, and that is down to this Government and this Prime Minister.
As with all Budgets, we have to be realistic. I may make some gentle criticism, but I fully accept that the Chancellor has been faced today with an impossible task.
Sir John Hayes (South Holland and The Deepings) (Con)
In making those gentle criticisms, I wonder whether my right hon. Friend will challenge the Government on the issue of small businesses that now have to pay VAT when dealing with the European Union. They can reclaim it, but there is a delay, which brings cash-flow problems. I am mindful particularly of the heritage craft sector, from blacksmiths to silversmiths and so on; they do so much for our economy and employ nearly 200,000 people.
Sir Edward Leigh
My right hon. Friend makes an entirely valid point. One of the points that I want to make in my short contribution is that we have to accept that the high street and small businesses have moved on. The truth is that we have a very unequal tax system. Giants such as Amazon are paying an infinitely small proportion of their profits and turnover in business rates, and are driving small businesses and shops out of the high street. I personally think that there is something to be said for abolishing business rates all together. How would we pay for that? We could actually pay for it through a 3% increase on VAT on all businesses. That, of course, would hit the very large businesses such as Amazon, which pay derisory levels of tax, very hard indeed. My right hon. Friend makes a very fair point.
May I repeat what I say in every Budget? Perhaps I am a bit of a broken record on this, but I do believe in transparency, and I believe that ultimately we should try to reform our whole tax system. The TaxPayers’ Alliance has counted 1,651 tax changes since May 2010, including: 58 changes to air passenger duty; 130 changes to national insurance; 68 changes to stamp duty; 256 changes to VAT; 53 changes to tobacco duty; and 258 changes to vehicle excise duty. Our tax code is 17,000 pages long—or it was in 2015; it is even longer now. We should compare that with the tax code of an enterprise economy such as Hong Kong, which is only 350 pages long.
As things get easier next year, my plea to the Chancellor is to make our taxes clear, simple and fair. Tax complexity creates a structural bias in favour of the very rich and the big corporations, and that is not fair. Global giants can hire entire departments of tax advisers. I therefore agree with my right hon. Friend the Member for South Holland and The Deepings: let us look after middle-class people, who pay PAYE and bear the brunt of all tax increases, and let us direct tax increases at those who can pay, namely the digital giants.
Madam Deputy Speaker (Dame Rosie Winterton)
Before I call the next speaker, I should explain that we are trying to get everybody into the debate. When there are interventions, if the speaker sticks to the time limit, that is fine—there is nothing against interventions—but the intervention on the right hon. Gentleman has effectively prevented a colleague from getting in. I am just pointing out that we are that tight on time.
Tracy Brabin (Batley and Spen) (Lab/Co-op)
This could have been a transformational Budget to help us recover from the Government’s chaotic response to the pandemic—a Budget that understood that, for the country as a whole to flourish, regions such as West Yorkshire, which have paid a disproportionate price under extended restrictions for longer than other places, will need enhanced support. Our NHS staff and key workers have worked flat out, without respite, for over a year. Our high street businesses have not been able to get back on their feet while other parts of the country enjoyed more freedoms between lockdowns. Our food banks have seen record levels of need.
Our recovery therefore needs to be different from that of other places. We need support, compassion and a long-term, strategic, properly funded plan, which puts health, education, social care and skills at the centre of our recovery. Sadly, we heard none of that from the Chancellor today. Instead, we had a Budget that tinkered around the edges of levelling up. For all the spin, photo opportunities and grand gestures, our nation’s recovery from covid will not be equal across our regions.
Of course, the Chancellor could say that the first round of levelling-up funding is now open and that we should apply. As the Mayor of West Yorkshire, hopefully, in May, I will take every opportunity to get investment for our community, but the Chancellor needs to know that we have heard those promises again and again, only for the Government not to deliver.
We have grown weary of projects announced and reannounced without a shovel going into the ground—schemes decided in Westminster, pitting regional leader against regional leader; money promised, but when we look closer, it is not what it seems. Analysis done by my hon. Friend the Member for Barnsley Central (Dan Jarvis) shows exactly that: the local growth fund, worth an average of £1.5 billion a year will be replaced with the levelling-up fund, worth an average of £1.3 billion over the next four years—less money.
Our recovery cannot be delivered from Westminster. As a proud Yorkshirewoman, I know that we do not want to come to Government with a begging bowl; we want to be treated fairly—to get a fair slice of the pie so that we can flourish and grow our way out of this recession. With only three Labour areas listed as recipients of the towns fund, we can see through the cynical pork barrel politics. West Yorkshire’s recovery from covid represents a pivotal moment, where historical imbalances must be rectified rather than further entrenched.
Having campaigned with others to bring the National Infrastructure Bank to West Yorkshire, I am pleased that the Chancellor agreed to locate it in Leeds, bringing jobs and investment, but for it to work, it must be part of a bold and innovative plan to end the north-south divide. When the spinning has stopped and the news agenda has rolled on, today’s Budget will be judged by the people who need it to work for them.
Mr Philip Hollobone (Kettering) (Con)
I welcome the Treasury’s continued commitment to the hospital building programme, which has resulted in promised commitments to Kettering General Hospital of £46 million for our new urgent care hub, £350 million in health infrastructure plan 2 funding for 2025-30, and a write-off last year of £167 million of trust debt at the hospital.
However, promises are one thing and delivery is another. I know that the Chief Secretary to the Treasury has the words “value for money” tattooed all over him. The Treasury has an infrastructure delivery taskforce, which has been code-named Project Speed. I invite the Chief Secretary to ensure that Project Speed is fully involved in the redevelopment of Kettering General Hospital. The problem that the hospital faces is that these two funding streams—£46 million for the urgent care hub and £350 million for the phased rebuild—are not meshing together. Building the original urgent care hub is no longer an option on a stand-alone basis, because there would not be enough room on the site for the HIP2—health infrastructure plan—funding, so the value-for-money solution is to integrate the two funding streams.
Kettering General Hospital is ready to go on this. It owns the land, so no land deals are required, and no public consultation is needed. It has written support from local planners and the regional NHS. It is a phased approach that would deliver visible and real benefits. It is shovel-ready and has far lower risks than other hospital build projects. In developing this whole-site plan, the hospital has identified the best way of delivering value for money to get these buildings up and operating, serving local people. However, the hospital is being told that it is not allowed to mesh the two funding streams together, and the result could be that we do not have an urgent care hub and we have a delay in the HIP2 funding.
Will the Chief Secretary to the Treasury please investigate the issue and engage Project Speed, so that Kettering people can have the long-awaited hospital rebuild that we have been promised and that will be so valued in the local community? The Treasury needs to be flexible in its funding streams. Let us have an early advance of the HIP2 funding and permission to mesh it with the £46 million funding for the urgent care hub. Then we can have a hospital that Kettering will be proud of.
Alex Davies-Jones (Pontypridd) (Lab)
Only a few hours ago, the Chancellor spoke about wanting this country to be a scientific superpower. I hate to dampen his ambitious spirit, but it is clear that he needs an urgent reality check—one that I am more than happy to provide. Let me be clear, because it really is quite simple: people across Wales and the UK just want to be able to work and earn a living without severe financial stress or strain. Yet wages have stagnated for over a decade, and millions of children are in poverty at the hands of this Tory Government. I am appalled, frankly, that it has taken a global pandemic for financial inequalities finally to be reaching the Government’s discourse. But as they say, talk is cheap.
This Government have been um-ing and ah-ing for weeks on whether to continue the £20 uplift in universal credit, which has been a lifeline for so many in recent months. More than 5,500 people in Pontypridd are receiving regular universal credit payments, and I often receive heartfelt messages from desperate residents urging the Chancellor to scrap the cut once and for all. The Government have finally admitted today that the previous levels of universal credit were simply not enough for people to live on, yet they are still pursuing a policy that undercuts the very system that is designed to protect our most vulnerable.
While the extension to the furlough scheme is welcome, for workers in the aviation sector at the General Electric and British Airways sites in Pontypridd, it is yet another case of too little, too late. That is despite months of warnings from trade unions, such as Unite, which are doing their very best to support workers through this extremely uncertain time. In addition, the Chancellor’s announcement on extending the self-employed income support scheme is broadly welcome, but what does this Budget really do for the 3 million people who have been excluded from support thus far?
Clearly, the Chancellor values the skills of his own videographers, stylists and photographers, so when will he extend the same respect and courtesy to the creative sectors across the UK? The Welsh Labour Government have not only offered the most generous business support package of any country in the UK, but crucially supported those sectors, and the support has been specifically targeted. Once again, I find myself in this Chamber urging the UK Government to follow where Wales leads.
More often than not, I find myself asking, “Just where are the women?” We know that traditionally female-dominated sectors, such as hospitality, have been hit hardest by the pandemic. Sadly, pregnant women and new mothers have also faced unimaginable challenges during this crisis. They have been left high and dry by this Government. Mothers are more likely to have been furloughed and to face redundancy. The Government urgently need to do more to halt the unequal impact of their policies on women.
Finally—not to sound like a broken record—after nearly a year of myself and MPs from across Rhondda Cynon Taf pushing the Government to make good on their commitment to communities affected by devastating flooding, there are still questions that urgently need to be answered. I urge the Government to stick to their word and continue to make funding available for communities such as mine that are still recovering.
I fear that once again we are seeing a Tory Government playing politics with the lives of the worst-off, having learnt none of the lessons of this pandemic. I for one will continue to do everything I can to push them to choose a better path.
Nigel Mills (Amber Valley) (Con) [V]
I join others in welcoming this excellent Budget, which strikes the right balance between trying to see us through the rest of the covid pandemic crisis and starting our response to what will be a pretty horrible set of public finances by the time we finally emerge. The sheer scale of the spending, the deficit that we have ended up with in this financial year and the one we will end up with next year should be pause for thought for all of us every time we ask for more tax cuts or public spending increases, because clearly they will not be affordable on any great scale for a very long period.
The Chancellor was right to extend all the various protection measures until well after we think lockdown will finally end. I warmly welcome the extension to furlough and the self-employment income support scheme, and I especially welcome 2019-20 tax returns being used to bring in those people who changed their occupation during that year. I hope that, when the grants are calculated, the income from that year will be used as one of the three years for the average for all claimants, so that they can have a more realistic assessment of what their earnings were, rather than it being based on years that can be quite a long time ago for some.
I also warmly welcome the £20 a week uplift to universal credit being retained, which I and the Work and Pensions Committee, on which I serve, called for. I see why the Chancellor chose to retain it for six months, so that he can wait and see how the job market and the economy are performing at the end of September. However, in a situation where we think we will need furlough until the end of August to protect jobs from redundancies, it is quite hard to see that there will be lots of new recruitment going on by the end of September at a scale that means we will not need that uplift to be around for a while longer. But we should be grateful that the Chancellor listened and has extended that uplift, which is much needed and much welcomed. I urge him to use the six months or the rest of this financial year to have a proper review of the levels of welfare in this country, so that we can work out whether we think UC, without that uplift, is giving people the right amount of money to have the decent kind of living that we hope. If it is not, we should retain the uplift more permanently.
Finally, on the corporation tax measures, the answer that the Chancellor has come up with to the puzzle of how we get businesses investing is a really interesting and innovative one. A 130% tax deduction for capital investment is a super idea, and I hope it works. I think that it is what businesses will call for and will need, and it balances out the decision to raise corporation tax. At a time when we have spent literally billions of pounds on saving businesses from going bust by paying their wages, it is entirely fair to ask them to pay higher corporation tax for a few years to repay that. On balance, this is an excellent Budget and I will be happy to support it.
Jessica Morden (Newport East) (Lab) [V]
As always with Tory Budgets, the devil will be in the detail. As the Leader of the Opposition rightly pointed out, what was announced today is the Chancellor papering over the cracks, not rebuilding our foundations. It is not a long-term plan to tackle the deep-seated problems of insecurity and inequality that this Government have presided over.
We have become used to Tory pledges of so-called new funding for Wales unravelling as soon as they are made. We saw that in January, when the Chancellor trumpeted an additional £227 million for Wales, only for the Secretary of State for Wales to have to admit within hours that it was not new money at all but funding repackaged and reannounced.
On the shared prosperity fund, we still do not know today whether the Government will make good on their promise to the Welsh people that we will receive not a penny less than we would have received in crucial EU structural funding. The Government’s plan to cut out the Welsh Government and run funds themselves is not respecting the devolution settlement. We need this Government to work with, not against, the Welsh Government and put those funds to best use, where they are needed most.
This comes at a time when this Tory Government would do well to learn from the example of Wales. The Welsh Government have provided the most generous support package for business and workers in the UK. In contrast, this Government have excluded 3 million people from support schemes for nearly a year. Moves to help the newly self-employed are welcome, but why has it taken a year to hear the loud pleas of those left out? As ExcludedUK has said, when the Chancellor promises to do
“‘whatever it takes to support British people and businesses’”,
that is
“the phrase that sticks most in the craw of many”.
Nor is there any credible plan to ease the burden of debt in so many businesses, which will hamper growth.
I hoped to hear today some good news on rail infrastructure funding, which is so important in south-east Wales. Wales accounts for 11% of the UK network but, under this Government, gets only 2% of rail investment. This chronic underinvestment was specifically identified by Lord Burns and the South East Wales Transport Commission’s recent report as something for this Government to fix, with work on the South Wales relief lines crucial, and new stations for Magor, Llanwern and Somerton as part of the plan. This Government appear to be ignoring their own responsibility to do this.
There can be no post-pandemic economic recovery without a strong and healthy UK steel industry, but distinct measures to benefit the steel industry were thin on the ground today. While the Chancellor has belatedly extended the £20 uplift in universal credit, this will only last until September. That means that the threat of losing £1,000 a year will still hang over 6 million families, just as the extension to furlough ends. Is this what the Chancellor meant in his statement by “going long to help”? What about those on legacy benefits—where is the support for them? There is still no news on scrapping the six-month rule for those who are terminally ill.
In Newport East, we have many people working in the public sector, and I know that, in a Labour Budget, key workers would have been at the centre, along with a bold and ambitious plan to help our young people. As the Leader of the Opposition said, there are few silver linings today from a Government who have presided over the worst economic crisis of any major economy.
Gareth Davies (Grantham and Stamford) (Con)
What a pleasure it is to speak in this debate, at this point in the debate.
As outlined in many good speeches, we are in a precarious economic position. Our debt is high, our tax revenue is low, unemployment is up and growth is down. One of the most important things that we can do in this place is to debate our economic future, but let’s face it: the vast majority of people we represent are not as concerned about the ping-pong of politics as they are about their real-life situation. People have lost their jobs, their livelihoods and their certainty—all from a virus that they could not have seen coming. We in this place cannot solve all our people’s woes. Our economic recovery will not be driven from the Floor of the House of Commons; it will be driven from the factory floors of Grantham and the shop floors of Stamford. It will be driven by our workers and our small businesses, not by politicians. But we can provide stability and certainty through management of our public finances.
We have heard many times today that borrowing is at a record high and our interest rates are at a record low, but, as a principle, I am uncomfortable with anyone suggesting that we should have more debt just because it is cheap. That goes for individuals as much as it goes for Governments. I am deeply concerned about inflation as we start to release restrictions in our economy, and what that means for rates in the future.
In advance of today, I set out three things that I was hoping to see in the Budget. I asked for us to look at ways in which we could better mobilise private capital, I wanted us to focus on innovation and entrepreneurs, and I wanted to see that we would prioritise investment over general public spending. I am delighted that all three of those were in the Budget today. The national infrastructure bank will mobilise tens of billions of pounds of private capital to help to fuel energy and transportation infrastructure many decades from now. The announcement on tech visas was fantastic because that highlights the importance of bringing in the best and the brightest to help to bolster our digital transformation in sectors such as finance, farming, education and healthcare. The investments that we are making in skills will help firms such as Iconic Engineering Solutions in Grantham to find the technical jobs that they so badly seek. They say that good crisis management is about being quick with the facts and slow with the blame. The fact is that this crisis will change the way we live, but let us not let it change the way we manage our public finances.
Catherine West (Hornsey and Wood Green) (Lab) [V]
Before this Budget, the facts were there in black and white. Our economy was hit hardest because we had longer and stricter restrictions than other countries because the Government failed to get the coronavirus under control. In response, Members on both sides of the House were crying out for the Budget to put the economy on the road to recovery and right the wrongs of the insecurity of the past decade through bold investment in jobs. Instead, the Budget announcement—the 15th financial statement in just a year—just papers over the cracks of a failed economic approach.
There was no mention of schools or teachers, of cracking down on crime or of restoring our high streets. What we did have was the Chancellor freezing pay for key workers—our coronavirus heroes who have got us through this crisis. There was no mention of help for the care sector or for the carers who have given everything—100% of their work—to this crisis.
On household debt, the charity StepChange reported in September last year that 2.5 million people faced a financial crisis due to the impact of coronavirus. The Budget missed the opportunity to set that right and provide relief for those in our society who need it the most. Despite the clear dangers, the Chancellor’s pledge to freeze the personal allowance will further compound the household debt crisis.
The Budget showed that the Government want to go back to the same insecure economy and unequal country that has been so cruelly exposed by the virus. We need a commitment from the Chancellor and the Government to do things differently and to deliver on the needs of all our constituents, not more years of strained finances and mounting debt. There was no real ambition on the question of international tax evasion and avoidance, which could bring in funds to tackle some of the problems that desperately need tackling, and to address our mounting debt problem.
On the climate, despite some progress, the Budget failed to deliver the ambition that we all want to see. That is why Labour has called for investment spending to be brought forward, to kickstart the green economic recovery, as many other countries are doing, including through the large stimulus we have seen across the Atlantic. We desperately need measures to help key industries, including aerospace, car manufacturing, steelmaking, shipping and agriculture, reduce their emissions. Where are the plans for that? Where is the investment in those key sectors to bring down our carbon footprint? And of course we need the Government to reverse the cancellation of the green homes grant, which was myopic to say the least.
We need the Chancellor to grasp the urgency of this crisis and deliver the change that is needed. Labour has a plan and a commitment to deliver. We are delivering on the green economy here in London, with the leadership of Sadiq Khan. Give us another chance to get that right.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
I very much welcome this Budget and I congratulate the Chancellor on producing it. It is a Budget for extraordinary times, and first and foremost it is a Budget for jobs.
The Chancellor has rightly made protecting the livelihoods of workers and families right across the United Kingdom his overriding priority throughout this covid crisis. That is what my constituents want and what they expect. They will welcome, as I do, the measures that the Chancellor has set out today—measures to protect existing jobs, such as the extension of the furlough scheme, which has given security and peace of mind to millions; the additional help for the self-employed, and the extension of the VAT cut.
Just as importantly, my constituents will welcome the innovative new policies to create the good new jobs of the future—the Help to Grow schemes, which will give our SMEs the tools they need to move up the league; support for new green jobs in Scotland, and the super deduction on capital investment. No country of our size has done more to help protect and grow jobs during and beyond this pandemic, and all parts of the United Kingdom stand to benefit.
This is truly a Budget for the whole of the UK, and it will be warmly welcomed in my constituency in the Scottish borders. For my constituents living in rural communities, the car is a lifeline, not a lifestyle choice, so they will welcome the eleventh freeze in fuel duty delivered by a Conservative Chancellor since 2010. Pay is lower on average in the rural communities I represent, so the extension of the universal credit uplift will make a real difference.
As well as the additional £1.2 billion in Barnett consequentials for the Scottish Government as a result of today’s announcements, I especially welcome the direct investments that the UK Government are making into Scotland through the levelling-up fund. My colleagues on my local council, Scottish Borders Council, will, I suspect, warmly welcome that fund, and I am sure that they are already preparing strong bids to be submitted. Scotland has two Governments. They both have a stake in its success, and Scotland is best served when they both play their full and active role.
Extraordinary times call for bold action. The Chancellor and this Government have provided that throughout this crisis and have done so again today. This is a Budget for jobs that will give security and hope to families across the United Kingdom. It deserves all our support.
Chris Bryant (Rhondda) (Lab) [V]
This Chancellor has an extraordinary record: he has overseen the biggest decline in economic output of any major economy and the largest number of excess deaths in the world. Why has the UK done so appallingly? Well, for a start because the Tories starved the NHS for 10 full years. We have fewer than seven intensive therapy units per 100,000 head of population in this country. Germany has 30. Now, today, there is a hidden cut of £30 billion to the NHS budget. Our social care for the elderly is a disgrace after 10 years. The poor, the elderly and key public sector workers in the Rhondda have died in their scores, but the Chancellor has not said a word about the poverty that is at the heart of that.
This Chancellor has repeatedly made poor decisions. He excluded 3 million people from any support whatever over the last year, including tradespeople and people in the creative industries. His vanity project, eat out to help out, directly contributed to the second wave of deaths. He fought against a firebreak in the autumn, which led directly to a much worse wave of deaths in January this year. He constantly delayed decisions about extending furlough, which meant that people were laid off completely unnecessarily. His support for the aviation industry, which is vital in this area, has been non-existent. He has failed to understand that it is easy enough for a middle manager to self-isolate in a large house in suburbia, but if you are on a daily or an hourly wage with hungry children to feed, it is impossible. He opposed free school meals in holidays and now he is starving local council budgets, even though councils are doing all the work that we rely on. We even have a Prime Minister who thinks he is so hard up and so hard done by that he has to set up a charity with a single beneficiary—himself. But there is no pay rise today, is there, for the people we all applauded last year? What hypocrisy!
The Chancellor boasts about spending £407 billion. It is easy to spend taxpayers’ money. Time and again, he has awarded massive contracts to people who have been recommended by Tory MPs and peers, and has now unlawfully refused to reveal those contracts. A few have massively and immorally enriched themselves on his watch.
I have one final complaint. In the old days, Chancellors used to resign honourably if any part of their Budget leaked before it was announced to Parliament. Purdah keeps Chancellors honest, because privileged access to information in the Budget has a value and a currency, especially in the markets. I know this Chancellor is very pleased with himself—he has done a video to tell us as much—but an empty pot makes a big noise and fills no bellies.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
It is rare that one can single out a day when everything changes, but for Teesside this Budget day is such an occasion. The announcements that Teesport is to become a freeport, that Treasury North is bringing hundreds of senior decision-making jobs to Darlington, and that Middlesbrough is to receive £22 million from the towns fund are each fantastic. Taken together, they are historic. They will create jobs, prosperity and opportunity for talented young people and mark a reset moment for my local economy and society.
Enormous credit is due to our Mayor Ben Houchen, who has constantly raised ambition. He has done hugely impressive work to co-ordinate our area’s bid and has been such a strong advocate for rejecting the idea that Teesside’s best days are behind it, or that there should be limits to our ambition. This is mirrored in the fantastic work of my Tees Valley Conservative colleagues, who have made such a difference since their election in 2019. While Labour talks Teesside down, we are levelling Teesside up.
We should remember that nothing that has happened today was inevitable. In particular, a freeport offering serious tax and customs incentives for companies to bring new investment and jobs would have been impossible had Labour had their way and we had either not left the European Union or had stayed trapped in the customs union. Nor did Labour deliver anything like this level of good news during their long years in power locally and nationally, despite Tony Blair, Peter Mandelson, Alan Milburn and others all representing Tees Valley constituencies.
This is where we come to the importance of leadership. This Budget comes from a northern Chancellor representing my neighbouring seat of Richmond and delivering in full for the Tees Valley. He has made an extraordinary contribution to our country over the last year and today he has made a contribution to the Tees Valley that will be felt for generations. More broadly, this is a really sensible Budget for the long-term health of our economy and public finances. The Chancellor is right to keep delivering strong support for our economy as we emerge from the pandemic. We went into this crisis together and we will come out of it together, but equally it is absolutely right to start doing the hard work now to restore order to our public finances. With debt at 100% of GDP, we need to take the tough, but responsible choices that will ensure our future is not mortgaged to chance. As things stand, even a 1% increase in the cost of Government borrowing would cost taxpayers an extra £25 billion a year by the end of this Parliament. Taking sensible steps now to bring the deficit down while still protecting the vulnerable shows that the Conservatives remain the party that people can trust to govern in the national interest.
I am delighted that the new super deduction has been introduced alongside the higher rate of corporation tax. Incentivising businesses to invest in new machinery will be a massive boost and help to put rocket boosters under what has been sluggish productivity growth for a long time. This is truly a Budget to build back better, and I commend it to the House.
John Spellar (Warley) (Lab)
Let us be fair, this Budget does try to tackle some of the gross injustices that have plunged many families and small businesses into dire financial straits, often because they do not fit some neat and tidy category, especially freelancers and the self-employed. What they most want to do is to get back to work, and that, frankly, is why I was not only disappointed, but surprised that the Chancellor did not put much more emphasis on the successful roll-out of the vaccine and the health effects and opportunities that opens up.
Fairly or unfairly, that does give the impression that the Chancellor has lost the battle inside Government with the statistical modellers. The Government are seeming to move ever further away from risk management and towards risk avoidance and a belief in blanket bans, rather than seeing how different parts of society can be opened earlier to get the economy moving and people back into gainful and, from the Chancellor’s viewpoint, taxpaying employment.
Unfortunately, Whitehall now seems to be drifting back into its default setting of one-size-fits-all and the convoy having to move at the speed of the slowest ship. Either the Chancellor has lost the war for the Prime Minister’s ear or, like many Ministers and civil servants now, he seems to be focused more on how he will come out of the public inquiry than managing risk effectively. Harold Macmillan once said that the British public expect their Chancellors to be bishops or bookies, and I fear today that the Chancellor has revealed his inner bishop.
The vaccine roll-out programme provides an effective model for governance, and the Government should learn from that. It shows that the Government, the public sector, academia and industry can really work together, making decisions in real time and rapidly rolling them out, and that can transform the country. It should therefore be a learning experience and seen as a template, not just treated as a necessary exception to an outdated anti-Government agenda that has dominated this Government for so long.
The final point I want to address is related to Brexit. Why, when we are out of the EU, are the Government, surprisingly, accepting that we are still bound by its procurement straitjacket—more so, indeed, than many continuing EU members? Frankly, I do not understand it. The Business Secretary is holding talks with Vauxhall, but the local police forces do not buy its cars. We give grants to bus companies to buy Chinese buses. The MOD is still sorting out the fleet solid support. The Chancellor should have made it clear to Departments, the civil service, local councils and all public bodies that they should buy British first, get money moving and get the British economy in all parts of our country back together.
Sir David Evennett (Bexleyheath and Crayford) (Con) [V]
I welcome my right hon. Friend the Chancellor’s Budget and the measured, sensible and constructive approach that he has taken. The extension of universal credit uplift; the extension of the furlough scheme to September with employees continuing to receive 80% of wages for hours not worked; businesses making small contributions as they reopen; continuing the extended support for the self-employed; and doubling the cash incentives to firms that take on an apprentice—all good news indeed. The Chancellor’s financial assistance has certainly been a great help to businesses over the past year, and although so many challenges for businesses still remain, this is undoubtedly a Budget for business and getting the economy back on track.
Small and medium-sized enterprises are the backbone of our economy, providing jobs, paying taxes and being entrepreneurial. Coronavirus and the lockdown measures have hit them hard in my constituency and across the whole country. I particularly welcome the extension of the business rates holiday until June and the discounted business rates for the remainder of the next financial year, which will save businesses £6 billion. News of the business rates holiday will be most welcome across the country, as it is a sizeable operational expense for many business, and this measure will help to mitigate the impact of the coronavirus pandemic.
Regrettably, the hospitality sector was one of the first industries to close and will be one of the last to reopen. I have had many discussions with the Chancellor and local businesses from the sector. I know that they will be grateful for the support announced today, including the reduction of VAT rates for hospitality and tourism to 5% until September and 12.5% for the following six months, amounting to £5 billion of VAT cuts for businesses in hospitality and tourism. The £5 billion new restart grant scheme, on top of the £20 billion that the Government have already provided, will also help shut-down businesses to reopen after the lockdown. This will be a great help as we begin to recover from the pandemic, as will the new recovery loans.
The Budget provides us all with hope for the future and allows us to begin to get the economy moving again. Hopefully, this will mean that we can enjoy hospitality, tourism and social opportunities, of which there are so many across my borough of Bexley. There are many places to visit, including sport and leisure facilities; our excellent parks—Hall Place being a particular favourite of mine; a wide variety of restaurants, such as Assos in Crayford and Stuzzichini in Bexleyheath; pubs, including micropub the Penny Farthing in Crayford; entertainment venues; and historic sites. We need people to be able to get back to normality and socialise safely, to visit places and shops, and to spend money to get our local economy in Bexley borough thriving again, as well as the rest of the economy across our whole nation.
I strongly believe that my right hon. Friend the Chancellor and his team have struck the right balance, and I congratulate them on this excellent Budget. I am very pleased to be able to support him in the excellent work that he is doing.
Rachael Maskell (York Central) (Lab/Co-op) [V]
It was critical that today’s Budget plugged the gaps in support, built a financial bridge to see us through this next phase, stabilised the economy, and invested in rebuilding a resilient economy for all. It should have moved us from short-term help to secure, long-term foundations, and pivoted from an economy driven by deep levels of inequality to one that values every worker, every business and every community.
Now confirmed by the Office for Budget Responsibility, the economic failure outlined today goes to the heart of how this Government have mismanaged the pandemic, leaving the worst health and economic legacy of any developed country. They have failed to plug the gaps in support. Businesses, charities and people will struggle, with greater turbulence, pain and austerity to come—not the stability and investment that Labour would have instilled. It is the same old Tory recourse to bear down on the most in need, regurgitated through their broken ideology, plunging us into another decade of austerity with no lessons learned. The lifeline that many were hoping for was never thrown.
Take charities, for example, which are over £10 billion in debt. The Prime Minister promised in this House last November:
“We will be doing much more over the winter to support the voluntary sector”—[Official Report, 2 November 2020; Vol. 683, c. 41.]
Those were words of hope—and yet, winter is over, the Budget done and barely the crumbs thrown. Starving charities will choke off the social recovery we long to see. The Government’s Victorian belief about charity fails to make the connection that charities today are the engine rooms of social transformation and building community resilience. Having closed their shops and stopped their fundraising, the Chancellor is now denying them their future.
Let me turn to my constituency. York is one of the worst-hit economies in the country. In my Budget submission, I set out three pillars for investment to rebuild York’s economic foundations. First, BioYorkshire would have put York at the heart of the global bioscience economy through significantly cutting emissions and reducing waste, while creating 4,000 green collar jobs and upskilling 25,000 people. Just £12 billion for a green investment bank in the year of COP26 shows no commitment to mitigating the climate crisis.
Secondly, I called for a high street recovery fund for York—the eighth worst-hit high street—and not a Tory towns fund that will benefit three Labour-held constituencies out of 40 areas. This is Tory self-interest put ahead of public need.
Finally, I called for a community business hub to harness innovation, talent and skills by supporting the growth of new businesses, including social businesses, to generate not only a secure foundation for future jobs, but greater community wealth. The Chancellor failed to respond to the needs of our communities. Today’s Budget should have been about support, stabilisation and long-term security to transform our economy and protect our communities. But, of course, those are Labour values.
Kevin Hollinrake (Thirsk and Malton) (Con)
I draw the House’s attention to my entry in the Register of Members’ Financial Interests.
As a northern businessperson, I was very pleased with the Budget statement—it was pro-business and pro-north. It was also an honest assessment of where we are today. I was quite astounded—perhaps I should not have been—by the response from the Leader of the Opposition, which reminded me of what Churchill said:
“Some see private enterprise as a predatory target to be shot, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon.”
That is what private enterprise is, yet all the Leader of the Opposition talked about was public services. Important though they are, this Budget was about the recovery from covid, which is critical. We cannot have the public services without the generation of wealth, jobs and taxes. That is how we pay for public services, so it was absolutely right that that was the focus of the Budget.
I am pleased with many of the things in the Budget for the north, including freeports in Teesside, Treasury North in Darlington and the UK investment bank in Leeds, for which my hon. Friend the Member for Grantham and Stamford (Gareth Davies) campaigned for heavily. Also, the ongoing business support is very important to the hospitality businesses of Thirsk and Malton.
We need to be honest, and I know the Chancellor will be when we have got over the covid crisis, about our future spending challenges. Because of this country’s demographics—we have an ageing population and a reducing fertility rate—we are going to see more and more pressure on fewer and fewer taxpayers, particularly to sustain pensions, healthcare and social care. That is true to such an extent that according to the Office for Budget Responsibility our debt to GDP ratio, which is currently 100%, will be 314% by 2060 if we do not do anything about our tax system. In many ways, the Budget was a short-term approach to recovery, which is absolutely the right approach, but we need to think differently about the solutions going forward.
I do not want to see a bigger state or higher taxation, so it is a difficult conundrum. One solution that I would like to see is an adult social care premium, which would tackle one of those cost pressures. It is not a tax any more than motor insurance is a tax; it is a small amount of money that people put aside for a rainy day. It is done on a mandatory basis and will solve one of the key problems.
As my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) said, we need to make sure that we set a fair and level playing field and stable framework for businesses. Because of the threats from Amazon and the like, one way we can do that is to scrap business rates altogether and replace them with a small increase in VAT. That would be a simple solution to the problem and set that fair and level playing field for many SMEs in this country.
Rushanara Ali (Bethnal Green and Bow) (Lab) [V]
This Budget completely fails to address the scale of the economic challenges facing our country in the light of the global pandemic, which is still affecting people throughout our country; in the light of the years of uncertainty caused by Brexit which, even with the Government’s limited trade agreement, will hit economic output by 4%; and in the light of a decade of Conservative economic policy and austerity, which has weakened the foundations of our economy and society.
UK GDP fell by nearly 10% in 2020, with the deepest recession in any major economy. We have seen a high level of unemployment, with 1.74 million unemployed, and young people are facing the highest level of unemployment in a long time, with nearly 1 million set to be unemployed. Of course, we have seen the huge loss of lives in our communities, with more than 123,000 people having died—the highest death toll in Europe. We have seen the inequalities that exist in our country play out by hitting some of the most disadvantaged in our communities the hardest. Economically, women, young people, those from black and minority ethnic communities and those from the poorest communities have been hit hard.
Yet the Government’s response does little to shore up our public services and our national health service, which have been at the forefront of protecting us; little to provide support to local government; and little to tackle youth unemployment. The kickstart programme has got only 2,000 people into employment, yet hundreds of thousands of young people have been made unemployed. That is why I am calling on the Government to do more to help our young people. This Budget does not do enough at all.
On public services, we desperately need the Government to provide support to our schools, which have suffered deeply in this crisis. As for the tax rises, the Government have already shown their true colours by increasing taxes, such as council tax, on families who have been affected deeply by this crisis. The universal credit uplift is welcome, but it is only for six months, and in constituencies such as mine, with high child poverty, we need that to be a longer-term response.
If the Chancellor needed inspiration, he should have looked at what the Americans are doing—what the Biden Administration are doing—in investing nearly $2 trillion in a rescue plan to generate economic growth, providing much more direct support to small businesses and ensuring that families who desperately need support get much more help. That is the scale of ambition that we need in our country if we are to promote growth to pay the debt that we needed in order to deal with this crisis.
Nicola Richards (West Bromwich East) (Con)
I congratulate the Chancellor on setting out such an optimistic Budget. There is not enough time to cover it in its entirety, so I would like to focus on just one part.
I am absolutely delighted with the announcement that West Bromwich will receive the full £25 million under the towns fund. I thank the Chancellor, his team and the Secretary of State for Housing, Communities and Local Government for all the work that they have done. I notice that the right hon. Member for Warley (John Spellar) neglected to thank the Government for the money that we will also be getting for Smethwick, so I thank them very much on behalf of the community in Sandwell.
This kind of investment is so important for us. It is recognition that areas such as West Bromwich are simply not used to receiving because we have not had that many people fighting our corner. I have been a member of Sandwell towns fund superboard, so I refer Members to my entry in the Register of Members’ Financial Interests, and I know that everyone will be delighted with this news. I pay tribute to all those who have spent so much time preparing the successful bid.
There has, sadly, been a period of neglect, but we are putting that right and we are starting with the accelerated funding programme for phase 1 of our plan to completely refurbish the outdoor market, a vital hub of commerce. In fact, work has already begun on the project. We cannot underestimate the benefits that this will bring. Although it is still busy, the old outdoor market in its current form has encouraged antisocial behaviour, as the stalls acted as a shelter from CCTV. Putting this right will start us on the right journey to attract all those former shoppers back to the town.
We are so lucky to have Dartmouth Park and Sandwell valley, in particular, on our doorsteps. It is a great place, among a busy and industrial part of the Black Country. Creating a better green corridor and walking link to these sites from the town will be great. Our plan also involves carrying out repairs and upgrades to both West Bromwich town hall and the library, restoring them to their former glory. This will create 1,000 seats in the town hall’s theatre.
We are also going to refurbish the indoor market. I am excited about quite a lot of these plans, but for me, this marks a firm step forward. Our indoor market has been the same since the ’70s. Locals will recall that it was the only place that people could get a West Bromwich Albion kit from at one point. Sadly, the market is so old and run down that this has serious consequences for trade. I often catch up with Dave from the pet stall, who explains this well. At a time when only essential stalls could open due to covid, he was not able to. Because the stalls are so old, there was nowhere to secure the stock of the non-essential market stalls. It meant that he could not open at first. For me, it was a sign of decades of missed opportunities, but we are putting that right and I am looking forward to meeting the indoor market holders to find out what they want from this deal.
Our towns fund investment plan in Sandwell goes far beyond physical infrastructure. The Sandwell civil and mechanical engineering centre is another part of this great plan. From conversations with Sandwell College and others, it is clear that we need to make more training opportunities available in engineering. We are also looking to help to tackle digital exclusion. Our bid to create a “free at the point of access” community digital den in Greets Green and Wood Lane community centre will enable digitally excluded residents to get online and fully engage with digital services.
Matt Western (Warwick and Leamington) (Lab) [V]
It is a year ago that we sat in a packed Chamber to hear the Chancellor claim that he was
“releasing the counter-cyclical buffer”.—[Official Report, 11 March 2020; Vol. 673, c. 279.]
I have to say that at the time, I thought it was something to do with letting his neighbour out of his fridge, but in fact, none of us is still any the wiser. More seriously, by that day the Prime Minister had already chosen to miss the first five Cobra briefings on the epidemic. He had indeed gone AWOL. That was a time when we should have been hearing the drumbeat of a Government prepared to face the threat. Instead, we heard:
“We will protect our country and our people.”—[Official Report, 11 March 2020; Vol. 673, c. 278.]
Except they did not: 123,000 deaths and counting, an economy that has crashed, falling 10% last year, and the Government presiding over the worst death rate of all the major nations. They got it wrong. Now we face the worst economic damage of all large economies, the consequences of which will be suffered for decades to come. They got it wrong.
Having sat and listened to the Chancellor’s speech, I find it extraordinary that he did not once mention the need for greater investment in our health service. Nor did he choose to acknowledge the work of all those on the frontline, including social care workers, and repay them for their courage and professionalism. Sadly, he has chosen not to respect their efforts. One thing we have learned from the past year is that the Government do well to listen to the Opposition—for example, the suggestion to introduce a furlough scheme. I welcome the Government’s announcement that they will be extending that scheme for a further six months, but they should have done this from day one, as happened in Germany, where the scheme will run until early 2022.
The truth is that the Chancellor’s announcements today do little to address the foundations of our economy. Those foundations have been undermined by the austerity of the past 10 years, but this relates not only to our economy but to our social fabric and the increasing inequality laid bare by the pandemic. But not once did the Chancellor mention inequality. We can measure a Government by their priorities. The Chancellor talked up his freeports, but it all sounded a bit emperor’s new clothes. This is a Government who are continuing with HS2 despite the fundamental restructuring of our economy that is going on, yet they are unable to recognise that a council house building programme is desperately needed. When it comes to our businesses, all that their leaders wanted to hear was some certainty for a country that has been bedevilled by the policies of successive Conservative Governments resulting in a steep decline in business investment. The Chancellor has got it wrong.
Where is the vision and delivery of public-private investment? Where are the plans for the network of electric vehicle charging points and hydrogen infrastructure that we need if we are to deliver net zero? It is not enough to leave it to those in the private sector, as they themselves state. Finally, it is not enough to continue with the business rates holiday. The Chancellor failed to do the right thing and undertake the wholesale revision needed to address the massive distortion in our economic landscape. The evidence is damning. The OBR has underlined the fact that we have sustained the worst economic damage of any G7 country, and it will be the public who pay for the Chancellor’s mistakes. A word of advice, then, for the Chancellor: he needs to start acting in the national interest and not in his own self-interest, or the public will never forgive him. Once again, he has got it wrong.
Saqib Bhatti (Meriden) (Con) [V]
I refer Members to my entry in the Register of Members’ Financial Interests. If there is one thing I have learned for sure in my short time in Parliament, it is that there is no such thing as an easy Budget. I commend the Chancellor for the balancing act he has had to do today to protect jobs and livelihoods while also being fiscally prudent and responsible and looking towards the inevitable recovery. I say “inevitable”, but it is only so because of the measures that my right hon. Friend has taken over the last 12 months. I commend him for his Budget and his characteristically honest approach with the British people.
As the acting chair of the all-party parliamentary group for small and micro business, I want to focus on some of the measures for small businesses, but before I do so, I want to thank the Chancellor for the £50 million allocated to develop transport improvements around the HS2 Birmingham interchange station in my constituency. These moneys are going to support economic generation and development around Arden Cross, which will be one of the key economic zones in the country. Crucially, by making land use more efficient, it will protect hectares of green belt, which is already under too much pressure in my constituency. I also thank the Chancellor for the renewal of the airports and ground operations scheme for a further six months. With Birmingham airport in my constituency, any and all support is welcome to protect jobs and protect this key economic asset, which contributes billions to the local and national economy.
I turn now to small businesses. I will be looking for further detail on what has been announced today, but I thank my right hon. Friend for recognising the importance of our small businesses. I know that much will be said in the weeks and months to come about the impact of the corporation tax rises. Like me, he is a low-tax Conservative, and I know that he will not have taken this decision lightly, but I thank him for limiting the impact of corporation tax on small businesses. There will be many up and down the country that will be struggling for the foreseeable future, and having one of the lowest small profits rates in the world is welcome. We must shore up our public finances, but we must also recognise the hard-working people across Britain who need our support.
I also welcome the Help to Grow scheme. It is no secret that the mortality of start-ups is exceptionally high in their early years, and I welcome the idea that we can help businesses to become more productive, more efficient and more profitable. Help to Grow really does summarise the Chancellor’s intentions and ambitions. I welcome the extension of rates relief. As I have said in this House before, I look forward to hearing further from the Treasury about reforming business rates, following the Treasury consultation that took place last year, because we can afford to be ambitious and we absolutely should be.
Today’s Budget will be pivotal. It recognises the pain that so many people have experienced over the last 12 months; it provides certainty for the anxieties of the British people and British businesses across the United Kingdom; and it looks to the future so that the British people have the tools at their disposal to be ambitious, to be optimistic and to show the world that, while covid-19 tried its best to bring us to our knees, we the people of Britain refuse to be beaten.
Kim Johnson (Liverpool, Riverside) (Lab) [V]
Today, we needed to see a Budget fit for the crises we are facing, one which fundamentally reshapes the foundations of our economy and delivers an ambitious programme to provide better living standards, protect jobs and livelihoods, and deliver strong public services, but it falls short of a long-term recovery plan and investment in our public services, including the NHS, schools and particularly local councils.
The Chancellor’s speech today included a lot of cheap headlines and stolen rhetoric, but no substance. Still deep in the throes of a public health emergency and staring down the barrel of a recession and an unemployment crisis on the scale of the great depression, tinkering at the edges just will not do. The gloss and spin do nothing to hide the fact that this Budget has done little to address the vital issues of deepening poverty, inequality and insecurity at work. Instead, it does the bare minimum to prop up the current system and kick the can down the road on the jobs and debt crisis.
It is indefensible that the Chancellor has only extended universal credit by six months. A lifeline for millions of the most vulnerable will be wiped out at the same time as furlough ends, and this will push hundreds of thousands of people deeper into poverty, including the 14,000 people on universal credit in Liverpool, Riverside. With 4.2 million children living in poverty in the UK today—many of them in my own constituency, which has a high of 30.4% compared with a national average of 18.4%—this Budget should have taken steps to tackle the child poverty crisis by making the universal credit uplift permanent, extending it to apply to legacy benefits, abolishing the cruel benefits cap and ending the two-child limit.
While the extra measures that have been announced to support people and retain jobs during the pandemic are of course welcome, including the extension to furlough, we need to see steps taken in relation to the existing gaps, including support for the 3 million excluded, who have been systematically abandoned by this Government and left to survive the crisis without support. We know that the inability to self-isolate for many workers has been a key driver of covid, due to the low rates of statutory sick pay, precarious contracts that prevent workers taking time off and the no recourse to public funds policy that prevents most migrants from accessing state support. Instead of raising SSP, the Chancellor has chosen to cut it in real terms at the height of a pandemic by raising it by just 50p. Let us call it what it is: an utter failure of public policy and leadership.
I am a very proud Scouser, and I am privileged to represent such a resilient city, which always fights back to protect its people, but let us have a fair fight. Give us the money we need to protect jobs and livelihoods and keep our economy growing, and we will respond by supporting our businesses and our workforces to come back much stronger.
Laura Farris (Newbury) (Con) [V]
There is nothing inevitable about high unemployment. Even when the storm has raged as violently as it has in the last 12 months, we have seen what the Government can achieve. Twelve months ago, the term “furlough” was completely unknown to us. Today, more than 30 million people have had most of their wages paid by the Government for most of the year.
To me, the most moving part of the Chancellor’s statement earlier was from the OBR—that it had revised its forecast that unemployment would peak at 11.9% and estimated that Government action had saved 1.8 million jobs in this country. That matters to me personally because, when I made my maiden speech on 24 February last year, I closed by saying that the jobs and livelihoods of my constituents would
“guide my work in this House.”—[Official Report, 24 February 2020; Vol. 672, c. 88.]
That has not changed.
There are three issues I want to touch on this evening. First, I want to talk about what this Budget means for female employment, which I have looked at carefully in my role as co-chair of the all-party parliamentary group on women and work. There are different reasons why women’s employment has been particularly affected by the crisis, but some of it is sectoral. Hospitality, retail, leisure and the beauty industry employ disproportionate numbers of women and have been particularly hard hit. In this Budget, every business in those sectors can claim a restart grant of some kind, whether it is £6,000 or up to £18,000. Taken together with the continuation of the furlough, that will be a huge factor in sustaining and rebuilding opportunities for women in the labour market.
The second point I want to raise is linked to training and apprenticeships. The kickstart scheme, which we heard about last year, was directly focused on young people and their opportunities, but today’s announcement went wider. It links apprenticeships to the lifetime skills guarantee and incentivises businesses to offer apprenticeships irrespective of age. That is hugely significant. It is fair to say that, whenever long-term structural unemployment has taken root in any period since the second world war, Governments of whatever party have tried and failed to tackle it. The reason for that has always been the long-term attrition of workers’ skills. This is the first time, to my knowledge, that any Government have put training and skills at the front and centre of the recovery package, and I welcome that.
The jobs that exist in 10 years’ time will depend on our choices today, their impact on the labour market and our readiness to react to changing circumstances. The super deduction, the offering to innovators through R&D tax credits, the visa reforms for highly-skilled workers and the work on productivity through the Help to Grow scheme are all welcome. I represent a part of the world that sits at the heart of the—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I am sorry Laura, but we have to leave it there.
Munira Wilson (Twickenham) (LD) [V]
Today’s Budget statement represents a massive missed opportunity. There were a number of measures to be welcomed, but the silence in so many areas was utterly deafening. There was absolutely nothing on social care, despite grand promises from the Prime Minister on the steps of Downing Street and the Heath Secretary promising proposals this year. There was nothing on further support for the NHS. With the backlog of non-covid care stacking up, lives are at risk, and our heroic NHS staff are on their knees. There was nothing on boosting mental health and wellbeing support for our children and young people, who have been hit so badly by this pandemic. Investing in our future means investing in our youth, not just in bricks and mortar.
There was nothing to help those exporters hit by Brexit red tape. Just last week, a chocolate maker in my constituency told me that he has been unable to export a single bar of chocolate to the EU since 1 January. He normally exports a quarter of a million pounds-worth per year. There was nothing on building more affordable and social homes—just measures to make homes yet more unaffordable. There was precious little on the environment and building a green economic recovery, and there was close to nothing for the 3 million hard-working entrepreneurs and small business owners excluded from Government support, on whose backs our economic recovery will be built.
I briefly want to focus on that last point: the small business owners who continue to be ignored by Government, despite having paid their taxes and often being so central to our local economies and our communities. With a year having elapsed since the emergency economic measures were introduced by the Chancellor, it is unforgivable that the vast majority of the 3 million excluded remain overlooked—in particular, directors of limited companies. These are not wealthy tax dodgers, as the Chancellor likes to make out. These are ordinary, hard-working folk at the heart of our high streets, including hairdressers and others—often women—who have built flexible, home-based businesses to fit around caring responsibilities.
My constituent Claire Leroux built her travel business from scratch as a single mum, eventually employing five people, with a turnover of £350,000. She has had to make her staff redundant, and her business hangs in the balance as she lives off her savings. Hairdressers, such as Elements in Teddington High Street, are struggling for survival. Owners are let down by the lack of personal financial support as directors and no VAT relief from the Chancellor for personal care businesses, as there has been for hospitality. The Treasury has had a compelling, workable proposal for a directors income support scheme put to it by experts, yet still nothing was offered today. I say to the Chancellor, it is not too late to help the 3 million excluded and put forward a revenue support scheme to support small businesses.
David Linden (Glasgow East) (SNP)
The Scottish National party has spent months calling for the Chancellor to make permanent the £20 uplift in universal credit and indeed extend it to claimants on legacy benefits. By announcing a six-month extension while ignoring those on legacy benefits the Chancellor is essentially just kicking the can down the road, and we all know that that is only to get the Conservatives through the May local and national elections. Let us be clear: the Chancellor is proposing to swipe away the £20 uplift just when the furlough scheme will end, when unemployment will peak and energy levels will start to go up again. For those who most need the safety net of social security, this Budget will see them teetering on the brink of an autumn knife-edge.
Removing the uplift in the autumn will cut over £1,000 a year from household budgets, and this announcement will not protect those who need our help the most. That is why the Trussell Trust has said that today’s Budget
“fails to give families on the lowest incomes the ongoing protection they need. The six-month extension to the UC uplift only delays the hardship people will face in the year ahead.”
The Women’s Budget Group says:
“Extension to the #UCUplift is welcome but it confirms what we all know. UC is not enough to live on. We need a #SocialSecurity system that is a true safety net and reflects the needs of those who rely on it.”
Meanwhile, the Joseph Rowntree Foundation has said:
“It is also totally indefensible that people who are sick, disabled or carers claiming legacy benefits continue to be excluded from this vital support.”
The Poverty Alliance echoes this call, stating:
“The decision should not have been between ‘hardship now or hardship later’. It should have been a simple decision to say ‘hardship never’ and to make the increase permanent.”
Out of work support will be at its lowest ever level since 1990 when universal credit is cut in six months’ time. The universal credit uplift should have been seen not as an emergency measure in response to the pandemic, but as a reversal of the long-standing cuts that bring it back in line with its original intended value. In essence, the uplift reverses cuts to universal credit over the past eight years and brings it back in line with rises in the cost of living. Indeed, if the uplift is removed, 2021 and 2022 universal credit rates will be 11.5% less in real terms than in 2013.
A thread of inequality runs through this Budget like a stick of Blackpool rock. There are 4.2 million children living in poverty across the UK, and hundreds of thousands of people rely on food banks and struggle to pay essential bills. The Chancellor’s Budget falls short on every measure to protect household budgets and family incomes, but once again we see the tale of two Governments: the Tories look to cut welfare support, while the SNP Government invest in game-changing policies such as the Scottish child payment and receive praise for their budget from anti-poverty campaigners.
It is clear that Scotland faces a choice of two futures: the long-term damage of Brexit and Tory austerity cuts at Westminster, or the opportunity to protect our place in Europe and build a strong, fair and green recovery as an independent country. With two votes for the SNP in May, we can put Scotland’s future in Scotland’s hands, not Boris Johnson’s.
Ben Bradley (Mansfield) (Con) [V]
With just a few minutes to speak in today’s debate I cannot discuss all the excellent news, but would like to thank the Chancellor and everyone involved in putting these packages together. There is much to be thankful for, particularly for businesses and employees looking to get back into work to reinvigorate their businesses in the months ahead as restrictions are lifted. The extension of the VAT cut for some the hardest-hit businesses will be welcomed by many local business owners in my constituency, as will the extension of eligibility for the self-employed scheme in particular. The vast majority of people want to get on the housing ladder, and if they can do so they will warmly welcome the 5% deposit scheme, which will help a huge number of people fulfil that lifelong dream of owning their own home. All of that is very welcome.
In the short time available I want to focus on Mansfield and our local good news, which is twofold. First, a huge thank you to everyone involved in putting together plans and the bid for the towns fund. The £12.3 million announced today is brilliant news. We will have a long-awaited replacement for the old Meden sports centre with a new community health and leisure hub that can help to reduce our health inequalities and deliver better services. That will be a services hub in our town centre, bringing together council, health and employment support services under one roof. It will draw the huge footfall that those services attract to our town centre instead of the existing out-of-town buildings and mean a change in the use of town-centre properties. That will be vital for the future of our high street, with the footfall supporting retail and other businesses.
There will be a business hub in Mansfield Woodhouse and a hub for new technology development and skills at West Notts college. That means tangible change, growth and improvement for our community, the like of which we have not seen for a very long time. It is very welcome.
I thank the Chancellor for choosing the east midlands as home to one of the new freeports. That is important and will be welcomed across the whole region. The impact of the jobs and growth that can come from the site, in conjunction with plans for a development corporation, the boost to green energy and businesses, and the potential for new infrastructure in that part of the world just a few miles down the M1, will be vital for the recovery across the east midlands. Combined with our new approach to skills, adult learning and retraining, which was announced in the FE White Paper, it will help many of my constituents to get into work or back into work and to rebuild their lives after covid.
The Budget will have a genuine, tangible impact on people in Mansfield over the coming years as the new investment turns into physical changes and improvements. It is positive that the economy is predicted to recover faster than was first thought and to hear that interventions in the past 12 months have saved 1.8 million jobs. That is massive, not just for our economy, but for 1.8 million individuals and their families. With our road map in place to lift restrictions in the coming months, the new announcements to support businesses and incomes as we reopen the economy, and the continued success and investment in our vaccine roll-out, we have many reasons for optimism.
Bim Afolami (Hitchin and Harpenden) (Con)
In the short time available, I want to talk about two words: “debt” and “productivity”. The Chancellor has shown in many different ways with this Budget his command of the fiscal landscape, particularly his awareness of the importance of a sensible fiscal strategy over the medium to long term. He has also shown his clear understanding that we depend on the kindness of strangers as a Government and as a country because we depend on low interest rates to sell our debt in the markets. On some level, that is boring, but it is important because the House and the country need to be fully aware of the fact that we are in a highly unusual time for the bond markets.
It is incredibly cheap at the moment to borrow money. There is no doubt about that. Indeed, I have heard many Opposition Members say that we should just borrow money ad infinitum because it is so cheap, but the problem is that it will not be cheap forever. The Chancellor is rightly thinking of the long-term fiscal sustainability of this country. His awareness of that and of the need to ensure that debt is falling as a percentage of GDP by the end of the Parliament is very important. Bearing in mind that the Budget is very generous in many ways, and many Conservative Members have explained how, the Chancellor also has that fiscal framework in mind.
My second point is about productivity. In December 1962, a bit before my time, Harold Macmillan wrote a memo to his Cabinet—it is in Lord Hennessy’s “Winds of Change”, which I urge all Members to read—about one of the major problems of the country’s economy, which he said was the need to enhance our productivity. It is a long-running problem, but the Chancellor is thinking about it in the long term.
One particular measure has not been talked about enough but it is significant: the help to grow scheme for small and medium-sized managers—indeed like my wife, who runs a successful family business. Hundreds of thousands, if not millions of people up and down the country are doing a fantastic job, but could benefit from extra help and support with management training, digital skills training and discounted digital software to help close the gap with higher performing bigger businesses. The Government and the Chancellor are backing our small businesses. That will improve our productivity because small businesses are the heart of our economy. For those reasons, and many thousands of others, I welcome the Budget.
Tim Farron (Westmorland and Lonsdale) (LD)
Probably the most disappointing thing about this Budget is that, at a time when cancer specialists estimate that 100,000 people are in a backlog waiting for treatment, and when Cancer Research UK estimates 35,000 additional deaths as a result of cancer through this covid crisis, it contains not a single additional penny for cancer, and indeed not a single mention of the word “cancer”. The reality is that we need to invest heavily if we are going to catch up with cancer and save lives that will otherwise be needlessly lost. The Government could have, and should have, as we asked them to do, invested in new radiotherapy equipment right across the country, including satellite centres in the likes of Westmorland General Hospital in Kendal in my constituency, and in new staffing and in networking, to make sure that we tackle the forgotten C through this crisis.
Another disappointment is the fact that although there is much-trumpeted help for some of the people who have been excluded from support, once we see the detail of the Chancellor’s announcement, we realise that it amounts to about 5% of those people. Those people will still have to sit on the crippling debt that they have been living with over the past 12 months, so we call upon the Chancellor to backdate his support to those people he is now going to intervene to help.
There is nothing there for the freelancers, directors of small limited companies, taxi drivers, hairdressers, personal trainers and the like, who, as my hon. Friend the Member for Twickenham (Munira Wilson) said, will be the entrepreneurial backbone of any kind of economic recovery as we move out of the pandemic, yet the Government continue, almost gratuitously, to forget those people and leave them in penury.
Representing a constituency that is so dependent on the outdoors and what it does for our economy, and indeed for our mental health, I am appalled that the Government have failed to follow the lead of Northern Ireland and Scotland and provide any support whatsoever for our outdoor education sector, despite the fact that the Prime Minister promised me last week that he would do so. We see outdoor education as an industry, with 15,000 employees, but 6,000 have already lost their jobs. Why can we not reopen safely so that young people can have residentials? If outdoor education centres cannot reopen, why is there not a financial package to help them, as they are vital to our future?
The VAT cut is welcome, but it does not extend to alcohol, and therefore it is a crippling blow to wet-led pubs across the Lake district, the Yorkshire dales and elsewhere. If we care about our local pubs, we need to support them, not advantage huge multinational supermarkets over the local hostelries that are at the centre of our communities. Finally, why did the Chancellor insult our country’s unpaid carers by giving them a rise of only 35p a week, when they deserve £20 more at least?
Miriam Cates (Penistone and Stocksbridge) (Con)
There can have been few more difficult times in living memory to deliver a Budget, so I want to commend and thank my right hon. Friend the Chancellor for his steadfast commitment to serving the British people through such challenging economic circumstances. This pandemic has not finished with us yet, so I welcome the additional support measures announced today, giving hope to many people in my constituency and security to businesses that are still struggling to hold on. The fiscal support provided by this Government is greater than that of almost any other country in the world, and it has disproportionately benefited those on the lowest incomes. That is the kind of one-nation Conservative Government that so many people voted for back in 2019.
I also welcome the Chancellor’s courage in facing up to the fact that we must have a plan for returning our finances to a sustainable footing, to maintain confidence in the UK economy, and to take responsibility for our future, rather than burying our heads in the sand. The modest rise in corporation tax for the largest businesses is a fair way to increase revenues. It is a tax on profits, after all, so those businesses that have been unable to make a profit will not pay. While many companies have had a very tough year, others have seen their takings soar as a result of the pandemic, and it is right that some of those profits should be returned to the taxpayer.
This Budget offers security and responsibility, but it also offers opportunity. I welcome the exciting proposals laid out by my right hon. Friend to set the UK economy on the path to becoming the best place in the world for innovative, high-growth and green investment. However, the proceeds of this growth must be shared evenly across the country, so I was delighted by today’s announcement of £24 million for our Stocksbridge town deal. For decades, towns such as Stocksbridge have been left behind, and previous Governments have failed to solve the problem of how to return opportunity, pride and aspiration to the communities whose sweat and toil have built the prosperity of our great nation.
The launch of the towns fund, back in 2019, in many ways marked the birth of the movement we call levelling up, and the Government have reaffirmed their commitment to that movement today. The £24 million will see improvements to our high street, local transport links revolutionised, a post-16 hub and new jobs and opportunities created for the whole community. The towns fund offers the targeted investment that Stocksbridge so desperately needs, upskilling our workforce, providing conditions for growth and reviving our local economy. There are difficult times ahead, but here we have a plan that offers security, responsibility and opportunity.
On behalf of the people of Penistone and Stocksbridge, I welcome this Budget statement.
Jim Shannon (Strangford) (DUP)
I, too, do not envy the Chancellor. How do we get the balance right of supporting the business sector and supporting the vulnerable while ensuring that we do not add further to the deficit? I believe he has delivered a Budget that is suitable for these times and the special circumstances of coronavirus. It is not easy to do that, but he has tried hard.
My little grandson, Max, and my granddaughter, Freya, who were born during the pandemic as lockdown babies, will most likely be paying off this debt through their taxes for their entire adult lives. What a burden on our children and grandchildren, yet the Chancellor has addressed some of the tax issues to deliver some of the moneys that will be needed to pay back the debt and take the burden off our grandchildren.
The Chancellor also referred to the kickstart programme, which I support. I wish we had it in Northern Ireland. For whatever reasons, Ministers in Northern Ireland have not delivered it, and I have been in contact with the Department to find out why.
I am also pleased to see the extension of furlough, and I believe extending it to September is correct. My concern is that the devolved nations are coming out of lockdown at different times, and therefore there should perhaps be a wee bit of flexibility.
I also welcome that there is no increase in fuel duty. Coming from the rural constituency of Strangford, and knowing my constituents’ need to be able to travel, I think that is a good news story, too. There are many other stories to which I could refer, such as the VAT reduction and the rates relief. This is a pro-business Budget, and they are all positive measures.
I congratulate the Government on how they have delivered the response to coronavirus, but we need further work on health. Those with cancer, motor neurone disease, organ failure and many others are in need of palliative care, and the Marie Curie campaign has highlighted that over 82,000 people in Northern Ireland have been bereaved during the covid-19 pandemic, and the number requiring palliative care has doubled over the past 10 years. The need for investment in palliative care must feature in any plan and Budget, and I gently suggest that, although the money for covid-related issues is absolutely right and appropriate, there is also a need for investment in cancer research and palliative care. I would like to see that feature more prominently in the Budget, and I gently and constructively ask that it be taken on board.
I also highlight the financial backing for cancer research and what can be achieved through the superior expertise of British science working alongside international colleagues to produce results. We have seen what is possible through single-minded focus and hand-in-hand support on covid-19.
As with any Budget, there is much to be welcomed and much to be desired. We need to balance the books as best we can in this world, which is so out of kilter. I look forward to the Government offering greater support to those who need it most at this time.
Anthony Mangnall (Totnes) (Con)
It is always a pleasure to follow my friend, the hon. Member for Strangford (Jim Shannon), who spoke such sense. I can only hope that others who sit on the Opposition Benches will follow his lead.
Of course I welcome this Budget, and I welcome the way in which the Treasury has engaged with businesses and with Members on both sides of the House to hear what needs to be done at a time of great national need. The Chancellor, as other Members have said, has acted responsibly to ensure that our fiscal and financial firepower is able to adapt and be resilient in future years, but he has also been responsible, ensuring that, when we see the road map unveiled and businesses are able to unlock at the end of June, they can do so with the certainty that the Government are there to support them.
The move to extend the 5% VAT cut, on which I am sure I have annoyed the Treasury on a number of occasions, is a welcome step. More importantly, the improvement of a sliding mechanism to 12.5%, providing that certainty for businesses, is also very welcome. In seats such as mine, where tourism and hospitality are so integral to our local economy, it will make all the difference for those businesses that have faced over 200 days without customers or service. It will make the difference, and the same can be said for the provision on business rates.
One overlooked group has been young people. I know that the Chancellor has bonded with young people recently by saying that he is a Coca-Cola addict. Well, this Budget goes further. It also makes the point that, to ensure we have productivity and growth in future years, we are able to provide the opportunity for young people to find the jobs they need, get the training they want and get the support that they need in the economy not just in London, but across the entire United Kingdom. It is particularly welcome to hear about work coaches, the kickstart scheme, the life skills guarantee, and encouraging and incentivising further apprenticeship schemes. That is extremely welcome, but I hope we can go further. Since organisations such as the National Union of Students seem incapable of doing so, we must stand up for university students who have over-paid for essential Zoom lessons over the last 13 months.
Lastly, it is particularly welcome to see a free port being designated in Plymouth and south Devon, not just for Plymouth itself but for the surrounding area. For those hydrographic and oceanographic companies that manufacture in my patch, and for those companies that can export the very best produce of south Devon, this will make a huge difference. It is an example of levelling up across the whole country and our commitment to providing opportunity in every region of the United Kingdom of Great Britain and Northern Ireland. I hope that the Opposition will recognise that this is a Budget that is fiscally pro-business and will deliver for generations to come.
Brendan Clarke-Smith (Bassetlaw) (Con) [V]
This is a Budget that not only supports our country in the here and now, but can truly set us on a path to bounce back from covid-19 and build a brighter future. While the Opposition only see problems and obstacles to reach our goal, this ambitious Budget weaves through them and takes aim to spectacularly hit the target, in much the same way as one of Matt Le Tissier’s wonder strikes the Chancellor would have seen growing up as a Southampton fan.
The furlough scheme has saved many jobs in Bassetlaw. Extending the scheme to September will make sure that businesses can recover in a steady and sustainable way. Many of those who are self-employed have benefited from the self-employment income support scheme. I am delighted that it will now be extended to those who are 2019-20 starters. The restart grants will be of huge benefit for the many retail, hospitality, leisure and personal care businesses in Bassetlaw which have been hit hard by the pandemic. That will be welcome not just in our town centres but in our many villages, as will the extension to the business rates holiday and the tapering that will follow, as well as the VAT cut for the industries that have so desperately needed it.
The temporary extension to universal credit will benefit many of those who have found themselves in difficulty through no fault of their own, not the Opposition’s permanent blank cheque. Home ownership is a British way of life and the stamp duty holiday and mortgage guarantee scheme will allow many young people and their families to get a foot on the ladder. While there will be an increase to corporation tax, the super deduction scheme is both innovative and encourages investment at a time when we need it more than ever. The United Kingdom will be the place to invest.
This Budget also brings with it the fantastic news that the east midlands free port has been confirmed. This will bring 60,000 skilled jobs to our region. This was a bid I was proud to support with colleagues from this House and local stakeholders.
A strong and balanced Budget enables us to pursue many of the priorities that are important for local people and for truly levelling up. Bassetlaw has received £150,000 to put together a business case and apply for the levelling up fund. We are passionate about seeing investment in Bassetlaw Hospital and making sure we also have the mental health provision we need in our communities. We want to see flood defences to protect our homes and businesses, be that in West Stockwith, Retford or Worksop. We want to see investment in our town centres. We want to see improved transport and infrastructure, such as extending the Robin Hood line to Retford. This Budget sets us on a path to recognising those goals and I wholeheartedly support it.
Mike Wood (Dudley South) (Con)
I, too, thank the Chancellor for delivering a solid a Budget statement in very challenging times. His achievement is reflected in the fact that the official Opposition party ran out of speakers well over half an hour ago, so little was there to say in response.
The Chancellor had three primary tasks today: first, to provide immediate support to protect the jobs and livelihoods of the people in our constituencies while the impact of this pandemic continues to be felt so sharply; secondly, to lay a framework for rebuilding and the recovery as part of the road map to reopening; and thirdly, to level up—to rebalance our economy away from over-reliance on a small number of sectors in a relatively small part of the country. He achieved that in today’s Budget, seemingly leaving the Leader of the Opposition with very little left to say—although, being the Leader of the Opposition, that did not seem to prevent him from taking a long time to demonstrate the fact.
The immediate support for people’s jobs and livelihoods is clear. The extension to the job retention scheme will help 5,300 of my constituents in Dudley South, and I am pleased to see that the support offered to self-employed workers is being extended to cover some of the more recent entries into that part of the labour market.
As we start to reopen and rebuild, the support that has been put in place for so many of the parts of the economy that have been hit hardest by lockdown and the pandemic, particularly retail and hospitality—the restart grants; the freeze on VAT for hospitality and tourism; the freeze on duties, cancelling the index-linked duty rises; and the extension of the business rates holiday—is extremely important for major employers in our constituencies.
Finally, on levelling up, the Leader of the Opposition spoke about the last 10 years. Actually, under the last Labour Government, Dudley’s gross value added relative to the rest of the country fell from 78% in 1997 to a really quite woeful 64% in 2010. Since 2013, we have started to address that, and it has started to increase; in the five years before this pandemic, salaries in Dudley rose more quickly than anywhere else in the country. I am pleased that Dudley has been identified as a priority area for the UK renewal fund and the levelling up fund, investing in our people and our infrastructure.
Antony Higginbotham (Burnley) (Con)
In this Budget, the Chancellor and everyone in Her Majesty’s Treasury have pulled out all the stops, left no stone unturned and directed the enormous financial firepower of the Government at building back better. But before we can do that, we have to get through the next few months, as millions more vaccines are administered and businesses prepare to open.
The restart grants will be an enormous lifeline to so many local businesses—gyms such as FX Fitness Experience; salons and barbers such as Jack Jones; and pubs such as the Hapton Inn and the Crooked Billet. They now have a date to reopen and Government support to do it.
However, the Chancellor has also been honest about the economic impact that coronavirus has had. When I was elected in December 2019, yes, it was to level up and give Burnley and Padiham the Government focus they deserve, but it was also to ensure that our economy was properly managed—not the reckless spending that was on offer from the Labour leadership, but Conservative management, which meant that we entered this economic crisis in a way that has allowed us to wrap our arms around the country. That same management will ensure that we can do the same again when the next crisis hits.
It is with that in mind that, as a low-tax Conservative, I agree with the tax measures announced today. While this Budget keeps taxes low, with things such as the VAT reduction sustained and alcohol and fuel duty frozen, it also begins the task of repairing the public finances, which we must do. It strikes the right balance, paving the way for corporation tax to increase on businesses that are making healthy and sustainable profits, but ensuring that losses can be carried back for longer, and it provides much-needed support to our SMEs through a reduced tax rate.
Then we have the announcement of the super deduction. For areas such as Burnley, where we have a significant manufacturing sector, that could be transformational. It means that local businesses in everything from aerospace to construction are incentivised to invest in new equipment and new machinery, boosting productivity, creating jobs and powering our local recovery. We should not under-estimate the impact any of that will have.
Finally, I turn to the levelling-up agenda, which I care deeply about. Just a few weeks ago, I was on the BBC’s “Politics North West”, and the shadow Business Minister said that when Labour was in government, it invested in the cities. As this Budget shows, this Government are investing in the towns, too. Nothing embodies that more than the levelling-up fund and the community renewal fund. These two funds will allow Burnley and Padiham to bid for tens of millions of pounds to regenerate our town centre, boost the high street, improve our infrastructure and make our area a place that people want to live, work and invest. As this Budget shows—
Andrew Griffith (Arundel and South Downs) (Con)
The support that the Government have put in place to protect jobs and livelihoods during the pandemic has been exceptional. The challenge today was to put in place pro-growth, pro-innovation policies to support the economy in the short term and fix the public finances in the medium term. Today, our Chancellor rose to that challenge. He delivered a Budget that puts in place the foundations to build a dynamic, pro-growth, pro-enterprise economy for the future. That is something I am particularly focused on, having spent most of the previous three decades in UK business.
Small businesses in particular—the mitochondrial beating heart of our economy—are central to the recovery. They have borne the brunt of this pandemic, which is why restart grants of up to £18,000 for our retail, hospitality and leisure businesses are particularly welcome, as are the extensions to the business rate holiday and the temporary 5% VAT cut. Together, they constitute a real lifeline for business.
It is also crucial for global Britain that we create the conditions for high-growth, innovative companies to choose the UK as the place to set up shop. Visa reforms to attract high-skilled, talented migrants to come to these shores are particularly welcome, as is the new future fund breakthrough scheme to support innovation and technology businesses.
My right hon. Friend the Chancellor also delivered some candid truths about the need to begin fixing our public finances, which I believe the British people already instinctively understand. Deploying the impressive support during a pandemic was only possible as a result of past sound finances. Without action to rein it in, our debt pile will continue to rise, even after we have recovered from this crisis. Maintaining the quality public services that we all want requires sustainably strong public finances.
A surprise centrepiece of today’s Budget for business was the revolutionary super deduction to encourage companies to unleash their potential and to get on with investing and building the future. In effect, the Government are standing shoulder to shoulder with risk takers, founders, entrepreneurs and investors. When companies invest in capital, they will be able to reduce their tax bill by an incredible 130% of the cost of investment.
As we emerge from this pandemic, we need to build a United Kingdom that is fit for the future. This Budget takes an important step on that path by balancing growth, investment and enterprise with a clear, honest plan to fix our public finances. By doing so, those on the Government Benches will deliver on the promises we made to the British people.
Jacob Young (Redcar) (Con)
Today’s Budget comes as a strong sense of relief for the country, for my constituents and probably also for this House, as it never has to hear me ask for a freeport in Teesside again. I could not be more buzzing that we were successful in our freeport bid, and I thank the Chancellor and the Secretary of State for Housing, Communities and Local Government for selecting Teesside. I also pay tribute to the enormous effort made by my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), who has campaigned on this issue since he was elected. I also pay tribute to the officers of the Tees Valley Combined Authority, particularly Chris Rowell and Julie Gillespie, who I know have worked incredibly hard on our bid. The biggest thanks have to go to our Tees Valley Mayor, Ben Houchen, without whom we would not have achieved the real transformation we have begun in Teesside over the past few years.
This is what this Budget means for my constituents in Redcar and Cleveland: a restart. I felt quite emotional listening to the Chancellor speak about my community in the way that he did, because it is a truth that every Teessider knows that when Gladstone called us “the infant Hercules”, he meant it—and it is not that we were the infant Hercules but that we are the infant Hercules.
Before coming into this role, I spent nine years working and training in Teesside’s chemical industry, so when we talk about protecting these jobs and creating more of them, those are not statistics to me—they are my former colleagues, and I am completely focused on securing their futures. The fatal blow that Redcar and Cleveland experienced just six years ago with the closure of SSI felt like something that we would never recover from. Now, six years on, the 4,500-acre site is going to be the centre point of the UK’s largest free port and home to 18,000 jobs over the next five years. That is levelling up in action; that is the transformation of Teesside.
But for Teesside this Budget is not just about a free port. It is about no personal tax rises in VAT, national insurance or income tax. It is about £150,000 for our council to look at ways to level up our area. I already know two things that they can look at: Eston swimming pool and a proper new pier in Redcar. It is about the Treasury moving to Darlington and having the most influential Government Department on our doorsteps—something I think the Leader of the Opposition will regret ridiculing in years to come. It is about the business restart grant of up to £18,000 to help us to reopen and never have to close again. It is about the 5% deposit mortgages that people can start to claim from next month, making it so much easier to buy a home. It is about the investment in Teesside airport to make sure we can fly again once the restrictions are lifted. It is about extending the VAT cut for hospitality and freezing alcohol duty so that we can all enjoy a cheap pint when this nightmare is over.
There are tough times ahead, but this is a Budget that spreads prosperity and helps us to genuinely level up while we recover from the pandemic. This is a Budget for Teesside delivered by a northern Chancellor, and I fully support him in it.
James Daly (Bury North) (Con)
Although I will try to be more articulate, all I can say to begin with is that this is a brilliant Budget. It is transformational, dynamic, hopeful and inspirational, and it is the basis to change lives.
Colleagues have talked at great length about various parts of the Budget, but I would like to concentrate on a number of factors that affect my constituency. Page 60 of the Red Book refers to the community ownership fund: a £150 million fund to help ensure that communities across the UK can buy local facilities that benefit the people in their areas. I quote:
“In exceptional cases up to £1 million of matched funding will be available to help establish a community-owned sports club or buy a sports ground at risk of loss from the community.”
That could have been written for Gigg Lane. Gigg Lane is central to Bury’s identity. It is a heritage asset, a cultural asset and a sporting asset. This Chancellor has delivered the opportunity for my community—and hopefully my council will come on board—to bid to ensure that Gigg Lane is owned by the community for the people of Bury in perpetuity.
But it does not stop there with the fund. Not only can a community group bid for a sporting asset like that—it can also bid for theatres. As you are an MP very close by, Mr Deputy Speaker, you will know this, but in Ramsbottom in my constituency there is a theatre, Co-op Hall, one of only five in the country, built in 1870 as a court meeting place. It has its original features inside. It is a unique cultural jewel within the country, let alone my region. Local community activists are working together hoping to find a way to buy this asset to create a meeting space for people of all ages, sexes, backgrounds, disabilities, whatever it is, and this offers a chance to do that.
My colleagues have spoken articulately about some of the wide-ranging policies that will benefit millions upon millions of people within our country, but this hopeful prospectus gives communities such as mine the chance to change lives and to change and impact how we feel about our areas. If the pandemic has done one thing, it has made everyone aware of how much pride we take in where we are from, and this Budget reinforces that.
Like the constituencies of a number of colleagues, Bury thankfully has priority status for the levelling-up fund. I have already started speaking to the Chancellor about investment in the world-famous Bury market. Hopefully, with the funding of £125,000 that has been provided, we will not only have Gigg Lane and an 1870s theatre but the world-famous Bury market, supporting our fantastic traders and bringing prosperity to the town. I congratulate the Chancellor on a fantastic, brilliant Budget that gives hope to my constituents.
Mr Deputy Speaker (Mr Nigel Evans)
And Bury market has the best black pudding.
Felicity Buchan (Kensington) (Con)
I warmly welcome my right hon. Friend’s Budget, and the honesty and openness with which it was delivered, because the Chancellor has levelled with the British public as to the scale of the debt challenge that we face as a country. This Budget achieved a delicate balance. It extended Government support to businesses and individuals until the end of September, while at the same time setting out a road map for rebalancing our books. Very importantly, it delayed any tax rises for two years to give the economic recovery time to bed in.
The Chancellor set out that the total cost of coronavirus support will exceed £400 billion. That is very difficult to get a visual sense of, but to put it in context, it is 10 times last year’s defence budget—huge numbers. I warmly welcome the focus on business investment in the Budget. Productivity has been a perennial problem. I also warmly welcome the tiering of corporation tax. In fact, I was with Kensington and Chelsea chamber of commerce last night, and someone suggested that on the call, so perhaps the Chancellor was listening in.
On that note, I want to talk briefly about three constituency matters. One is stamp duty. I welcome the extension of the nil rate, but I feel we need a fundamental reform of stamp duty. Stamp duty is a tax on social mobility, and in my constituency, where property prices are high, it is a disincentive for people to move, with the result that the Exchequer’s tax take goes down. Secondly, I did not see in the Budget any further detail on cladding remediation and the property development tax, so I look forward to seeing those details over the course of the next few weeks. Finally, I warmly welcome the restart grants, but one point I would make is that in London business costs are way higher. Typical rents in London are two to three times the national average, so I would ask the Chancellor to consider a London weighting for grants.
To summarise, I warmly welcome this Budget, and the honesty and openness. We have big challenges ahead, but collectively we can deal with them.
Anthony Browne (South Cambridgeshire) (Con)
I do not normally start my speeches by citing former Labour Ministers in support, but I have noticed that Frank Field, Lord Field, has issued a tweet saying:
“Best budget in my 42 years in politics.”
I always thought he was very wild that Mr Frank Field.
Actually, the ultimate accolade came from the Leader of the Opposition. I listened to his speech from beginning to end, and he had nothing to say—no line of attack. In fact, it is not really surprising. I have been struck time and again since coming here how little the Labour party has to say about growth. The public sector has helped pull us through this crisis, and we have all thanked it deeply, but it is the private sector—businesses, private enterprise—that will rebuild the economy, taking us out of it. Only the private sector can create the jobs that we need and pay the taxes that we need to pay for public services.
This is a Budget for rescue, a Budget for recovery and a Budget for repair. As a Budget for rescue, it is absolutely right that the Chancellor has continued support for people and businesses until the pandemic is well and truly over. His actions have saved 1.8 million jobs, probably more than any other Chancellor in history. As a Budget for recovery, I called for a Budget for growth and that is exactly what this is. There is a whole package of useful measures, such as the Help to Grow scheme, subsidies for apprenticeships and the three-year carry-back. The super deduction for investment is inspired. It will lead to a tidal wave of investment, creating jobs and growth.
In terms of repair, we have a moral duty to balance the books of this country. It would be a betrayal of future generations not to live within our means. For a low-tax Conservative such as me, seeing tax rises I like is as rare as hen’s teeth, but even fiscal conservatives have to admit that sometimes taxes have to rise, and now is such a time. There is no fairer way to do it than to freeze the threshold on income tax and to raise corporation tax on highly profitable companies. As the Office for Budget Responsibility figures show, these measures will lead to the stabilisation of the national debt in 2023—just two years’ time. That is a remarkable achievement and incredibly reassuring.
The Chancellor did not say much about this in his speech, but it is also very much a green Budget, with the retail green bonds; the infrastructure bank, largely funding green projects; the green mandate for the Bank of England and its Monetary Policy Committee; and a review to get London to be the world leader in carbon offset markets. I fully welcome that. There is a lot to like in this Budget and nothing to dislike in it. I recommend it to the House.
Marco Longhi (Dudley North) (Con) [V]
The fallout around the globe from covid-19 is immense in human terms and economic terms. Most people here want to know whether this Budget means they will have jobs to pay their bills, whether their business will survive and whether they should invest or shut up shop. Throughout the pandemic, we have seen the Government step in and embrace the whole United Kingdom, supporting it to unprecedented post-war levels.
Today, that has been reaffirmed with continued and deeper support, which is, crucially, complemented by a road map that shows the way to sustainable finances in the future—something that we and most people know would have been tragically lacking if the Opposition had been in control. This country, more than ever before, needs people with a track record of success, people with vision and strategy and people who will make things happen. The Chancellor has delivered the tools. We now need to deliver by combining impressive vision and creativity with sound fiscal plans for recovery.
Dudley and the west midlands have been supported by the Government, but we must now translate this support into real jobs and economic growth. Here is a question: are we best served by keeping this delivery team of Conservative MPs, Conservative Mayor and Conservative Government together, with Andy Street leading us as Mayor, or by breaking those important links by having his challenger for Mayor, a former Labour Treasury Minister—the very same person who infamously played his part in bankrupting the country, leaving a note behind saying that the money had run out, and “good luck”? Let us hope that the people of the west midlands remember these facts in May.
This is a people’s Budget from a people’s Chancellor. It is a clever Budget for growth. The super deduction scheme exemplifies everything that a Conservative pro-business, pro-growth, pro-trade, pro-jobs Government will deliver, in stark contrast with the Opposition’s fence-sitting, hindsight sniping, dilly-dallying, tax and economy-busting incompetence that we have all seen this year and in previous decades.
I hope to soon be rejoining my constituents for a pint of duty-frozen Holden’s Golden Glow, to celebrate the continued success of this local brewery and the jobs it provides. Thanks to the vaccine and its roll-out, and thanks to this fantastic Budget, we have great reasons for optimism and prosperous times ahead.
Imran Ahmad Khan (Wakefield) (Con) [V]
It is a privilege to follow my hon. Friend the Member for Dudley North (Marco Longhi) and to speak on the first day of the Budget debate. Today’s Budget is a purposeful response to truly unprecedented circumstances. The economic and social impact inflicted by the pandemic has radically altered our world. The UK economy has just experienced the worst recession in hundreds of years. Millions of individuals and tens of thousands of employers have turned to the Government and received help. I congratulate and thank my right hon. Friend the Chancellor and his Treasury team for presenting a Budget with the singular purpose of tackling the challenges that we face.
Although I would object to overreaching state intervention, this crisis requires unprecedented action. We in the Conservative party understand that in times of genuine national crisis, the state is the only entity that possesses the necessary machinery and resources to respond effectively. Today’s Budget does not herald a permanent or evolutionary change in the nature of the state. I am pleased that the furlough scheme and other support mechanisms will continue while our remarkable vaccination programme advances and we emerge from lockdown. They are vital recovery support mechanisms.
I thank the Chancellor for the additional support provided specifically for my constituency, Wakefield. Some £25 million has been allocated to Wakefield’s town fund, with a further £5 million from the Department for Digital, Culture, Media and Sport and £150,000 from the levelling-up fund, which will be used to scope and frame innovative bids that have the potential to reset, repurpose and revitalise Wakefield.
The £25 million will be instrumental in the redevelopment of Wakefield, including areas such as the old Westgate station, Little Westgate and Bread Street, the Kirkgate gateway neighbourhood and the wider Kirkgate area. These rejuvenation projects will be a critical step in the levelling up of areas that have long felt left behind, ensuring that Wakefield and other similar cities are attractive places to live and work.
Once we enter a post-covid age, the Government must rely on the power and dynamism of the unfettered market economy and drive forward our economic growth and prosperity. I conclude by congratulating my right hon. Friend the Chancellor on today’s Budget and on providing the support mechanisms so desperately needed by our businesses and industries. I look forward with optimism to Her Majesty’s Government returning to secure the traditional Conservative objectives of reducing the remit of the state and unleashing the power of businesses and markets to drive forward growth.
Andy Carter (Warrington South) (Con) [V]
It is a pleasure, as always, to follow my hon. Friend the Member for Wakefield (Imran Ahmad Khan)—although my video background is not quite as regal.
Today’s Budget is pivotal for the UK’s recovery. It recognises the pain that so many hard-working families have experienced over the past 12 months, but it also puts us on a pathway to recovery while offering a safety net for those sectors that have been most impacted and are not yet able to reopen. I am particularly pleased to hear promising numbers from the Office for Budget Responsibility on improved growth.
It is business, particularly small business, that will be the engine that drives our recovery, so I thank my right hon. Friend the Chancellor for listening, particularly in respect of the extension to the self-employment scheme and the restart grants, which will help to protect many businesses that have been forced to close.
I am also pleased that the Chancellor has extended the cut to VAT to support the hospitality sector. Alongside the freeze on beer and spirit duty, that is an essential step for pubs and restaurants as they begin to reopen over the summer.
Small business makes up 98% of the total business population, so a small business rate of corporation tax protects many from the risk of being disincentivised from striving for the next level.
The Chancellor has rightly set out steps—such as increasing corporation tax to 25%—to reduce the strain on our public finances. I say this as a low-tax Conservative: it is important that big business pays its way in society, and those businesses that have done well in recent months should support the economic recovery.
The super deduction scheme is a welcome addition to allow businesses to invest back into their companies. Just today, I heard from a company to which I had spoken last week that is keen to install new plant: the super deduction scheme was the gift that it had been waiting for.
We have seen some significant measures supported by the Help to Grow scheme, which will give companies here in Warrington an incentive to digitally innovate and transform their business. Many such businesses have operated in a traditional sense but learned, through the pandemic, that the opportunity for growth may well be beyond their traditional customer base.
For generation rent, we have today’s news that the Government plan to back a scheme to help first-time buyers with a new 95% mortgage that is easily accessible through high street banks. That is a way to help young families in Warrington get on the property ladder, and will make an incredible difference to their lives and the lives of many families in years to come.
Having felt the wrath of Storm Christoph in January, I was pleased to see £5.2 billion for flood defence programmes to start in April, including a scheme for Warrington.
Finally, the Chancellor today started to make good on his priority to level up by building our future economy and investing in every corner of the United Kingdom, with Warrington benefiting from a high-potential opportunities programme. Put that alongside a new freeport in the north-west, and this really is an encouraging business Budget.
Chris Loder (West Dorset) (Con)
No greater effort has been made in peacetime than what we have seen over the last 12 months in our national response to covid—at great personal cost but also, for many, at great financial cost. That is why we are now faced with almost £2 trillion of national debt. The level of expenditure is a cause of great concern and nervousness for me, as someone who has always paid my way and spent within my means. However, I know that the Chancellor will not want to borrow £355 billion this year, if at all possible, because borrowing at the current rate might be okay for the moment but clearly places us in a position of risk going forward.
Thank goodness, however, that there is a Conservative Chancellor in No. 11 Downing Street. Where would we be if we had a Labour Chancellor? I recall vividly the last Labour Chief Secretary to the Treasury—I even have his note here just to remind me what it would be like if there was not a Conservative Chancellor. I know that our Conservative Chancellor will look to get this financial situation under control. I am extremely pleased that he is doing his work, and I think we will see a renewed effort across the nation after covid to ensure that borrowing more generally is also brought under control, locally and personally. I listened intently from my office to the speech by the right hon. Member for Birmingham, Hodge Hill (Liam Byrne). I was very sorry to hear what he had to say—he was very critical of the Chancellor and his Ministers, who are doing exceptional work in exceptional times. He was also very critical of the Mayor of the west midlands, which I thought was desperately unfair. I just wanted to feed that back so the House knew full well the extent of feeling not just in this House, but across the nation.
In West Dorset, we are a community that continues to contribute to the national effort, and to help ourselves and others not just financially, but in that community spirit. With 15% of my constituents employed in tourism and 18% of them self-employed, the Chancellor’s measures in this statement are very much welcome. The 95% mortgage guarantee is also much welcomed by young people, to help them to get on the housing ladder.
The measures to extend the 5% VAT rate and the business rates holiday will make a huge, positive impact to the economy in West Dorset. I look forward to seeing an economic recovery after covid not just in West Dorset, but for the nation, and I thank the Chancellor and his team very much for that.
Mr Richard Holden (North West Durham) (Con)
I want to concentrate quickly on three key points today. First, I thought that this was an excellent Budget, which was about recovery, delivering on our manifesto and economic credibility in the long term.
On the recovery, I support the extension of the support and the grants through to September this year. That is really important for all our businesses and for people in employment locally. The VAT support—5% rising to 12.5%—will also give our hospitality sector real time to get on its feet. I ally that with a campaign that I was involved in, along with many Conservative Members, to ensure that our pubs and clubs could get back to recovery with no increase in beer, spirits or wine duty. That is really important. Fuel duty is hugely important for communities such as mine, because those taxes are particularly regressive on people just going back into work at the moment, so those measures are absolutely vital and very welcome.
On delivering the manifesto, it is quite clear that we are doing a cracking job. The cash is there for the police and the NHS. There is a cash increase for schools, as well as cash for the environment—that is really important —and for levelling up, and I will touch briefly on what that means for the north-east today. We have seen that great new freeport in Teesside. We are seeing the Treasury coming to Darlington. That is really important and recognises how important our towns are. Hopefully, that will feed through into some of the Treasury thinking more broadly. I hope that that boosts our campaign for the A68 upgrade, which I am working on with several other Members from across the north-east. I thank the Chancellor for ensuring that that cash going into the NHS means that Shotley Bridge gets the extra £10 million that I have been campaigning for over the last few days.
This is about credibility; we have had a really honest approach from the Chancellor today, outlining where the cash has to come from. That is in stark contrast to the Labour party, which for years banged stealth taxes on our constituents against their wishes. Until the Opposition learn that lesson, they will never be in government again.
Ordered, That the debate be now adjourned.—(Michael Tomlinson.)
Debate to be resumed tomorrow.
Mr Deputy Speaker (Mr Nigel Evans)
Will those leaving the Chamber please do so in a covid-friendly manner, particularly in order for the Minister to take his position?
Business without Debate
Delegated Legislation
Reopening of Leamside rail line
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab) [V]
I am pleased to be able to present this petition on behalf of my constituents who support the reopening of the Leamside rail line, which runs through my constituency. This petition is along the same lines as another petition that has been signed by 1,800 people over three weeks.
The petition states:
The petition of residents of the constituency of Washington and Sunderland West,
Declares that petitioners support the reopening of the Leamside rail line in full as the town of Washington needs a rail link; further that the rail line will bring economic and connectivity benefits for the North East; and further that it will bring infrastructure benefits for the East Coast Main Line.
The petitioners therefore request that the House of Commons urge the Government to ensure that the forthcoming Integrated Rail Plan allows for the re-opening of the Leamside Line in full and the re-introduction of rail services to Washington; to recognise the support of a forthcoming Restoring Your Railways bid to promote this; and calls on the Secretary of State for Transport to consider this proposal.
And the petitioners remain, etc.
[P002650]
Sexual Offences Act 2003: Positions of Trust
(3 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sarah Champion (Rotherham) (Lab) [V]
It is a huge honour to be here, Mr Deputy Speaker. Thank you for granting this debate about closing the loophole in the law to protect 16 and 17-year-olds from sexual exploitation.
I have been campaigning on this vital issue for years, but I wish we did not have to be here again. The only reason we are here is that the Government have failed time and again to listen to me, to other MPs, to peers, to charities—especially the NSPCC and Thirtyone:eight—and to victims and survivors of sexual exploitation. The Government have failed time and again to close a loophole in the Sexual Offences Act 2003 that leaves 16 and 17-year-olds open to sexual abuse. Currently, section 22 of the Act describes a person in a position of trust if they are
“regularly involved in caring for, training, supervising or being in sole charge”
of a child. Someone in a position of trust who then has sex with a 16 or 17-year-old in their care is acting unlawfully.
However, this sensible legislation only applies to adults working in a set of professions listed in section 21 of the Act, including teachers, care workers and youth justice staff. This loophole allows adults such as faith leaders or sports coaches—who clearly meet the criteria in section 22, but are not on the list of public sector professions—to be above the law, and therefore to engage in sexual activity with 16 and 17-year-olds in their care with impunity. Given the Government’s claim to be sending out what the Home Secretary’s foreword to her recent “Tackling Child Sexual Abuse strategy” describes as
“a clear message to those who abuse our children”,
I fail to understand why, after years of persistent campaigning by Members across the House, action to protect children from being sexually exploited by adults in positions of trust has not been taken. In the same strategy, the Home Secretary goes on to state that
“if you think you can…abuse positions of trust—think again, you will pay for your crimes”,
but that is not true. Government inaction means that there remain a whole host of adults in positions of trust, from sports coaches to those in faith organisations, who are not covered by the law and who will simply say that the 16 or 17-year-old consented to a sexual relationship with them as their defence. That is if the abuse is ever discovered. The current legislation makes it the child’s responsibility to identify, report and be the witness in court to the abuse. This is totally unrealistic and unjust.
Closing the current loophole would simply make the act of sex with a child in your care a crime. Does the Minister really think that a maths teacher has more influence over a child than their sports coach? The child will see that sports coach every day, and the coach will have the power to make their dreams come true or dash them. Currently, the law does think that the maths teacher has more influence. I was pleased that, in 2019, the Ministry of Justice finally conducted an internal review into the law. Then, in March 2020, after being in post for only a few short weeks, the Under-Secretary of State for Justice, the hon. Member for Cheltenham (Alex Chalk) stated that it was
“crystal clear…that this is an extremely important issue which requires a clear, considered and decisive response.”
The Minister went on to say that
“we should urgently consider all options, including legislative change, and must be in a position to announce next steps by the end of May.”—[Official Report, 4 March 2020; Vol. 672, c. 303WH.]
That was in March 2020, but as I am here again today, it goes without saying that no announcement was forthcoming. So I ask the Minister, given his May deadline, when exactly the Government will be able to announce the next steps to protect children.
In February 2003, Baroness Blatch highlighted the loophole and called for it to be addressed. The Baroness was the first to raise this concern, but she certainly was not the last. I would like to pay tribute to all those who, over the years, have urged the Government to close this loophole. In particular, I want to recognise the work of the hon. Member for Chatham and Aylesford (Tracey Crouch) and that of Tanni Grey-Thompson in the other place, both of whom have worked tirelessly to draw attention to predatory sports coaches abusing children in their care.
The Minister is aware that I have previously carried out an inquiry on this topic in my former role as chair of the all-party parliamentary group on safeguarding in faith settings. The APPG published its report in 2019. It highlighted that adults holding positions within faith organisations
“will automatically be seen as having authority, power and influence.”
There is a power imbalance, and when combined with the close, regular and intense contact between faith leaders and young people, this creates significant opportunities for grooming and abuse. Young people and their families place significant trust in these leaders, and there is a failure to question potential abusive behaviour or poor safeguarding standards. Many young people and parents assume that legislation prevents faith leaders and workers from engaging in sexual activity with children under their care.
That is the nub of it. If someone leaves their child in the care of a professional, even if the child is over the age of consent, it is completely logical to assume that the law would apply if that professional failed in their duty to safeguard. Sadly, because of Government inaction, parents are making the wrong assumption. The law does not prevent faith leaders, sports coaches, driving instructors, tutors or even police officers from engaging in sexual activity with a 16 or 17-year-old under their supervision. It is important to add that many children will have been groomed by the professional prior to their turning 16, and they will actually believe that they are in a relationship with their abuser.
Let us take the example of Hannah—not her real name—who featured in the NSPCC “Close the loophole” campaign. Hannah swam from a young age and took her training seriously. She admired her coach, Jeff, and would work hard to be given praise by him. When she was 15, Hannah was having a difficult time, and Jeff built up her trust by supporting her. After Hannah turned 16, Jeff started to compliment her, saying she looked nice, or that her clothes looked nice on her. He said she looked beautiful and attractive. Hannah says that she had not heard a man say those kinds of things to her before, and she was unsure how she felt about it, but things progressed to the point where they started having sex. The relationship lasted over a year before a disclosure revealed what had happened. The police questioned Jeff, but no charges were brought, due to Hannah being over 16 and therefore able to consent to sex.
A Freedom of Information request commissioned by the NSPCC found that between 2014 and 2018, there was a total of 653 recorded cases in which adults in a position of trust had had a sexual relationship with a child of 16 or 17 in their care. What really horrifies me is that those numbers will be just the tip of the iceberg. As the law stands, it is the child’s word against their abuser—if the offence is ever uncovered— which means that the vast majority of cases will never see the light of day, let alone be investigated or recorded. That is just as the abuser intended.
The all-party parliamentary group on safeguarding in faith settings, the NSPCC, the independent inquiry into child sexual abuse, Thirtyone:eight, the Church of England, Sport England, West Midlands police, the Offside Trust, the former Chancellor of the Exchequer and even the Home Secretary are all calling on the Government to close this loophole to protect children. What more will it take for the Minister to act?
Protecting children and young people from harm should be one of society’s top priorities. It is really is quite simple. The law needs to change so that all adults who hold a position of trust over a child, even if that child is 16 or 17, must be banned from having sex with them. Over the years of campaigning on this, I have heard the same justifications for doing nothing from a host of different Ministers.
I suspect that tonight the Minister will highlight that the law around positions of trust offences is complex, and that any reforms should not unduly impinge upon the sexual rights and freedoms of those who are over 16. The Minister may say that a broad new definition of positions of trust could result in the age of consent being raised by stealth. I appreciate and understand the complexities here, and of course the unintended consequences must be considered.
I am not here to argue for denying young people age-appropriate rights to agency and self-determination, but we cannot abandon our duty to protect children from abuse when it is clearly happening. Children and young people across the country will soon be returning to school and many will again participate in vital extracurricular activity after an incredibly difficult year. The Minister has the ability to protect those children from abuse. He has already acknowledged the urgency and pressing nature of this problem, so will he confirm tonight that the Government will once and for all close the loophole in the Sexual Offences Act 2003 and make sure that 16 and 17-year-olds are protected from all predatory professionals in a position of trust over them? Minister, I await your answer.
Mr Deputy Speaker (Mr Nigel Evans)
Thank you, Sarah Champion. The Dispatch Box was sanitised while we were off screen.
The Parliamentary Under-Secretary of State for Justice (Alex Chalk)
I congratulate the hon. Member for Rotherham (Sarah Champion) on securing the debate on the law about positions of trust and the Sexual Offences Act 2003. She is right—she has a strong interest in this area of law, and she deserves the House’s thanks for her work, including steering the work of the all-party parliamentary group on safeguarding in faith settings, which has helped inform our thinking as we consider the protections afforded to children and young people by the criminal law.
I confess I was a little disappointed by the very partisan tone that the hon. Lady took. Lest we forget, in 2003, under a Labour Government, a deliberate decision was made to limit the reach of the criminal law in this way. To emphasise that point, the Lord Chancellor at the time is the current shadow Attorney General. When we consider these matters, it is important to take some of the political sting out of it and recognise that they are difficult issues.
Our shared priority across the House is of course safeguarding young people and I welcome the opportunity to debate the important issue of the abuse of power by those who hold positions of trust in relation to young people and choose to exploit that to engage in sexual activity.
I acknowledge that it has taken a little time for us to share our next steps following our review of the law in this area, but I hope that the hon. Lady will appreciate that extending of the scope of protection gives rise to the complex issues that have had to be considered in a challenging broader public health context.
The hon. Lady is right; we did have a debate in March last year. As she will be aware, there have since been a number of competing considerations, but I hope that I can reassure her that our work in this important area remains a priority. We are continuing to look at how the law might be strengthened in this area, and I hope to set out our plans very shortly.
Jim Shannon (Strangford) (DUP)
I commend the hon. Member for Rotherham (Sarah Champion)—she is Champion by name and champion for the work that she does, which we all appreciate and thank her for very much. We live in a very different world, as the Minister knows, and I believe that we in this House have a duty to protect the vulnerable and also those in positions of trust. What discussions has he had with the devolved Administrations, such as the Northern Ireland Assembly, to ensure that, whatever legislation comes through, we all come under the same rules and law?
Alex Chalk
It is a pleasure, as always, to hear from the hon. Gentleman. Indeed, I remember him asking this important question when we were in Westminster Hall. We have been sure to consult all the devolved Administrations, as indeed have sports bodies and faith bodies operating in those jurisdictions, because we want to ensure that we received feedback from across the United Kingdom in order to reach the right result.
Let us begin with some first principles, because they really are important. Any sexual activity with a child under 16 is a serious criminal offence regardless of whether consent is given. Equally, any non-consensual sexual activity is a crime whatever the age of the victim and whatever the relationship between the victim and the perpetrator. If an adult has sexual intercourse with someone over 16 and they do not consent, that is a crime in all circumstances.
Furthermore, when it comes to consent, the law has developed through our courts to ensure that, in many circumstances, if the perpetrator was in a position of power where they could abuse the trust placed in them by a victim, that may negate—or may vitiate, in the words of the law—any supposed consent given. It is always important to consider the facts of individual cases and recognise that law in any event may be apt to cover the criminality that is engaged.
However, alongside the more general sexual offences that address this behaviour, as hon. Members will be aware, and as the hon. Member for Rotherham has made clear, the Sexual Offences Act 2003 contains a number of offences that specifically target any sexual activity between a 16 or 17-year-old young person and a person who holds a defined responsibility of trust in respect of that young person, even if such activity is consensual. Those offences were designed to build on the general child sex offences in the 2003 Act, but they are defined to target situations in which the young person has considerable dependency on the adult involved, often combined with an element of vulnerability.
It is clear from the debates that took place in 2003 that the House was wrestling then, as indeed it is invited by the hon. Lady to wrestle now, with the balance that she struck. How do we broaden the offence to catch those people who are truly abusing their trust without making it so broad that, in effect, we raise by stealth the age of consent? She raises it as if to dismiss it, but it is none the less an extremely important consideration, because I venture to suggest that were the House to frame the offences too widely, in effect criminalising any person over 18 having sex with anyone aged 16 to 17, that would neither be in the public interest, nor would it meet the will of Parliament.
However, for all of that, the Government recognise that the current law may not be sufficient—this is the point I was making last year, and I reiterate it today—in dealing with situations in which an adult abuses their position of trust in order to exploit a 16 or 17-year-old, and that in the past victims have felt that the law was inadequate in this area. It is because the protection of children and young people from the scourge of sexual abuse and exploitation is one of this Government’s top priorities that we have looked at the issue in very great detail—in unapologetic detail. Making certain that the law continues to be effective in providing that protection is not just our priority, but our duty.
As the hon. Lady indicated, in 2019 we began an exhaustive review of the law on such abuses of positions of trust, to ascertain whether it is working effectively and to ensure that young people are fully protected. In essence, we were considering whether the House had got it right in 2003 or not. To ensure that young people are adequately protected, the review has considered a range of situations and settings in which a young person could be considered to be at risk from an adult holding a position of trust, including those that she has referred to in relation to religion and faith. But my goodness, that is not the extent of it, because as soon as we start down that road, plenty of other contexts hove into view, and that is what we need to consider with care.
A wide range of stakeholders were consulted to ensure that we developed a thorough understanding of the issues before establishing the best way forward. For example, across the youth and criminal justice sectors, the review engaged the police, the Crown Prosecution Service, sports bodies, victims’ groups, charities and religious organisations to discuss concerns around how well the law is working to protect young people against those seeking to abuse their power in this way.
In the area of faith and religion, to which the hon. Lady referred, we engaged key groups such as the Anglican dioceses of Chichester and Lincoln, the Board of Deputies of British Jews, academics, Gardens of Peace, Hindu Council UK, Marriage Care, Sikh Council UK and the St Philip’s Centre. I could go on, but I do not want to trespass on the patience of the House. With regard to those involved in the sporting sector, the review team heard from a very broad range of stakeholders.
Since the review, we have continued to engage with those stakeholders, including the hon. Lady and, indeed, my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch). I was grateful to the hon. Lady for mentioning my hon. Friend—[Interruption.] The hon. Lady is giving a thumbs-up, so Hansard can record that. My hon. Friend has done tremendous work, and the Lord Chancellor and I met her and the hon. Lady last year.
The discussions that we have had have been candid and wide-ranging, and I am very grateful for that. A number of themes emerged during the engagement that go beyond the law in this area and are important for us to address. Let me make this point clear: almost everyone agreed that, whatever we change in the law, we will need a more broad-based spectrum in our approach to dealing with this. We need better provision of education; we need consideration of the effectiveness of the Disclosure and Barring Service system in practice; we need to raise awareness and understanding of what grooming and genuine consent really look like; and we need the measures that need to be put in place to protect young people from this type of abusive behaviour. I make that point because sometimes in this House we can be guilty of assuming that changing legislation fixes everything. It rarely does. It is important, of course, but it is rarely the complete answer.
A key topic raised with us was, of course, whether a change in the existing positions of trust legislation was required in order to best protect young adults from those who sought to use their position of power for sexual purposes. Many of those we heard from agreed that any change or reform of the existing laws raised difficult and complicated issues. There was a clear concern from some stakeholders that any broad or sweeping new definition could raise the age of consent by stealth. The risk is that if we go too far in one direction, the pendulum may swing all the way back in the other direction. Who will be the collateral damage in all this? Young people. That is why we proceed with care.
Conversely—I think that the hon. Lady will find this point more to her liking—there were those who said that drafting the law too narrowly, or perhaps by simply listing roles or jobs to be considered as positions of trust, in effect adding to the list, could create loopholes or definitions that could be easily exploited or circumvented by abusers. That is why we have to take care.
It is fair to say, however, that most stakeholders felt that a change in the law was required, and I can see the merits of change. It was made clear during the review that any legislative changes would need to be bolstered by changes outside the criminal law in order to ensure an effective overall approach to safeguarding young people.
Let me conclude, however, by saying this. The Government are very sympathetic to concerns that have been raised throughout this process—not just sympathetic but, as I indicated in words that the hon. Lady was kind enough to repeat back to me, we agree that it requires a clear, considered and decisive response. We are continuing to look at how the law might be strengthened in this area, and as I indicated at the beginning of my speech, I hope to set out our plans very shortly.
Finally, I thank all those hon. Members who have contributed to the discussion of this sensitive topic. I am grateful to the hon. Lady, I am grateful to other colleagues in the House, and I am grateful too for the House’s patience as we consider our next steps and for its understanding of the need for care and sensitivity in approaching this important issue.
Question put and agreed to.
Draft Authority to Carry Scheme and Civil Penalties Regulations 2021
(3 years, 1 month ago)
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The Chair
Before we begin, I would like to remind hon. Members to observe social distancing. I think everyone is sitting in a place with a tick on it—yes. Hansard colleagues would be grateful if they could receive a copy of your speech at hansardnotes@parliament.uk.
The Parliamentary Under-Secretary of State for the Home Department (Kevin Foster)
I beg to move,
That the Committee has considered the draft Authority to Carry Scheme and Civil Penalties Regulations 2021.
Dr Huq, it is a genuine pleasure to serve under your chairmanship—and not just when we are campaigning to save whales in Iceland.
The purpose of the regulations, laid under sections 23(2) and 24(7) of the Counter-Terrorism and Security Act 2015, is to give effect to the authority to carry scheme 2021—the 2021 scheme—to make consequential amendments to the Authority to Carry Scheme (Civil Penalties) Regulations 2015 and to revoke the Counter-Terrorism and Security Act 2015 (Authority to Carry Scheme) Regulations 2015. Once given effect, the 2021 scheme will in turn replace and revoke the authority to carry scheme 2015.
Authority to carry is, in effect, the UK’s no-fly scheme. It is operated to prevent certain individuals from travelling to or from the UK when that is necessary in the public interest. The scheme is operated by the National Border Targeting Centre, which processes information about individuals, both passengers and crew, intending to travel to or from the UK. Where an individual is identified who is in a class of persons described in the scheme, the carrier may be refused authority to carry the individual either to or from the United Kingdom. Authority to carry is a key part of the UK’s border security arrangements, preventing individuals, including known terrorists, serious criminals and those subject to sanctions, from being able to travel to the UK.
The 2021 scheme applies to all carriers who have been required by law to provide passenger and crew information before departure. It applies on all international routes to and from the UK, plus routes within the common travel area where advance passenger and crew information is received from a carrier.
The authority to carry scheme has been extremely successful. Since the scheme’s introduction in March 2015, the National Border Targeting Centre has refused carriers authority to carry more than 8,200 individuals seeking to travel to the UK. That has included about 200 individuals excluded from the UK, about 3,300 individuals previously deported from the UK and more than 4,700 individuals using invalid, lost, stolen or cancelled travel documents. It has also included subjects of international travel bans. Those are all individuals who otherwise would have arrived in the UK and been refused leave to enter by Border Force officers. The carrier would then have been required to remove them and, in some cases, meet their detention costs. Some of those individuals, once in the UK, might also have taken the opportunity to challenge their removal, potentially through abuse of our humanitarian protection routes, by submitting spurious claims aimed purely at preventing their removal from the UK.
I hope that, with the description that I have given, the Committee has a full picture of the regulations.
Conor McGinn (St Helens North) (Lab)
It is a pleasure to serve under your chairmanship for the first time, Dr Huq, and it is always a delight to see the Minister in his place and to follow him on behalf of the Opposition.
As I have said before, the security of our country and its citizens is a top priority for the Opposition. Strengthening protections at our borders is integral to keeping the public safe, and we fully agree that our authorities should be able to pre-emptively stop and disrupt individuals posing a significant threat, terrorism related or otherwise, from travelling to or from the UK. We recognise, therefore, the practical necessity for an efficient and effective authority to carry scheme to ensure that those individuals cannot make their way into this country. We recognise also the need to update the 2015 legislation to reflect new and changed circumstances, particularly regarding the deportation and exclusion of European economic area nationals post Brexit, and including those affected by recent travel-related sanctions. Of course we, like the Government, would not have wanted the existing scheme to lapse without an adequate replacement, as it otherwise would have done in April 2022.
We welcome these measures, which will relieve our hard-working UK border officials and their operational partners of additional and unnecessary burdens, because they will not have to stop, process and report people at the border. We also recognise the vital importance of ensuring that people who pose a threat to our safety and way of life never make it to these shores.
However, even as we support these measures today, the Minister will understand that we have some questions to ask, particularly on some of the technical implications of the scheme. First, what discussions has the Home Office had with UK Border Force and its operational partners, not just on the proposed renewed scheme but on the effectiveness of the strengthened 2015 model, and are UK Border Force and its operational partners in full accordance with the proposals? Also, what benefits and challenges have they identified in relation to the new proposed arrangements?
Secondly, could the Minister update the Committee on the effectiveness of the scheme and carriers’ compliance, and does he have any information on where it has worked well and where it has not worked so well? The explanatory memorandum says that “Updated guidance” for carriers and
“industry on the operation of the 2021 Scheme and penalty regime”
will be provided, but it does not make clear when. Could he clarify that, not just for us here but of course for the carriers themselves, who at this current time, more than ever, will want maximum operational clarity?
Regarding the maximum penalty for carriers, can the Minister confirm that it will remain at £50,000? What assessment has the Department made about the effectiveness of that figure as a deterrent? Have any carriers actually being fined this amount? If not, is it a realistic amount and does it work as a deterrent? Will the 2021 scheme, if it is passed, be monitored and reviewed regularly by Ministers? And when, if at all, will the scheme be up for renewal?
I appreciate that some of those questions are technical questions, so I am very happy for the Minister to write to me if he does not have the information to hand now.
In summary, however, we find these measures to be reasonable, proportionate and practical, as we said in 2015, when a predecessor of mine in this role—David Hanson— responded to the Government. While it is important that we ensure that the existing regime does not collapse without the maintenance of these measures, it is also right that we subject them to scrutiny, as we have done today, because the safety and protection of the public is the responsibility of us all. I know that the carriers themselves take their duties seriously, and we in this place must ensure that we provide clear and robust regulations to support them.
Kevin Foster
May I genuinely thank the shadow Security Minister for the overall tone and constructive nature of his comments? I will respond to some of his questions in writing, to ensure that he receives the detail that he is entitled to ask for. And I know that he will appreciate why we do not have the number of officials in the room today that we would normally have. However, I will give some practical and brief replies to some of his questions.
The regulations certainly have been discussed extensively with UK Border Force; indeed, UK Border Force has been involved in their formulation. As the shadow Minister rightly said, the regulations are a protection for UK Border Force, as it will deal with complex and difficult individuals at the UK border and then arrange for a carrier to remove them from the UK, rather than having to prevent their arrival in the first place.
Of course, the regulations are also a protection in terms of aviation security and security on other modes of transport. Obviously, the general approach of the carriers to this issue has been extremely constructive; they do not want people on their services who may be a threat to the train, ship or plane that is coming to the UK.
Perhaps I can give a little flavour of the nature of the compliance with the measures. I mentioned that more than 8,200 people—I think that figure is right—have been excluded and prevented from travel. With the 2015 regulations to date, when we compiled the figures for the Committee we found that there have been only 51 breaches of the 2015 scheme. And to respond to another of the shadow Minister’s points, 18 penalties have been imposed for non-compliance, which led to total fines of just over £186,000.
We believe it is appropriate that there is a significant financial penalty. The regulations are not about basic immigration failings or not checking someone’s passport. They are about preventing someone who could be an active danger to this country from coming to the UK and people whose presence in the UK would be wholly unconducive to the public good. One person we excluded in September 2019 was a notorious holocaust denier, a US citizen, who had booked a flight to the UK from a European country. They were picked up and the carrier concerned denied boarding.
We will issue updated guidance, and we have already engaged with the carriers. We have made it clear that a lot of this is about updating the fact that we have now left the European Union and EEA nationals now have a different legal position. The guidance makes it clear to the carriers when someone cannot fly, get a train or come to the UK. Where there is passenger information in place, it gives certainty and also takes the decision away from the carrier so that they do not have to get into a debate with someone who has appalling views or who has committed serious crimes. The carrier can be clear that they have been advised by the Home Office that someone cannot travel. The person concerned is then given contact details at the Home Office. For the carriers, there is the advantage of an additional layer of security for their own staff and passengers and customers, and also a firmness about the position.
The renewal period will be confirmed in writing. We have introduced the update slightly earlier, rather than in 2022, to reflect the fact that now that the transition period for free movement rights has ended, we cannot create new ones in terms of coming to the UK for the first time. It is therefore appropriate to update the scheme. To reassure the shadow Minister, we will keep it under constant review. With regard to those who are subject to this system change as people are added to sanctions lists or deported from the UK, the list is constantly updated and we take into account the international situation. For example, if the United Nations imposes a travel ban on someone, the scheme will apply to them.
I hope my response has been helpful. I thank the shadow Minister for the tone of his reply.
Question put and agreed to.
Draft National Minimum Wage (Amendment) regulations 2021
(3 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
I beg to move,
That the Committee has considered the draft National Minimum Wage (Amendment) Regulations 2021.
It is a pleasure to serve under your chairmanship, Sir David.
The purpose of the regulations is to raise the national living wage and national minimum wage rates on 1 April 2021. The economic impact of coronavirus has been significant—the UK economy contracted by 9.9% in 2020. This recession has clearly been more severe than previous ones. However, effects on the labour markets have so far been muted. The latest Office for National Statistics headline estimate of the unemployment rate was 5.1% from October to December 2020, lower than forecasted, or than following the 2008 recession. That is partly due to Government intervention, including the coronavirus job retention scheme, which allowed workers to retain some form of attachment to a job. I am pleased that earlier today, the Chancellor announced that this scheme would continue until September, with some changes in the final months. That will bring businesses and workers much needed certainty.
The regulations will increase the minimum wage rates. We estimate this will give around 2 million workers a pay rise. I am delighted to say that we accepted all the recommendations made by the Low Pay Commission in 2020. The independent LPC brings together business and worker stakeholder views, supported by research and analysis, to provide their advice. I would like to state my gratitude for their work.
Low-paid workers have supported the country through these challenging times. The Government recognise that many businesses are also struggling during this crisis. The LPC sought to balance those needs against the wider economic conditions in its recommendations. Owing to this, the 2021 increase to minimum wage rates is smaller than previous years. We have concluded that these rates will give low-paid workers, who have contributed throughout this pandemic, a real-terms pay rise, recognising their contributions, without presenting a significant risk to employment prospects. Business stakeholders supported cautious increases to minimum wages. The regulations increase the national living wage by 19p to £8.91, and we are lowering the age threshold for the national living wage to 23. As a result, 23 and 24-year-olds will get a 71p increase. We are also increasing the rates for younger workers, apprenticeships and the accommodation offset.
This year, we are also making another change to minimum wage regulations to do with the records employers must keep to ensure compliance with the minimum wage. Currently, the records must be held for three years. We are extending that period to six years. This will align the time period for which an employer must retain records with the period of liability under the National Minimum Wage Act 1998, which is six years. I thank the hon. Member for Liverpool, Wavertree (Paula Barker), who introduced a private Member’s Bill on this issue; our discussions on that helped to formulate the change. Making that change will ultimately enable underpaid workers to receive the money they are owed as soon as possible.
Last year, we announced a target for the national living wage to reach two thirds of median earnings by 2024. The national living wage is also to apply to those aged 21 and over by 2024. Earlier today, as part of the Budget, we published the Government’s remit to the LPC for 2021. In this, we reaffirmed our commitment to those targets, recognising decisions continue to be dependent on economic conditions. We asked the LPC to provide its recommendations for rates to apply from 2022 this autumn.
The regulations ensure that the lowest paid workers are fairly rewarded for their valuable contribution to the economy during this crisis. I commend them to the Committee.
Imran Hussain (Bradford East) (Lab)
It is a pleasure to serve under chairmanship, Sir David. I echo the thanks from the Minister to my hon. Friend the Member for Liverpool, Wavertree who has done significant work on this matter and has an outstanding private Member’s Bill that addresses some of the issues that we are addressing today.
The regulations are not contentious and I hope that the Minister will agree that raising the minimum wage—the wage that some of the poorest in our society are paid—should never be contentious. We welcome any rise in the minimum wage and we also recognise the step in the right direction made by the change within the regulations, which will see a reduction in the age at which an individual is eligible to be paid the full rate from the age of 25 to 23.
Broadly, therefore, the regulations have our support. However, let us remember that when the Government speak of increases in the minimum wage, it was indeed a Labour Government who introduced the national minimum wage in the first place, and that when the Government pat themselves on the back for introducing, in their words, a national living wage, it is actually no such thing. The living wage is currently set at £9.50, and at £10.85 an hour in London, by the Living Wage Foundation, taking into account a range of living costs and considerations, compared with the Government’s rate of £8.91 an hour.
We recognise that the increases in the different rates of the national minimum wage for different age groups come at the recommendation of the independent Low Pay Commission, as highlighted by the Minister, and that the Government tasked the Commission with recommending the increases required to reach two thirds of median earnings by 2024. However, for too many workers with high costs of living, particularly in the capital and other urban areas, this increase may not prove sufficient to match their rising costs, particularly during this pandemic, when we have seen those on the lowest end of the pay scale being hit the hardest. Instead, the last Labour manifesto set out an ambitious but achievable goal of introducing a national minimum wage for all employees by 2020, creating a real living wage whereby everyone is rewarded with a fair day’s pay for a fair day’s work.
We also recognise the above-inflation rise for apprentices, who are woefully underpaid, and we hope that this increase will not end there and will also be matched by a real ambition to boost the number of quality apprenticeships across the country. The Government should seriously consider using the underspend in the apprenticeship levy to help pay the wages of new apprentices directly in order to boost take-up, as those of us on the Labour Benches have advocated many times. An apprentice is an investment by an employer in their local economy and their workforce, and employers must always be encouraged to treat them as an investment and not as low-paid, disposable labour.
Although reducing the age limit at which an individual is eligible for the full rate of the national minimum wage is, of course, also a step in the right direction, the Government have still retained the age limit. This retention fails to acknowledge that those under the age of 23 face many of the same pressures as those faced by someone over the age of 23. Many young people below the age of 23 still have to make rent, cover bills and put food on their tables, and it is wrong that they are being held back because the Government and employers do not believe that their contribution to society and to the economy is worth the full rate of the national minimum wage. Therefore, the Government should look closely at scrapping this ridiculous age limit. Those below the age of 23 are more likely to spend their wages than put them away in savings, which will put money back into our local economies at exactly the same time that we need to bolster consumer spending, in order to recover from the present crisis and get the country back on its feet.
The regulations also increase the time limit for which employers are required to retain records for the purpose of enforcement of the national minimum wage from three years to six years, following a recommendation from the Director of Labour Market Enforcement. Again, this change is, of course, welcome.
Underpayment of the national minimum wage remains a serious problem, which sees unscrupulous employers exploiting their workforce, particularly in certain sectors of the economy, such as the care sector, and we should rightly clamp down on practices that see staff being cheated of their pay. However, we note that this was a recommendation put forward by the now departed Director of Labour Market Enforcement, who left his post last month. His post remains unfilled, despite his offering to remain in the position over an interim period. Allowing this post to remain vacant during a pandemic in which many workers, and predominantly those on the lowest end of the pay scale, are being exploited is a grave oversight by the Government, particularly when we know that so many employers are trying to circumvent minimum wage rules and so few punishments for doing so have been handed down.
In conclusion, we will not oppose the regulations. However, we must leave ourselves in no doubt that, although any rise in the minimum wage is a positive thing, those proposed in the regulations will not be the answer to the endemic problem of low pay in our economy, and nor will they help deliver the transformation that our economy desperately needed even before this crisis. It will also not solve the ills that are faced by many workers in low-paid roles, who face disproportionately higher living costs and who have to pay a poverty premium, whereby they are financially penalised just for being poor. We therefore urge the Government to look at the remit and scope of the LPC—particularly during these pressing times, in which those who are on low pay have been hit the hardest—and to scrap the age limits for the minimum wage to ensure that all are paid fairly for their work, regardless of age.
Paul Scully
I thank the hon. Member for Bradford East for his contribution to the debate, and I thank other colleagues for being here in a collegiate spirt to look at this important issue. The national minimum wage and national living wage make a real difference to millions of workers in this country, particularly during the current crisis. I am glad that he talked about apprenticeships, which are incredibly important to our recovery, as well about the prospects of young people, who have been particularly badly hit by this pandemic. I hope he welcomes the doubling of the apprenticeship payments to £3,000 for all new hires of any age, which was announced earlier by my right hon. Friend the Chancellor of the Exchequer, and the flexi apprenticeship scheme as well.
The hon. Member for Bradford East talked about the changes to the rates for younger people. Traditionally, we have looked at young people having more vulnerability in the employment market, but the LPC’s advice noted that, generally, employment transfers of workers aged 23 and 24 tended to be similar to those of workers aged 25 and over. That is why we have decided to cautiously expand the full rate to younger people.
Clearly, there is agreement that the lowest-paid workers in this country, who have contributed so much during this pandemic, deserve an above-inflation pay rise to protect their standards of living, which the regulations will provide. The policy of the national minimum wage was first announced in 2015, and workers will now be accumulatively £4,030 better off over each year compared with that point—a 33% increase. For the first time, the national minimum wage increases will benefit workers aged 23 and 24. We know that most businesses support increases in the minimum wage rates, and I am glad that we can bring businesses clarity by approving the regulations. I am also pleased that we are making changes to the record-keeping requirements for employers. That will improve our enforcement of the national minimum wage and ensure that underpaid workers receive the money that they are owed.
We committed to raise the national living wage to 60% of median earnings back in 2016. We reached that target with the increases in 2020. Although this year’s increases are more modest than in recent years, we remain committed to the target for the national living wage to reach two thirds of median earnings by 2024, provided that economic conditions allow. We will monitor the labour market closely and carefully over the coming months, to make the best decisions to support low-paid workers and their employers.
Again, I would like to thank the LPC for the substantial evidence gathering that it performs, and for providing well-reasoned recommendations. It reached a consensus agreement on its recommendations to the Government, and those increases balance the ambitions of the Government’s long-term target against current economic conditions. We look forward to receiving the LPC’s recommendations for 2022 later this year. I commend the regulations to the Committee.
Question put and agreed to.
Written Statements
(3 years, 1 month ago)
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British Council Annual Report and Accounts 2019-20
(3 years, 1 month ago)
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The Minister for Asia (Nigel Adams)
Copies of the British Council’s annual report and accounts for the 2019-20 financial year have been placed in the Libraries of both Houses.
The British Council builds connections, understanding and trust between people in the UK and other countries through arts and culture, education and the English language. As the UK’s international organisation for cultural relations and educational opportunities, it makes a significant contribution to projecting British values overseas and generating soft power for the UK in return. In doing so it makes a lasting difference to the UK’s security, prosperity and influence.
The British Council is the world’s leading cultural relations organisation, with a reach in 2019-20 of 983 million people. This included 76 million direct interactions, through a presence in over 100 countries.
The Council received £187 million grant-in-aid, including £161 million ODA, from the FCO in 2019-20.
The report can also be found at the British Council’s website: www.britishcouncil.org.
[HCWS817]
EEA EFTA Separation Agreement Joint Committee Meeting, 18 December 2020
(3 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Wendy Morton)
The EEA EFTA separation agreement agreed with Iceland, Norway and Liechtenstein protects citizens’ rights and includes other separation provisions. These provisions wind down certain arrangements that the UK has with the EEA EFTA states by virtue of their participation in the single market and other EU-led initiatives. The agreement also establishes a Joint Committee whose primary role is to supervise and facilitate the implementation and application of the agreement, with the power to make decisions. The Joint Committee has a rotating chair, which, when held by the UK, will be chaired by a Minister from the Foreign, Commonwealth and Development Office, but may be delegated to officials.
The first meeting of the Joint Committee took place on 18 December 2020. The meeting was held by remote means, with the UK holding the rotating chair. All parties reaffirmed their commitment to ensuring the correct and timely implementation of the citizens’ rights part of the agreement, which protects the rights of EEA EFTA nationals living in the UK and UK nationals living in the EEA EFTA states and the agreement as a whole.
Two decisions were adopted by the Joint Committee . The first decision adopted was the rules of procedure for the Joint Committee, and the second was on “triangulation” under article 32 of the agreement. The triangulation provisions ensure that social security co-ordination rights between the UK, the EU and the EEA EFTA states continue for those in scope of the EEA EFTA separation agreement and the withdrawal agreement. Corresponding agreements between the EU and the UK, and the EU and the EEA EFTA states were in place by the end of the transition period, thus the Joint Committee was able to set the date from which the triangulation provisions would apply as 1 January 2021. Copies of each of these decisions have been deposited in the Libraries of both Houses.
The Joint Committee will meet at least annually, with Iceland holding the next rotating chair. The next meeting is expected to take place later in 2021.
[HCWS818]
Northern Ireland Protocol: Implementation
(3 years, 1 month ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Northern Ireland (Brandon Lewis)
As part of the pragmatic and proportionate implementation of the Northern Ireland protocol, the Government are taking several temporary operational steps to avoid disruptive cliff edges as engagement with the EU continues through the Joint Committee. These recognise that appropriate time must be provided for businesses to implement new requirements, and support the effective flow of goods between Great Britain and Northern Ireland.
For supermarkets and their suppliers, as part of the operational plan the UK committed to at the UK-EU Joint Committee on 24 February, the current scheme for temporary agrifood movements to Northern Ireland (STAMNI) will continue until 1 October. Certification requirements will then be introduced in phases alongside the roll-out of the digital assistance scheme.
In addition, further guidance will be provided later this week on parcel movements from Great Britain to Northern Ireland to provide necessary additional time for traders beyond 1 April. Guidance will also be set out to help address practical problems on soil attached to the movement of plants, seeds, bulbs, vegetables and agricultural machinery. And the Government will write to the Northern Ireland Executive to confirm that flexibilities within the Official Controls Regulation 2017/625 are such that no charging regime is required for agrifood goods.
[HCWS819]
Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
My Lords, the hybrid Grand Committee will now begin. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering, except when seated at their desk, to speak sitting down, and to wipe down their desk, chair and any other touchpoints before and after use. If the capacity of the Committee Room is exceeded or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
I will call Members to speak in the order listed. During the debate on each group, I invite Members, including Members in the Grand Committee Room, to email the clerk if they wish to speak after the Minister using the Grand Committee address. I will call Members to speak in order of request.
The groupings are binding. Leave should be given to withdraw amendments. When putting the question, I will collect voices in the Grand Committee Room only. I remind Members that Divisions cannot take place in Grand Committee. It takes unanimity to amend the Bill, so if a single voice says “Not Content” an amendment is negatived and if a single voice says “Content” a clause stands part. If a Member taking part remotely wants their voice accounted for if the question is put, they must make this clear when speaking on the group. We will now begin.
Financial Services Bill
Wednesday 3rd March 2021
(3 years, 1 month ago)
Grand CommitteeRead Full debate Financial Services Bill 2019-21 View all Financial Services Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 162-V Fifth marshalled list for Grand Committee - (3 Mar 2021)
Lord Eatwell
“Review of penalties for insider dealing and financial services offences
(1) Within six months of the day on which this Act is passed, the Treasury must commission a review of penalties for insider dealing and financial services offences (“market abuse”).(2) The review under subsection (1) must include statistics relating to—(a) the perceived level of market abuse,(b) the number of arrests for market abuse, and(c) the number of successful convictions for market abusein each of the last five financial years.(3) The review under subsection (1) must also contain a summary of steps being taken by Her Majesty’s Government to ensure market abuse offences are identified and punished. (4) Within one month of the review under subsection (1) being completed, the Treasury must—(a) lay the document before both Houses of Parliament, and(b) make a statement responding to the review, including a declaration of whether and how the Treasury will act to—(i) increase the resources available to those charged with investigating market abuse,(ii) modernise and reform the United Kingdom’s suspicious activity reporting regime, and(iii) ensure greater consistency in the intensity of supervision across different parts of the financial services sector.(5) After the requirements under subsection (4) have been met, the Treasury may by regulations enact such reforms of market abuse provisions that are identified in the review.(6) Regulations under this section are subject to the affirmative procedure.”Member’s explanatory statement
This probing amendment seeks to understand what steps the Government is taking to improve identification and punishment of market abuse. It asks for the Treasury to outline proposals for enacting recommendations from a 2018 evaluation by the Financial Action Task Force, the global money laundering and terrorist financing watchdog.
Lord Eatwell (Lab)
My Lords, we now come to the section of the Bill that introduces measures to deter financial crime, whether insider dealing or money laundering. None of us in this Grand Committee can be content with this country’s attempts to limit financial crime. Headlines that cry that London is the “money laundering capital of the world” may embody journalistic exaggeration, but, sadly, they are not that exaggerated.
I will first speak to Amendment 50 in my name and then turn to Amendment 49 in the names of the noble Lord, Lord Tunnicliffe, and myself. I admit that Amendment 50 is constructed in a rather peculiar way, and I am grateful to the clerks for that ingenuity and for allowing me to make what I believe to be an important point concerning money laundering legislation.
The measures in Clause 31, to which Amendment 50 refers, derive from the EU fifth money laundering directive and the UK response to the examination of UK anti-money laundering measures by the Financial Action Task Force. An important outcome of the FATF examination was Her Majesty’s Government at last announcing measures to deal with the scandal of Companies House.
One of the political puzzles of the past 10 years is that Conservative Prime Ministers have regularly referred to the register maintained by Companies House as a gold standard, a beacon of openness and an example to the rest of the world. In fact, the manner in which the register is constructed is the key element in those headlines that describe London as the money laundering capital of the world.
The scandal derives from the fact that Companies House does not verify the beneficial ownership of companies registered there. Companies House is a library in which any shameful book can be deposited. There are so many shameful books that have been deposited, and that is a matter of record. Just to take a couple of the more colourful examples, the Mafia managed to set up one UK firm with a director named as Ottavio Il Ladro di Galline—Ottavio the chicken thief. His occupation was listed in Companies House as truffatore—fraudster. Another company had an address that translated as “Street of the 40 Thieves”. At the moment, the Companies House register includes almost 4.5 million UK businesses, but it operates in much the same way as it did 150 years ago. That means that criminals have been able to set up seemingly legitimate shell companies without even the most basic identity checks.
Consider the case of Mr Kevin Brewer. A few years ago, he launched a campaign to expose how easy it is to fake British company records. He decided in 2013 to register government Ministers, including Vince Cable—the then Business Secretary—and the noble Baroness, Lady Neville-Rolfe, as the directors and shareholders of fictitious companies. The idea was to prove how anyone could form a company in the UK in any name or address that they wished. He used an online service offered by—you guessed it—Companies House. He then owned up. As a result, he was prosecuted by Companies House and fined £12,000. The Government issued a triumphant press release, which is still available on the government website, headlined:
“UK’s ‘first ever’ successful prosecution for false company information”.
It is the only prosecution in 150 years.
A study published by Transparency International in November reported that British shell companies were implicated in nearly £80 billion of money laundering scandals. On top of that, the anti-corruption group Global Witness reported in 2019 that more than 336,000 companies did not disclose their beneficial owner. It also found that more than 2,000 company owners were actually disqualified directors—people who had previously failed to meet their legal responsibilities and were banned from directorships in the future. A further study by, among others, my colleague, Professor Sharman of Cambridge University, found that it was impossible to establish a shell company in the Cayman Islands, the Bahamas or Jersey but it was easy to do it in London.
It should be clear that an open register, as we have in the UK, is no protection against financial crooks. Protection is provided only by verification and regular reverification of beneficial ownership by skilled forensic accountants. At last, in September of last year, under continuing pressure from the Financial Action Task Force, the Government published a document entitled Corporate Transparency and Register Reform. The Minister, the noble Lord, Lord Callanan, wrote in his foreword to the document that Companies House procedures, or lack of them, resulted in,
“Shell companies … set up for no other purpose than to launder the proceeds of crime – committed both here and overseas.”
The noble Lord, Lord Callanan, recommended verification of company data. However, the document contained an ominous sentence:
“This document sets out the actions the Government intends to take in response, subject to funding being agreed”.
Amendment 50 would simply require the Government to keep Parliament up to date with what is happening. After all, this is the biggest money laundering scandal to which the UK has been subject. When will this country acquire an honest register? How much funding has been agreed? Is it enough? When will the entire Companies House register—the whole register—be fully verified? I hope that the Minister will be able to tell the Grand Committee that initial funding has already been agreed, that future funding will be forthcoming and, to ensure that the momentum is sustained, that the Government will be happy to accept this amendment and report regularly to Parliament on the progress towards a fully verified register of beneficial ownership. The Government owe that to everyone who has been betrayed by the lax approach to money laundering.
I now turn to Amendment 49, which takes a wider perspective, seeking a thorough review of Her Majesty’s Government’s efforts to limit insider trading and market abuse, so providing a firm foundation for the measures outlined in Clauses 29 and 30 of the Bill. The rationale for such a review can be stated in brief as this: what is the point of Clause 30; what is the point of increasing the penalties if there are almost no convictions? Hundreds are prosecuted every year for fiddling a few quid from social security; you can count the annual number of prosecutions for crimes in high finance on the fingers of one hand. Consider this comment, published in the Financial Times on 3 November 2019:
“The FCA has previously been accused of taking a light touch approach to white collar crime. A freedom of information request showed the regulator prosecuted just eight cases of insider dealing, securing 12 convictions, between 2013 and 2018.”
There were 12 convictions in five years.
It is not as if there is no financial crime about. Consider this further story, published in the Financial Times on 10 September last year:
“Britain’s financial regulator”—
the FCA—
“is still working on a high volume of investigations into potential wrongdoing by firms and individuals, but delivering a relatively low proportion of clear outcomes at an increasing cost, according to new data.”
The Financial Times continues:
“the Financial Conduct Authority’s annual report provided details of its enforcement actions in the year to March 31 2020, and showed 185 cases were concluded in that period, leaving another 646 ongoing. In the previous year, 189 cases had been closed, leaving 647 open. However, despite this persistently high caseload, only 15 investigations resulted in financial penalties being handed down in the latest 2019-20 period — down on the 16 cases that led to fines in the two previous years.”
So what is going wrong? An important clue is to be found in the section of the 2018 report of the Financial Action Task Force dealing with the substance of UK measures to deal with money laundering and the financing of terrorism. The report states that, with respect to the UK Financial Intelligence Unit, which is the financial division of the National Crime Agency:
“The UK has pursued a deliberate policy decision to limit the role of the UKFIU in undertaking operational and strategic analysis. The UKFIU suffers from a lack of available resources (human and IT) and analytical capability which is a serious concern considering similar issues were raised over a decade ago in the UK’s previous FATF mutual evaluation. The limited role of the UKFIU calls into question the quality of financial intelligence available to investigators.”
Is it not the case that the surest way to deter criminal behaviour is to increase the likelihood that the criminal will be caught? I ask again: what is the point of increasing sentences while, at the same time, reducing the capacity to catch the criminals? When the Minister replies to this debate, will she explain why:
“The UK has pursued a deliberate … decision to limit the role of the UKFIU in undertaking operational and strategic analysis”?
Surely now is the time for a thorough investigation into the Government’s persistent failure to prosecute crime in our financial services industry. Accepting Amendment 49 will be a start. I beg to move.
Lord Holmes of Richmond (Con) [V]
My Lords, it is a pleasure to speak on day four of proceedings in Committee on the Financial Services Bill. In doing so, I declare my interests as set out in the register.
I want to speak to Amendment 51, standing in my name. The purpose of this new clause can be simply stated: what is the purpose of the KYC—“know your customer”—requirements? It is one of the top TLAs—three-letter acronyms—in financial services, but is it fit for purpose? Does it achieve what we would want? Does it feel modern in outlook? Does it feel inclusive? It not only goes to the heart of a number of other amendments in this group; it really is a key underpin, and the adoption of this amendment would transform our KYC system and approach in this country. We have to ask those questions: what do want KYC for; what does it need to contain; when do we need it, and in what form?
Amendment 51 seeks, on passage of the Bill, a review of KYC requirements that considers a number of elements in order to seek to transform our approach to KYC. My first point concerns the question of inclusion, and I draw this broadly. Whom do we want to come within, in what form and through what means? For example, asking for paper documentation seems not only outmoded but somewhat exclusionary. Where is the level of efficiency in the current provisions? We have the ability to have “atomic settlement”. The current KYC feels a million miles away from a settlement in a millionth of a second. My final point addresses exactly that question of outdatedness. We have one of the greatest financial services sectors in the world. The big bang in the 1980s revolutionised the City of London, but it goes much beyond that when we consider our role in fintech, not just in London but across the UK, and the Kalifa review on that very subject, published only last week. We are leading-edge in so many ways when it comes to our financial services. KYC in no sense reflects, represents or leads that technological position.
If this amendment were to be seriously considered, if not adopted, we could look at different means of ensuring KYC. We could look at attributes and elements that would assist and give real-time assurance, giving elements to those who need them—things which operate absolutely in real time and are to be relied on, rather than bits of paper, bits of supposed identification, which hark not from a 20th-century but a 15th-century approach to identification. That brings me, finally, to the whole question of digital-distributed ID, which I will speak on later in Committee. That goes to the heart of so much of solving the KYC puzzle. If we could deliver an effective and efficient distributed ID system for individuals and corporate entities, we would transform the position regarding KYC.
I look forward to hearing the comments of my noble friend the Minister on Amendment 51.
Lord Sikka (Lab) [V]
My Lords, I speak to Amendment 51A, which invites the Government to reduce the number of anti-money laundering supervisors so that we can have consistent application of standards and effective regulators.
Dirty money is a huge danger to every country on this planet. The full extent of dirty money sloshing around in the UK is not known, although some authorities estimate that around £100 billion a year may be laundered through our banking and financial system. Transparency International’s report, Hiding in Plain Sight, examined 52 cases of global corruption and noted that despite a plethora of form-filling and regulators, some 766 UK-registered business entities were involved in laundering stolen money.
The threat of money laundering to national security is well documented in the Intelligence and Security Committee’s July 2020 report, Russia, which stated that
“the arrival of Russian money resulted in a growth industry of enablers—individuals and organisations who manage and lobby for the Russian elite in the UK. Lawyers, accountants, estate agents and PR professionals have played a role, wittingly or unwittingly, in the extension of Russian influence, which is often linked to promoting the nefarious interests of the Russian state.”
Large sums of dirty money cannot be moved or concealed without the active involvement of accountants, lawyers, and financial experts. These enablers must be tackled, and without effective regulation that is not possible.
However, the UK’s fragmented regulatory system for dealing with money laundering is highly deficient. There are 25 anti-money-laundering supervisors. These include the Financial Conduct Authority, HMRC, the Gambling Commission and 22 other bodies, mainly trade associations connected with accountancy, audit, bookkeeping and legal and notarial services. The list of 22 includes bodies such as the Association of Accounting Technicians, the Association of International Accountants, the Institute of Certified Bookkeepers, the Institute of Chartered Accountants in England and Wales, the Law Society and sundry other trade associations. Having twenty-five supervisors results in duplication, waste, inefficiency, poor co-ordination, inconsistency and obfuscation.
In September 2016, the Committee on Standards in Public Life, in its report, Striking the Balance: Upholding the Seven Principles of Public Life in Regulation, stated that the seven principles of public life apply to all regulatory bodies, and the Government agreed. These include independence and public accountability, but for some reason the Government do not apply these principles to anti-money laundering supervisors. Accountancy and law trade associations have no independence from their members. In any regulatory system, there is a concern that regulators would be captured by those who are to be regulated, but that is the starting point in AML supervision by trade associations.
In October 2011, the Government announced that they would make quangos more democratically accountable, but they have failed on that front too. Of the 25 AML supervisors, 22 are not subject to the freedom of information law, even though they are an explicit arm of the state. Perhaps the Minister will be able to explain this anomaly. Their exclusion from FOI means that the public have no opportunity to scrutinise their practices.
The Government’s faith in regulation by trade associations is routinely punctured by the Government’s own reports. In October 2017, a joint report by the Treasury and the Home Office, entitled National Risk Assessment of Money Laundering and Terrorist Financing 2017, summed up key risks around the accountancy sector:
“complicit accountancy professionals facilitating money laundering; collusion with other parts of the regulated sector; coerced professionals targeted by criminals; creation of structures and vehicles that enable money laundering; provision of false accounts; failure to identify suspicion and submit SARs; and mixed standards of regulatory compliance with relatively low barriers to entry for some parts of the sector.”
The report went on:
“Accountancy services have also been exploited to provide a veneer of legitimacy to falsified accounts or documents used to conceal the source of funds. For example, law enforcement agencies have observed accountants reviewing and signing off accounts for businesses engaged in criminality, thereby facilitating the laundering of the proceeds. In many cases accounts have been falsified by criminals and unwittingly signed off by accountants, while in others accountants have been assessed to be complicit”.
That is the state of money laundering and the world of accounting.
However, rather than consolidating the number of regulators and thereby securing consistent application of standards and law, in January 2018 the Government created a new body called the Office for Professional Body Anti-Money Laundering Supervision, better known by the acronym OPBAS. At considerable cost, it became a “supervisor of the supervisors” and oversees the 22 trade associations. The formation of OPBAS is an acknowledgement that all was not well with the regulatory role of trade associations.
A year later, on 12 March 2019, the OPBAS director of specialist supervision said:
“the accountancy sector and many smaller professional bodies focus more on representing their members rather than robustly supervising standards. Partly because they don’t believe – or don’t want to believe – that there is any money laundering in their sector. Partly because they believe that their memberships will walk if they come under scrutiny.”
The OPBAS Director went on:
“We found that some did not fully understand their role as an anti-money laundering supervisor. 23% had no form of supervision. 18% had not even identified who they needed to supervise. Over 90% hadn’t fully developed a risk based approach and had not collected all the data they needed to form a view about their riskiest members and their services. Supervision was often under resourced – and in some cases, there were no resources.
We found that for many supervision wasn’t important. It was only an add-on. This means it often wasn’t on the agenda and for around half, there was insufficient senior management focus. For 20%, it wasn’t overseen by the governing bodies. In some of the professional bodies, where supervision had been outsourced to another provider, there was minimal oversight of the work being done.”
The director also said:
“We also found that in all but 2 professional bodies, processes for handling whistleblowing were inadequate. We found that 56% of professional body supervisors had no whistleblowing policy in place at the time of our assessments.”
There you have it—a powerful indictment of the folly of relying upon trade associations for regulatory purposes. They do not want to be robust regulators because of the concern that “their memberships will walk”.
Lord Garnier (Con) [V]
My Lords, I am grateful to my noble friends and other noble Lords who signed Amendments 81, 82 and 83, which, with Amendment 84, take our debate in a slightly different direction from the other amendments in this group. I also thank my noble friend Lady Penn and the Economic Secretary, John Glen, for meeting me last week to discuss my amendments and for his letter received at 11 am. As can be seen from the names of those noble Lords who signed these amendments, they are driven not by party-political motives but by a desire to make the law of corporate criminal responsibility fit for the modern age.
Reform of this aspect of the criminal law is overdue. The Government accept that. I will raise the salience of this question and remind this Government, as I reminded their predecessors, that the current state of the law does not take account of modern company practice. The difference between us in substance is not that there should be reform but what sort of reform and when. I am glad to have this opportunity to explain my concerns and I apologise in advance to noble Lords if, in speaking for too long, I try the patience of the Grand Committee.
This is not the first time that I have tried to encourage reform of corporate criminal liability. I was persuaded more than 10 years ago when studying American law that the way we deal with corporate criminal liability is outdated. I was then trying to work out how best to introduce deferred prosecution agreements, or DPAs, into this jurisdiction—they were enacted via the Crime and Courts Act 2013—and I became convinced that, in an era of large, international companies with hundreds of thousands of employees, with main, local and regional boards in many different geographical locations and with turnovers sometimes larger than the GDPs of some small countries, what had worked in the 19th century was no longer suitable in the 21st.
A company, although a separate legal personality, is an artificial construct and can commit a criminal offence that requires, for example, proof of dishonesty only through the agency of a human. In 1915, the then Lord Chancellor, Viscount Haldane, giving judgment in the case of Lennard’s Carrying Co., said that a corporation is
“an abstraction. It has no mind of its own any more than it has a body of its own”.
Our law required a human directing mind and will to fill that vacancy. Equally, whereas a human being convicted of bribery can be sent to prison, a company cannot.
At present our law requires prosecutors to satisfy the identification principle, which essentially asks whether a person can be identified as the directing mind and will of the company and is thus capable of fixing the company with criminal liability for the act or omission of that identified individual. The difficulty in satisfying the identification principle has led to cases where only individuals, but not their employers, have been charged. A recent example is the phone-hacking scandal. Another example of the difficulties caused by the identification principle were the cases involving Barclays Bank and some of its senior staff in 2018.
One hundred and fifty years ago, companies were mostly small concerns that traded locally. Of course, many businesses were not incorporated at all, but there were exceptions to that general rule. As British maritime power and commercial reach became increasingly global during the 18th century, and developed yet further through the 19th century, company structures became more sophisticated. Financial services, be it in banking, capital raising or insurance in the City of London, kept pace to enable these advances. That said, leaving aside mechanical advances, a milling business of 1900 was not all that different from a milling business of 1800; had the managing director of that milling company bribed someone in the late Victorian age, it would not have been difficult to determine whether he could be identified as the directing mind and will of the company so as to fix it with criminal liability for the corruption, in addition to any that attached to the director.
Although the identification principle received its then-highest judicial approval in the Lennard’s Carrying Co. case in 1915, that principle had been developed during the 19th century, when most English companies were run by fewer than half a dozen people. It is now plainly an inhibiting factor when prosecutors are considering cases involving large, complex companies with international and country boards, operating around the world. In 1912, the US courts recognised that the identification principle was not suitable in a modern industrial economy, whereas three years later our highest court affirmed it. It is time that we caught up.
Since 1912, an American company can be liable for a criminal offence committed by an employee in the course of his employment for the benefit of the company. The offence may also benefit the employee, but if it benefits the company it, too, is criminally liable. It is the criminal law equivalent of the concept of vicarious liability that we have in English civil law. It is not complicated but, plainly, each case of suspected corporate offending will be highly fact specific. I would like to have that system here, but it is not going to happen. I therefore look to the failure to prevent model, not least because it is now well established in our own criminal law.
In 2011, US federal prosecutors told me that they greatly admired the failure to prevent bribery offence in Section 7 of the Bribery Act 2010. They said that the United Kingdom led the world in countering corporate crime because of that new offence. More recently, the Criminal Finances Act 2017 introduced a corporate offence of failure to prevent facilitation of tax evasion. The noble Baroness, Lady Bowles, may talk about that in support of her Amendment 84.
In the case of Tesco Supermarkets Ltd v Nattrass in 1971, Lord Reid held that, in order for liability to attach to the actions of a person, it must be the case that
“the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company … If it is a guilty mind then that guilt is the guilt of the company.”
That case turned on whether a store manager who broke the Trade Descriptions Act was the directing mind and will of the company. He plainly was not, but Lord Reid’s words are relied on in pretty well every case where a company is charged with an offence because of what an employee is alleged to have done. As Lord Justice Davis said in the 2018 Barclays Bank case, large modern companies are complex organisations not so that they can avoid criminal responsibility but to facilitate their business operations. They cannot be expected to have a detailed knowledge of what every manager throughout the world is doing, or to be held criminally liable for everything that they do. I agree.
That will not happen under these amendments but, under the current directing mind and will test, corporations involved in wrongdoing face little prospect of prosecution. As a result, corporate compliance procedures in the UK could slip. One of the reasons why Section 7 was introduced into the Bribery Act was to improve corporate behaviour. It has had an important preventive effect. When companies face little consequence for failing to maintain procedures to prevent financial crime, the business case for putting resources into implementing these procedures becomes harder to make.
If the failure to prevent regime were to be introduced for other economic crimes, such as those in my amendments, the impact on corporate standards would be significant because it would focus companies’ attention on having the right measures in place to prevent the commission of these crimes. It would also help us to maintain our reputation for the highest standards of business integrity, as we refocus our attention on building trade links around the world and on a future outside the EU.
The failure to prevent offence carries strict liability for a commercial organisation: a bribe paid anywhere in the world by an “associated person” with the intention of benefiting the company will cause it to commit an offence, and the only defence is that it had in place “adequate procedures” to prevent bribery. An “associated person” is defined under the Bribery Act as a “person who performs services” for or on behalf of the organisation; this may include employees, subsidiaries and agents. This was intended to embrace the whole range of persons connected to an organisation that might be capable of committing bribery on its behalf. It may include joint venture partners or entities, depending on the circumstances.
Under the law as it is now, companies can be prosecuted for not having in place systems to prevent a predictable crime here or abroad. This approach has proved effective. There have been prosecutions under Sections 1 and 7 of the Bribery Act, but Section 7 has been used to greatest effect in deferred prosecution agreements. I declare my interest as a barrister in private practice who has acted for both the Serious Fraud Office and companies accused of offences under the Act, but my experience of cases where companies have failed to prevent bribery by their associates tells me that the Act is not just necessary but works both to catch and deter corporate criminal conduct. I suggest that it would work as well with the offences in these amendments.
On proper analysis, my amendments are not a radical departure from the current state of the law but a small extension of it. Government and Parliament created the failure to prevent regime a decade ago. I am doing no more than increasing its ambit beyond bribery and tax offences to a few more financial and economic crimes. My amendments are limited to the UK financial system.
Amendment 81 says that a “relevant body”—in essence, a commercial organisation—commits an offence if a person associated with it commits an “economic criminal offence” in the course of using or providing financial services
“that might affect the integrity of the UK financial system.”
The expressions “relevant body” and
“the integrity of the UK financial system”
have the same meanings as in the Criminal Finances Act 2017 and the Financial Services and Markets Act 2000. For the purposes of this amendment, an economic criminal offence is defined by a list in paragraphs (a) to (g) of subsection (2) and includes, for example, conspiracy to defraud, theft and false accounting. As in the Bribery Act, there is a reasonable prevention procedures defence. “Reasonable” does not mean “perfect” so it is not a meaningless defence.
Amendment 82, which also has the same reasonable prevention procedures defence, defines an economic criminal offence as any of the approximately 50 offences
“listed in Part 2 of Schedule 17 to the Crime and Courts Act 2013”.
Those are offences that can be the subject of a DPA. Again, there is nothing radical there. Amendment 83 is in similar terms to Amendments 81 and 82, save that it relates to the failure to prevent a “criminal financial offence”, which is defined by the same list in the Crime and Courts Act used in Amendment 82 and a similar, but not identical, list of offences to that in Amendment 81. There is, again, a reasonable prevention procedures defence.
Clearly, we need laws that will make a real difference and deter crime. The approach taken in the Bribery Act and the Criminal Finances Act has proved its worth. Surely, it is now time to extend the tried-and-tested failure to prevent regime to the offences referred to in these amendments. Of course, I expect that they will be met by departments from the “Ministry of Paperclips” through to the “Department of Circumlocution”, as non-government amendments often are, with much sucking of teeth and earnest furrowing of brows. We have all heard the reasons why an amendment cannot be accepted, be it its drafting, its being in the wrong Bill, its public expenditure implications or its timing—and anyway, the Law Commission is about to look at this aspect of the law. I promise noble Lords that I wrote those words before I received the Economic Secretary’s letter this morning.
All Governments suffer from an aversion to ideas that they did not invent. That is not a criticism directed at my noble friend the Minister, I assure her, but of course this is an idea invented not by me but by government. Gordon Brown’s Labour Government introduced the Bribery Act, and David Cameron’s coalition Government took it on and ensured that it received Royal Assent. It had all-party support. Theresa May’s Government brought in the Criminal Finances Act 2017, to widespread acclaim. These amendments obediently follow those statutes. If the Financial Services Bill is not the right Bill for these financial offences, what on earth is? Surely, the Treasury can make a good case for adding these provisions, on financial and economic crime connected to financial services, to the Financial Services Bill. They will not cost money but, like DPAs, enhance our national economic reputation and, in the right case, see large fines flow into the Treasury.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I remind the Committee of my interests as in the register. I have two amendments in this group, one on facilitation of financial crime, which is also signed by the noble Lords, Lord Hodgson of Astley Abbotts and Lord Rooker, and my noble friend Lord Thomas of Gresford, and a second amendment relating to whistleblowers.
There is much else of merit in this group. In particular I support the comments of the noble Lord, Lord Eatwell, concerning catching, and willing the means and money to catch, perpetrators of financial crime. While I have hounded the noble Lord, Lord Callanan, on this issue, I do see the point of pressing the Treasury on funding.
My amendment on the facilitation of financial crime is also about the Treasury willing the means. It is similar to the amendment tabled by the noble and learned Lord, Lord Garnier. We are not in competition; there are more noble Lords wishing to show interest in this topic than can fit on a single amendment. Unfortunately, we did not get to this amendment on Monday and my noble friend Lord Thomas of Gresford is unable to speak today. He was deeply engaged in the Bribery Act provisions, so his contribution will be missed.
In addition to the measures outlined by the noble and learned Lord, Lord Garnier, my amendment, Amendment 84, has a final paragraph that deals expressly with the conviction of a director or other manager who is proved to be responsible for the systems failure of the corporate body. A facilitation or failure to prevent amendment has a particular resonance in this Bill for two reasons: first, because the FCA has a specific remit to prevent the use of the financial system in financial crime; and secondly, because the Treasury, the sponsor of this Bill, has already availed itself of the mechanism with regard to tax evasion. As a believer in the mechanism, it seems appropriate for Treasury to avail itself of it again in relation to the financial system.
The tightening up of corporate systems against bribery following the Bribery Act is well documented, and what better way is there to enhance the reputation of the UK’s financial system at the point when it must protect and enhance its credibility than forcing similar tightening against financial crime? We already know well the reason for needing such offences. It is the old-fashioned way that criminal law works. Having to establish a directing mind is increasingly impossible given the complex board structures of large firms. Indeed, the principle of requiring a directing mind encourages what has been called “organised irresponsibility” by Pinto and Evans in Corporate Criminal Liability.
I know there is some reluctance in the Ministry of Justice, which sat on its hands for ages after its call for evidence on corporate liability, to which I made a submission, and then said there is no new evidence. That was really a bit rich, given that the call for evidence background document itself gave a good exposition of how bad matters are and of many of the reasons why evidence of failures in prosecutions is relatively scant. That is exactly why there is no new evidence—because prosecutors know they cannot succeed against large companies and give up.
Nevertheless, the issue has been sent off to the Law Commission, which has already said in its 2010 paper, Criminal Liability in Regulatory Contexts, that
“the identification doctrine can make it impossibly difficult for prosecutors to find companies guilty of some … crimes, especially large companies”.
In its 2019 paper on suspicious activity reports, it said:
“The identification doctrine can provide an incentive for companies to operate with devolved structures in order to protect directors and senior management from liability.”
The current common law “directing mind” principle is also unfairly discriminating to small businesses. The Crown Prosecution Service’s legal guidance, under “Further Evidential Considerations”, states:
“The smaller the corporation, the more likely it will be that guilty knowledge can be attributed to the controlling officer and therefore to the company itself.”
Given the general guidance for prosecution that there must be a “realistic prospect of conviction”, it is no wonder that prosecution evidence is scant and statistics show a preponderance of prosecutions against small companies. In its response to the MoJ call for evidence, the SFO said:
“In its current form, the law relating to corporate misconduct is both unjust and unfair and in need of urgent reform.”
Note the use of “urgent”, not “kick down the road”.
It is time for the Treasury to be less selfish and to help those other than the Revenue who are defrauded by expanding the use of this mechanism beyond tax collection, and to catch those threatening the integrity of the financial system by using it to commit financial crime.
My whilstleblower amendment suggests that regulators be obliged to give evidence when it is relevant to a whistleblower seeking redress in an employment tribunal. I have tabled it to probe the present state of play, which I understand is that they do not give evidence, indeed decline to do so, even when the whistleblowing has been important and valuable to them. This gives entirely the wrong message and looks like the regulators again being too cosy with the companies they regulate. If they are too frightened to be seen to disturb that cosiness, perhaps it should be made mandatory so that they cannot shy away.
The second part of the amendment suggests making it a behaviour that is not fit and proper for a person in authority to seek to identify, dismiss or penalise a whistleblower. We all know the case of Barclays CEO Jes Staley trying to identify a whistleblower and being let off with a fine that was insignificant for him, while the industry had thought it was an action bad enough to merit removal under the new senior managers regime. The net consequence is that the senior managers regime has been undermined and the regulator has again shown its fear of regulating behaviour in large banks. It would be interesting to know what special pleading went on to achieve that result. Was the PRA involved, rather like its special pleading to US regulators on HSBC? Was the Treasury involved? Whether it was or not, it was certainly a disaster. It is now time to make amends and show that the balance of protection lies with the whistleblower and not with bank executives.
The Lord Bishop of St Albans [V]
My Lords, I shall speak to Amendment 136, which is in my name. I tabled the amendment because of concerns about the lower levels of responsibility placed on appointed representatives and the increased risk of poor financial advice that this poses.
The objective of the senior managers and certification regime to influence an individual’s behaviour by making them personally accountable to the regulator is one that I agree with and it was the correct response to the culture that had arisen in the City of London prior to the financial crash in 2008. I know that some Members of this House have criticised the application of the senior managers and certification regime, or lack of it, by the FCA, and I agree that it is worrying. However, I do not want to comment on the effectiveness of the SMCR but to remedy an anomaly that exists within the current framework.
The SMCR currently applies to directly regulated financial advisers, yet it does not extend to those who are appointed representatives. This anomaly means that, while a directly regulated adviser carries a personal responsibility for the quality of the advice they provide to their customer, no such responsibility is incumbent upon the adviser who is an appointed representative. This is despite the reality that a customer seeking financial advice is unlikely to know the difference between the two types of adviser and the possible effects that this might have on the quality of the advice they receive.
The requirements of the SMCR mean that a directly regulated adviser faces higher costs and carries greater personal responsibility for their actions than they would if they were an appointed representative, despite doing the same job. I want to be clear that this is not to say that those advisers who are appointed fail to provide sound advice. As with most instances of malpractice within the financial advisory sector, the activity of a minority will, by virtue of their actions, tarnish the reputations of the majority of diligent advisers—whether directly regulated or appointed representatives. However, it is self-evident that lower levels of regulatory responsibility increase the risk of poor advice.
This amendment corrects that anomaly by giving the FCA the power to extend the SMCR requirements and responsibilities to appointed representatives. Currently, an appointed representative is regulated through a principal firm which carries the relevant responsibilities and is directly regulated by the FCA. Transferring responsibility from the principal firm to the appointed representative extends the current framework to this overlooked anomaly and places responsibility on the appointed representative. Rather than adding an additional regulatory burden on to the principal firms, this change would be to their benefit. Extending the SMCR to appointed representatives and making them personally responsible for their actions will significantly reduce the principal firm’s own regulatory risk.
Furthermore, it will reduce the risk of poor or reckless advice being given to consumers within the appointed representative regime and level the playing field between directly regulated advisers and those who are operating as appointed representatives. This amendment would remove the distinction—largely invisible to customers—in the regulations that oversee directly regulated advisers and appointed representatives and increase regulatory confidence in the diligence of financial advice given by all advisers.
From my conversations with individuals within the financial services, it is understood that the current regulator—the FCA—would welcome the ability to extend the SMCR to appointed representatives but currently lacks the power to do so. Although I obviously cannot speak for the FCA on this matter, or on the validity of the conversations I have had, similarly I have no reason to doubt the sincerity of its comments or concerns about the increased risk that the current anomaly poses.
This amendment would be a small but positive change to the Financial Services Bill by ensuring that robust and responsible regulation applies to all those who provide consumers with financial advice. Extending the SMCR to appointed representatives would directly benefit customers, by ensuring that all advisers have a personal responsibility for the advice provided, level the playing field between all financial advisers and reduce the risk to the customers and the relevant principal firms.
Finally—I have to confess that I am not quite sure of the proper process here—I had hoped to explore the possibility of tabling an amendment for this stage that would mandate the providers of deposit or credit accounts to provide voluntary debit card and credit gambling blockers. Unfortunately, I have simply not been able to get it ready for Committee, and I apologise for that, but I would be glad to speak with the authorities and the Minister on this amendment that I hope to bring later on.
Baroness Altmann (Con) [V]
My Lords, I apologise for the inadvertent interruption to the Committee’s proceedings on Monday. I declare my interests, as shown in the register.
I have sympathy with the intentions of all the amendments in this group. I have added my name to Amendment 51, in the name of my noble friend Lord Holmes. I also support Amendment 84, in the name of the noble Baroness, Lady Bowles. I have added my name to Amendments 82 and 83 in the name of my noble and learned friend Lord Garnier. All these amendments relate to confidence in our financial system, whether of customers using financial services or of corporates—both domestic and overseas—engaging with British firms in our financial services sector. Both of these are important.
In his introduction to Amendment 51, my noble friend Lord Holmes clearly explained the need for a review of the “know your customer” regulations, and I agree with him. That, hopefully, could help to improve customers’ confidence in the suitability of products sold to them. One example would be the sale of annuities by firms without having previously asked what state of health the customer was in and whether the annuity they were being quoted was at all suitable for them. Another would be credit companies extending credit without necessarily knowing the credit position of the customer. I do hope that the Government may agree to a review, whether in the context of the Bill or not.
Amendments 82 and 83, so comprehensively and expertly spoken to by my noble and learned friend Lord Garner, would strengthen corporate criminal law to ensure that companies do not profit from criminal acts committed by their employees. These companies need to have much stronger reasons and incentives to ensure that crimes are avoided, rather than blind eyes being turned, so that we have a zero-tolerance approach for corporates. These amendments, in the name of the noble and learned Lord, supported by the noble Lords, Lord Rooker and Lord Faulks, demonstrate this. A change to corporate practice is long overdue, so that senior managers in financial services firms will themselves change their procedures to try to prevent employees committing financial crimes and will install adequate processes to demonstrate that they have taken this issue seriously. I am grateful to my noble and learned friend Lord Garnier for raising this issue.
The pre-emptive nature of financial services processes that can avoid problems needs to be encouraged. These amendments could do this and would be a welcome addition to our financial landscape. All too often, firms and, indeed, regulators, seem to be taken by surprise when offences occur and then have to react to them, rather than doing more to prevent the wrongdoing occurring in the first place. I hope that my noble friend the Minister will consider these amendments sympathetically and that the Government will accept them or bring forward their own version. They would be a useful addition to this legislation. I will now mute myself.
Lord Rooker (Lab) [V]
My Lords, this has been a fascinating debate on a fascinating part of the Bill. I know that progress has been slow in Committee and I certainly do not intend to speak for too long. In fact, most of what I was going to say has been covered. I will make a few comments in support of Amendment 84, but first, I point out that I certainly support the speeches of my noble friends Lord Eatwell and Lord Sikka. My noble friend Lord Eatwell made the point about the history of dealing with this in Companies House. I remember reading about Kevin Brewer.
I also remember the remarkable speech in, I think, September 2015 in Singapore by David Cameron when he was Prime Minister; it foreshadowed a lot of change in this area regarding access to beneficial ownership, which seems to have been buried. It was absolutely solid, but obviously it was not supported by those who followed him. It is certainly worth looking back on.
The other issue is the reluctance regarding the financial intelligence unit. It is almost the same as the Home Office’s reluctance to institute an inquest when we had the murder by polonium in London. We had an inquest in that case only after the family had been to court. The Home Office’s defence for having no inquest was the effect on international relations. The reluctance to operate on money laundering is exactly the same. I am sure that the Minister will not admit that—he probably has not been given the evidence for it—but the suspicion has to be that the effect on international relations is slowing matters down.
My noble friend Lord Sikka made the point on his Amendment 51A, which I much support, about the trade bodies and the anti-money laundering organisations. It is exactly the same in property transactions. I remember a Bill from a couple of years ago, when a dozen or more organisations were involved in checking money laundering property transactions and they were all trade bodies. Trade bodies will not operate that way. They exist only because of income from their members. It is exactly the same situation. Now we have regulation in secret. That is the real danger: it is regulation in secret by bodies that cannot be checked on.
Amendment 84 was admirably spoken to by the noble Baroness, Lady Bowles, so I do not intend to go over the detail, but I will add a few points based on the briefing I received before Second Reading from Spotlight on Corruption, which was incredibly helpful. As has been said, bribery and tax evasion are already on the statute book in terms of failing to prevent crime, so what is the difference in including false accounting, fraud and money laundering? By the way, I might say something about the Chancellor’s very last point in his Budget, about free ports. I read the report yesterday from UK in a Changing Europe. The scope for money laundering via free ports is enormous. That will certainly have to be added to the list.
The amendment would widen the scope of the existing statute book: this is not reinventing the wheel. It is supported by the Treasury Select Committee and the prosecutors. In the consultation that took place—I know that it was some ago—it was supported by more than 70% of those who responded. The list of examples given by Spotlight on Corruption of companies that could not be prosecuted or brought to book for corporate wrong- doing in recent times—whether it was Serco, Olympus or Barclays—is enormous. I do not see why they should be allowed to get away it, but there are gaps in the law.
I am not an avid reader, but it is always worthwhile reading the manifestos of the various parties. I do not read too many of my party, by the way, but the 2015 Tory manifesto made this commitment, which resulted in the consultation. But the consultation closed three and a half years ago. It has just been one delay after another. It shows a lack of commitment and a lack of drive from the top. If the drive from the top is there, things happen in government—that is the key that I picked up during my 12 years.
The key benefit of the amendment is greater fairness for how large and small companies are held to account. It is dead easy. The small companies are the ones that are gone after by the prosecutors: they are low-hanging fruit and it is easy. That can make the numbers look good, but it is not fair.
Of course, bringing the UK into line with international standards of corporate crime is where we come up against our friends in the European Union. This is a situation where UK companies operating in the European Union are going to operate to a higher standard than they do at home. It is preposterous. It is going to make the UK top of the list for those who want to engage in money laundering. It puts the UK’s reputation in tatters.
The charge that my noble friend Lord Eatwell made about London being the money-laundering capital is true. There are so many different allegations and they are tied up with the operation of many of our blue-chip accountancy firms and blue-chip corporate lawyers and legal firms, because these actions cannot take place without the acquiescence of these home-based enablers.
My final point is the obvious one. The amendment would bring these offences into line with bribery and tax evasion. Why leave a big gap? Bribery and tax evasion can and do involve money laundering and fraud on a grand scale. It is absolutely inconsistent to have different models operating for different economic crimes, where the crimes are linked. I look forward to listening to the Minister get out of this one.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, it is a pleasure to follow the noble Lord, Lord Rooker, and I very much agree with his view on freeports. These are entirely the wrong direction of travel, opening up the UK even further to corruption and fraud. I also agree with him about the need to help small companies. They face an extremely un-level playing field of heavy enforcement, while they do not have the same options—happily—for tax dodging, fraud and corruption as the large ones have and, all too often, exercise.
I commend the noble Lord, Lord Eatwell, for his hugely powerful speech. I will use social media to ensure that it gets as wide a circulation as possible. I offer the Green group’s support for Amendments 49 and 50. I disagree with the words of the noble Lord on only one point. He asks what is going wrong. I would say that this is not a failure of design; it is not things going wrong from intention. This is what our financial sector has been designed to do and has refined its practices for over centuries. We have been robbing the world blind for centuries.
Baroness Noakes (Con)
My Lords, this is a large group of amendments and I shall not comment on all of them. I had not intended to speak about Amendment 51A, to which the noble Lord, Lord Sikka, spoke a while ago, but the way in which he framed his comments has prompted me to do so. The noble Lord persistently used the term “trade associations” to describe the professional bodies that are involved in supervisory activities in relation to money laundering. I declare an interest as a member, and former president, of the largest of the professional bodies to which he referred, namely the Institute of Chartered Accountants in England and Wales.
The ICAEW does act as a regulatory body for its members in relation to money laundering, as it does in relation to other activities, but its members carry out as professionals. This activity is overseen by an independent regulatory board, which is chaired by a QC and has lay members on it. I fear that the noble Lord, Lord Sikka, has not presented the whole story on this—perhaps he did not know it; those who listened to his contribution ought to be aware that it is not the whole picture by any means.
My noble and learned friend Lord Garnier made a strong case for his new offence of failing to prevent an economic crime. He will know that there is considerable concern about the practical impacts of such an offence on the commercial world and that there was only a small majority in favour of a new offence when the Government consulted on it. I have no idea what is in the Economic Secretary’s letter, to which he referred, but I believe that the Government made a wise decision last year in referring the matter to the Law Commission for further study. We should await its findings. I understand that it is due to report by the end of this year; that is not a huge delay for something that could have significant consequences for a large part of the commercial world.
I support the idea behind Amendment 51 in the name of my noble friend Lord Holmes of Richmond, namely a review of the “know your customer” regulations. All noble Lords taking part in this Committee are PEPs—politically exposed persons—and I am sure that we have all bumped up against the ludicrous way in which some banks and other financial institutions act under the guise of their customer due diligence obligations. Looking again at this whole territory is definitely worth while.
Further, the UK’s money laundering rules were made in the EU. Now that we have left it, we have the opportunity to see whether the money laundering directives and regulations now embedded in our law are fit for purpose. The UK must remain committed to high standards in the fight against financial crime, but looking at the efficiency and effectiveness of the rules is entirely consistent with maintaining high standards.
The KYC rules are just one part of the money laundering rule set, and I would urge any review to go beyond KYC and look at the whole range of rules. For example, the SARs regime for suspicious activity reports is very burdensome for all involved, both the firms that make the reports and the regulators that receive them. In addition, there are restrictions on banks’ ability to communicate with each other about customers or potential customers, which increases costs and certainly reduces effectiveness. So, I urge my noble friend Lord Holmes to be even more ambitious in the review that he seeks.
Lastly, Amendment 96 in the name of the noble Baroness, Lady Kramer, seeks the establishment of a financial services whistleblower office. I wonder whether she has taken account of the changes made by the regulators to whistleblowing arrangements in regulated firms. Since early 2016, firms have had to have a nominated non-executive director as a whistleblowers champion—not responsible for whistleblowing but, effectively, for its oversight. Most firms align that specific required responsibility with the responsibilities of the audit committee chairman. In addition, the whistleblowing rules themselves were overhauled at the same time. I have not yet heard the noble Baroness speak to her amendment but I wonder whether the evidence base that she relied on as a background to her amendments pre-dates those new arrangements, and whether it would be wise to review how well the new arrangements are working in practice before creating yet another quango.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I have put my name to Amendment 84, in the name of the noble Baroness, Lady Bowles, so I am afraid I am going to disappoint my noble friend Lady Noakes. We are normally on the same side but I am afraid that, on this issue, we are not. Perhaps I can turn away her wrath somewhat by saying that I much supported her views on Amendment 51A, which is a worthy amendment but does not go nearly far enough. We need to look at the whole regime; looking at one part of it is not sufficient, a point I was trying to make on an amendment we debated on the first day in Committee.
Like my noble and learned friend Lord Garnier, I am grateful to the noble Baroness, Lady Penn, and to the Economic Secretary to the Treasury for their briefing and correspondence. I apologise that the briefing was cut short for me because I had a power cut. My computer therefore went down, but I am grateful for the letter that was received earlier today.
The issue of failure to prevent has been pretty widely forked over in the speeches on this group, so I want to make two pretty quick points. The first flows from my membership of the Committee in your Lordships’ House which undertook the post-legislative scrutiny of the Bribery Act. We reported in March 2019 and our report found that the Act was:
“an excellent piece of legislation which creates offences which are clear and all-embracing.”
We went on to say that
“the new offence of corporate failure to prevent bribery is regarded as particularly effective, enabling those in a position to influence a company’s manner of conducting business to ensure that it is ethical, and to take steps to remedy matters where it is not.”
In our report, we noted, as did the noble Lord, Lord Rooker, that it was as long ago as May 2016 that the then Prime Minister, David Cameron, called for a consultation on a new offence of failure to prevent economic crime. We also noted that when Ministers gave evidence to the bribery committee on 4 December 2018, now over two years ago,
“Mr Argar said: ‘We intend to publish our response to it [the consultation] next year,’ and Ben Wallace MP added: ‘The Solicitor-General and I are pretty keen that we explore further the failure to prevent in broader economic crime … We raised it at the last inter-ministerial government meeting’”.
He added that John Penrose, the Government’s anticorruption champion,
“and I are keen to see this.”
The responses to the government consultation, although unpublished, and those suggested by Mr Glen to be inconclusive, are not as inconclusive as all that. The staff of our committee were able to find a lot of the submissions, which were available on the websites of the respondents, and none that we could find opposed the extension of the failure to prevent offence. Indeed, many supported it.
That takes me to my second point: the road to hell is paved with good intentions. The Government said in May 2019 that the call for evidence had closed in March 2017 and a response “will be issued shortly”. So, what are we waiting for? The Government have been standing on the edge of the pool for over two years. Each time they seem ready to jump in, inertia overcomes them and another round of consultation begins—now with the Law Commission, for which I have the highest regard. When my noble friend comes to reply, it would be helpful if she could let the Committee know what angles the Law Commission is supposed to focus on in this latest review and, in particular, what angles it will examine that have not been extensively looked over during the past four years.
Baroness Neville-Rolfe (Con)
My Lords, I have listened with great interest to some excellent contributions on this group of amendments. I refer to my own entry in the register of interests, although my comments stem from my experience over a lifetime of support for regulatory common sense as a witness of the perverse effects of well-intentioned but sometimes ill-judged regulation, sometimes added at the last minute to Bills such as this. I support proper standards and the use of whistleblowing, which is the subject of Amendments 96 and 97, in the names of the noble Baronesses, Lady Kramer and Lady Bowles. But my conclusion is that nearly all the harms articulated in the Committee today reflect a failure of enforcement by our regulators, and/or the failure of prosecuting authorities.
Baroness Kramer (LD)
My Lords, this is such a fascinating group of amendments. I think I have rarely seen a group that includes such powerful and important amendments one after the other ranging from the relatively narrow, such as Amendment 136, tabled by the right reverend Prelate the Bishop of St Albans, which would be a valuable extension of the senior managers certification regime, to the fundamental, in the form of the “failure to prevent” amendments in the names of the noble and learned Lord, Lord Garnier, and my noble friend Lady Bowles. Those amendments cover similar territory, and I notice that by splitting the amendments they have succeeded in garnering a wide range of signatures, thereby demonstrating that this is not a party-political issue but has extraordinary breadth across many political views in this House, so they have done that rather well.
I find these changes absolutely fundamental and, frankly, fail to understand why the Government resist them. I would argue that they are particularly important in the absence of a duty of care because of the way in which they change the locus of responsibility, if you like, or enhance it as it falls on a company in dealing with its customers and its products. I am cautious when an issue is sent to the Law Commission. I hold it in very high regard, but I notice that it is at its best when an issue is considered very narrow and limited. I am afraid that the Government may view “failure to prevent” as a narrow and limited concerned, whereas in fact it deals with the fundamental culture and sense of responsibility of major financial institutions for the behaviour of their staff and their various departments, and for the outcome for or impact on their customers.
I also support the various reviews sought by the noble Lords, Lord Tunnicliffe and Lord Eatwell. I smile at Amendment 50 in the name of the noble Lord, Lord Eatwell; he has had to craft it very carefully to make it fit into this Bill. Of course, he is absolutely right: we have a public register of beneficial ownership of companies in the UK, but it is not verified. I know how that rankles with the noble Lord, as we have discussed it in the past and I have a great deal of sympathy for his position. We rely on transparency to keep the register clean, but it is an imperfect system. Frankly, I would say to anybody that no one should rely fully on the information in the register; it is only a starting point. Making it verifiable would be a huge improvement. One of the things that bothers me the most is that many people who look at the register do not understand that it is unverified. That creates false impressions and leads people, particularly those who are less sophisticated, into making decisions that put them in financial danger.
I can see where the noble Lord, Lord Sikka, is going with Amendment 51A, but I am in the same camp as other noble Lords; I pick up the comments made by the noble Baroness, Lady Neville-Rolfe, which were also made by the noble Lord, Lord Eatwell, and others. We have absolutely inadequate resources for enforcement in the whole area of financial crime; that applies to the regulators and the Serious Fraud Office. Just a couple of weeks ago, I spoke to a former police commissioner and asked why, in a particular instance, he had not turned to the National Crime Agency’s Financial Intelligence Unit. The reply was, “It’s one man and a dog.” It is hideously underresourced. Also, our local police forces, which so often end up bearing the brunt of enforcement, are not resourced to deal with crime of this specialist nature and reach; neither are they sufficiently resourced when they come across companies with vast resources. The inequality of arms is exceedingly questionable.
On other days, we have spoken extensively of the HBOS Reading fraud—to the point where I think everyone is now familiar with it—but I wonder whether people realise that the case was pursued by Thames Valley Police only after the regulators, the Serious Fraud Office and two other police forces refused to pursue it. They did so not because they thought that there was insufficient evidence but because they did not have the resources to do it: it cost Thames Valley Police £7 million to prosecute. The fraud itself amounted to some £800 million, of which only £250 million was placed in evidence in court because that was sufficient to get the necessary convictions. It quickly became evident that this was a very serious fraud case. Many of us are concerned that similar fraud cases are simply ignored by police forces that cannot step up to the plate. I note that the entire financial penalty paid by HBOS was commuted for good behaviour so it was only £45 million, but every penny went to the Treasury and nothing went back into enforcement. We must tackle this issue, which will only get worse as we move into the era of cryptocurrencies and more digital financial transactions; for example, FATF identified crypto-thefts, hacks and frauds totalling $1.3 billion in the first five months of 2020.
I will focus most of my remarks on my amendment, which proposes to create an office of the financial services whistleblower. It is a probing amendment; noble Lords will understand why in a moment. Very many of the people who speak out to expose wrongdoing find that they become the target of retaliation and lose their livelihoods and careers. They are most often employees—that is not always true; they can be clients as well—and this is very much true in financial services.
When I was an MP and therefore a prescribed person, I assisted colleagues with two whistleblower cases. Both individuals had their lives shattered by retaliation from the financial institution that had misbehaved, despite their passing absolutely critical information to the financial regulators. Confidentiality was on paper only because, being good employees in one case and a good client in the other, they had raised the issues inside the organisation first. Their information also made it pretty obvious who had spoken out. I am no longer a prescribed person, but I work with the APPG for Whistleblowing and I have heard from numerous MPs about today’s cases, not cases that predate changes in rules, legislation and regulation. I have talked to regulators and civil society groups and they have all confirmed that there has been relatively little effective, real-world change.
If whistleblowers are employees they are typically fired—not for whistleblowing of course; there is always another coincidental reason—so they spend their savings in the long process of going to an employment tribunal, which can take years. Three years is nothing to go through an employment tribunal, given appeal processes. In the employment tribunal, the regulators to which they provided information refuse to give evidence in their support. My noble friend Lady Bowles raised this issue; it is a shocker and most people do not realise it. The regulator says that the tribunal is not about whistleblowing, so there is no reason for them to give evidence that the person happened coincidentally to be involved in these various cases. Frankly, I find it shocking that they do not believe that their responsibility to a whistleblower extends to that role.
Whistleblowers often face expert counsel paid by the employer. They know that if they lose the case they will have to pick up that legal counsel’s fees. That is a huge inequality of arms. In the end, most accept a modest settlement out of sheer fear and exhaustion. Whistleblowers desperately want wrongdoing stopped and put right. Where neither the regulator nor the law enforcement agency decides to act on their evidence they cannot turn to the public or the press because the settlement agreements invariably include draconian non-disclosure clauses.
The existing legislation, the Public Interest Disclosure Act 1998, was once ground-breaking. Now it is inadequate and out of date. Even the EU, which has never been a leader in this field, is about to overtake it with much more effective directives.
I am, among others, campaigning for an office of the whistleblower. One reason why I will not press the amendment is that we actually need an overarching office covering all sectors, public and private. Whistleblowers need one place to go to find out where they stand, get support and advice, source the financial means to fight retaliation and, if necessary, get appropriate compensation for their damaged careers—for most whistleblowers, whistleblowing is career ending. The amendment covers a wide range of needs. I also see an office as one that can work with regulators to design a much better system that means that whistleblowers come forward and are taken seriously, stopping bad behaviour in its tracks.
The US is extraordinarily effective in this area, and it aggressively protects and rewards whistleblowers because they both expose and deter abuse and crime. Since the Dodd-Frank Act—the key whistleblowing legislation—was passed in 2010 and set up their own Office of the Whistleblower inside the Securities and Exchange Commission, that commission has collected $2.7 billion in fines and penalties on wrongdoers in financial services whose conviction depended on whistleblowers. One federal prosecutor I spoke to just a couple of weeks ago described whistleblowers as “a citizens’ army” with a deterrent effect without which the regulators and law enforcement could not succeed. The United States takes this so seriously that the first conversation with a financial whistleblower or their legal representative is with an experienced investigator of at least five years standing versed in financial practice and law.
Baroness Penn (Con)
My Lords, the Committee has heard about a range of issues relating to the importance of tackling economic crime. This is an area that the Government have taken significant action to address in recent years. As the noble Baroness, Lady Neville-Rolfe, noted, improved enforcement is crucial. That is why the Government have created a new National Economic Crime Centre, established the Office for Professional Body Anti-Money Laundering Supervision and, in 2019, launched the economic crime plan, which brings together government and the private sector to tackle this issue.
Amendment 49 would require the Treasury to commission a review of the penalties for market abuse offences. Market abuse undermines integrity and reduces public confidence in the financial system. That is why, in the Bill, the Government are increasing the maximum sentence for such crimes, to bring them into line with other types of economic crime offences. However, the Government recognise that, in other respects, the criminal market abuse regime has not been materially updated since these offences were introduced. That is why the Treasury and the FCA have committed to reviewing the criminal market abuse regime by July 2021, as part of the 2019-2022 economic crime plan. The review will consider whether updates are required to ensure that the UK’s regime for combating market abuse continues to work effectively in an evolving market.
Amendment 50 seeks to offer an additional defence to a bank that relies on information from a publicly accessible verified register of the beneficial ownership of companies. This Government are committed to ensuring that our anti-money laundering regulations support the identification of criminal and terrorist financing activity, without placing disproportionate burdens on the regulated sector. The UK was the first G20 nation to introduce a public beneficial ownership register. There are over 3.5 million companies registered in the UK, and over 5 million beneficial owners listed on the register at Companies House. In answer to the challenge from the noble Lord, Lord Eatwell, I want to be clear on the Government’s intention to introduce a package of reforms to limit the risk of misuse of companies, including by verifying the identity of people managing or controlling companies; providing the registrar with new powers to query and remove information; and investing in investigation and enforcement capabilities. This was set out in September 2020 in our response to a consultation on Companies House reform. We will legislate for this reform programme when parliamentary time allows. On the question of resources, the Chancellor made a further £20 million available to support these reforms in the spending review last year.
In answer to the question from the noble Lord, Lord Eatwell, the Government are bolstering the UK Financial Intelligence Unit with an uplift of over 70 additional staff, enabling more feedback to reporters and better analysis of SARs. However, the UK does not consolidate all resources and activity relating to suspicious activity reports in the FIU. The intelligence collected is also distributed to regional and local law enforcement.
Returning to Companies House, this information alone would neither represent sufficient customer due diligence, nor provide sufficient confidence that a transaction did not relate to the proceeds of crime. Central registers are not a “silver bullet”. Effective anti-money laundering regulation will still rely on the private sector playing its part. The regulated industry has significantly more exposure to, and interaction with, its clients and individual transactions than can be captured on a public register, and it is therefore well placed to identify and prevent suspicious activity by carrying out sufficient client due diligence. While I hope that I have reassured the noble Lord, Lord Eatwell, on his first two points—on the Government’s commitment to implement reforms to the Companies House register—I do not agree that we should remove the obligation on deposit-taking bodies to identify abuses by allowing them to simply rely on a beneficial ownership register. The Government cannot, therefore, accept the amendment.
I turn to Amendment 51. The “know your customer” or customer due diligence provisions are part of the money laundering regulations, which the Treasury is already required to review the effectiveness of at least every five years and to publish a report on its findings each time. This review will measure the impact of the existing regulations, assess the proportionality of duties and powers, the effectiveness of enforcement actions, and the interaction of the money laundering regulations with other pieces of legislation.
I also agree with my noble friend on the importance of financial inclusion. The Government are committed to working with a range of stakeholders to ensure that all consumers are able to access the financial services they need and that identification and verification are not a barrier to this, including by using innovations in technology to support this work.
Amendment 51A would replicate a power to amend the money laundering regulations 2017 under the Sanctions and Anti-Money Laundering Act 2018. That means that through statutory instrument the Treasury can, if it chooses, already amend the list of professional body supervisors, or PBSs, in Schedule 1 to the regulations. The remit of the UK’s anti-money laundering supervisory authorities set out in Regulation 7 can also be amended in this way.
On professional body supervision, the Treasury already works closely with the Office for Professional Body Anti-Money Laundering Supervision, known as OPBAS, to ensure high standards of effectiveness and consistency among PBSs. The noble Lords, Lord Rooker and Lord Sikka, spoke about transparency. The Government have introduced a requirement for the 22 professional body supervisors mentioned to publish annual reports on their AML supervision activity. This will support transparency and accountability and ensure consistency.
A report setting out the findings of the first review of the money laundering regulations to which I have referred will be published no later than 26 June 2022, with a call for evidence planned for this summer. That review will consider the effectiveness of the UK’s AML supervision and whether any reform is needed. It will also cover the OPBAS regulations.
Amendments 81, 82, 83 and 84 all propose to create a new criminal offence for corporate bodies or partnerships of facilitating, and of failing to prevent, economic crime or financial crime. First, I thank my noble and learned friend Lord Garnier for his focus on this important issue, echoed by other noble Lords who have signed the various amendments. The Government are committed to ensuring that under UK law corporate bodies and partnerships are properly held to account for criminal activity that takes place within them or is conducted by others on their behalf. The Government take these proposals seriously and are committed to considering whether there is a need to introduce such an offence. However, this is a complex area that requires careful consideration before acting. As noble Lords have noted, the principle of a “failure to prevent” offence is not opposed by the Government, as long as it is supported by a strong evidence base and addresses perceived gaps in the legal and regulatory framework. That is why in 2017 the Government issued a call for evidence on whether corporate liability law for economic crime needed to be reformed. Those findings were inconclusive and, subsequently, the Government commissioned the ongoing Law Commission review of this issue. That is expected to report by the end of this year.
I appreciate that this is a long-running issue, but before any broader, new “failure to prevent” or facilitation offence for economic crime is introduced, there needs to be strong evidence to support it. A new offence will also need to be designed rigorously with specific consideration given to how it sits alongside associated criminal and regulatory regimes and to the potential impact on business. Unlike with bribery and tax evasion, there are already extensive regimes, both criminal and regulatory, to hold both individuals and corporates to account for money laundering. Further, the “failure to prevent” offences introduced in respect of bribery and facilitation of tax evasion are both formulated to tackle very specific and precise circumstances. Wider economic crime offences present more complications. Fraud, for example, covers a much wider range of activity and business areas. The complexity of a broader economic crime offence is why the Government want to await the conclusions of the Law Commission’s review.
I also note briefly that the proposed new offences would only apply to activity undertaken,
“in the course of using or providing financial services”,
in keeping with the scope of the Bill. However, the 2017 call for evidence did not provide any evidence to suggest that financial services businesses should be specifically targeted with a new offence. Therefore, I believe it is best that this issue continues to be considered within the broader context, rather than focusing on financial services firms.
The Deputy Chairman of Committees (Lord Caine) (Con)
My Lords, I have received a request to speak after the Minister from the noble Lord, Lord Sikka, and the noble Baroness, Lady Bowles of Berkhamsted. I call the noble Lord, Lord Sikka.
Lord Sikka (Lab) [V]
The group of amendments which we just discussed focused primarily on economic crime. Matters such as tax avoidance and tax evasion have also been mentioned, which are often the domain of the accounting law firms, banks and others. The noble Baroness, Lady Noakes, is absolutely right in that accountancy trade associations, such as the Institute of Chartered Accountants, also carry out a variety of other regulatory functions; but the question is how well such functions are actually carried out. There have been a number of court cases brought, by HMRC, where the judges have held that the tax avoidance schemes were unlawful. I hope the Minister can help us by telling us whether, after those court judgments, even one big accountancy firm has been investigated, fined or disciplined by the Institute of Chartered Accountants or any other accountancy trade association. Even one example from the past 10, 20, 30, 40, 50 or 100 years will do.
Baroness Penn (Con)
My Lords, I would be happy to write to the noble Lord on his question. The debate focused on the role of these organisations in respect of their anti-money laundering supervisory functions. As I said to the noble Lord in my response, a review of the AML regulations will be published no later than 26 June 2022, with a call for evidence this summer. If he feels the need to input to that review, that would be very welcome.
Baroness Bowles of Berkhamsted (LD) [V]
I want only to point out to the Minister that I believe she said in her reply that the “failure to prevent” offences were targeting financial services firms. That is not the case. They were targeting use of financial services. The difference is quite important because it is much more generic, and I would not like anybody to think that I was targeting only financial services firms. The point is that it is quite difficult to do a lot of the things that are economic fraud without touching financial services. That is why it falls so full-square within what the Treasury is responsible for and why, as I said previously, it is particularly relevant to the Bill. I know the Minister has to have a “Hands off, do nothing and do not amend this Bill” attitude, but I hope that this issue will be taken to heart and that reasons to do something, rather than reasons not to, will be looked at. I was generic about the use of financial services, not financial services firms.
Baroness Penn (Con)
My Lords, I happily acknowledge that point. The point I was trying to make is that even with that slightly broader definition of the use of financial services, a “failure to prevent” offence for broader economic crime is one that people would want to apply in a broader context. I appreciate that the scope of the Bill defines how amendments may be written, and that takes me back to one of the reasons that my noble and learned friend Lord Garnier predicted I might give for resisting this amendment: that this is not the right Bill for it.
Lord Eatwell (Lab)
My Lords, this debate has evidenced considerable concern from all sides of the Grand Committee at the level of financial crime and the apparent inability to tackle it in this country in a consistent manner. I am afraid that the Minister’s reply did not provide any reassurance. Indeed, there seemed to be an enormous amount of long grass in evidence into which various reviews and considerations were being kicked.
Before commenting on the Minister’s reply to my amendment, I shall comment on the amendment by the noble Lord, Lord Holmes, on KYC. I entirely sympathise with his point about a modernised means of identification, but I am afraid he will come up against what seems to be a most peculiar British national aversion to any comprehensive means of identification. Therefore in KYC we rely on documents such as utility bills that were never designed for this purpose. The debate over a vaccine passport is running into the same national aversion. However, I wish him well because he is on the right track in what he is attempting to do.
I was also enormously impressed by the amendments in the name of and the speech made by the noble and learned Lord, Lord Garnier. I cannot understand why the notion of failure to prevent, which he described so clearly that even a non-lawyer such as myself could understand it, can apply to bribery and tax evasion but not to other financial crimes. The Minister did not really address that lacuna in her reply.
Turning to my two amendments, first, the UK’s approach to measures against financial crime is underresourced, scatter-gun and generally ill directed. The evidence is clear in the extraordinarily low number of prosecutions. I therefore feel that there is an urgent need for a major reconsideration of this matter. I hope that the review referred to by the Minister, to be conducted by Her Majesty’s Treasury and the FCA, will produce something concrete and effective—for a change, I must say.
On beneficial ownership, I was amused by the point made by the Minister that, because of the peculiar structure of my amendment, I was somehow letting the private sector off the hook. That was not my intention, of course; it was about the necessity of getting the argument in the Bill. However, I was really disappointed to hear her repeat the discredited support for Britain’s so-called wonderful public beneficial ownership open register. This public register is inaccurate, misleading and shelters criminals, and I am surprised that she is so enthusiastic in her support for it. I hope that the committee that scrutinises financial matters, which we discussed earlier in this Committee, will be able to keep an eye on developments in the prosecution of financial crime and the provision of a proper, verified beneficial ownership register. I hope that it will push these matters forward and not let them disappear into further reviews.
In the meantime, I beg leave to withdraw Amendment 49.
Baroness Coussins
Member’s explanatory statement
This amendment, and the amendment to page 40, line 32 in the name of Baroness Coussins, would require that the Statutory Debt Repayment Plan element of the debt respite scheme would have to come into force before 1 May 2024.
Baroness Coussins (CB)
My Lords, I am very glad to open the debate on this group, although I fear that we may be interrupted at least twice if votes are called in the Chamber; I see that the Minister is on his feet there now.
I declare my interest as an ambassador and former president of the Money Advice Trust, the charity that runs National Debtline and Business Debtline. In moving Amendment 52, I will also speak to Amendment 67 in my name, to which the noble Baronesses, Lady Morgan of Cotes and Lady Kramer, and the noble Lord, Lord Rooker, have added their names. I warmly welcome their support.
Before dealing with my own amendments, though, I want to say a brief word about the probing Amendment 54 in this group, in the name of the noble Lord, Lord Stevenson, who has done so much to secure the introduction of both the Breathing Space scheme and Statutory Debt Repayment Plans. I hope the Minister will be able to provide clarity today on universal credit advances and third-party deductions, and I am sure the noble Lord, Lord Stevenson, will set out further details on those issues. At Second Reading, I also mentioned the problem of lead generator firms or imposter websites, so I also welcome Amendment 111 in this group, in the name of the noble Lord, Lord Holmes of Richmond, and others. I look forward to hearing the Minister’s response on what action the Government intend to take on this issue.
Lord Holmes of Richmond (Con) [V]
My Lords, it is a pleasure to take part in the debate on this second group of amendments. I declare my interests as set out in the register. It is also more than a pleasure to follow the noble Baroness, Lady Coussins, and the elegant way in which she introduced the amendments. I would certainly have added my name to her Amendment 67 had I had any ink left in my pen. I can only express regret that my name is not on it, as it elegantly and excellently expresses her intention, as she has done on her feet today.
In many ways, this is the most important group of amendments that we are considering in Committee. It takes me back to 2017, when we debated the Financial Guidance and Claims Bill, as it was then, and our discussions about duty of care and financial inclusion. It all rings true in these amendments and in our earlier discussions in Committee on financial inclusion objectives, not least for the Financial Conduct Authority.
I am grateful to the Money Advice Trust, Macmillan and StepChange not just for their briefing, advice and commentary for these amendments but for the work that they and all the organisations involved in the debt space do day in, day out—often unsung—dealing with people who find themselves in some of the starkest situations. Those organisations step in, and they deserve our thanks, praise and recognition.
I shall cover Amendments 53, 68, 69 and 111 in my name. I shall also touch briefly on Amendments 54 and 70 in the name of my friend, the noble Lord, Lord Stevenson, but I shall be mindful not to eat his tea. I feel somewhat nervous speaking before him, with all the expertise he has in this area and in view of his excellent chairmanship of StepChange. This Committee and our nation owe him a tremendous debt for the work that he has done in the area of debt.
Amendment 53 is relatively straightforward. It focuses on the provision of debt advice for those who would fall within the scheme. It hints at the wider point of financial education, not just in schools, as we have discussed in the past, but broadly, throughout life. It was not possible to craft an amendment to the Bill on financial education the way I would have intended. However, I believe that Amendment 53 speaks to that specific intention while having general applicability, broader than just those within the scheme.
Amendment 54, in the name of my friend the noble Lord, Lord Stevenson, is an excellent probing amendment, and I shall leave him to walk us through it. Amendment 68 has elements of Amendment 67, in the name of the noble Baroness, Lady Coussins. It sets out the provisions of the SD scheme and a timetable for its implementation. I am not entirely sure why I opted for December 2024 as the end date for when people would have to have been taken up into the scheme. I may have had the view that the Johnson Administration would go the full five-year distance. On balance, I am probably minded to go with the noble Baroness, Lady Coussins. May is probably a better date; it is certainly reasonable and achievable and gives the right amount of space, with the right amount of road, to enable this scheme to get up and running.
Amendment 69 seeks a consultation on how funding for advice will operate under the scheme and is relatively straightforward. Amendment 70 is, without question, one of the key amendments in this group. It was handsomely set out and I will not eat my friend’s lunch in doing so again. By setting out particular groups, not least SMEs, those with protected characteristics and charities, the noble Lord has done an excellent job in focusing on the key groups and on how such a review should be structured.
Amendment 111, my final one in this group, is concerned with so-called lead generators. In many ways, it goes to the essence of the human condition: the ebb and flow; the give and the take. What we witness with lead generators is, all too often, those taking from those who have the least. The aim of the amendment is straightforward: to end the misery and mental stress that the practice of lead generation, as currently conducted, causes to tens of thousands across the UK. What are lead generators? In essence, they use online tools to crawl the online world in search of those who have entered that environment to try and find solutions to their current debt difficulties. They then serve up the individuals they have captured, if you will, to organisations which seek to “advise” and “help” them. This area is riddled with misleading statements, misrepresentation—
The Deputy Chairman of Committees (Lord Caine) (Con)
The Committee will now adjourn for five minutes.
The Deputy Chairman of Committees (Lord Caine) (Con)
My Lords, before I invite the noble Lord, Lord Holmes, to complete his comments, I point out that I completely omitted to put the question when the noble Baroness, Lady Coussins, moved her amendment. For clarity, the question before the Committee is that Amendment 52 be agreed to. I call the noble Lord, Lord Holmes of Richmond.
Lord Holmes of Richmond (Con) [V]
As I was saying, lead generators are involved in misleading and misrepresentation by holding themselves out as organisations such as the Money Advice Trust or StepChange, or representing themselves as government to pull in for financial gain those who sought help for their debt difficulties. It is a pernicious practice, preying on those who are, without doubt, extremely vulnerable as a result of debt. It is unfortunate that the arena for their taking is the world wide web—one of the greatest gifts to humanity from one of the greatest of great Britons, Tim Berners-Lee. It is such a tragedy that his world is populated by these tawdry takers.
Amendment 111 would amend the FSMA to bring lead generators into the world of regulation to end this pernicious practice and to address the current asymmetry in FCA regulation: if you are introducing creditors that is a regulated activity; if you are introducing a debt advice service or the like, that is currently unregulated. The problem is large: StepChange and the Money Advice Trust estimate that at least 10% of those in need who seek their help and that of other debt advice services are caught up in and misdirected by such lead generating practice. That is an extraordinarily high figure.
We often see the world in a grain of sand when we consider personal testimony. One man said: “I am caught up in this world of these people. I am called, if not once, five times a day. Fortunately, I’ve managed to sort out my debt problems, but this harassment from these organisations is almost as bad as the debt itself. It’s having a detrimental effect on my life; it’s having a detrimental effect on my mental well-being.” That is the outcome of this mendacious practice, of this fakery and falsehood, from these tricksters and takers.
When my noble friend the Minister considers Amendment 111, would he agree that when individuals look for support in their hour of need as a result of a debt situation, they should find help, not harm? I am delighted that the amendment has the number 111; it is a single Nelson of an amendment. It is a single amendment with a single intention: for it to pass to make one single, simple change that will help hundreds of thousands. Will my noble friend the Minister channel his inner Nelson and give Amendment 111 its victory?
Lord Stevenson of Balmacara (Lab) [V]
My Lords, I declare my interest as a former chair of StepChange Debt Charity. I thank the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes, for their kind words about the work we have done with StepChange and all the other groups involved in supporting the repayment of debt and the management of unmanageable debt. It has been a pleasure to work with them and I have listened to their words very carefully, but it has also been wonderful, over the years I have been working on this issue in your Lordships’ House, to see the number of people who have become interested in it and who are prepared to join in and support it grow. It is now a very solid group with very firm views about how things should move forward, as we just heard.
I was very struck by what the noble Lord, Lord Holmes, said about the way people prey on those who have problems with debt. When I was working at StepChange we decided to change the name from the rather uncomfortable Foundation for Credit Counselling, which no one ever used. It was not a foundation, we did not deal with credit, and we did not counsel. It was a problem to get across what we did do, but we decided to be bold, as one is when coming to a new organisation and thinking about how you might change it. We decided to go for a name that took us away from any descriptive elements, and came up with StepChange.
One thing that we did not expect, which plays back to what the noble Lord, Lord Holmes, said, was that within 24 hours of our name being announced to the world there were between 15 and 20 groups preying on the same group of people we were trying to help, in exactly the way that the noble Lord described: they had changed their names to variations on StepChange. They also changed their colour coding, the whole look of their websites and the whole way that they approached potential customers. It was a wonderful example of the difficult area in which we operated. Here we were, trying to help people who were desperate to repay the debt that they had got themselves into. They were, by and large, decent, ordinary people for whom something had gone wrong with their lives and as a result they were spiralling into unmanageable debt. Yet here were these other companies trying to make money out of them, as the noble Lord explained. It was just awful, and to do so in a way that showed that they were watching how we operated in the market and were prepared to copy our techniques to get people to pay them money which they could not afford in order to get out of debt, was an extraordinary basis.
That leads into the amendments in this group, which are largely about trying to work with the Government in their good and well-thought-through plans, which are slowly coming to fruition. Perhaps they could go a little faster, but that is part of this discussion. My principal point is that I want us to support what the Government are doing because they are on the right track. We would like to do anything that we can to help them.
I have two amendments in this group and would have signed others, but I did not need to because they have a lot of support in other areas. Amendment 54 probes the nature and content of the regulations that will establish the statutory debt management scheme, which is complementary to and foreshadowed by the debt respite scheme mentioned by the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes of Richmond. Amendment 70 calls for a formal review of the debt respite and statutory debt management schemes within a two-year period after Royal Assent. It looks very straightforward on the surface but when the Minister responds I am sure that he will realise where the amendment is trying to take him. It has the same impact as the points made by the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes, which is that we are a bit worried about the time that it has taken to get this scheme going. The idea was—
The Deputy Chairman of Committees (Lord Caine) (Con)
My Lords, as there is a Division in the Chamber, the Committee will adjourn for five minutes.
The Deputy Chairman of Committees (Lord Caine) (Con)
My Lords, the Committee will now resume.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, I will move on to the first of my amendments: Amendment 54. Clause 34 as drafted, is quite short, and it is hard to reconcile it with what I understand to be the Government’s ambition. I would be grateful if, when he comes to respond, the Minister could confirm whether plans remain to replicate the Scottish statutory debt management plan, which has worked well for debtors and creditors. The reason for Clause 34, at its heart, is to take the necessary powers to ensure both that creditors participate in the scheme and that they contribute towards the funding so that the full range of advice and support for the SDMP is available.
The experience of the scheme in Scotland is that the Government are on the right track. Recent discussions with Ministers have been very reassuring, and I thank them for their time. However, it would be helpful if we had a little more detail put on the record; whether he is able to do this in response to the points I am about to make, or whether he would like to write to me, I should be grateful to hear further from the Minister in relation to some of my points.
One point is that the breathing space regulations—SI 2020/1311—define a debt advisor as having FCA permission for debt counselling or a local authority. That is quite a wide group: when he comes to respond, can he make that a little bit narrower? Presumably, this is a local authority which is currently offering a full debt advice system. Of course, that has been badly affected by cuts in recent years, so I hope that more detail will be provided on that. Can he confirm that this definition used in relation to debt advice will also be available for the debt-advice component of the statutory debt-management plan?
Secondly, the Minister will also be aware of the concern that debt advice should continue to be available for free. There is considerable evidence that many people do not get access to the debt advice that they need. The pandemic is obviously a worry that may yet crystalise into concern about, interest in, and need for debt advice. We have not seen the numbers increase very significantly recently, but that is because the Government have been effective in getting the funding necessary to maintain people’s continuing existence at the moment. However, when those schemes wind up—and it will be some time before they do, but they will wind up—then there will, of course, be some concern about the amount of debt advice available and whether it will be fundable on a continuing and sustainable basis.
In this context, my third point is that the Government have said that they wish to restrict the funding of the SDRP providers to 9% of the effective debts. This sounds like a reasonable proportion, and there might be a lot of support for it, but it exposes a gap in the current arrangements, which are based on a fair share plan of 13%, so it is a reduction of about 4%, including the costs that are currently absorbed within the structure being made explicit and being met by the overall system. This is a detailed point and I am sure that the Minister will be pleased to hear that I do not expect a very detailed answer at this point, but it would be helpful if more detail could be provided in a letter. We need to know the basis on which the direct cost of the statutory debt management scheme will be operated and that there will be funding available for debt advice, which is the other part of the equation that needs to be funded.
My final point on this list is the question of timing, which has already been addressed by the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes. I do not think it is sensible to set an artificial time limit for the Government on this. It should come through as and when the Government can get it right and get it out, but I hope that my Amendment 70, which is couched in the form of an amendment asking for a report, is a sufficient stick to suggest that a little more effort on this would be very welcome all round.
We have already touched on my next point in relation to those who seek to benefit from people who are suffering from unmanageable debt by offering them commercial services. A number of companies offer this, and a number of other amendments deal with this, but it is important to establish that the scheme that the Government are supporting is entirely on a non-profit basis. Clearly, if there were to be profit-seeking FCA-authorised debt advice providers also included in this group, it could mean additional costs for the scheme or else a reduced service for those participating. I cannot believe that it would be in the public interest to have a situation where people were obtaining commercial returns from what should be a free service. I accept that the original policy statement by the Government said that debt advice providers would not be able to charge fees in addition to the FairShare scheme, but I should be grateful if, when he comes to respond, the Minister can confirm that that will be set out properly in the regulations.
I have two final points. Can the Minister confirm that the reference to the Crown in Clause 34(4) means that all public body debts will be included in the scope of the statutory debt management plans? It is important to get that confirmation. It is really good that the Government have accepted that Crown debts will be included but, obviously, a significant number of debts are also owed to public services, which are not officially within the Crown, unless I am unaware of a definitional point here; that particularly applies to local authorities.
In that respect, it is also important that we can get confirmation that while individuals are in the debt respite scheme or the SDMP, they will be protected from enforcement action—particularly bailiff action. This has been one of the most welcome measures in the pandemic moratorium affecting those people in unmanageable debt. The suspension has released a great deal of concern that people had about this. It seems unlikely that the Government would want to see a scheme that, on the one hand, protects those who are attempting to repay their debts by obtaining breathing space and then entering a plan to do so but, at the same time, does not seek to restrict the possible bailiff action that would have such a deleterious effect on them.
We will come back to this issue in a later group because there is now an amendment around it—that may well be a better time to discuss it—but I would be interested to have an initial response from the Minister when he comes to respond.
Lord Lucas (Con) [V]
My Lords, my amendments in this group are all a result of my chairmanship of the Enforcement Law Review Group. They reflect the concerns of members of that group—it has representatives from all sides of the debt management business, from creditors to debtors and others—about the breathing space regulations. I would be quite content if my noble friend wrote to me or discussed these matters afterwards, but I am grateful for the opportunity that the Bill affords to pick them up before the arrangements themselves go live.
Amendment 56 asks whether the 60 days of the breathing space moratorium can be extended. There is concern, particularly from the debt management side, that the whole business of processing a benefit claim can run beyond 60 days and make it necessary that the period should be longer. They want to see either that there is flexibility or that there will be some way of managing situations where a longer period is needed.
Similarly, Amendment 57 looks at the need to report in the middle of the 60 days and, if there has been no change, to ask whether the requirement of the report might be omitted.
Amendment 58 looks at situations where the debts owed include those where it would be really difficult to inform the creditor of what was going on, in terms of obtaining a breathing space, because the creditor is in a position to upset the debtor’s life substantially. Examples might be having children in a nursery, a car in to be repaired or a landlord who is in a position to evict the debtor from their house. It would allow debt management agencies the flexibility to manage a debtor’s life in a way, at the same time as they are helping them with their debts, and not push them into trouble because they have involved more commercial creditors in a breathing space scheme.
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
I call the next speaker, the noble Lord, Lord Rooker.
Lord Lucas (Con) [V]
My Lords, I am still going—I have a number of other amendments. Is the Committee not hearing me?
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
Please continue—sorry. It was a pregnant pause.
Lord Lucas (Con) [V]
Amendment 62 looks at joint debt situations, for instance between a wealthy husband and an impoverished wife where it is the wife who has the breathing space moratorium. Under those circumstances, it is not obvious that the wealthy husband should have the benefit. The amendment therefore asks whether, under some circumstances, the moratorium should not apply to all parties to a debt.
Amendments 63 and 64 are really just opportunities to ask the Government whether this scheme is ready to go. A lot of pressure has been placed on the Insolvency Service and the courts in the course of Covid. Are we actually in a position to launch a working system? If not, should there not be some arrangement to allow delay to ensure that, when the launch comes, it is successful?
Amendment 65 looks at situations where a debtor gets the benefit of a breathing space but then just does nothing and does not engage with the breathing space process in any way. It asks: should there not, under those circumstances, be some incentive—something that the debtor loses by not engaging with the process?
Amendment 66 looks at the situation of a creditor that has taken its debt to the point of commencing legal action and then faces a breathing space process. That is fine, but should not the position that the creditor has got into be finalised so that things can be picked up again afterwards if they need to be, rather than having to be started again at considerable expense to the creditor? Should not the system recognise—[Inaudible.]
I appreciate that these are complicated and detailed amendments. As I said, I would entirely accept written correspondence, and I shall be grateful for anything the Minister says today. However, they reflect an industry that is looking to make a success of both sides of the breathing space initiative but is concerned that some details are not provided for in the regulations as they exist at the moment.
Now I have finished.
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
Thank you for the clarification. I call the next speaker, the noble Lord, Lord Rooker.
Lord Rooker (Lab) [V]
My Lords, I counted at least three occasions when I thought that the noble Lord, Lord Lucas, had finished his incredibly thoughtful speech as he moved from one group to another. That is not a criticism by any stretch of the imagination, by the way. I will be extremely brief.
My name is on only a couple of amendments: Amendments 52 and 67. I have nothing new to say from what I said at Second Reading. I simply wanted to get my name on the amendments to show the widespread support for the issue raised by the noble Baroness, Lady Coussins. The key amendment in her name—Amendment 67—might be thought to be far too reasonable. If I were the Minister—and I have been in that position—I would accept it, I must say. I would go back and tell the boss that I had to accept it because it would have been made worse on Report—it may well do with another amendment with another date on it—and it would save everybody a lot of time. I did that more than once as a Minister, and it usually turned out okay.
I am very grateful for the work of the Money Advice Trust. This amendment affects what could be millions of people. We are talking about some really serious problems. I was taken by the examples given earlier in the debate on this group by the noble Lord, Lord Holmes of Richmond. I fully support the amendment and cannot see why it cannot be accepted now just to tidy everything up so that we do not have to spend more time on it on Report. I am not saying that it is not important but it is likely that, on Report, Ministers will be faced with a different date. I would accept this amendment and run with it. Everyone will be grateful if the Minister does so.
Finally, the Government deserve great thanks for Clause 34. I want to give credit where it is due. I have finished.
Baroness Morgan of Cotes (Con) [V]
My Lords, it is a pleasure to speak in this debate and follow the noble Lord, Lord Rooker. Like him, I will speak to Amendments 52 and 67, as well as to Amendment 54. I have added my name to all of them. I will also speak in support of Amendment 111. I declare my interest as a pro bono adviser to the board of StepChange, the debt advice charity, which has already been mentioned—quite deservedly—in the course of the debate. I am sorry that I could not speak at Second Reading.
We have heard some excellent speeches. I do not want to detain your Lordships for too long. As we have already heard, even before the pandemic, tens of thousands of households faced personal debt situations requiring debt advice. A recent report by Pro Bono Economics said that, because of the pandemic, an extra 480,000 households are likely to be pushed into debt. In the worst-case scenario, that would mean the overall number would rise to 1.5 million by the middle of this year. Of course, the cost to society of problem debt is likely to exceed £1 billion this year through things such as extra mental health support and housing provision.
Like the noble Lords, Lord Rooker and Lord Stevenson, I also recognise the Government’s work to address this issue through introducing the Breathing Space scheme and the forthcoming Statutory Debt Repayment Plan. I added my name to Amendments 52 and 67. I pay tribute to the way they were introduced by the noble Baroness, Lady Coussins, and I thank the Minister for the conversation we have had about them. Like other noble Lords, I think that we need a firm timetable for the introduction of the SDRP so that debt agencies and advisers can plan for that introduction. I understand that 1 May 2024 basically fits in with the Treasury’s timetable, so I hope my noble friend can take the Committee’s advice. I wait to hear what he will say about whether that timetable can be accepted.
The noble Lord, Lord Stephenson, introduced his Amendment 54, which he said is a probing amendment. It asks some good questions about the new Statutory Debt Repayment Plan. I will listen to what the Minister has to say in response. I echo in particular the points he made about the fair share funding, which will obviously be very important for organisations such as StepChange. There is a concern that, without the clarifications the noble Lord has been seeking, the SDRP statutory fair share will not be successful in increasing access to free debt advice and might actually reduce access for clients who are not suitable for an SDRP. Clarification on that funding model would be extremely welcome.
The other subsection of the amendment that I particularly want to pick up relates to bailiffs. There is currently a confusing landscape in this third national lockdown where bailiffs are permitted to appear on doorsteps but not, for example, enter premises. However, they can seize goods such as cars sitting on the highway. I know that Amendment 36F, which has recently been tabled, is in a different group, but having bailiffs clearly bound by the terms of the SDRP and, as suggested in that amendment, by a regulator would help to ensure compliance with the SDRP scheme. I hope the Minister will confirm that bailiffs will absolutely be bound by the terms of the Statutory Debt Repayment Scheme that has been agreed.
I also offer my support to my noble friend Lord Holmes’s Amendment 111, which he so graciously introduced. It seeks government action to regulate lead generators for debt advice and debt solutions. We have already heard how easy it is for people, who are often extremely vulnerable at the point that they seek debt advice, to think that they are contacting StepChange or National Debtline and instead find that they are speaking to other people who then, as my noble friend said, harass them thereafter. Even when they have got themselves into a better position, they are harassed for continued work and debt advice. I also know that StepChange has to spend a significant amount of time monitoring and reporting misleading advertisements and, obviously, that time could be better spent helping more clients with their debt advice. I hope the Minister will be able to indicate whether the Government will now require FCA authorisation.
As I said, the Government have shown a very welcome intention to act in this space. I thank and pay tribute to Treasury Ministers for that. However, as we heard in the Chancellor’s Budget Statement today, it is not just the public finances that are being thrown into disarray by Covid. Sadly, more households’ and individuals’ personal debt situations will have been created or exacerbated by the past 12 months. They will really need these schemes to help them get back on their feet. Therefore, I very much hope that the Minister will be able to confirm that the Government are minded to accept the 1 May 2024 dead- line and also to answer the points raised by other noble Lords in these amendments to help to confirm exactly how the Statutory Debt Repayment Plan will operate.
Baroness Ritchie of Downpatrick (Non-Afl) [V]
My Lords, I am delighted to follow the noble Baroness, Lady Morgan, in this debate on this group of amendments. I shall make particular reference to Amendments 52 and 67, introduced by the noble Baroness, Lady Coussins, and spoken to already by various noble Lords.
Clause 34 gives the Government powers to introduce a statutory debt repayment plan scheme, which is very welcome and which other noble Lords have already endorsed. It will significantly improve the protections offered to people in debt, who will be able to repay what they owe but over a longer timeframe. Like many noble Lords, I have received a briefing from the Money Advice Trust, which would like the Government to commit to a firm timetable for the scheme’s introduction. Hence, I support Amendment 52, which is a tidying-up amendment, and Amendment 67, which provides a timetable.
Amendment 52 and 67, tabled by the noble Baronesses, Lady Coussins and Lady Morgan, and the noble Lord, Lord Rooker, and spoken to by the noble Lord, Lord Holmes, would put a timetable for the introduction of statutory debt repayment plans in the Bill. The pandemic will have accentuated debt problems faced by businesses in the small to medium-sized sectors as well as by many individuals who are facing unemployment, the true number of whom will not be revealed until furlough ends. The noble Baroness, Lady Coussins, referred to the number of people—3.8 million, I think—who have missed payments during the pandemic. In fact, 3.2 million people struggle to make ends meet. Those are unacceptable, but realistic, figures that all of us must address, particularly the Government. It is vital that a scheme is put in place with a definitive timetable to enable debt repayment plans.
It is important that the Minister demonstrates support for these amendments and other amendments in this group which would add a requirement to the Bill that statutory debt repayment plans come into force, as per Amendment 67, by 1 May 2024 at the latest. That would provide time to develop and pass regulations and to set up the required systems and infrastructure to deliver the scheme while ensuring that introducing it remained a clear priority for the Treasury. I urge the Minister to set out a clear timetable today and to indicate that the Government will accept these amendments. Will he now commit to adding a timeframe for their introduction to the Bill, with the Covid-19 crisis producing so many financial challenges for people? As we heard earlier, many of those people have been subjected to sharks, moneylenders and tricksters, as the noble Lord, Lord Holmes, referred to. Ordinary people who find themselves in debt and find it difficult to repay it must be protected, and the best way to do that is to provide that date in the legislation. I know many people have faced financial challenges, so I ask the Minister to assure the Committee that introducing statutory debt repayment plans will remain an absolute priority for the Treasury, accompanied by the date of 1 May 2024.
Baroness Meacher (CB) [V]
My Lords, along with StepChange and many others working in the debt field, I welcome Clause 34, which I hope will provide some support and protection for vulnerable people with problem debts. I also very much welcome the amendments in the names of the noble Baronesses, Lady Coussins and Lady Morgan. I will not speak to those amendments, because all the main points have been extremely well made by the two Baronesses. However, I have the permission of the Government Whips Office—
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
Baroness Meacher, forgive me, we are about to go into a Division, so if you will allow us to have an Adjournment for five minutes then we will return to your speech.
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
Get your finger ready for button pressing.
Baroness Meacher (CB) [V]
My Lords, I will start my sentence again. I have the permission of the Government Whips’ Office to speak to Amendment 136F in my name, which should be in this group but appears elsewhere. I have only just managed to table this amendment, and therefore other noble Lords have not had time to put their names to it, but I thank the noble Baroness, Lady Morgan, for expressing her support.
Amendment 136F seeks to introduce independent regulation for bailiffs and bailiff companies. The amendment builds on a Ministry of Justice review of bailiff issues that began in 2018, although we still await the report. The amendment does not specify who should regulate the industry, other than it should be subject to statutory regulation. It seems to us that is the job of the Treasury and the MoJ to work together to establish an appropriate framework. I want to give the Minister the opportunity to commit to meaningful reform, and I hope that he will be able to respond to that.
As noble Lords will know, bailiffs’ powers are quite extraordinary: to enter a person’s home, in some circumstances forcibly; to take possession of belongings as security against debt repayments; and, in extremis, to seize those goods. Of course, it is important that the law supports creditors to recover money owed to them, but it is equally important that the law should regulate debt recovery action, with controls to protect people who are vulnerable and those in financial difficulty from further hardship and harm. At the moment, there is a tremendous amount of further hardship and harm.
The Government recognise the importance of this in numerous places. We have debated Clause 34 concerning a debt respite scheme to protect the financially vulnerable. The Government have equipped the Financial Conduct Authority with the resources and powers to supervise firms’ conduct and ensure that key consumer protection issues, such as affordability and vulnerability, are taken into account. There are binding rules and standards on debt recovery action, a toolkit of sanctions and an accessible consumer redress scheme. All these factors prove strong incentives for firms to abide by the rules. However, despite bailiffs having the most intrusive and potentially harmful powers, there is no similar effective framework of oversight for bailiff enforcement. This is surely a glaring anomaly, which should be rectified in the Bill.
Bailiff enforcement is not a small matter. It is very common, particularly among public sector creditors. Research for the Money Advice Trust found that local authorities alone had referred 2.6 million debts to bailiffs in 2018-19. As Citizens Advice has shown, the number of people facing bailiff enforcements for small amounts of unpaid council tax debt is likely to double as a result of the pandemic to more than 3 million households. A significant proportion of those people will be in very vulnerable situations. Some 40% of people with bailiff issues helped by Citizens Advice have a disability or a long-term health condition, and 58% of StepChange clients with an additional vulnerability were subject to bailiff action on their council tax arrears.
Baroness Kramer (LD)
My Lords, I spoke at length on the previous group, so I am going to pay penance and try to be much briefer on this one, even though this is an issue that I also care about passionately. I do not think I can start without acknowledging all the incredible work done by the noble Lord, Lord Stevenson, in this arena. He has genuinely moved the issue on by sheer determination, a baton now picked up by the noble Baroness, Lady Coussins.
The statutory debt repayment plan element of the debt respite scheme needs to come into effect as soon as possible. I suspect that we all acknowledge that, but the impact of Covid makes it more important than ever. When we talk about a timetable—I am thinking of the speeches by the noble Baronesses, Lady Morgan and Lady Ritchie—we know that a group of people who will probably never have experienced financial difficulties will now be drawn into a system where they are overwhelmed by their debts. One can see that this is an opportunity for the less scrupulous to take advantage. Even those who regard themselves as perfectly professional and ethical will look for weaknesses in the system in order to get paid. There is pressure on both sides. I have therefore added my name to Amendments 52 and 67.
The noble Lord, Lord Lucas, raised a number of interesting issues but he can probably take comfort in the fact that there is a sort of Scottish template, if you like, in that experience in Scotland will help to make sure that the programmes in England—I assume this covers Wales as well—will benefit and learn any necessary lessons. That should remove a lot of the anxiety and some of the teething problems.
The amendment in the name of the noble Baroness, Lady Meacher, is completely new to me. It seems entirely logical that we should have a proper framework of oversight for bailiff enforcement.
I also strongly support Amendment 111, in the name of the noble Lord, Lord Holmes, to bring lead generators for debt advice and debt solution services under FCA regulation. I have worked on many financial services Bills over the years, particularly on the consumer side, and it is almost breathtaking how many people and groups are totally unscrupulous and use any opportunity to gouge people when they are anxious and worried. One can just see the exploitation that could happen here. I ask that the issue be taken more broadly, that the FCA go on the front foot and anticipate where unscrupulous individuals might try to exploit the situation, and that we see if we can to some extent head it off at the pass. We are quite good at doing something when thousands of people are complaining that they have been taken advantage of; it might be very useful if we turn that around and try to anticipate where trouble could come from and see whether we can deal with it.
The issues have been so well laid out by others that I will not repeat them, but I join in asking the Government to respond to these amendments, particularly those on the timetable, with some very strong assurances at the very least.
Lord Tunnicliffe (Lab) [V]
My Lords, we have spent an hour and a quarter debating a clause that is two thirds of a page long in a 182-page Bill. This, at first sight, might seem unreasonable, but when you look at the clause from the point of the view of the individual citizen, it is probably one of the most important in the Bill, so it is right that we have done so. There are an amazing 19 amendments to this clause, which would normally imply concerted opposition. In fact, that has not been the mood of the debate at all.
To sum the clause up, it has dealt well with one of the concepts, but we have too little detail. My noble friend Lord Stevenson of Balmacara seems in many ways to have been the father of this concept, and I congratulate him. We have adjacent desks, and I have seen him busily dealing with issues such as this. His two amendments seek to flesh out how the clause would bring in proper regulation, a degree of reasonableness and recognition of the role of bodies related to national and local government; they also address the importance of protection from bailiffs, and funding.
The noble Baroness, Lady Coussins, brought in the idea that we must have a hard deadline, and the noble Lord, Lord Holmes of Richmond, introduced the concept that we need advice for individuals. A timetable of December 2024 was gazumped by the noble Baroness, who suggested instead May 2024. It is important that the funding issues be addressed, especially if this fine concept is improved, because it could always go wrong if they are not faced up to. Again, this brings home the importance of regulation.
Finally, we have the 11 amendments from the noble Lord, Lord Lucas. I hope he will not mind me saying that they are very “Lord Lucas-like”, with each small detail adding value to this legislation. I say that in order to illustrate that most of the amendments are complementary.
I ask the Minister to recognise the degree of clear, cross-party consensus on this important clause. Many people have urged him to make concessions. My experience is that Ministers making concessions on the hoof is considered rather dangerous; hence, this is unlikely. But I do strongly urge him not to reject too many of these ideas. His brief probably says that the wording will not work. Wording never works when it is from the Back Benches, but the ideas work, and these ideas are powerful and need to be taken account of. I hope there will be a further round of conversations before Report, and that the Government will come back with a composite proposal that improves this important clause. I fear that if that does not happen, we will spend a lot of time on Report, and there will be a more muscular approach from those who tabled and who support these amendments.
The Minister of State, Cabinet Office (Lord True) (Con)
My Lords, this has been an extremely detailed and thoughtful debate. I will try to answer as many points as I can in the time available, which I fear will be quite Parkinsonian and extend in line with the notes I have received. I am grateful for the general tenor of the debate; I think all of us in this House agree that there are profound problems here which we collectively, across parties, are seeking to address. I am grateful for that.
I will briefly explain the Government’s position before turning to the amendments. Obviously, the Government want to incentivise more of the people who could benefit from it to access professional debt advice, and access it sooner. To this end, we are introducing a debt respite scheme, as many noble Lords have said. The first part is the breathing space, which begins on 4 May, and the second part is the statutory debt repayment plan. The SDRP will be a new debt solution for people in problem debt and will provide a revised long-term agreement between the debtor and their creditors on the amount owed and a manageable timetable over which it has to be repaid. It is intended that during their plan, debtors will be protected from most credit enforcement action and from certain interest and charges on debts in the plan.
My noble friend Lady Morgan asked whether bailiffs can be sent in during a moratorium or SDRP. During a moratorium, a court or tribunal must not instruct a bailiff to take action. It is intended that, during an SDRP, enforcement action would also be paused.
These amendments seek to require the Government to include certain features in the debt respite scheme, including specific requirements relating to breathing space. Amendments 52 and 67, which many noble Lords have spoken to, seek to set a deadline of 1 May 2024 for the SDRP to be implemented. Similarly, Amendment 68 would require the Government to publish a timetable, with a requirement for the scheme to take on clients before the end of 2024.
I am sympathetic to the intention behind these amendments and am grateful for the chance to address the timing of the SDRP and for the discussions we have been able to have and the genuine and positive engagement with noble Lords prior to this stage and—who knows?—afterwards. The consultation response published in June 2019 set out areas that required further policy work and consultation. Given the challenges and complexity involved, the Government continue to work closely with the debt advice sector, creditors and regulators to make sure that the policy can be implemented successfully and that everyone involved has time to prepare. Setting a hard deadline for the SDRP risks tying all our stakeholders’ hands unnecessarily and arbitrarily limiting the time they have available to prepare properly.
I can nevertheless assure noble Lords that the Government are committed to implementing the SDRP in a timely manner. To that end, detailed regulations establishing the SDRP are currently being drafted and will be consulted on as soon as possible after this Bill receives Royal Assent. This process will ensure that the SDRP is not rushed and is developed to a high standard that can effectively support the individuals who will use it, as well as those who will operate it.
As my noble friend Lord Holmes of Richmond said, the noble Baroness, Lady Coussins, put her case most elegantly. Although a bad dancer myself, my wife would tell the Committee that it is much more congenial to dance to elegant music. I can say that the May 2024 date is consistent with the Government’s planning assumptions, although, for the reasons I have given, they do not agree that setting a specific date in primary legislation is an appropriate or practical way of ensuring this. The amendments as drafted would prevent the Government making further regulations on the whole of the debt respite scheme after that date; this would be undesirable, as it would prevent the Government acting to amend the scheme in future—for example, in response to feedback.
The noble Baroness also asked when universal credit debt will be brought in to the scheme. UC overpayments will be included in the breathing space scheme from day one. UC advances, which the noble Baroness asked about, will be included in the scheme, on a phased basis, as soon as possible, as will third-party deductions. This does, however, require significant IT changes, but I assure the noble Baroness that the Government recognise the importance of including all UC debts as soon as possible. I hope that, having heard the debate, noble Lords will accept that we will reflect on what further clarity might be offered on a timetable, short of a statutory tie, and that what I have said on this will be reassuring.
Amendment 53 would expressly enable the regulations to cover the provision of debt advice. I assure my noble friend Lord Holmes that this is possible under the existing powers. It is already built in to the breathing space and is intended to be built in to the SDRP parts of the scheme. Indeed, the scheme cannot work without professional debt advice provision and the Government are aware of its importance. Amendments 56, 57 and 58, in the name of my noble friend Lord Lucas, affect the debt advice provider in breathing space, including extending the 60-day period of respite in breathing space, varying the time in which the debt adviser must conduct a midway review, or allowing the debt adviser to exclude certain debts from the scheme.
Amendments 61, 62 and 65 focus on the creditor, including the possibility of regulations being made which vary the time creditors have to comply with notifications, among other implications. The Financial Guidance and Claims Act 2018 delegated the detail of the debt respite scheme to secondary regulations, thus providing the Government with broad powers to design the scheme and implement it, rather than specifying implementation decisions in primary legislation. The Government have already set out their approach to the debt respite scheme as a whole in their response in June 2019, following the consultation they carried out. The policy aims to strike a fine balance between the interests of the debtor, debt advice provider and creditor. That was recognised in the speech by my noble friend Lord Lucas. My noble friend asked if joint debts would be included. Joint debts can be included in a moratorium, even if only one party seeks it. However, the other party’s other debts are unaffected. A moratorium applies to a debt, not a debtor.
Many of the aspects covered by these amendments are already factored in to the scheme design and, should the Government wish to make further changes to the breathing space regulations in future, they would not require these amendments to be made in order to do it. We will be glad to exchange further information with my noble friend Lord Lucas to reassure him further. He may ask whether, if the Government can already do these things, they will commit to do them. I assure noble Lords that the Government listen with respect and intend this scheme to be successful and useful. As I have already set out, there is still significant policy work to do on the SDRP, which is why the Government have committed to publishing draft regulations and consulting on them as soon as possible. With less than three months to go until the start of the breathing space scheme, it is important to have certainty and stability in the requirements to allow everyone affected to make the appropriate preparations. The matters which noble Lords have raised in their amendments will be kept under very close review.
Amendments 54 and 59 suggest changes to the Financial Guidance and Claims Act that would allow the Government to include specific provisions to the debt respite scheme. I assure noble Lords that Section 7 of that Act, as amended by Clause 34 of this Bill, will contain powers to allow the Government to include such measures as are suggested in this amendment. I recognise that Amendment 54, in the name of the noble Lord, Lord Stevenson, is intended to suggest certain design features for the SDRP. I will attempt to reassure noble Lords on the points raised, but not exclusively. As with my response to my noble friend Lord Lucas, we would certainly accept the noble Lord’s invitation to write to clarify further.
Amendment 54 seeks to require that debt advice providers be authorised by the FCA. It is envisaged, as set out in our response, that only debt advice providers with appropriate FCA authorisation will be able to offer an SDRP, unless they are a local authority which offers money advice and is exempt from FCA authorisation. This would mirror what has been legislated for in the Breathing Space scheme in secondary legislation. The noble Lord, Lord Stevenson, asked for further clarity on this point—on which local authorities will be able to start Breathing Space. It applies only to those local authorities that offer debt counselling to residents. It is intended that those same debt advisers will be able to offer SDRPs when they are implemented.
Amendment 54 also suggests that only authorised charities or not-for-profit organisations should be allowed to become payment distributors. The 2019 consultation response explained that either debt advice agencies with FCA permissions for handling client money or the Insolvency Service should act as payment distributors. If commercial debt advice agencies do this, it is intended that they will be entitled only to the same percentage of monthly payments available to other types of payment distributor in the scheme. It is intended that they will not be able to charge debtors any fees for delivering any other aspect of the SDRP. Powers to determine a reasonable level for the charges in the scheme, to require debts owed to the Government and other public bodies and service providers to be included, and to protect against enforcement action by court-appointed enforcement agents, are already provided for in the clause we are debating.
Amendment 59 suggests the introduction of penalties for creditor non-compliance. Section 7 of the Financial Guidance and Claims Act already provides powers to impose consequences on creditors, so this amendment is unnecessary. I repeat that the Government have committed to publishing draft regulations and consulting on them as soon as possible after the Bill receives Royal Assent. That consultation will offer all those who are interested in the SDRP, including noble Lords, to consider the proposals and offer their feedback on the Government’s design for the scheme, ensuring that it is fit for purpose.
My noble friend Lady Morgan asked how the scheme would be funded. The Government intend for the administrative costs of the scheme to be funded by deducting an amount from debtors’ repayments. The funding model aims to ensure that it remains sustainable to operate for debt advice agencies while providing fairness to creditors—but I acknowledge that the noble Lord, Lord Stevenson, probed a little further on that.
Turning to reviews, which are the subject of Amendments 60, 69 and 70, I can confirm that the Government are already committed to carrying out full and proper evaluations of both the Breathing Space scheme and SDRP after their commencement and will keep the matters raised by noble Lords under review. The Government are already required by law to carry out a review of Breathing Space within five years of its commencement. I can confirm that the Government are happy to continue to engage with my noble friend Lord Lucas on this issue to ensure that the views of stakeholders are heard. On Amendment 60 in particular, the Government continue to work closely with the Money and Pensions Service, the Financial Conduct Authority and other stakeholders to monitor personal finances, including financial resilience and the impact of debt on individuals.
On Amendments 63 and 64, my noble friend Lord Lucas asked whether the scheme was ready to go. His amendments would not permit regulations to commence until certain aspects of the Insolvency Service and court system’s IT services had been delivered. The Treasury understands that the Insolvency Service and Courts Service are on track to deliver the necessary functionality for debt advisers and creditors to comply with Breathing Space. Officials have engaged extensively with a broad range of creditors to ensure that they understand their obligations under the scheme and are making any necessary IT systems changes. Guidance for debt advisers and creditors was published in December 2020 to assist with that process, and the Money and Pensions Service is delivering training for debt advisers this month.
The start date for this scheme—4 May 2021—was set in regulations and agreed by both Houses last year, and the Government consider that implementing the Breathing Space scheme on time is a priority. Delaying implementation of a scheme that is due to start in less than three months would be unnecessary, unhelpful and harmful to debtors, who desperately need the relief this scheme offers, as all noble Lords have agreed.
Baroness Coussins (CB)
I thank all noble Lords who have contributed to the debate on this important group of amendments, especially those who supported my own two amendments on the introduction of SDRPs.
I am extremely grateful to the Minister for such an encouraging and sympathetic response. I will say only that the inclusion of the date of 1 May 2024 is there not as a fixed date but as a “no later than” date. Nevertheless, he has given me enough hope that we might meet again between now and Report to have a further discussion on this issue to see if any further progress can be made. In the meantime, I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
We now come to the group consisting of Amendment 55.
Amendment 55
“(4B) The regulations must also include the following as part of the scheme—(a) provision to ensure that any debts appearing on a repayment plan, which have either—(i) been sold by originating lenders to debt purchasing companies prior to the debtor entering the scheme, or(ii) been sold by originating lenders to debt purchasing companies whilst the debtor is in the scheme,are subject to what is to be known as a “fair debt write-down”; (b) that the level of the fair debt write-down must be calculated by the amount paid by the debt purchasing company for the debt plus no more than twenty per cent of the value of the debt;(c) that no more than the amount calculated under paragraph (b) may be collected in respect of any debts to which a fair debt write-down applies throughout the course of the debt repayment plan; and(d) that at the end of an individual’s debt repayment plan, any outstanding amount in respect of debts to which a fair debt write-down has applied is unenforceable against the debtor and must be treated as if fully discharged by virtue of section 251I of the Insolvency Act 1986 (discharge from qualifying debts).”Member’s explanatory statement
This amendment seeks to ensure that debts which have been sold by originating lenders on the secondary debt market are written down to a fair level.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, I beg to move Amendment 55, which appears in my name and has attracted the most welcome support of the right reverend Prelate the Bishop of St Albans. I thank all noble Lords who have put their names down to speak in this group.
The amendment is modest in scope but highly practical in action. It addresses actions that could greatly improve the lives of people who desperately need that boost, as the noble Lord, Lord Tunnicliffe, said in summing up the previous debate. It also relates to Clause 34, but I think it makes a large enough difference to the plans that it needs to be considered alone, as useful and helpful as many proposals in the previous group were. It brings in a concept of debt write-off or debt write-down—something that I suspect will become part of many debates in your Lordships’ House in the coming years.
We were talking in the first group of amendments about flows of billions of pounds, Russian moguls and massive lumps of cash. Here we are talking about the lives of people for whom a 50p cup of tea in the local café is a luxury, for whom the disintegration of a long-nursed pair of shoes is a crisis. In the previous group many speakers referred to how Covid has made millions of debtors’ lives much harder, but this is not —or at least not just—an emergency pandemic measure.
If we look back a decade ago, debt often arose because of a sudden crisis, such as a car breaking down or a washing machine failing to start, or sometimes because the siren call of the payday lender or predatory credit card provider had proved irresistible. However, over the past decade, for hundreds of thousands of households, the persistent inadequacy of income, in most cases income coming through work with added benefits, has still not been enough, week after week, month after month, year after year, to meet basic needs. Debts have built up: essential debts such as council tax, and gas and electricity bills, even when resort to a food bank provided some brief moment of relief. For millions of Britons, finance—we are taking about the Financial Services Bill—means being trapped and overindebted. That is the situation of one in five adults, more than 8 million people, according to the Financial Conduct Authority. Even if we were to suddenly miraculously snap our fingers and lift the minimum wage to the real living wage and ensure that benefits met the level needed to pay essential bills—a very loud snap indeed—there would still be a huge mound of debt remaining.
I pay tribute to the Centre for Responsible Credit, which has done extensive work on this amendment and from which I think noble Lords will have received a briefing. This is not a political amendment but very much a practical one to address an issue that I hope the Committee will allow me to explain at a little length. In the debate on the last amendment, we were introduced to the Government’s debt respite scheme, which is intended to provide people who seek debt advice respite from enforcement proceedings for 60 days. Clause 34 creates an additional statutory debt repayment plan, a formal plan with creditors to repay all debts over a manageable period with protection from the bailiffs in the meantime. Crucially, that timeframe will generally be seven years, although it may be up to 10.
To set the scene for why we need this amendment, why we need a fair debt write-down, I will explain the other three means by which unpayable debt can be dealt with. Perhaps the best known is bankruptcy, which is reserved for debtors with significant assets that need to be liquidated and the proceeds distributed among creditors. Generally, the debts are discharged in full after one year. Next in terms of debt scale are individual voluntary arrangements, which were originally intended to allow home owners with significant levels of surplus income, after taking account of essential outgoings, to retain their home and secure a partial debt write-off. Resolution is generally achieved over five to six years. Remember, the idea is that people will still stay in their home. At the bottom of the income scale are debt relief orders. These were brought in 2009 for low-income, low-asset debtors, who see their debt discharged after one year. Access is by approved debt advisers but, to be eligible, conditions are tight.
However, many people fall in the middle, between IVAs and debt relief orders, and increasing numbers of IVAs are failing. There is a significant number of reports of them being mis-sold. Changes to debt orders are planned to enable them to encompass more people, but many will still fall in the gap between these two groups. Significant numbers of people are likely to be taking out statutory debt repayment plans, but as currently constituted there are problems. People are being assessed to see if they can repay the entirety of their debts over up to 10 years, based on a calculation of surplus income using the standard financial statement spending guidelines provided by the Money and Pensions Service. During the period of the plan, any increased income will be directed towards repayment of creditors, trapping people and actively discouraging them from taking up any opportunities that might, with a different plan, improve their circumstances. I also note that we have a transparency problem here with the standard financial statement not being in the public domain due to the Money and Pensions Service licensing terms. In summary, though, the key issue is that people under SDRPs are being trapped for up to 10 years, and certainly seven years, and locked into circumstances for at least double—and, potentially, 10 times—the length of other schemes.
I turn now to question of the debts and the companies that hold them. A large portion of these debts have already been written off by the originating lenders and sold on the secondary debt market. In 2018, the Financial Times reported that more than half the money being collected through debt management plans had been sold on in the secondary market. A presentation by the chair of the Credit Services Association in 2019 indicated that, in the preceding year, the total value of debt purchased by such firms was more than £55 billion. According to the 2019 annual report of one of the main debt purchasing firms, Cabot Credit Management Group Ltd, the average long-term purchase price for the debt averages 9p in the pound. So we have a potential 10-year debt repayment period, with 10 years of dragging fear, worry and poverty, and an industry that has purchased the right to impose that weight for less than 10% of the cost of the face value of the debts.
The Lord Bishop of St Albans
My Lords, I am glad to speak to Amendment 55 in the name of the noble Baroness, Lady Bennett. I placed my name to this amendment because of my concerns over indebtedness and particularly over the huge growth of household debt that has occurred during the Covid pandemic. Like the noble Baroness, Lady Bennett, I thank the Centre for Responsible Credit for the work it has undertaken on this amendment.
Last year, four Christian denominations and Church Action on Poverty published Reset the Debt. It documented the astonishing growth in indebtedness that occurred during the first lockdown and the summer. At that time, there was a hope that the economy would begin to reopen and bounce back, bringing a return to normality which would allow many people to get a handle on their growing debts. Unfortunately, the second spike in infections and increases in death meant that that economic reopening failed to materialise in the way we had hoped, causing conditions to worsen for many of those in debt. Furlough has been a lifesaver for many, and I congratulate Her Majesty’s Government on that policy, but there is a well-placed fear that once the economy opens redundancies will increase further, creating extra pressures on those who are already struggling. To quote the report:
“The lockdown continues to have profoundly unequal and poverty-increasing effects”.
At the time when the report was published, 6 million people had fallen behind on rent, council tax and other household bills because of coronavirus, with low-income families particularly turning to credit cards and overdrafts simply to survive. Covid debts, although particularly damaging for the poor, have significantly affected a variety of lower to middle-income households. This is on top of the existing debt that some of these households had incurred.
Over these past months, I have been struck by the many reports that I have received from churches, chaplaincies and charities across Hertfordshire and Bedfordshire in my diocese. They all describe the huge increase in demand from foodbanks and parish pantries, along with many more people seeking advice and relief from our of services and charities. In most cases, debt is not the consequence of a single factor but has slowly built up. However, Covid has speeded things up in a terrifying way. For the absolute poorest, debt relief orders may provide a lasting reprieve after a one-year period but many other households will be much less fortunate. Those households with a disposable income level of more than £100 per month, when compared with the lowest-income quintile, face difficult decisions and may end up being placed on a statutory debt-repayment plan and, as the noble Baroness, Lady Bennett, pointed out, may endure 10 years of full debt repayment. This can be egregious when that debt has been partially or even substantially written off and sold on to the secondary market.
Debt financing plays an important role in our economy and, despite my reservations about debt recovery practices, allows firms to profit from debt, which remains an unfortunate but perhaps necessary part of our economy. However, at the same time, there needs to be a balance. When debt has been partially written off, discounted and sold on to the secondary market, there is a strong moral case to pass on some of this discount to the debtor. It would be wrong to force an individual into misery and penury for the purpose of a full debt repayment when the original creditor readily discounted the debt to shift it on to a secondary buyer.
The amendment does not bar the purchaser of secondary debt from making a profit but merely places a limitation on how much can be reclaimed, and rightfully passes on a portion of the discount to the debtor. Limiting the potential return to more than 20% could even reduce the financial risk associated with purchasing secondary debt and may produce a more co-operative and less fearful environment for debtors and the recovery of debt.
Finally, it is worth reiterating the positive financial impacts that this would have on the Treasury. Allowing the full amount to be reclaimed may enrich the owners of the debt but will certainly cost the Treasury. As the noble Baroness, Lady Bennett, points out, debt leads to horrifying social consequences, all of which cost the taxpayer. In not allowing the discounts from partially written-off debts to be given to the debtor, we would, in effect, be partially subsidising the social cost of debt, potentially to the tune of millions or perhaps even billions of pounds per annum. Given the increased debt resulting from the Covid crisis, morally it makes sense—there is also a strong economic case—to pass on the discounted price of the debt to people in severe financial difficulties and provide them with a fair debt write-down.
Baroness McIntosh of Pickering (Con) [V]
My Lords, I am delighted to follow the right reverend Prelate. We both sit on the rural action group of the Church of England. I should also declare that as a Bar apprentice in Edinburgh, one of my first duties was as a debt collector. I cannot claim that I had any particular training in that regard, and I was probably the least sympathetic at the time, given my youth and inexperience. I therefore congratulate the noble Baroness, Lady Bennett, on the research that she has carried out in preparing for the amendment and bringing it forward. I also thank the Reset The Debt campaign for what they have achieved, as well as the Church Action on Poverty campaign in bringing these issues to the fore.
It may be that my noble friend the Minister is not minded to look sympathetically on the amendment but, at the very least, I ask him whether he accepts that there is a problem that needs to be addressed in this regard, for the simple reason that there will be an uplift in council tax of some 5% in some areas. It would also seem that, as yet, we have failed to address the issue of zero-hour contracts, which remains vexatious.
In moving the amendment, the noble Baroness, Lady Bennett, referred to food banks. My experience is not that recent but occurred between 2010 and 2015, when I had cause to visit them in my area. What impressed me most is that it was often not people on benefits who used them but those in work but who did not work sufficient hours to make ends meet. This is a category of people to whom we owe something, and is an issue that should be addressed.
In particular, I ask my noble friend what instruction is given to IVAs and others that administer debt relief orders on the power they have to be more sympathetic to and imaginative about the circumstances in which debtors find themselves. Given the rather modest remit set out in Amendment 55, I hope that my noble friend might look at it fairly sympathetically. If he feels unable to support it, perhaps he will bring forward something along these lines at the next stage.
Lord Davies of Brixton (Lab) [V]
I want to say a few words at this late hour strongly in favour of Amendment 55 and mention the possibility of a wider-ranging debt jubilee. There is clearly a case for this amendment, and the same case can be made for a wider-ranging approach to relieving the burden that debt places on us all, not just on the individuals. Clearly it ruins lives and leads to much misery, but it also affects the rest of us: it acts as a drag on the economy and the recovery that we now so desperately need. Anything that we as a society can do to relieve the absolute burden of debt, the better.
The proposal in the amendment for a fair debt write-down is a welcome development to the debt relief scheme. The moral case for passing on some of the discount that currently goes to debt collection agencies is clear, and there is an advantage to the Treasury. The same case fundamentally applies to us as a whole. We need a more comprehensive package of debt cancellations, targeted at the household sector. We want a way of writing off debts, just as so many debts were written off in the financial sector 12 or 13 years ago. We were told then that some banks were too big to fail, because of the harm it would cause the economy. I argue that the challenges facing individuals, because of their debt, mean as much or even greater harm for us all.
The main argument today is that such a scheme, as well as relieving much individual misery, would provide a direct, targeted macroeconomic boost to the economy, exactly where it is needed, helping some of the most hard-up in our society. It will boost economic growth, and help those who have fallen into the misery of debt—and all of us.
Baroness Noakes (Con)
My Lords, I will offer a slightly different perspective on this. I understand the problems of overindebtedness among poor people, but I do not believe that Amendment 55 makes sense. If I understand the proposed scheme correctly and if a debt under a debt respite scheme is sold for less than its face value, the original borrower has to pay back only that lower amount plus 20%. Let us say that I buy a debt with a face value of £100, for which I pay £80. I can recoup £96, which is £80 plus 20% of £80. That might seem reasonable on a loan-by-loan basis but, in practice, loans are sold in groups or books.
To the extent that there is a market for debt respite scheme debts, the amount that a purchaser pays will take account of two main things—first, the likelihood that the debt will be repaid; and, secondly, the difference between the income receivable on the debt, if any, and the purchaser’s cost of funds.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, that was a very interesting intervention from the noble Baroness, Lady Noakes, which enhances her reputation as a banker of some repute. I am sure her figures are absolutely right; I was still writing them down as she finished. She has made the case that you need to be able to do these sorts of sums and mathematics if you are dealing with the sorts of debts we have been talking about for most of the afternoon.
I put my name down to speak on this debate, but not because I have a particular view on the merits of the amendment, which I thought was extremely well argued by the noble Baroness, Lady Bennett of Manor Castle. She raised issues on the wider context of how debts are managed in society, which I think the Committee will be very grateful for having on its mind as we focus on the issues. She gave us a tour d’horizon of the various ways in which those who run into unmanageable debt have to deal with the process of repaying, absent a debt respite scheme and absent a scheme under which statutory repayments are organised. They are extremely tough and, to go through an IVA, a debt relief order or full bankruptcy is not something that one would recommend to people if there was another way of doing it.
Indeed, part of the debates we have been having are about how wide we should take this discussion. As my noble friend Lord Davies of Brixton mentioned, the way debt impacts on society is something that is worthy of wider consideration in a more general sense rather than in relation to the particularity of the processes that we are involved in.
That said, it is good that we are having this debate about the wider context within which debt operates in society. It is not a debate that you hear very often, and it is an area of policy that could be afforded a lot more consideration. As such, I will join with the noble Baroness, Lady Noakes, in suggesting that the amendment should not progress at this stage, but for completely different reasons. I think there is a better way of dealing with this relating to the way debts are sold.
The argument that the noble Baroness, Lady Noakes, made, which is that this is how financial institutions obtain the liquidity necessary to maintain the cycle of lending on which we all depend, means that we need to have a better understanding of what happens when debts go wrong and when big institutions of the type that she talked about have to deal with the consequences. I do not mean to go through that in any real detail, but perhaps when the Minister responds he could take into account some of the thinking on this for when we look in detail at the regulations that he has promised us sight of on the statutory debt management plan, and in relation to what I think will be necessary at some point in the not-too-distant future: a reconsideration of the role of the debt relief order and the IVA’s structure, which is part and parcel of the process of dealing with this.
The essential point here is about how, and on what basis, those who have decisions to make about debt make them about individuals who have repayments to make. My understanding, picked up over the time that I was at StepChange, was that, by and large, we are not dealing with a very large proportion of society who are feckless about incurring debts. What tended to come across to me from looking at StepChange’s clients, listening in to the calls that were made to it and observing some of the emails and discussions around electronic systems was that most people—the huge majority—were appalled to be in unmanageable debt situations and were desperate to make a repayment. However, they did not have the financial knowledge and understanding of the system and the world in which they were operating to deal with it themselves. They needed help, which led to the debt advice and the subsequent process of repayment that we have been talking about.
However, at the heart of this is the same calculation that the noble Baroness, Lady Noakes, made: if someone in a credit card organisation or bank is lending money to someone and learns that that debt is going wrong, then there is an immediate calculation of the likely return from it. While we in this country stick to the idea that the creditor must always be repaid in full—or as close to it as possible—the reality is, as the noble Baroness, Lady Noakes, explained it, that a decision has to be reached about what proportion of that debt will be repaid and over what timescale.
My impression is that we are talking about a very large difference in perception. I return to the noble Baroness’s example of a £100 debt that goes bad—she says that one in five will not repay. In a sense, that is the start of the conversation that the person who made the loan has to have with their boss to assess what rate of recovery the loan will have. I believe that we need to have further understanding—not necessarily today or on this Bill—about how that process needs to work better for society. I agree with my noble friend Lord Davies of Brixton: a social issue needs to be addressed at some point, not necessarily today.
If it is true that a loan of £100 has a default rate of at least one in five—I suspect it is higher than that—then we should not be thinking in terms of trying to get a 100% return; we should set in our minds a figure that society could accept and which would be more reasonable in relation to the overall quantum of debt, better afforded by those who need to make repayments and more acceptable to those who do the lending. We are not yet there, and I do not have a solution to this; we are probably too early in the process of discussion and debate. I look forward to the Minister’s comments. This is a conversation that we should have more generally, away from a Bill, on a broader understanding of debt in society.
Baroness Kramer (LD)
My Lords, the noble Baroness, Lady Noakes, and I very rarely seem to agree on the types of issues covered in this amendment, but on this one we are totally of one mind. I am very grateful because I tried to write an explanation of how this process would work and it was so inferior. The noble Baroness, Lady Noakes, not only explained it very clearly, step by step, but included numbers, which makes it much more evident.
I think there must be some misunderstanding. As the noble Baroness, Lady Noakes, explained, it is perfectly normal for an originating company to sell off the loans it has, sometimes because it can sell them to someone who has a different funding profile or a different tolerance for the average duration of the book of loans being sold, or because somebody may take a different view on how many of the loans will pay in full, pay in part or default. It is a perfectly standard process and provides liquidity to the market. As the noble Baroness, Lady Noakes, said, if an organisation had to keep all the loans it generated on its books and could not sell them off, it would find very quickly that it was constrained in doing any new business. That would be hugely damaging to many of the people who go out and borrow. It tends to be a completely different business that will buy loans in the secondary market.
The question that underpins this is: is the Statutory Debt Repayment Plan right and fair when it is put in place? If that is true, it should not matter if the money is paid to the originating company or to the secondary buyer. Within the portfolio, there will be some people who can and do meet the full obligations of the Statutory Debt Repayment Plan, and surely that is appropriate. There will be others who fail and end up in bankruptcy, and whoever is holding the loan will lose out.
My question is whether there is any read-over from the kind of issues we have had with mortgage prisoners. It is important that where there are expectations about how the original lender will behave, they are carried over to the secondary lender. For example, if the original lender is quite likely to offer an alternative loan or new terms and conditions or whatever else, you would expect to see that reflected in the secondary lender. I would not want a situation where the secondary lender was able to levy additional charges or put additional costs on the borrower that would not have been expected by the original lender but perhaps are not covered in the minutiae of the contract.
Otherwise, the honest truth is that I just do not understand this amendment. I am absolutely certain that it completely seizes up any possibility of having a secondary market, and the people who will pay the greatest consequence for that are those who need to go out and borrow from time to time and are at the margins of being appropriate borrowers.
Lord Tunnicliffe (Lab) [V]
My Lords, I think this debate brings out the fact that we do not fully understand this area. There is obviously a case for a great debate. We are, sadly, going to see many more people in heavy, chronic debt and we will see people—to use a colloquial term—fall apart. When people have debt and cannot see how they are going to cope, they lose their equity in society.
Perhaps I am being unfair, but I see a conflict here between people—human beings—and loan books and technocrats. That is not a very useful comment. I cannot argue that this particular amendment should be pressed, but the debate about it brings out that we almost certainly do not have all the mechanisms, and the understanding of the human beings involved, to face the many more people who will be in chronic debt when we, who are not in that situation, are talking about the Covid crisis being over. Those people need society’s help, and for them to have that, we need a much better understanding of the impacts on those people and how we can make sure that the excesses of the people who hold the books are restrained.
Lord True (Con)
My Lords, we have already spoken at some length about the statutory debt repayment plan, so I will restrict my remarks to the amendment in front of us. Amendment 55 would require regulations to include a provision that would mean debts that have been sold by one creditor to another are subject to a fair debt write-down when they are included within an individual’s SDRP. Both my noble friend Lady Noakes and the noble Baroness, Lady Kramer, illustrated, from their position of great experience in these areas, some of the important issues that would need to be considered in an intervention of the kind proposed. The noble Lord, Lord Stevenson of Balmacara, made the same point from a slightly different perspective.
As its name suggests, the SDRP is intended to support the repayment of debts in full, over a manageable timeframe. The policy is not intended to provide debt relief, but a fair and sustainable way to improve debtors’ finances and returns to creditors. Other statutory debt solutions, such as debt relief orders, offer debt relief to people for whom repayment is not a realistic prospect. The Government recently launched a consultation on raising the financial threshold criteria for individuals entering a debt relief order.
The noble Baroness’s amendment would apply to debts which have been sold on, and not to other qualifying debts. The Government do not agree that it is necessary or desirable to treat these debts, or the people who owe them, differently from other debts and debtors in the scheme whose debts have not been sold on. People entering an SDRP will be in financial difficulties regardless of who the debts are owed to, and they all deserve fair and equitable treatment. I can, however, reassure the noble Baroness that, as per the 2019 consultation response, accrual of most interest, fees and charges will be prevented during a SDRP, so the amount of a person’s debt should not increase while they are repaying, regardless of who the debt is owned by or sold to in that period.
This amendment would also require any outstanding amounts owed in respect of sold-on debts to be treated as if fully discharged at the end of an SDRP. As the SDRP supports debtors to repay debts in full, it is not envisaged that there will be any outstanding amount left to pay at the end of a completed SDRP. Including such provision would be contrary to the policy intent of the Bill and to the broader arguments put forward by noble Lords in the course of this brief discussion, so I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, I thank all noble Lords who have contributed to this debate, particularly those who have supported Amendment 55. I particularly thank the right reverend Prelate the Bishop of St Albans, who painted a powerful picture of the impact of what we now know was the early stages of the pandemic, as set out in the churches’ Reset the Debt report. He spoke movingly about the increase in demand at food banks and church food pantries, which have been essential in helping so many households through. However, the food bank does not pay the gas bill or the council tax demand.
The right reverend Prelate stressed, as we would expect, the strong moral case for this fair debt write-off—who better to do so? The noble Baroness, Lady McIntosh of Pickering, highlighted the pressure of council tax being felt by so many households. Of course, council tax is funding essential services as budgets are being squeezed by slashed funding from Westminster. I should perhaps declare at this point that I am a vice-president of the Local Government Association. I also thank the noble Baroness for stressing the issue of zero-hours contracts, which affect so many households.
I strongly thank the noble Lord, Lord Davies of Brixton, for making a powerful argument for something much larger than this, as I said at the start, modest proposal; for making the parallel with the bank write-offs of 2007-08; and for calling for consideration of a more wide-ranging debt jubilee. That is why I went to a number of NGOs and campaign groups with a proposal; they came back to me with this, saying that it could and should be practically delivered right now. The noble Lord also made a useful point about the macroeconomic impacts and the sheer drag of debt.
As for the contribution of the noble Baroness, Lady Noakes, I am sure that we will find something to agree on one day, but I thank her for her thoughtful exploration and exposition of the detail. I am not sure, looking at the clock on my computer, that this is the ideal time in the evening to go through her worked example in detail, but I will point out that what is proposed here is not retrospective. In fact, I do not think we even have the power to do such a thing. The price of the debt purchased in the future would reflect the legal change and so would still allow a profit to be made. I also think, given that the secondary debt market is currently paying less than 10 pence in the pound, that her example reflects little understanding of the practical reality of the lives of many in society and in many communities. Perhaps she is thinking more in the range of the market of Greensill Bank, which we have seen collapse today.
I very much agree with what the noble Lord, Lord Stevenson of Balmacara, said on the need for a broader debate on debt, reflecting also what the noble Lord, Lord Davies, said. I do not agree that we should not act now: we are in an emergency situation and, as the discussion on the previous group highlighted, we need to give some certainty and hope. Given the noble Lord’s reflections on how people are appalled and horrified to find themselves in this situation, I thank him for sharing those experiences.
On the remarks of the noble Baroness, Lady Kramer —I will take a look at them in Hansard to ensure that I understood them clearly—there may be some misunderstanding at their heart. Being in debt in the secondary market is not about creating a situation where extra charges can be laid. We are not talking about people going out to borrow money. We are talking about council tax bills, and gas and electricity charges.
The noble Lord, Lord Tunnicliffe, said that we really need broader debates on these issues. Indeed, I said in my introduction that I expect to come back to them many times in the coming years. At the moment, we have had a useful debate; I take on board the noble Lord’s suggestion of a general debate. Perhaps those on the Front Benches, who have much more access to such occasions, would consider originating such a debate. My action at the moment is obvious.
Again, I thank everyone who has contributed here today and everyone who has contributed to this discussion outside this Committee. For the moment, I beg leave to withdraw the amendment, but I reserve the right to consider bringing it back. I invite any noble Lords who are interested in working with me on this matter to approach me.
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
That concludes the work of the Committee this evening. The Committee stands adjourned. I remind Members to sanitise their desks and chairs before leaving the Room.
House of Lords
Arrangement of Business
The Senior Deputy Speaker (Lord McFall of Alcluith)
My Lords, the Hybrid Sitting of the House will now begin. Some Members are here in the Chamber and others are participating remotely, but all Members will be treated equally. I ask all Members to respect social distancing, and if the capacity of the Chamber is exceeded, I will immediately adjourn the House. Oral Questions will now commence. Please can those asking supplementary questions keep them no longer than 30 seconds and confined to two points? I ask that Ministers’ answers are also brief.
Northampton Town Football Club
(3 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Kennedy of Southwark
To ask Her Majesty’s Government what assessment they have made of the report by KPMG Northampton Borough Council: Report in the public interest regarding the Council’s loans to Northampton Town Football Club, published on 27 January; and what steps they are taking in response to any such assessment.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and in doing so I declare my registered interest as a vice-president of the Local Government Association.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
We are aware of the public interest report concerning Northampton Borough Council. However, it is for the council to consider and respond to the issues raised in the report. On 22 February, the council set out its response to the report’s recommendation, and it will be for it and its successor council to implement.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, does the noble Lord, Lord Greenhalgh, agree that this is a terrible scandal—a failure of due diligence, of governance and of leadership which has let down the residents of Northampton and lost them over £10 million, and has let down the supporters of Northampton Town Football Club, who have a half-built stand? The club was formed in 1897 and was affectionately known as “The Cobblers” in recognition of the town’s historic connections to the boot and shoe industry. Northampton Borough Council is about to be abolished, so can the noble Lord tell me how those responsible for this scandal will be held to account and made to pay?
Lord Greenhalgh (Con)
My Lords, I join the noble Lord in condemning any situation where money is lent in a way that does not secure the amount that has been lent, resulting in taxpayers being out of pocket. We recognise the importance of carrying out the recommendations that were outlined in the public interest report and will monitor the situation and see how things progress.
Lord Flight (Con) [V]
What lessons can be learned from the Northampton Town Football Club case and what steps, if any, should the Government take to ensure that all councils have rigorous procedures for protecting and safeguarding public funds?
Lord Greenhalgh (Con)
My Lords, there is a trend towards an increasing reliance on commercial income as a way of balancing the books. Therefore, the Government are doing two things. We are undertaking a complete review of the prudential framework that governs loans of this nature, and the Public Works Loans Board has changed the lending conditions to ensure that local authorities cannot take on debt as a way of pursuing commercial income.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, the Minister is missing the point. Will he confirm that David Mackintosh was leader of the council when this loan, which is the subject of irregularities, was made, and that the chairman of Northampton Town Football Club and some of the businessmen associated with it then gave money to David Mackintosh’s election account when he stood as a Tory Member of Parliament? These donations were not declared, and the Electoral Commission has asked the police to investigate this as well. Will the Minister explain what the police are doing, when they will report, and when the Conservative Party will admit that this has been a terrible scandal on its watch?
Lord Greenhalgh (Con)
My Lords, if there are criminal matters, it is for the police to investigate those, and it is for the Electoral Commission to investigate any other wrongdoings. It is important that we learn the lessons of this, so that it does not happen again, and that the recommendations that follow from the public interest report are carried out in full.
Lord Addington (LD)
My Lords, if we take it as read that something has gone very wrong politically here, could the Minister cast his eye over the situation of Northampton football club? Would its situation be better if the Government had taken seriously the suggestion by the Minister’s honourable friend Helen Grant that there should be a commissioner to look at football finance, which could be funded by football? Surely that might have taken the edge off the situation.
Lord Greenhalgh (Con)
My Lords, I am not an expert in football finance, but I can say that it is very ill-advised for the leader of any council to undertake a loan that is not properly secured; this has resulted in the loss of a tremendous amount of income to the people of Northampton.
Lord McColl of Dulwich (Con) [V]
My Lords, I am very pleased to hear that the Government plan to try to deal with the situation, but it is not a petty party-political thing. The noble Lord, Lord Kennedy of Southwark, is of course not involved in petty party politics; he was just trying to make sure that this situation did not arise in the future.
Lord Greenhalgh (Con)
My Lords, I take that as a comment on the intentions of the noble Lord, Lord Kennedy, rather than a question.
Lord Mann (Non-Afl)
There are good examples abroad of effective state investment into football facilities; for example, the huge Ajax stadium owned by the council in Amsterdam. Should not the Government consider, in good time, looking at the relationship between local government and major sport and learning some of the positive lessons from abroad, where money has been invested but with good returns and some community benefit guaranteed?
Lord Greenhalgh (Con)
My Lords, in preparation for this Question, I asked my officials whether it was in any way illegal to loan the money to Northampton Town Football Club. It is not illegal. The issue at hand is that the terms and security that were guaranteed were not sufficient. I am sure that there are lessons to be learned on the involvement of public expenditure in supporting sport in the way described.
Lord Holmes of Richmond (Con)
My Lords, building on the point made by the noble Lord, Lord Mann, would my noble friend agree that there are good examples of local authority investment in sport stadia and other commercial entities and that it can be a clear part of place-based growth and a real sense of community? What went wrong here? Is there any need to review the legislation governing local authorities in this regard?
Lord Greenhalgh (Con)
My Lords, there are plenty of examples of investment in community sport infrastructure by local authorities and a lot of them make sense. What does not make sense is the pursuit entirely for commercial income. We saw in the London Borough of Croydon the investment in the Croydon Park Hotel, for instance. Another example is the Robin Hood Energy company in Nottingham, where there was an overreliance on commercial income to balance the books.
Lord McNally (LD) [V]
My Lords, will the Minister promise to bring this exchange to the attention of his colleague Nigel Huddleston, the Minister for Sport, and suggest to him that it is time for the Conservative Government to fulfil their manifesto commitment to a fan-led inquiry into the governance of football?
Lord Greenhalgh (Con)
My Lords, I am happy to take away all these suggestions around how we can improve the governance of our national game.
Lord Taylor of Warwick (Non-Afl) [V]
My Lords, this is sad, because football is about romance, not just finance. Fans love their local club, whatever division it plays in. Although this is about a council loan, the loyal fans of Northampton Town Football Club, which formed in 1897, had their hopes of a new stadium dashed. Will the Government take into account the findings not only of the KPMG public interest report but the report of the then internal auditor, PricewaterhouseCoopers, in 2016, which also made various recommendations?
Lord Greenhalgh (Con)
My Lords, I am sure that the successor council will take on board the recommendations of the public interest report and any recommendations that have come out of the local audit system. It is important that those are acted on.
Lord Bhatia (Non-Afl) [V]
[Inaudible]—the football club will not be able to repay the loan in view of the pandemic restrictions.
Lord Greenhalgh (Con)
I am not entirely sure I got the gist of the question. I am sure that the noble Lord agrees with the sentiment that we should learn the lessons of this transaction and ensure that future investment is properly secured.
The Senior Deputy Speaker (Lord McFall of Alcluith)
My Lords, all supplementary questions have been asked and we now move to the second Oral Question.
United Kingdom Resettlement Scheme
(3 years, 1 month ago)
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Baroness Ludford
To ask Her Majesty’s Government what is the planned (1) programme, and (2) timetable, for refugee resettlements under the United Kingdom Resettlement Scheme.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the UK Government are committed to resettling refugees to the UK and we continue to work closely with domestic and international partners to assess capacity for resettlement activity as we recover from the pandemic. This commitment, alongside a fair and firm asylum system, will ensure that we continue to offer safe and legal routes to the UK for vulnerable refugees who need our protection.
Baroness Ludford (LD) [V]
My Lords, only 800 people were resettled in the UK last year, compared to 5,600 in 2019. This is against the UNHCR’s assessment of the global need for almost 1.5 million places. Why have the Government failed to fulfil their pledge of a new consolidated UK resettlement scheme to succeed the schemes closed a year ago? Will the Minister now give an assurance not only of 5,000 places here in the current year but of an ambitious 10-year commitment to resettle vulnerable refugees from Syria and other conflict areas?
Baroness Williams of Trafford (Con)
I am very glad that the noble Baroness recognises the extent of our efforts to resettle people who need our protection. She is right to point out that not many resettled last year, but of course we had, and continue to have, a global pandemic. To move people, unless absolutely vital, was not advisable at that time. However, it is vital that we continue to provide those safe and legal routes for people in need of our protection. Refugee resettlement will continue to be a core safe and legal route for those vulnerable people.
Lord Touhig (Lab) [V]
Across Europe, hundreds—perhaps thousands—of unaccompanied young refugees are suffering. They are being abused and trafficked, are self-harming and some have taken their own lives. In January 2020, the Parliamentary Assembly of the Council of Europe, which Winston Churchill helped found and of which we remain leading members, called for each member state to appoint a parliamentary commissioner to oversee the work of caring for refugee migrant children. What has been the Government’s response?
Baroness Williams of Trafford (Con)
The noble Lord will know that we have left the European Union—[Interruption.] I will get to that if noble Lords do not interject. Our commitment is to resettle people from around the world who need our protection. It has been difficult to achieve resettlement in the last few months, but our commitment is not dimmed despite the pandemic hindering some of our efforts.
Baroness Sheehan (LD) [V]
My Lords, the Government’s own documents say that resettlement schemes
“target those in greatest need … including … survivors of violence and torture, and women and children at risk.”
Does the Minister agree that an apology is owed to the 3,477 people accepted on to the new UK resettlement scheme this year for the unexplained and, quite frankly, inexplicable delay to their arrival in the UK?
Baroness Williams of Trafford (Con)
Naturally the pandemic has hindered our efforts. Everything has been delayed, including resettlement schemes. We have restarted the resettlement schemes because we have reached over 20,000 under our previous commitment. I am not sure “apology” is the right word as we are doing everything we can, and we have restarted our resettlement schemes.
Lord Vaizey of Didcot (Con)
My Lords, I mention in passing how much work is being done by Arts Council-funded organisations to support and help refugees. I have a specific question for the Minister: how many family reunion visas have been granted in the last five years?
Baroness Williams of Trafford (Con)
I join my noble friend in paying tribute to those Arts Council organisations. Their efforts are very much appreciated. We have issued almost 30,000 family reunion visas in the last five years. This House often goes on about Dublin transfers, quite rightly, but those figures pale into insignificance compared with the number of family reunion visas we have issued.
Baroness Wheatcroft (CB) [V]
My Lords, the Minister explained delays in getting refugees into this country as being due to the pandemic. But in 2019, UK resettlement took 63 weeks on average, compared with the 35 weeks that had previously been the norm. Can the Minister explain why that process had lengthened to such an extent and reassure the House that this prolonged delay is not an attempt to reduce refugee resettlement?
Baroness Williams of Trafford (Con)
Any delays in resettlement are in no way an attempt to frustrate resettlement—quite the contrary. My noble friend will have heard me say how many people we resettled between 2010 and this year under the vulnerable persons resettlement scheme, which was well over 20,000—far in excess of some of the numbers suggested. It is absolutely not an attempt to frustrate the system; in fact, we have restarted our resettlement schemes.
The Lord Bishop of Durham [V]
I am a trustee of Reset and a member of the RAMP project. As the Minister knows, stakeholders continue to warn that, without parity of the timing of the resettlement scheme and a long-term funding commitment, they are unable to plan their services to resettle refugees. Indeed, some are having to place staff on notice and scale back their existing operations. Can the Government confirm now when the scheme will be launched for the long term with secure funding from the Treasury?
Baroness Williams of Trafford (Con)
I am most grateful to the right reverend Prelate for the meeting I had with him and Reset. We talked about funding and the importance of the security of funding. We will continue with resettlement. That process has been paused and almost stopped at times, but we are reworking our approach to asylum to deliver a fair but firm system. I look forward to bringing those provisions forward.
Lord Balfe (Con)
My Lords, the key word in the Minister’s Answer was “legal”. I point out that we have a lot of refugee programmes and a visa programme for Chinese nationals. When we look at the resettlement scheme, I ask the Minister to ensure that, when we choose the refugees to resettle, we pay some attention, like the Canadian Government do, to the contribution they can make to the British economy and its future?
Baroness Williams of Trafford (Con)
I totally agree with my noble friend. Just because someone is a refugee, it does not mean they cannot contribute to society and the economy. Many of them can and are highly skilled. Going back to the conversation I had with the right reverend Prelate the Bishop of Durham, that is precisely what we are looking at. These people have much to contribute to our economy.
The Earl of Sandwich (CB) [V]
We in the UK cannot easily imagine and must not forget the extent of suffering in cities such as Aleppo and Idlib. I am glad we have a good reputation for resettlement. Following the right reverend Prelate’s question, can the Government explain the true situation of local authorities and confirm that they really are ready to welcome a further 5,000 vulnerable refugees under the new UK resettlement scheme? What is the cause of any delay? I understand people are being laid off.
Baroness Williams of Trafford (Con)
The noble Earl is right to point out that we are dependent on local authority places and accommodation to bring forward resettlement. We are very grateful to local authorities, but we cannot go beyond their capacity. We will launch the new UK global resettlement scheme in March this year. We intended to launch it in March last year, but clearly the pandemic placed restrictions on this. Resettlement arrivals have been coming since December 2020. We have received regular calls for that commitment, and it will be forthcoming.
The Senior Deputy Speaker (Lord McFall of Alcluith)
My Lords, all supplementary questions have now been asked and we move to the next Question.
Wales: Replacement Funding
(3 years, 1 month ago)
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Lord German
To ask Her Majesty’s Government how the money replacing funding previously provided by the European Union in Wales will be administered.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
The UK shared prosperity fund will help to level up and create opportunity across the United Kingdom in places most in need and for people who face labour market barriers. The UK-wide investment framework will be published later this year. In addition, to help local areas prepare over 2021 and 2022 for the introduction of the UK shared prosperity fund, we will provide £220 million of additional UK funding to support our communities to pilot programmes and new approaches.
Lord German (LD) [V]
The Minister told the House last year that Wales would receive at least the same sums of money that it had previously received from the EU—that is, money that was administered by the Welsh Government to meet priorities they set in devolved areas. Can the Minister tell us what portion of this £400 million-plus annual funding will be administered by the Welsh Government? Will the UK Government make a portion biddable across the UK? Can the Minister reassure the House that they will not use these funds to cut across devolved areas of competence without the approval of the Welsh Government?
Lord Greenhalgh (Con)
My Lords, the UK Government have a responsibility to support the economic health of people, businesses and communities across the entirety of our United Kingdom. The Government have committed that the devolved Administrations will be represented on the governance structure for the UK shared prosperity fund.
Lord Morris of Aberavon (Lab) [V]
My Lords, will the Minister confirm that the Government are committed to
“at least matching current EU receipts for Wales”?
Since farming is an important way of life for so many in Wales and agriculture is a devolved matter, will the Minister give a specific assurance that funding decisions will be decided solely by the Welsh Government in this field?
Lord Greenhalgh (Con)
My Lords, I am afraid I cannot give that assurance but we will continue to ramp up funding so that the total UK-wide funding will at least match EU receipts of, on average, around £1.5 billion per year.
Baroness Finlay of Llandaff (CB) [V]
During the passage of the Internal Market Bill in both Houses, Ministers committed to collaborate closely with the devolved Administrations, not simply to have them represented. Will the previous £375 million of EU structural funds now be built into the shared prosperity fund allocation to Wales, and will the Welsh Government’s framework for regional investment, which has been developed through extensive local consultation, be respected?
Lord Greenhalgh (Con)
My Lords, I note the points made by the noble Baroness but I think we need to wait for the UK investment framework that underpins the shared prosperity fund for those sorts of details.
Baroness Wilcox of Newport (Lab) [V]
The Welsh Counsel General’s requests to meet UK Ministers leading the shared prosperity fund have unfortunately been met with silence. Meanwhile, the Welsh Government have engaged with hundreds of key stakeholders, as the noble Baroness, Lady Finlay, just said, on the development of successor arrangements. The framework for regional investment in Wales was published three months ago and it sets out high-level strategy for achieving prosperity and inclusive Wales-wide economic interventions. Will the Government agree to meet Welsh Ministers to use their consultative plan for moving investment into Wales, or is the lack of engagement with the Welsh Government a further example of this Government’s undermining of the devolution settlement?
Lord Greenhalgh (Con)
My Lords, we are committed to working with the devolved Administrations. In fact, there have been 26 engagement events, attracting more than 500 representatives, all about the UK shared prosperity fund. Sixteen of those events took place in the devolved Administrations and I am sure Ministers will be meeting representatives of the devolved Administrations in due course.
Baroness Randerson (LD) [V]
My Lords, in 2019 the Conservative manifesto promised that the shared prosperity fund would, at a minimum, match the size of EU structural funds in each nation. In the last six years, Wales received £400 million a year in ESI funds. That is £123 per person on average. I ask the Minister again—to give him the opportunity to confirm today—to say that the Government will be keeping their promise to Wales and that this funding will be specifically identifiable over and above current UK sources of funding.
Lord Greenhalgh (Con)
My Lords, again, we need to see the publication of the investment framework but I can commit to saying that the overall envelope of funding will be at least the amount that we receive from EU structural funds of around £1.5 billion per year.
Lord Hain (Lab) [V]
My Lords, can the Minister confirm that, far from increasing funding through the Barnett formula to devolved Governments as was promised, money is being spent on priorities set in Whitehall, not Cardiff; that official-level meetings have involved no sharing of any information about Whitehall’s plans for the pilot shared prosperity fund in Wales; and that Welsh Ministers have not had a single ministerial-level meeting on this subject since the Government took office? Is this not yet another London power grab and betrayal of devolution?
Lord Greenhalgh (Con)
My Lords, we need to recognise the improvements of moving away from EU structural funds. This will allow for quicker delivery of funding, better targeting and better alignment with domestic priorities and will certainly be less bureaucratic and burdensome than the current EU structural funds arrangements.
Lord Wigley (PC) [V]
My Lords, the Minister will recall that the EU scheme for structural funds comprised two parts: the money that came from Brussels and match funding from the Treasury that had to be additional to normal spending programmes. Will he confirm that the UK Treasury will henceforward make available, additional to the Barnett-based block, two sums of money to be wholly administered by the Welsh Government, one corresponding to the EU allocated funding and the other to the match funding based on the additionality principle?
Lord Greenhalgh (Con)
My Lords, I cannot make specific funding commitments. However, I point out that as well as the UK shared prosperity fund we have talked about the additional funding of £220 million. There is also the levelling-up fund, which provides further opportunities for funding in the devolved Administrations. All of this will go to ensure that we deliver the levelling-up agenda between and within areas.
Lord Berkeley of Knighton (CB) [V]
My Lords, I associate myself with the comments of the two previous speakers. I want to ask the Minister a specific question. When Brexit was being discussed, we heard of European companies which might be shutting down or withdrawing from Wales, particularly south Wales. Have the Government made any assessment of whether that has come to pass and should not money go to those areas that might be very deprived now?
Lord Greenhalgh (Con)
My Lords, the whole purpose of the UK levelling-up fund of some £4.8 billion is precisely to provide the funding to underpin the regeneration required to make areas in Wales as competitive as possible. Of course, we keep changes in the industrial landscape under close scrutiny.
Lord McConnell of Glenscorrodale (Lab)
My Lords, the partnership between local communities, the devolved Governments and other local authorities in England inside the UK and the European Commission was a real strength of the old structural funds. They had their problems but they also had those strengths. Why have the Government moved away from that model? There was a real opportunity here to set a structural fund-type analysis for the whole of the UK and priorities that could be shared within this shared prosperity fund, and then to implement it in practice with the devolved Governments and regional and local authorities throughout the UK. That partnership will be missing from this new model and simply sticking a UK flag on a fund then distributed straight to Scotland or Wales will not solve the problems the United Kingdom has in terms of respect in Scotland and Wales right now.
Lord Greenhalgh (Con)
My Lords, I underpin the commitment to collaborate very closely with the devolved Administrations. That is why they will be an important part of the governance structure of this new fund. The new fund gives us opportunities to improve on the funding approach used by the EU structural fund, not least because there are now only two layers of government that need to work closely together.
Baroness Jolly (LD) [V]
Will the Minister explain how EU funding for Cornwall will be replaced, given that Cornwall would have received around £600 million over the next seven years? Cornwall is still some way from being as prosperous as our south-west neighbours. When does the Minister expect the shared prosperity fund to be designed and funds made available for growth and investment?
Lord Greenhalgh (Con)
What applies to Cornwall will apply to other areas. Further details on the operation of the fund will be set out in the UK-wide investment framework for the UK shared prosperity fund that will be published in 2021. The funding profile for the UK shared prosperity fund will form part of the next spending review.
The Senior Deputy Speaker (Lord McFall of Alcluith)
My Lords, the time allowed for this Question has elapsed.
Stop and Search
(3 years, 1 month ago)
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Lord Paddick
To ask Her Majesty’s Government what assessment they have made of the report by Her Majesty’s Inspectorate of Constabulary Disproportionate use of police powers—A spotlight on stop and search and the use of force, published on 26 February.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the Government support the police in the fair and legitimate use of stop and search and, where necessary, reasonable force to tackle criminality and violent crime. We have worked with the police to put safeguards in place to ensure that no one is targeted because of their race.
Lord Paddick (LD) [V]
My Lords, like previous research, this report doubts the efficacy of stop and search in reducing serious crime—but, more importantly, it highlights the impact of disproportionality on trust in, and the legitimacy of, the police. Some 40 years ago, in his report on the Brixton riots, Lord Scarman said that enforcement of the law needed to be balanced against the negative impact of enforcement on communities. This report effectively criticises the police service for not having learned the lessons of the 1981 Scarman report. What action are the Government going to take?
Baroness Williams of Trafford (Con)
My Lords, I trust the police to use their powers in a fair way to tackle serious violence and protect communities. It is right that these powers are used to stand firm against criminals who break the law. Every knife taken off our streets is a potential life that is saved, and, in 2019-20, stop and search removed over 11,000 weapons and firearms from our streets and resulted in over 74,000 arrests. It is a tragedy that young black men are disproportionately more likely to be the victims of knife crime—no one should be targeted because of their race. The extensive safeguards in place now, such as statutory codes of practice and the use of body-worn video, are important safeguards to ensure that it does not happen.
Lord Harris of Haringey (Lab) [V]
I refer to my interests in the register. We all want proper scrutiny of stop and search, but we have also seen highly disturbing clips on social media of what appear to be inappropriate stops. Those who post them have surely waived their right to privacy. Given that, as police body-worn video makes it possible to see the context—particularly what went on before the stop and why it took place—will the Government make it possible for the police to publish the full videos in a timely fashion to counteract misleading impressions from truncated social media clips?
Baroness Williams of Trafford (Con)
I totally concur with the noble Lord that, sometimes, what you see in a snapshot is not actually indicative of what happened in the round. Obviously, the police are operationally independent of government, but the safeguards, which include body-worn video and data, are very important in this area. We now collect more data on this than ever before, allowing local scrutiny groups, police and crime commissioners and others to hold the forces to account. However, I thank the noble Lord for that question because it is a very important point.
Baroness Jones of Moulsecoomb (GP)
My Lords, this was an exceptionally damaging report from Her Majesty’s Inspectorate of Constabulary. It talks about how the use of stop and search for drug possession is not an effective use of police time. As such, one option for the Home Office is perhaps, as it is the lead department on drugs policy, to update this and make it more relevant, bearing in mind this report. Is that something it will do?
Baroness Williams of Trafford (Con)
I think the noble Baroness takes one aspect of this—drug use—and conflates it with what is actually a much more complex issue. Possession of drugs, knives and offensive weapons are linked in a complex web of criminality and victimhood: young people carry knives to protect themselves. This is all linked and complex, and I go back to the point that any stop and search should be reasonable and proportionate.
Lord Davies of Gower (Con) [V]
As a former police officer, I recognise the importance of stop and search as a tool—but training is a recurring theme in the report, which is clear that:
“The results of our review of stop and search records suggests that supervisors need further training on their responsibilities and how best to supervise their officers’ use of stop and search powers.”
It goes on to say:
“Research shows that lasting improvements are only achieved when a force’s culture promotes diversity, inclusion and equality.”
I argue that these ingredients are the responsibility of those at the top and throughout the organisation to develop and engender. Does my noble friend agree that if the police are to rid themselves of accusations of disproportionality, they must first address these training issues at all levels?
Baroness Williams of Trafford (Con)
I totally agree with my noble friend because good training and, as he said, diversity, with enforcers, should really improve the performance in this area. Training is crucial because, unless these officers are trained, they will not be equipped to deal with these issues.
Lord Woolley of Woodford (CB) [V]
My Lords, this is an honest and fair report. I declare my interest as a board member for Police Now, which seeks to recruit graduate police officers, particularly from black, Asian and minority ethnic communities. Our job is made that much worse when we see the levels of stop and search for black youths at nine times higher than for their white peers. When 95% of the nation was in lockdown, stop and search for black youths went up 25%, and they were often humiliated as well as being stopped and searched. It was not for knives, in general; 70% of it was for drugs. Often the smell of marijuana—
The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)
Could the noble Lord please ask a question?
Lord Woolley of Woodford (CB) [V]
Does the Minister agree with me that this disproportionality, which alienates so many youths and puts off so many of them from joining the police, must change? We must police by consent.
Baroness Williams of Trafford (Con)
I agree that we must police by consent. I also agree that someone should never be stopped on the basis of their race, and that the use of stop and search must be both reasonable and proportionate.
Baroness Sanderson of Welton (Con)
My Lords, we were told that increasing the use of Section 60 powers was necessary to suppress levels of violence and knife crime, yet, according to this report, of all Section 60 searches in 2019-20, only 3.7% found a knife or a weapon. Meanwhile, disproportionality has increased, with black people 18.1 times more likely to be searched under Section 60 than white people. Given the damage that Section 60 searches can cause to community relations and in the light of the very low find rates, can my noble friend the Minister tell me whether there are any plans to review this policy?
Baroness Williams of Trafford (Con)
As the noble Baroness is probably alluding to, we eased the restrictions on stop and search back in 2019, and stop and search went up by 53%, but it led to 74,000 arrests and 11,000 arrests for knives and weapons. The important thing is that, when people are stopped and searched, there is intelligence to underpin the reasons for stop and search.
On that point about black people being 18 times more likely, it is a very troubling figure. It has actually gone down rather than up, so the situation was actually worse—not that that justifies it. But to go back to that reasonable and proportionate approach, that is the important thing.
Lord Rosser (Lab) [V]
It seems that no force fully understands the impact of the use of stop and search powers, disproportionality persists and no force can satisfactorily explain why, and there are wide differences in performance between forces in the use of stop and search powers and in disproportionality. What action do the Government intend to take to ensure greater consistency of approach between forces on the use of these powers? Surely there should be at least a broad national standard that is actually adhered to, or do the Government disagree and believe that it is all an operational matter for each individual chief constable?
Baroness Williams of Trafford (Con)
The use of data is very important, and police collection of data is very important to interrogate why some of the trends that we see are happening. I would also say that, in many ways, it is more complex than just the data we have, and some of the social and economic factors in this have to be taken into account. It is very important that the collection of data is also scrutinised as we go forward.
The Senior Deputy Speaker (Lord McFall of Alcluith)
The time allowed for this question has elapsed.
Arrangement of Business
The Deputy Speaker (Lord Faulkner of Worcester) (Lab)
My Lords, the Hybrid Sitting of the House will now resume. I ask Members to respect social distancing.
Yemen: Aid Funding
(3 years, 1 month ago)
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Lord Collins of Highbury (Lab)
My Lords, in response to the global pandemic, every other G7 member has increased aid. The UK is alone in choosing to cut it. What impact will this cut have on the UN’s ability to prevent famine in Yemen? I hope that the Minister and his Government will rethink this move and the plan to abandon the 0.7% target.
The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)
My Lords, let me assure the noble Lord that we remain very much committed to resolving the continuing conflict in Yemen. In terms of specific aid, our recent announcement is in addition to the £214 million we will spend in the current tax year on humanitarian aid and support for Yemen. Our additional aid for 2021-22 will feed an additional 240,000 of the most vulnerable Yemenis every month, support 400 health clinics and provide clean water for 1.6 million people. We are extending support to the special envoy in Yemen, Martin Griffiths, to bring peace and get all parties to the table.
Lord Purvis of Tweed (LD)
My Lords, there has been a 49% reduction in our contribution of support to the world’s poorest country, which has been afflicted with the worst cholera outbreak in global history. Will the Government now rethink the unlawful cut from 0.7% to 0.5%? If the Government were correct, and the focus of overseas aid was to be on the world’s poorest, there must have been a humanitarian impact assessment for this cut. Was one carried out? Will the Government publish it if it was?
Lord Ahmad of Wimbledon (Con)
My Lords, first, in terms of announcements, the final settlement on ODA is still being finalised within the department. I will be able to answer with more detail once that has been agreed. As I have already alluded to, we stand by our commitments to Yemen from previous years, and famine alleviation remains a key priority. But it is a challenging announcement in terms of the reduction and the challenges that the country is facing at the moment. Notwithstanding that, we remain committed to supporting the people of Yemen in not just humanitarian aid but resolving the conflict.
Lord Jay of Ewelme (CB) [V]
My Lords, cutting British aid, particularly to Yemen, in the middle of a humanitarian emergency looks less like global Britain than little England at its worst. Let us hope that it is not too late to reverse it. How will we use our chairmanship of the G7 group of rich nations this year to help the poorest and most vulnerable people in Yemen and elsewhere?
Lord Ahmad of Wimbledon (Con)
My Lords, I assure the noble Lord that global Britain means that we remain committed to helping the most vulnerable. The noble Lord, Lord Purvis, raised the issue of cholera, and we should acknowledge the role that British aid and support has played in ensuring that cholera treatment is delivered. That is why we have given the commitment to both CEPI and Gavi, in addition to the COVAX facility, for the current crisis. Providing support to the most vulnerable is high up the priority list of the G7 agenda.
Baroness Chalker of Wallasey (Con)
My Lords, will the Minister get the department to look again at the money going to non-governmental organisations working in Yemen under incredible difficulties? There is a simple reason: they are more effective than anyone else at delivering help in the benighted situation faced there. I repeat that we really should not cut aid to Yemen, let alone to all the other countries. We really need to look at this again.
Lord Ahmad of Wimbledon (Con)
My Lords, as ever, I listen carefully to my noble friend, who has great insight on international development. I note the concerns she has previously aired to me directly as well as what she has said today. Her point about the important role that NGOs play in Yemen is at the forefront of our mind, although I am sure she would acknowledge that things have been extremely challenging on the ground, particularly in some of the areas controlled by the Houthis.
The Lord Bishop of Leeds
My Lords, the Minister rightly used the word “peace” a number of times when referring to the Government’s commitment to bringing peace in Yemen, and yet we continue to sell arms to Saudi Arabia, which is part of the violent problem there. Does this not reflect badly on the moral case for global Britain, at a time when we have cut our aid to what are acknowledged to be the poorest and most suffering people in the world—look at the television programme the other night on the nine year-old blind boy teaching in a derelict school—when they need it most?
Lord Ahmad of Wimbledon (Con)
My Lords, I align myself with the news story that the right reverend Prelate relates. As a parent, I totally understand the issue of children, in particular, who are suffering in Yemen and elsewhere in the world. That is why we remain very much committed to our programmes on vaccination, but also, importantly, as noble Lords have brought to our attention again today, to humanitarian aid. On the issue of our support to the Kingdom of Saudi Arabia, that is subject to a very rigorous arms control regime which is applied quite specifically. It was also revisited after the court case a couple of years ago, to ensure that the application of that regime could be more specific.
Baroness Clark of Kilwinning (Lab) [V]
This is an almost 50% cut in aid compared with last year, at the same time as the UK Government have granted £6.7 billion of arms sales to Saudi Arabia to be used in Yemen. Surely given the humanitarian crisis in Yemen, and as the UN penholder on Yemen at the UN Security Council, the UK should be increasing aid to Yemen and putting all our endeavours into trying to get peace talks going.
Lord Ahmad of Wimbledon (Con)
The noble Baroness is right to point out that we are the penholder of the UN Security Council. It is through our leadership, both in resolutions and regular updates, that the situation in Yemen has been at the forefront of each discussion of the UN Security Council, no matter who holds the presidency of that body. We have also extended support to the UN special envoy’s office in pursuit of peace, with £342,000 provided in direct support to the peace process, and have seconded advisers to the UN special envoy Martin Griffiths. We will continue to support the international community in alleviating the humanitarian crisis currently engulfing Yemen, but the best way out of it is through a political settlement.
Lord Eames (CB) [V]
My Lords, does the Minister agree that no political, economic or other issue supersedes the moral issue on the question of Yemen? Does he agree that we are painting a very confused picture to the world of our compassion, or lack of it, having supplied arms at the same time as reducing our humanitarian aid? I add my voice to those pleading for a revision of this situation.
Lord Ahmad of Wimbledon (Con)
My Lords, we take extremely seriously the point that the noble and right reverend Lord has raised about arms export licensing. Indeed, our rules ensure that we focus specifically on international humanitarian law. If we look at what the United Kingdom has done over the last five years, we see that we have provided more than £1 billion in aid. However, I concur with what he says: we must ensure that we focus on the most vulnerable in what are very challenging circumstances for our budget, and that is exactly what we are seeking to do.
Baroness Helic (Con) [V]
My noble friend will be aware that 80% of the population of Yemen rely on humanitarian support, and that a child dies every 10 minutes from diarrhoea, malnutrition or other preventable causes. The situation in Yemen today is as dire as it has ever been since the conflict started in March 2015. What consideration has been given to this dire situation—[Inaudible.] I ask the Government to reconsider—[Inaudible.]
Lord Parkinson of Whitley Bay (Con)
My Lords, I fear there was a difficulty, and we did not catch all of that question. If the noble Baroness is able to repeat the end of her question, that would assist us.
The Deputy Speaker (Lord Faulkner of Worcester) (Lab)
Does the noble Baroness, Lady Helic, want to repeat the last part of her question?
Lord Parkinson of Whitley Bay (Con)
I fear we have lost the connection with the noble Baroness, so the Minister will write in response to her.
The Deputy Speaker (Lord Faulkner of Worcester) (Lab)
My Lords, I regret that the time allowed for this Question has elapsed, and I apologise to the noble Baroness and other Peers who were unable to get in.
Domestic Abuse Bill
The Earl of Courtown
That the Bill be considered on Report in the following order: Clauses 1 to 38, Schedule 1, Clauses 39 to 68, Schedule 2, Clauses 69 to 80, Title.
The Earl of Courtown (Con)
My Lords, I beg to move the Motion standing in the name of my noble friend on the Order Paper.
Arrangement of Business
The Deputy Speaker (Lord Faulkner of Worcester) (Lab)
My Lords, the Hybrid Sitting of the House will now resume. I ask all Members to respect social distancing. I will call Members to speak in the order listed. Short questions of elucidation after the Minister’s response are discouraged. Any Member wishing to ask such a question must email the clerk. The groupings are binding. A participant who might wish to press an amendment other than the lead amendment in a group to a Division must give notice in debate or by emailing the clerk. Leave should be given to withdraw amendments. When putting the Question, I will collect the voices in the Chamber only. If a Member taking part remotely wants their voice accounted for if the Question is put, they must make this clear when speaking on the group.
Counter-Terrorism and Sentencing Bill
Wednesday 3rd March 2021
(3 years, 1 month ago)
Lords ChamberRead Full debate Counter-Terrorism and Sentencing Bill 2019-21 View all Counter-Terrorism and Sentencing Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 169-I Marshalled list for Report - (26 Feb 2021)
14:00 - Division conducted remotely on Amendment 1 - Ayes: 126 / Noes: 281 - Amendment 1 disagreed.
16:58 - Division conducted remotely on Amendment 16 - Ayes: 316 / Noes: 267 - Amendment 16 agreed.
17:13 - Division conducted remotely on Amendment 18 - Ayes: 103 / Noes: 300 - Amendment 18 disagreed.
17:51 - Division conducted remotely on Amendment 21 - Ayes: 106 / Noes: 292 - Amendment 21 disagreed.
“(aa) after subsection (1) insert—“(1A) The court may not assume that an offence has a terrorist connection for the purpose of this section unless—(a) the defendant has admitted in person and in open court that the offence has such a terrorist connection, or(b) where the defendant does not make such an admission, the court is satisfied beyond reasonable doubt upon a trial of the issue that the offence has a terrorist connection.(1B) A trial held pursuant to subsection (1A)(b) above must be determined by a jury unless the court determines that the interests of justice would be better served by a trial by a judge alone upon evidence admissible in a criminal court.””Member’s explanatory statement
This amendment would require a trial of the issue as to whether or not there is a terrorist connection in relation to an aggravated offence.
Lord Marks of Henley-on-Thames (LD) [V]
My Lords, I argued in Committee that Clause 1 should not stand part of the Bill because it would create a whole raft of new aggravated offences, for which offenders would be sentenced on the basis that the offences had a terrorist connection without the question of whether they had such a connection ever having been tried by a jury or a judge or even tried on the basis of admissible evidence.
For the purpose of Section 69 of the Sentencing Act, which is to be amended by this clause, an offence has a terrorist connection if it is, or takes place in the course of, an act of terrorism or is committed for the purposes of terrorism. The principal point I made in Committee was that the decision that the offence had a terrorist connection was not made by the jury before the offender was convicted but was reserved to the judge at the sentencing stage. A defendant might be convicted by a jury of the basic offence, for which the appropriate penalty might be a short term of imprisonment, but sentenced on the basis of a decision taken by a judge alone, without hearing any evidence, that the offence had a terrorist connection and merited a sentence of a long term of imprisonment. I said then and repeat now that that feature would cut across the principle of our criminal law that no one should be convicted of an offence except upon admissible evidence, open to challenge in a trial and, if in the Crown Court, heard by a jury.
Prior to this Bill, offences with a terrorist connection that would act as an aggravating factor in sentencing comprised a relatively limited range of very serious offences which might often be expected to have a terrorist connection, such as murder, a number of explosives offences, hijacking, hostage-taking and serious aviation offences. They were listed in Schedule 2 to the Counter-Terrorism Act 2008 and would all normally merit long terms of imprisonment.
For that reason, the effect of aggravating the sentence was less objectionable than it is to be as a result of Clause 1 of this Bill. That is because this Bill broadens the range of offences that may be treated as aggravated by a terrorist connection to include any offence that carries a sentence of imprisonment of more than two years. An offence of assault occasioning actual bodily harm, for example, carries a maximum sentence of seven years’ imprisonment, even though the violence involved can be relatively minor and the harm caused can be restricted to bruising or pulled muscles. The basic offence might merit a fine or a short term of imprisonment, but the offence committed with a terrorist connection might attract the maximum sentence. While the offender’s guilt of the basic offence would be determined by a jury, the terrorist connection would be a matter for the judge alone at the sentencing stage.
The finding that an offence has a terrorist connection does not simply increase the likely sentence; it also has the effect of activating the notification requirements for terrorist offences, thus classing the offender as a terrorist, with lifelong consequences, and the further effect of activating a number of forfeiture provisions. In addition, the increased sentence is subject to the restriction on early release under the so-called TORA Act, the Terrorist Offenders (Restriction of Early Release) Act 2020 that we passed as emergency legislation last year. Not only would the sentence be longer, but the proportion served in custody would be greater. In short, the consequences of a finding of a terrorist connection are devastating for the offender.
It was the fact that those consequences could be imposed without a trial of the fact of the terrorist connection that led us in Committee to oppose Clause 1 standing part of the Bill, despite our complete acceptance of the central proposition of this Bill that terrorist offences call to be treated with the greatest severity, for the protection of the public as well as the punishment of the offenders.
Amendment 1 is far more targeted than the opposition to the clause standing part. I am extremely grateful to the noble Lord, Lord Wolfson, and the noble and learned Lord the Advocate-General for discussing this amendment with me at a meeting yesterday. Importantly, the noble and learned Lord, Lord Stewart, reminded us that in Scotland the different charging arrangements and arrangements for jury verdicts would enable verdicts to be given making it clear whether a terrorist connection was proved or not.
Not being a Scottish or Northern Irish lawyer, I had not attempted to formulate amendments that would apply in Scotland and Northern Ireland. At the suggestion of the Public Bill Office, I have confined my amendment to England and Wales in the hope that, if it is agreed, the Government will draft and bring back suitable amendments for Scotland and Northern Ireland. However, it is to be noted that Section 31 of the Counter-Terrorism Act 2008, which applies to Scotland and is also to be amended by this Bill—although not materially for this purpose—requires that, before an offender in Scotland can be sentenced for the aggravated offence,
“(a) it is libelled in an indictment, and
(b) proved”.
Only then does the court take into account the aggravation of the offence. This was, no doubt, what the noble and learned Lord had in mind, proving once again to this Englishman how often Scotland is more enlightened than England and Wales on justice issues.
In the short debate in Committee on 26 January, my noble friend Lord Thomas of Gresford raised the possibility of a Newton hearing—a hearing to determine a question of fact relevant to sentence—as a way of determining whether an offence had the necessary terrorist connection to justify treating it as aggravated. That point was also hinted at by the noble and learned Lord, Lord Falconer of Thoroton.
The applicable legislation does not provide for such a hearing. Section 30 of the Counter-Terrorism Act 2008 provides only that the court must determine whether the offence has or may have a terrorist connection. Under subsection (3):
“For that purpose the court may hear evidence, and must take account of any representations made by the prosecution and the defence, as in the case of any other matter relevant for the purposes of sentence.”
That provision is entirely unsatisfactory for the wide range of aggravated offences now proposed, many of them not of the greatest seriousness in the absence of the aggravating factor.
Our amendment would require that before an offence is taken to have a terrorist connection, either the defendant must admit
“in person and in open court that the offence has such a … connection”
—in much the same way as a plea of guilty would entitle the court to pass sentence—or there must be a trial of the issue. That trial would be by a jury
“unless the court determines that the interests of justice would be better served by a trial by a judge alone”.
At the trial of the issue, evidence admissible in a criminal court would be adduced and the court could proceed on the basis that the offence had a terrorist connection only if satisfied of that fact beyond reasonable doubt.
I suggest that this amendment strikes a proper and important balance between the public interest in securing severe punishment for offences with a proved terrorist connection and the public interest—also of great significance—in ensuring that sentences are imposed for offences that are properly proved before the court upon admissible evidence. That is the way our criminal law has generally proceeded, and that is the way it should proceed. I will wish to test the opinion of the House if the Government do not accept the amendment. I also wish to record the fact that I would like my voice to be heard when the voices are counted. I beg to move.
Lord McCrea of Magherafelt and Cookstown (DUP) [V]
My Lords, I strongly support the Bill, and welcome its extension to Northern Ireland. It is absolutely right that we have a unified approach to the sentencing and release of offenders across our United Kingdom. Although I share the desire expressed by the noble Lord, Lord Marks, to uphold the principles of our criminal justice system and defend everyone’s right to a fair trial, I believe that the concerns underlying Amendment 1 have been overstated.
At present the courts are expressly required to consider whether there is a terrorist connection at the point of sentencing, for a defined list of non-terrorism offences. Clause 1 would extend that requirement to all non-terrorism offences with a maximum penalty of more than two years. Importantly, for the aggravating factor to be applied, the offence would have to be committed in the course of an act of terrorism or for the purposes of terrorism. I see no compelling argument that consideration of those issues at the point of sentencing represents a disproportionate burden on a defendant or restricts their rights. Judges already have discretion in many cases, including for the offence of murder, to increase or reduce a sentence in accordance with their view of the evidence.
The key factor in this case, therefore, is the need for effective guidance relating to the threshold for an aggravated offence, and its fair application. Only if there is enough evidence to satisfy the criminal standard of proof that there is a terrorism connection should the judge apply an aggravation. We have to remember, especially in an ever more digital and connected world, that terrorist offending can take many forms, so it is appropriate that the range of routine offences that can come under the scope of counterterrorism legislation is being extended. Ultimately, this process will help identify offenders who might otherwise have fallen through the cracks, and will ensure that they are registered, monitored and subject to notification requirements.
I make these points not because I am not committed to due process, or to respecting the fundamental rights of defendants, but because I believe that we must take a strong but balanced approach to enhanced sentencing and release provisions in such hearings.
Lord Ponsonby of Shulbrede (Lab) [V]
My Lords, the noble Lord, Lord Marks, set out his amendments clearly, and concentrated on the fact that the decision about a terrorist connection is made by a judge at the sentencing stage, not by the jury when they are assessing guilt or otherwise.
The noble Lord said that prior to the Bill, a limited number of offences were included. Those were serious offences, so his argument was that it did not make that much difference if there was a terrorist connection. He gave the example of ABH, for which the maximum sentence is seven years’ custody, although the penalty for low-level ABH may be some type of community order. His argument was that putting a terrorist connection on a wider range of lower-level offences would have a much larger effect on the likely sentence.
The noble Lord also spoke about activating notification requirements, and early release provisions. He prayed in aid the noble Lord, Lord Thomas of Gresford, who previously raised the possibility of Newton hearings. I am much more sympathetic to that possibility than that laid out in the amendments tabled by the noble Lord, Lord Marks, which would mean that either somebody admitted in open court that there was a terrorist connection or there would be a trial of the issue.
Surely that determination should be made by the judge. A judge could make a determination that a Newton hearing was the right way forward. Perhaps the Bill should be amended to enable the judge to make a determination for a Newton hearing, or to take it on himself or herself to make a determination of whether there is a terrorist connection. For that reason, we will abstain on these amendments—but if, at a later stage, amendments along the line that I have just suggested, giving the judge discretion to order a Newton hearing, are tabled, we may well be in favour of those.
Lord Parkinson of Whitley Bay (Con)
My Lords, I am grateful to all noble Lords who spoke in this short debate. The amendment would require a trial of the issue as to whether there is a terrorist connection to an aggravated offence. I am grateful to the noble Lord, Lord Marks, for the way in which he set out his amendment, but I am afraid we feel that it would represent a fundamental departure from existing processes—a significant divergence from practice within the wider criminal justice system—and it is therefore not an amendment that the Government consider necessary or appropriate.
It may be helpful if I first briefly recapitulate why the Government are making the changes that we propose in the Bill. The noble Lord, Lord McCrea, gave a good summary. Clause 1 will expressly require the courts, in cases where it appears that any non-terrorism offence with a maximum penalty of more than two years was committed in the course of an act of terrorism, or for the purposes of terrorism, actively to consider whether the offence was committed with a terrorist connection and should be aggravated as such. At present only specified offences can be so considered. Closing this loophole will make for more effective and flexible legislation, reflecting the fact that terrorist offending takes a wide variety of forms.
The noble Lord, Lord Marks, gave some examples of offences that are and are not covered. It might be helpful to include further examples. Various offences under the Firearms Act 1968 are not currently covered, including possessing a firearm with an intent to endanger life; as are offences under the Criminal Damage Act 1971, including destroying or damaging property with an intent to endanger life, and arson. There are many more, but I hope that provides an illustration of some of the offences that we think ought to be considered, if needed.
These changes will also ensure that the consequences of a terrorist connection are applied consistently to all offenders. The identification of a terrorist connection by the courts has a wide-ranging impact, as the noble Lord noted. It must be treated as an aggravating factor when sentencing, helping to ensure that terrorist offenders receive punishment befitting the severity of their offending and the risk that they pose to public safety. It will also result in offenders being subject to the registered terrorist offender notification requirements following their release from prison, which supports the police to manage their risk more effectively.
Finally, under the Bill, these offenders will be subject to a minimum of 12 months on licence following their release and will be eligible to have certain licence conditions imposed on them to assist in the effective management of their risk. I emphasise that both the Independent Reviewer of Terrorism Legislation, Jonathan Hall QC, and the Crown Prosecution Service expressed their strong support for this change. In fact, Mr Hall stated in his oral evidence to the Public Bill Committee in another place that this change, out of all the measures in the Bill, would make the most substantial difference to public safety.
Having set out the background, I will address the substance of the noble Lord’s amendment, which proposes a significant change to the process by which the courts in England and Wales, and in Northern Ireland, determine a terrorist connection at the point of sentencing. This process is well-established, having been in successful operation for more than a decade since the provisions of the Criminal Damage Act 1971 came into force. It is also consistent with the wider criminal justice system.
Under the existing process, courts are required to apply the criminal standard of proof—beyond reasonable doubt—when determining whether an offence has a terrorist connection. The court will make this determination on the basis of the usual information before it for the purposes of sentencing—that is, the trial evidence or evidence heard at a Newton hearing, if necessary, following a guilty plea—and take into account any representations by the prosecution or defence, as well as any evidence heard.
Furthermore, in England and Wales, and in Northern Ireland, it is the standard approach for the judge, rather than the jury, to determine the presence of aggravating factors as part of the sentencing function. To provide one example, Section 66 of the Sentencing Act 2020 requires the court to aggravate a sentence for an offence if it was motivated by hostility based on certain protected characteristics, such as race or sexual orientation. The judge will determine such a finding as part of the sentencing. The terrorist connection provision works in exactly the same way. This very issue was debated by your Lordships’ House in 2008, when the terrorist connection provisions were first enacted. It was concluded then that the existing process is appropriate and the reasons that I will now outline still stand.
During the passage of the Counter-Terrorism Act 2008, the then Government set out that, as part of their consultation on that Bill, they considered whether the determination of a terrorist connection should be made by the jury, rather than the judge at sentencing. That included discussing the option with experienced prosecutors in this area. It was concluded, however, that there were significant practical issues in taking that approach. For example, having to prove the terrorist connection as part of the trial would lead to lengthy diversions, were the defence to argue that the action of the suspect did not fall within the definition of terrorism. Such an approach would divert the prosecution from its primary aim to secure swift justice for the substantive offence—that is to say, securing a conviction or freeing the individual on trial—and would unnecessarily create significantly longer terrorism trials.
Alternatively, if the jury were to be responsible for determining whether there was a terrorist connection as part of a sentencing exercise after the trial, it would have to be summoned to make such a determination following a guilty plea. This would be entirely novel and run counter to well-established sentencing procedure. We therefore strongly believe that it would not be right to put it in the Bill. It was concluded then, as we maintain now, that sentencing is properly a function for the judge.
That is why the Government cannot accept the amendment of the noble Lord, Lord Marks: it would impose unusual requirements on the finding of a terrorist connection, deviate significantly from well-established practice and, in doing so, put that process out of kilter with the courts’ considerations of other similar aggravating factors. The current system provides adequate safeguards against the erroneous finding of a terrorist connection. A judge who has determined that the offence was committed with a terrorist connection is required to state in open court that that is the case. That determination is capable of being appealed to the Court of Appeal. For the reasons outlined, despite the noble Lord being minded to do otherwise, I hope that he will see fit to withdraw his amendment.
Lord Marks of Henley-on-Thames (LD) [V]
My Lords, I heard what the noble Lord, Lord McCrea, said, and he seemed to accept that the aggravating factor should be proved to a court, on admissible evidence, to the criminal standard of proof. He did not answer the point that there ought to be a trial of the issue.
The noble Lord, Lord Ponsonby, had sympathy for the principles behind our amendment. He preferred the idea of a Newton hearing before a judge to the possibility of jury trial to determine a terrorist connection. That is a compromise position that is allowed for in my amendment, where the interests of justice require that there should not be a jury trial. The important thing is that this issue should be tried on evidence, not simply permission for there to be evidence, if the judge deciding the issue decides to have evidence; or, otherwise, that the court must listen to representations—that is submissions, which are necessarily partial.
The reason our amendment is framed in the way it is is that we believe in trial by jury. Since the aggravation of having a terrorist connection changes the whole nature of the offence, to have that issue tried by jury is, we say, consonant with our way of doing criminal justice and consonant with the way we have always conducted criminal trials.
The Minister suggested that this amendment represented a significant divergence from the criminal justice system. Most of his speech was, with respect, devoted to establishing that point. However, the Bill and much of the counterterrorist legislation of the last few years have involved such divergence. What is unique about the Bill is that the aggravating factor can raise a pretty commonplace offence into an offence of terrorism, with very severe consequences. I have heard nothing to answer the point that establishing that terrorist connection in a trial, on admissible evidence, before a jury or, in suitable cases, a judge, should be the way to proceed.
Nothing that I have heard from the Minister or the noble Lord, Lord McCrea, allowed for the possibility that an offender guilty of only the basic offence, but not guilty of committing an offence with a terrorist connection, would nevertheless be sentenced following a judge who heard only representations on the basis of the aggravated offence, with all the consequences that that would have. That is what runs counter to our criminal justice system.
Our point is limited and principled. The Government have made no concession to our principle at all. We say that there has to be a trial of the issue, not at the same time as the trial of the basic offence, but afterwards. To establish that principle, I wish to test the opinion of the House and have my voice heard when the voices are counted.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
We now come to the group consisting of Amendment 2. Anyone wishing to press this amendment to a Division must make this clear in the debate.
Clause 27: Removal of early release for dangerous terrorist prisoners: England and Wales
Amendment 2
Lord Carlile of Berriew
“Continued imprisonment of terrorist prisoners during the extension period of an extended sentence of imprisonment
(1) The Criminal Justice Act 2003 is amended as follows.(2) In section 247A(7) (restricted eligibility for release on licence of terrorist prisoners), at the beginning insert “Subject to section 247B,”.(3) After section 247A insert—247B Continued imprisonment of terrorist prisoners during extension period of an extended sentence of imprisonment(1) This section applies to a terrorist prisoner within the meaning of section 247A, where— (a) an extended sentence of imprisonment was imposed on the prisoner under section 226A or 226B, or under section 254, 266, 268A, 279 or 282A of the Sentencing Code, and(b) the prisoner is in custody, in accordance with section 247A, immediately before the expiry of the appropriate custodial term.(2) The prisoner must only be released under section 247A(7) in accordance with the provisions of this section.(3) It is the duty of the Secretary of State to refer the case of the prisoner to the Board—(a) as soon as the prisoner has served the appropriate custodial term, and(b) if the prisoner is still in custody, every year, before the anniversary of the conclusion of the appropriate custodial term.(4) It is the duty of the Secretary of State to release the prisoner on licence as soon as the Board has directed the release of the prisoner under this section.(5) The Board must not give a direction under subsection (4) unless—(a) the Secretary of State has referred the prisoner’s case to the Board, and(b) the Board is satisfied that—(i) the prisoner does not represent a grave risk to the public, and(ii) it is no longer necessary for the protection of the public that the prisoner should be confined.(6) Where the Secretary of State has not released the prisoner in accordance with subsection (4) by the conclusion of the extension period, it is the duty of the Secretary of State to release the prisoner immediately upon the conclusion of the extension period.(7) For the purposes of this section—“appropriate custodial term” has the same meaning as in section 247A,“extension period”, in relation to a sentence imposed under section 226A or 226B, or under section 254, 266, 268A, 279 or 282A of the Sentencing Code, means the period determined as such by the court under that provision.(8) Nothing in this section affects the duty of the Secretary of State to release a person whose release has been directed by the Board before this section comes into force.””
Lord Carlile of Berriew (CB) [V]
My Lords, I should like at the outset to acknowledge the assistance that I have received from the Bingham Centre in preparing the amendment and the courtesy of Ministers in this House and their staff in discussing it. I will briefly give my reasons for the amendment.
First, I am clear in my belief, which is shared by many others, that some men and women imprisoned for terrorist offences—I repeat, some—represent a threat to public safety and national security beyond the length of their sentences, and that the consequences of that risk may be the death of innocent citizens. Some examples of such people can easily be identified and are well known, but it is clear that others who present such a risk are much more difficult to identify.
It is to be noted that the recidivism rate for terrorist offences is extremely low compared with that for most other offences—under 3%, on the most recent figure that I have seen—and that a fraction of the recidivism rate therefore applies to terrorist offences. Their recidivism rate is a fraction of that for other offences, including serious offences such as armed robbery. So far, at least, projects in prisons to achieve deradicalisation or even recognition of the wrongness of the acts taken as radicals have been difficult to assess. It is extremely difficult to know whether prisoners are deradicalised and such efforts to assess prisoners have suffered significant failures. The room for erroneous judgments is high. I shall give only one of several examples, that of Usman Khan, the Fishmongers’ Hall terrorist.
As part of the effort to identify whether prisoners remain a serious risk to the public, I support the use of polygraphs but only as one instrument of assessment—one component only in such determinations. It has been proved in other areas—for example, in relation to sexual offences and in the context of some immigration matters—that polygraphs can provide useful corroboration, though one should be careful not to use them as primary evidence.
A great deal of work has been done to enable terrorist prisoners to be assessed because it is known that, to date, the evidential analysis of such prisoners has proved fragile. It has been extremely difficult to assess the threat that they may present on release. Where has most of the work been done in relation to making judgments about such prisoners? I emphasise that we are talking about judgments. It has been done by the Parole Board and it is about its potential role that I am mainly speaking.
The Parole Board in its ordinary duties deals at present with people who have been sentenced for terrorist offences and, indeed, with prisoners who have become radicalised in prison, though not sentenced for terrorist offences. To deal with that, the Parole Board embarked on an extensive and detailed training programme so that its members—chairs and lay members—could fulfil empirically their existing role with that cohort of prisoners. The board is recognised as offering a fair procedure that is legal and justiciable in a way that is familiar to prisoners and their legal advisers, and is understandable to commentators and us parliamentarians.
I have met the argument that it would be a mistake to extend the role of the Parole Board beyond its present functions. However, given what I have said about the training that it has given to its members in relation to terrorism offences, and looking at what the board does in a more rounded way, I suggest that it is entirely fitted to have its range of responsibilities broadened to deal with wider issues. They could properly include a possible extension of sentences within appropriate statutory limits. Those decisions may not be made by the Parole Board if the Government or others do not find that acceptable, although, in my view, the board is well suited to making such decisions about the possible extension of sentences. For example, it could refer certain cases to the Court of Appeal Criminal Division or the Senior Presiding Judge for England and Wales, so that if a sentence was to be extended beyond its temporal determination, that could be done by a senior judge or judges.
Given the very serious risk posed by a small percentage of terrorist prisoners, there is a danger that the majority who have been reformed may become the victims of the 3% or so who are unreformed. That should be avoided if at all possible, for I am sure that we would agree that what may seem like a failure to recognise that a prisoner truly is reformed and remorseful may create the very opposite effect and leave them to become reradicalised.
The aim of my amendment is to attempt to persuade Her Majesty’s Government to change the architecture of the process of extended sentences in relation to terrorism offences. I accept that the amendment does not complete the task, which is why I will not press it to a Division. However, I hope that it will be possible to discuss this matter further with Ministers before we reach the end of the procedures of the Bill.
I suggest that the changed architecture, as I have called it, should allow, first, the sentencing judge to inform and warn a defendant at the time of sentence—no ifs, no buts—that at the time when otherwise they may or should be released, they will be subject to assessment by the Parole Board and that that assessment will be based on whether they represent a serious and continuing risk to the public. It should be clearly said by the judge at the time of sentencing in accordance with the discretion of judges, who as has been said earlier, not least by the noble Lord, Lord Parkinson of Whitley Bay, are used to dealing with sentencing scenarios.
Further, I suggest that the changed architecture should allow the following: if a prisoner presents a serious and continuing risk to the public, the ensuing procedure, founded on comprehensive evidence from both sides, as happens at Parole Board hearings, could result in the sentence being extended further, and possibly on more than one occasion. In my view, such an architecture would provide for a fair process that is clearly understood by a prisoner at the time he or she is sentenced. I suggest, therefore, that such a procedure would be fairer and certainly more capable of review before the courts, and safer for the small cohort of very dangerous prisoners envisaged by this Bill.
I also invite the Minister to confirm in his reply that the Parole Board has been consulted about any additional roles it might take, either along the lines that I have described or in the general context of this Bill. I would, as I have said, welcome further discussions with Ministers.
Lord Marks of Henley-on-Thames (LD) [V]
My Lords, it is a great privilege to follow the noble Lord, Lord Carlile of Berriew, particularly given his deep and long experience in counterterrorism and the legislation in this area, along with his wide experience of the workings of the Parole Board.
Clause 27 was the subject of considerable controversy in Committee because as it stands, it would remove the role of the Parole Board from the determination of whether, and at what stage, a terrorist offender should be released from custody. Without wishing to repeat the arguments that were canvassed in the debate on the clause at that stage, many of us felt then and continue to feel strongly that the Parole Board has had, and should continue to have, an important part to play in determining whether and at what stage even dangerous terrorist offenders should be released on licence.
The amendment of the noble Lord, Lord Carlile, refers to prisoners who are serving extended sentences and applies after they have completed their custodial term, thus changing the architecture of extended sentences, as he has put it. Such prisoners’ release would be contemplated only after the custodial term, at which stage their cases would be referred to the Parole Board for consideration, as they then would on every further anniversary of the completion of that custodial term.
As the noble Lord, Lord Carlile, has explained, before the board could direct release, it would have to be satisfied that two important conditions had been met: first, the prisoner did not represent a grave risk to the public, and secondly, it was no longer necessary for the protection of the public that the prisoner should be confined. We would have preferred that the amendment went further and applied more widely for the reasons that we expressed in Committee, but we regard the work of the Parole Board, whose members are specialists in the field, as extremely valuable. We are firmly of the view that a full hearing before the Parole Board is the best way to determine whether a prisoner should be released after a suitable minimum custodial term, having regard to the elimination of the threat that the prisoner posed to public safety and to such progress as might have been made in the prisoner’s deradicalisation, rehabilitation and reform.
I should emphasise that throughout our approach to this Bill, we have maintained the position that hope of rehabilitation should always be part of the process of punishment, even in severe terrorist cases, and that sentences which offer no hope are counterproductive. We recognise that all prisoners are likely to be released one day and that rehabilitation is more achievable in the context of a release on licence than it is in the context of continued incarceration. That is a position that was rightly taken and recognised by the experts who briefed a number of Peers at the Joint Extremism Unit drop-in session that was arranged for us by the Ministry of Justice. Those who attended found it to be interesting and informative, and we are all very grateful. For my part, however, I confess to remaining perplexed that the Government have decided to cut the role of the Parole Board in the way set out in Clause 27. This amendment would reduce the impact of that particular cutting axe, and I therefore support it.
Lord Ponsonby of Shulbrede (Lab) [V]
My Lords, Amendment 2 in the name of the noble Lord, Lord Carlile, sets out an alternative possible architecture for assessing terrorists and the possibility of extending sentences. In speaking to the amendment, the noble Lord and the noble Lord, Lord Marks, expressed their faith in the Parole Board and the view that it should play a much fuller role in assessing terrorist prisoners who are coming towards the end of their sentences. I too joined in the very useful expert panel held last week with presentations from Home Office experts as well as senior psychologists who have an overview of this work.
The probation service itself employs around 350 psychologists, some of whom are specialists in this work. The message I got from that meeting last week is that it is very complicated work and there is no guarantee of success. However, that does not mean that there should not be efforts—indeed, very strenuous efforts—made to try to rehabilitate these offenders.
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Wolfson of Tredegar) (Con)
My Lords, I understand that the intent of this amendment, tabled by the noble Lord, Lord Carlile of Berriew, is to do two things: first, to introduce a role for the Parole Board where, otherwise, the changes in the Bill would make its role superfluous; and, secondly and at the same time, not to reintroduce eligibility for early discretionary release for this cohort.
I will begin by outlining briefly the effect of the amendment in a little more detail. It would replace Clause 27, which restricts early release for offenders convicted of a serious terrorism offence—that is, those listed in Schedule 2 to the Bill—who receive an extended determinate sentence, or EDS, or a new serious terrorism sentence so that they instead serve the full custodial term of their sentence. In its place, the amendment would insert a provision that would change the release provision for all terrorist offenders sentenced to an EDS. Further, and while I understand that this may not be the noble Lord’s intent, this amendment would also apply to those currently serving an EDS for a terrorist offence.
The replacement release provision in the noble Lord’s amendment would continue to restrict early release, but there is an important difference. At the end of the custodial term, the scheme set out in the amendment would instead refer the offender to the Parole Board. The Parole Board would then determine whether the offender represents a grave risk to the public and whether it is necessary for the protection of the public that the offender continues to be imprisoned. Under the scheme in the amendment, this consideration would continue annually until release was granted, or to the end of the extended licence period, when the offender would then be released, unconditionally, into the community. The effect would therefore be that, if release were not granted until the end of the extended licence period, there would be a cliff edge and the offender would at that point be released unconditionally into the community. There would be no period of supervision and reintegration. For the reasons set out by the noble Lord, Lord Marks of Henley-on-Thames, that is a matter of concern.
I have carefully considered the proposed changes, especially as they arise from an amendment from the noble Lord, Lord Carlile. I hope I may be permitted to say that contributions from him on this subject always merit the most careful consideration, and I can assure both him and the House that I have done so in this case. None the less, having undertaken that careful consideration, I must set out the Government’s view that the changes to the release provisions for the EDS, as set out in the amendment, would be contrary to safeguards set out in the European Convention on Human Rights and its case law governing sentencing and release. That case law is usefully summarised in a recent decision of the Supreme Court of this country in Brown v Parole Board for Scotland—we seem to be referring to Scottish cases everywhere today. It is reported at [2017] UKSC 69, in particular the discussions between paragraphs 49 and 55. While every decision of the Supreme Court is obviously a decision of a strong court, that court, for which the noble and learned Lord, Lord Reed, spoke, contained three former and current Presidents of the Supreme Court.
The reason the proposal would be contrary to the case law is that the EDS comprises two distinct parts. The first is a punitive component—namely, the custodial term—imposed for the length a judge considers commensurate with the seriousness of the offending. The second is a separate preventive element—namely, the extended licence—imposed to protect the public from the danger posed by other, future, yet to be determined serious offending. To that extent, we agree with the noble Lord, Lord Carlile, who was right to draw attention to the question of serious risk to the public. That is what the second part of the EDS does.
If the Government were to detain EDS prisoners into their extended licence period for reasons related to their initial offending, that detention would be contrary to the nature and intended purpose of the community supervision component of the sentence, and contrary to the court’s order imposing the EDS. As the noble and learned Lord, Lord Reed, for the Supreme Court, put it in the Brown case,
“the purpose of detention during the extension period is materially different from that of a determinate sentence.”
The noble Lord, Lord Carlile, acknowledged that this amendment would require further development, either in the form of a new sentence or by further alteration to the existing EDS regime. I am grateful for that acceptance. However, I must state that the Government would not support such a proposal, because there is no need for such a new sentence. The EDS and the new serious terrorism sentence are deliberately structured to do two things: to provide punishment and, separately, to aid public protection and reintegration through the licence period. We have no desire to change this overall approach or, to use the metaphor of the noble Lord, Lord Carlile, to change the architecture.
For those who are not dangerous, the sentence for offenders of particular concern sufficiently caters for release with a role for the Parole Board and yet without the risk of an unsupervised cliff edge, which the amendment would introduce. I understand, as the noble Lord, Lord Carlile, noted, that the amendment is born of a desire to introduce a role for the Parole Board. But there is no role for the Parole Board here because it is not necessary. There is no early release and no parole so, accordingly, there is no role for the Parole Board. That is, therefore, my answer to the question put to me by the noble Lord, Lord Marks, who asked why there is no role for the Parole Board. It is for the reasons I have just given. While I suspect that my answer may not leave him persuaded, I hope it means that he is no longer perplexed.
The noble Lord, Lord Ponsonby, asked me whether we are saying that the alternative can do a better job than the Parole Board. I accept that, as the premise behind that question would admit, some Peers consider the Parole Board the only qualified body to deal with the specialised nature of setting licence conditions for terrorist offenders. But in answer to the noble Lord, Lord Ponsonby, I must respectfully reject that approach. The reason the Parole Board is responsible for setting licence conditions when it directs the prisoner’s release is that that is part and parcel of the Parole Board’s decision that the offender can be safely released and managed in the community. The Parole Board decides that the offender can be released and, as part of that, decides the licence conditions that will govern such release.
However, with an EDS for a serious terrorism offence and the serious terrorism sentence, there is no provision for early release before the end of the custodial period. The corollary of that proposition is that release at the end of the custodial period is automatic. Where release is automatic, there is no reason why the Parole Board specifically should consider licence conditions.
Furthermore, offenders will be subject to management under MAPPA—Multi Agency Public Protection Arrangements—through which the police and the probation and prison services work with other agencies to manage the risks posed by offenders living in the community in order to protect the public. In cases under the Terrorism Act 2000—TACT—and TACT-connected cases, that involves the probation service, the releasing prison, counterterrorism police, security services, the Joint Extremism Unit of HMPPS, and social services.
With the creation of the national security division of the National Probation Service, we will see even greater specialism in making such recommendations. That ensures that professionals with a detailed knowledge of the offender are involved in identifying the licence conditions which are necessary and appropriate. The key point is that that happens regardless of whether the final decision-maker on setting the licence is the Parole Board or HMPPS—the governor. While ultimately the board or the governor makes the decision, that decision is always directly informed by those with intelligence of and expertise in managing the offender. I therefore assure the noble Lord, Lord Carlile, that the process is no less rigorous and the outcomes are no different.
The noble Lord, Lord Carlile, asked a specific question about our discussions with the Parole Board. We have shared the Bill with the Parole Board and discussed its implications with it, but there has not been a formal consultation, if that is what the noble Lord was driving at in his question.
For those reasons, which I hope I have explained clearly and fairly, I remain of the view that there is no role for the Parole Board where there is no consideration of early release. That point, combined with the issues I have explained around the legality of this amendment from an ECHR standpoint, leads me to consider this amendment unnecessary. I therefore respectfully urge the noble Lord, Lord Carlile, to withdraw it. Of course, I am happy to continue our conversations with him about this matter, as I am sure we will continue to benefit from an exchange of views about other matters in the Bill also.
Lord Carlile of Berriew (CB) [V]
My Lords, I am grateful to all who have spoken in this debate, to the noble Lords, Lord Marks and Lord Ponsonby, for their broad support for what I have suggested, and to the noble Lord, Lord Wolfson of Tredegar, for his detailed response.
When I was at school, I had a teacher who taught us about different forms of argument, one of which is entitled “argumentum ad maiorem”—argument using a greater authority. In those days, I suppose it was something like “Because Sir Winston Churchill said something, it must be right.” The Minister’s argumentum ad maiorem was about the case of Brown v the Parole Board for Scotland, which, it will not surprise your Lordships to know, I have read.
I do not propose to embark on and bore your Lordships with a legal moot about that case. I say simply that I respectfully do not agree with the noble Lord, Lord Wolfson, despite his eminence as a lawyer, about the effect of that case on my proposal. I believe that my proposal, because of the change of the architecture that I suggested, including the fact that the sentencing judge would clearly refer to the potential extension provisions at the time of sentence, would come within the judgment of Brown v the Parole Board for Scotland.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
We now come to the group beginning with Amendment 3. Anyone wishing to press this or any other amendment in this group to a Division must make that clear in the debate.
Clause 29: Further provision about release of terrorist prisoners: Scotland
Amendment 3
Lord Stewart of Dirleton
“(a) a sentence of imprisonment imposed under section 205ZA of the 1995 Act (serious terrorism sentence),(b) a sentence of imprisonment imposed under section 205ZC of that Act (terrorism sentence with fixed licence period), or(c) an extended sentence imposed under section 210A of that Act in respect of a terrorism offence.”Member’s explanatory statement
This amendment expands the scope of new section 26ZA of the Prisoners and Criminal Proceedings (Scotland) Act 1993 by making it applicable also in relation to a person who is serving an extended sentence under section 210A of the Criminal Procedure (Scotland) Act 1995 in respect of a terrorism offence.
The Advocate-General for Scotland (Lord Stewart of Dirleton) (Con)
My Lords, in order to ensure that terrorist offenders in Scotland serve the appropriate custodial period of sentences for terrorism offences when they are imposed consecutively to other sentences, we introduced several amendments in Committee. Following these changes, we are now making a series of minor, technical amendments to provide further clarification and to ensure that the legislation will operate as intended.
The amendments have a variety of complementary effects but, taken together, they ensure that new Section 1B, which was introduced in Committee, operates effectively within the Scottish jurisdiction. Given the complexity of the amendments, we have continued to consider their effect with the Scottish Government, resulting in these final amendments, which have been agreed by all parties.
Many of the amendments simply insert the relevant terminology into the new clauses and deliver consequential changes to ensure the smooth operation of Section 1B. The overall effect is to ensure that terrorist offenders in Scotland serve the appropriate custodial period when they are serving multiple sentences, including for non-terrorism offences, and that offenders who receive multiple sentences for terrorist offences—and therefore multiple licences—will serve only one, aggregated licence period.
I draw your Lordships’ attention specifically to Amendment 31, which ensures that the sentence calculation provided for in Section 1B will apply retrospectively. This will provide clarity in calculating release dates where sentences for both terrorism and non-terrorism offences are imposed, ensuring the effective application of the Terrorist Offenders (Restriction of Early Release) Act 2020 in all cases.
Should noble Lords wish to see an individual breakdown of these amendments and their effect, I would be happy to place in the Library a letter in terms similar to the one I issued following Committee to explain the purpose of each one. I beg to move.
Lord Paddick (LD) [V]
My Lords, as the noble and learned Lord has explained, most of these amendments are technical in nature. The first group relates to a person who is serving an extended sentence in respect of a terrorist offence.
Amendments 27 to the end of the group amend Schedule 13. As the noble and learned Lord has explained, in Scotland—unlike in the rest of the UK—multiple sentences being served concurrently or consecutively are amalgamated into one sentence with one release date. This is known as “single terming”. Part 7 of Schedule 13 disapplies single terming for individuals where one of the offences is a terrorism offence, to ensure that the provisions of the Bill apply correctly. The noble and learned Lord did not exactly say that, but that is what he meant.
I had two questions for the Minister. The noble and learned Lord has already answered the first—on Amendment 31. The second is about Amendment 43, which makes changes to Section 24 of the International Criminal Court (Scotland Act) 2001. Can the noble and learned Lord give the House some idea of the extent of this change? How many prisoners serving sentences in Scotland have been sentenced by the international court, and what is the effect of these changes on them?
I gratefully acknowledge the support of the noble Lord, Lord Thomas of Gresford, in advising me on these matters.
Lord Falconer of Thoroton (Lab) [V]
My Lords, I am grateful to the noble and learned Lord, Lord Stewart of Dirleton, for explaining these measures. It would probably be helpful for a similar letter to that provided in Committee to be placed in the Library of the House so that we can have a clear view about it.
We do not object to any of these amendments. They have a quite significant effect on a very small number of cases, because the consequence for people convicted of a serious offence and a serious terrorist offence is that they may stay in prison for years longer. But that is the policy decision and the consequence of the Bill, and I accept that.
I am slightly anxious that this has happened so late in the process and that what the Bill contains depends on when the music stops. The Bill was introduced in the Commons in May 2020. Ten months have gone by. There has been this quite massive change of effect on a few cases. Can the noble and learned Lord explain how that has happened? I was struck by the noble Lord, Lord Wolfson, saying to the noble Lord, Lord Carlile, that he was happy to continue discussions on the issues. This is good and nice, but the Bill has a cliff edge. I worry that it is very late in the day to make these sorts of changes but, as I said, we do not object to them.
Lord Stewart of Dirleton (Con)
My Lords, I am grateful to both noble Lords for their contributions to this very short debate. The noble Lord, Lord Paddick, asked about the number of prisoners affected by this in relation to the International Criminal Court. I do not have that information to hand, but I undertake to supply it to the noble Lord.
The noble and learned Lord, Lord Falconer of Thoroton, raised the lateness in the stage of proceedings at which this amendment has been tabled. I acknowledge the complexity of the statutes involved and the alertness of those in my office, the Advocate General’s office, and in the Scottish Government who are monitoring the position. There has been useful and effective collaboration between them. I will look into the matter raised by the noble and learned Lord and see whether I can provide any further detail as to why these points were identified only at this stage. If I can identify anything specific, beyond my general answer relating to the complexity of the relevant provisions, I will provide it to the noble and learned Lord in writing.
Lord Stewart of Dirleton
Member’s explanatory statement
This amendment excludes sections 1AB, 1A and 1B of the Prisoners and Criminal Proceedings (Scotland) Act 1993 from the scope of new section 26ZA(3) of that Act.
Member’s explanatory statement
This amendment makes new section 26ZA(7) of the Prisoners and Criminal Proceedings (Scotland) Act 1993 subject to section 1B(11) of that Act (inserted by paragraph 52(4) of Schedule 13 to the Bill).
Member’s explanatory statement
This amendment is consequential on the amendment at page 26, line 11.
(a) ”Member’s explanatory statement
This amendment is consequential on the amendment at page 26, line 11.
(b) the term determined as the custodial term by the court that imposes the extended sentence on the prisoner under section 210A of that Act;”Member’s explanatory statement
This amendment provides for the purposes of new section 26ZA of the Prisoners and Criminal Proceedings (Scotland) Act 1993 a definition of “appropriate custodial term” in relation to an extended sentence under section 210A of the Criminal Procedure (Scotland) Act 1995 imposed in respect of a terrorism offence.
Member’s explanatory statement
This amendment clarifies that the reference to section 205ZA is a reference to section 205ZA of the Criminal Procedure (Scotland) Act 1995 (defined as “the 1995 Act” for the purposes of Part 1 of the Prisoners and Criminal Proceedings (Scotland) Act 1993).
Member’s explanatory statement
This amendment clarifies that the reference to section 205ZC is a reference to section 205ZC of the Criminal Procedure (Scotland) Act 1995 (defined as “the 1995 Act” for the purposes of Part 1 of the Prisoners and Criminal Proceedings (Scotland) Act 1993).
“(c) in relation to an extended sentence imposed on a terrorist prisoner under section 210A of that Act in respect of a terrorism offence, the period specified as such under that section by the court that imposes the sentence on the prisoner.”Member’s explanatory statement
This amendment provides for the purposes of new section 26ZA of the Prisoners and Criminal Proceedings (Scotland) Act 1993 a definition of “extension period” in relation to an extended sentence under section 210A of the Criminal Procedure (Scotland) Act 1995 imposed in respect of a terrorism offence.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
We now come to the group beginning with Amendment 12. Anyone wishing to press this amendment to a Division must make that clear in the debate.
Amendment 12
“Review of sections 1 to 31
(1) The Secretary of State must arrange for an independent review of the impact of sections 1 to 31 of this Act to be carried out in relation to the initial one-year period.(2) The Secretary of State must, after consultation with the Independent Reviewer of Terrorism Legislation, appoint a person with professional experience relating to imprisonment for offences of terrorism to conduct the review.(3) The review under subsection (1) must consider but is not limited to considering any evidence as to any effects of this Act—(a) by the imposition of longer prison sentences upon the reform or rehabilitation of those offenders on whom they are imposed;(b) upon the reform or rehabilitation of those offenders required to serve a greater proportion of their sentences in prison and a correspondingly smaller proportion on licence; (c) upon the radicalisation of prisoners other than those upon whom longer prison sentences are imposed or who are required to serve a greater proportion of their sentences in prison;(d) on the degree to which those prisoners upon whom a serious terrorist sentence is imposed are segregated from other prisoners.(4) The review must be completed as soon as practicable after the end of the initial one-year period.(5) As soon as practicable after a person has carried out the review in relation to a particular period, the person must—(a) produce a report of the outcome of the review, and(b) send a copy of the report to the Secretary of State.(6) The Secretary of State must lay before each House of Parliament a copy of the report under subsection (5)(b) within one month of receiving the report.(7) In this section, “initial one-year period” means the period of one year beginning with the day on which this Act is passed.”Member’s explanatory statement
This Clause would require an independent review of the impact of sections 1 to 31 of the Act after one year, with particular attention to radicalisation in prisons and the effects of longer periods of imprisonment on reform and rehabilitation and radicalisation in prisons and of segregating serious terrorist offenders.
Lord Marks of Henley-on-Thames (LD) [V]
My Lords, Amendment 12 echoes the amendment calling for a review which we proposed in Committee. The purpose of the amendment is to enable the noble and learned Lord—or another Minister—to update the House on the Government’s proposals for reviewing the impact of the first 31 sections of this Act, as it will then be. During my speech in Committee, I spent some time setting out in detail why we contend that the review called for by our amendment is necessary. I will not trespass for long on the House’s time this afternoon.
My noble friend Lady Hamwee will speak to Amendment 13, in the name of my noble friend Lord Paddick, about polygraphs. We broadly support Amendment 24 in the name of the noble and learned Lord, Lord Falconer, and the noble Baroness, Lady Jones of Moulsecoomb and Amendment 25 in the name of the noble Lord, Lord Ponsonby of Shulbrede, and the noble Baroness, Lady Jones of Moulsecoomb.
We are concerned, first, to ensure that the Government keep under review and report on the impact on prisoners of longer terms of imprisonment and consequently proportionately shorter periods on licence. To answer a point made in Committee on behalf of the Government, in our view it is not premature to ask for such a review at an early stage. It is not necessary to await the release of such prisoners in many years to come before reviewing the working of this part of the Bill. The impact of very long sentences on, for example, prisoners’ behaviour in prison—a point raised by the noble Lord, Lord Ponsonby of Shulbrede—their prospects of rehabilitation and their continued contact with their families and friends outside prison can be assessed from an early stage.
Lord Bhatia (Non-Afl) [V]
My Lords, I fully agree that the different treatment is justified because of the consequences of the early release of the offender. The offender must remain for the maximum sentence of 25 years as stated in the Bill.
Baroness Jones of Moulsecoomb (GP)
My Lords, I will speak to the whole group but I have co-signed Amendments 24 and 25 in the names of the noble and learned Lord, Lord Falconer, and the noble Lord, Lord Ponsonby, respectively. I signed those agreements because they seemed so sensible. It is all very well making up rules and imposing limitations on people’s liberty but, if you do not have the facts and you do not actually know what the statistics are, it all seems a bit academic. Post-legislative scrutiny is incredibly important, especially for Bills such as this which implement contentious and possibly damaging and complex arrangements. They can either work very well or be disastrous.
The Government are taking a very worrying approach to counterterrorism with this sort of “tough on crime” mentality where we just lock people up and throw away the key. We need an evidence-based, multidisciplinary approach to deradicalisation. We need to rescue people from these deeply destructive ideologies, recognising that they are pretty much groomed and brainwashed until their thinking becomes so warped that violence seems like a legitimate tool.
I agreed with every word that the noble Lord, Lord Marks, said earlier about prisons. I have visited prisons and have spoken to a lot of people who have been in them and, quite honestly, there is a huge risk that issues and behaviours like this can spread in prison and in fact the prisons become a recruiting ground. That is pretty much how ISIS started, in the prison camps in Iraq, so we have a precedent for some quite damaging events coming out of locking people up. We have to be very careful that the Government’s attempts to imprison people indefinitely do not just make the problem much worse. Could we please have independent reviews and get the evidence base, and compare the Government’s approach with the other options, which could be much better?
Baroness Hamwee (LD) [V]
My Lords, Amendments 24 and 25 struck me as setting out a number of concerns that we would like to have seen in the Bill now. I agree very much with what the noble Baroness, Lady Jones, had to say, except that I do not think that they amount to post-legislative scrutiny. Both highlight concerns that we expressed at an earlier stage, although not all those concerns. My noble friend’s Amendment 12 is rather different in that after a year’s experience of the Bill—an Act, as it will then have been—it would assess its impact. Like him, I have had a similar impression: a kind of inconsistency between the words that we see on paper in the Bill—the impression that is given about responding with even tougher sentences, which is supported by some of the debate that we have had—while privately we have had much more nuanced conversations which have encouraged me, even though I am somewhat depressed by this legislation.
I want to say a word—well, several words—about Amendment 13, which would provide for a review of the use of polygraphs. The amendment came out of amendments in Committee, not our own but those proposed by the noble and learned Lord, Lord Falconer, when he called for a pilot and a report to Parliament, including on specified matters. I understand that, with a relatively small number of terrorist offenders to whom the polygraph condition will apply, it is quite hard to undertake a useful pilot, but that does not negate the importance of an assessment of the polygraph condition which is published in the public domain.
Crucially, the review that we propose in Amendment 13 would be an independent review. Its report would include data, as set out in the amendment’s subsection (3), on the number of terrorist offenders subject to the polygraph condition and on the number of terrorist offenders recalled to custody following a test. I should mark those sentences as copyright of the noble and learned Lord, Lord Falconer—I think I lifted them wholesale. It would also cover regulations, rules and codes of practice, and make recommendations regarding those, and the report would be made to Parliament. We have included the caveat that any material that the Secretary of State considered might prejudice public safety should be omitted.
The review would be within three years of the Section 32 polygraph condition coming into force. I understand, though I could not quite pin it down, that the Government are intending a review after a couple of years, which would essentially be the same; after two years is more or less the same as within three years.
I take this opportunity not only to argue for a review but to ask the Minister to confirm what is planned by the Government. not only as to the timing but as to the four elements that I have listed.
Lord Ponsonby of Shulbrede (Lab) [V]
My Lords, I have one amendment in this group, Amendment 25, and my noble and learned friend Lord Falconer of Thoroton put his name to Amendment 24. I was very pleased that the noble Baroness, Lady Jones of Moulsecoomb, said that she had read our amendments and that they seemed sensible; I think that is a good start. The general point made on this whole group is that there is an appetite for reviewing different aspects of this legislation, and the amendments referred to go into particular aspects of that.
I want to make a slightly more general point. It is important that the general case for this sort of legislation is made regularly. I have had the opportunity in recent days of talking to young people who are becoming more politically active and engaged. They are very interested in terrorism legislation as a whole, particularly in how Parliament seeks to review it, change it and make it more effective. Particularly in our House, we have a duty to make sure that those arguments are remade and heard by the general public.
The specific amendment that I have put my name to concerns looking at particular impacts on prison capacity, the National Probation Service and offenders convicted of terrorist offences, as well as levels of bad behaviour in prisons—a point that I made on an earlier group. Also within my amendment are financial matters, because there is a very significant financial impact of the review of extended sentences and licence periods.
Lord Stewart of Dirleton (Con)
My Lords, the amendments in this group would all require the Secretary of State to commission independent reviews into various aspects of the operation of the Bill and to lay the resulting reports before both Houses of Parliament. I welcome the considerable appetite for scrutiny of these measures and for the accumulation of data—the facts and statistics that the noble Baroness, Lady Jones of Moulsecoomb, sought. I acknowledge the appetite for review, to which the noble Lord, Lord Ponsonby of Shulbrede, referred. However, while I welcome these things, I must respectfully disagree that the amendments are necessary.
First, as acknowledged within the amendment of the noble Lord, Lord Marks of Henley-on-Thames, the Government already have an Independent Reviewer of Terrorism Legislation, Jonathan Hall QC, whose remit covers this Bill. Indeed, he has announced his intention to conduct a review of matters within prisons, which we welcome. The benefit of an independent reviewer is that he will not be constrained by the specifications of government and can decide what is most appropriate for his consideration. We have every confidence that he will continue to provide valuable and independent scrutiny following the Bill’s enactment and through the prisons review that he will be undertaking. I remain of the view that there is no need to appoint another reviewer to focus on just some of the provisions of the Bill.
The amendments indicate some areas of particular concern, which I shall seek to address with greater specification. On Amendment 12, the noble Lord, Lord Marks of Henley-on-Thames, has noted a particular interest in the rehabilitation of terrorist offenders while in custody. As he told your Lordships’ House in relation to an earlier group of amendments, he and others, including the noble Lords, Lord Ponsonby of Shulbrede and Lord Carlile, attended the briefing held by officials in the Joint Extremism Unit. I have heard that at least some noble Lords found that a helpful exercise, and I hope others did as well. I understand from engagement, and from the contributions made from the Floor today, albeit electronically, that there was a healthy discussion and a recognition that there is no simple cure or metric for this matter; indeed, that was acknowledged in a contribution by the noble Lord, Lord Carlile of Berriew, on an earlier group of amendments.
It is very difficult to measure the effectiveness of intervention programmes in changing behaviour for any offenders but especially within such a small cohort. Efforts in our prison system to deradicalise and rehabilitate offenders in custody are ongoing, and techniques are developing constantly. However, while rehabilitation will remain central to the work undertaken with terrorist offenders in custody, that goes hand in hand with risk management.
The noble Lord, Lord Marks of Henley-on-Thames, has again raised the question of the Government’s ability to protect other prisoners from radicalisation within the prison estate, and the use of separation centres to this end. The risk was identified that such persons might otherwise become kingpins, looked up to by other persons in the prison estate. We have a set of specialist operational controls for managing counterterrorism risk in custody, as well as a number of population-management controls available for use across the entire prison estate.
I assure the noble Lord and the House that most extremist prisoners can, and should, be managed in the mainstream prison population with appropriate conditions and controls. That having been said, we take the risk of radicalisation within the prison estate seriously and, where deemed necessary, we have used, and will use, the separation centres available to us to prevent persons spreading malicious ideology to other prisoners.
In bringing to a close my submissions on this amendment, I acknowledge on behalf of the Government the anxious and thoughtful concern expressed by the noble Lord and others, following a very constructive series of engagements.
Amendment 13 would require the Government to commission an independent review and publish a report into the use and operation of polygraph testing in the licence conditions of terrorist offenders. Today and, more importantly, in Committee, we discussed in some detail the matter of polygraph testing. As I am sure noble Lords now understand, it is not intended to be used as a stand-alone measure but as part of a package to provide a further source of information to test offenders’ compliance with their conditions of licence. It is not to be used as something to catch an offender out in breach.
That said, I recognise that the use of polygraph testing as a licence condition is a novel matter for the House, which is why the Government have committed to conducting and publishing a review of polygraph testing on terrorist offenders after a two-year period, which will provide more meaningful results and report on most of the criteria outlined by the terms of the amendment. I hope that that will satisfy the noble Baroness, Lady Hamwee, who dwelt specifically on this material in the course of her submission.
I will make one further point on this amendment. The terms have specified that the review may make recommendations on
“regulations, rules and codes of practice”.
Clear rules governing the use of polygraph examinations in a licence condition will be laid by statutory instrument. We currently anticipate that these will be those already in place for the use of polygraph testing in licence conditions for sex offenders, as set out in the Polygraph Rules 2009, which specify the qualifications expected for polygraph examiners, how a polygraph examination should be recorded and how those examinations will be reviewed.
Our review will of course inform whether these require amendment or tailoring in light of factors presented by the specific cohort, so I assure the noble Lord, Lord Paddick, who moved the amendment, and those noble Lords who spoke on it that our plans for the introduction of polygraph testing already account for this concern.
Amendment 24, in the name of the noble and learned Lord, Lord Falconer of Thoroton, would introduce a new clause requiring the Secretary of State to
“commission a review and publish a report”
into a number of measures, most of which are not directly addressed by provisions in the Bill, in the first year of it coming into force. While I recognise the desire to test for unintended consequences of the Bill, I politely disagree that a review on these terms and within this timeframe would be either necessary or add to what is already under way.
I want to set out briefly why, taking each part in turn. Proposed subsection (1)(a) would require a review into
“the effectiveness of current strategies to deal with lone terrorists”.
There is a great deal of work under way to target the terrorist threat, including that of lone terrorists. I point the noble and learned Lord to the Security Minister’s speech at the Royal United Services Institute in November 2020.
The Government’s response to the recent terrorist attacks has been comprehensive and informed by the Independent Reviewer of Terrorism Legislation’s analysis. The Government will shortly bring forward policing and crime legislation to implement a number of recommendations from Jonathan Hall QC’s independent review of the effectiveness of the Multi Agency Public Protection Arrangements—MAPPA—when it comes to the management of terrorism, matters connected with terrorism and offenders of terrorism concern within the community.
The Government recognise that independent analysis can be useful in terms of challenging existing practices and processes. That is why the noble Lord, Lord Anderson, QC, was asked to oversee the operational improvement reviews following the attacks in 2017. I submit that now is not the time for another review.
As part of the constant, ongoing review and improvement of our counterterrorism systems and processes, the CONTEST unit, based in the Home Office, undertook an internal review of lone-actor terrorism last summer, working with operational partners and departments from across government. The review’s findings are sensitive and will not be published, but they have been shared with Parliament’s Intelligence and Security Committee.
Proposed subsection (1)(b) refers to
“the effectiveness and availability of deradicalisation programmes in prisons”.
As I have said, it is difficult to measure their effectiveness, but the primary intervention, the Healthy Identity Intervention—HII—has been accredited by a panel of experts and is informed by the best available evidence. We have also conducted an evaluation of the HII pilot study to assess implementation and delivery. This is publicly available on GOV.UK, and a short-term outcome evaluation of the HII is under way. Although this has been delayed due to the impact of Covid-19, we are committed to publishing it once it has concluded.
We remain committed to keeping our interventions under review and developing the evidence base, which is what so many of your Lordships who have spoken on this matter have sought. As I have said, we will establish a new counterterrorism assessment and rehabilitation centre, which will not only help us to develop knowledge and evidence but will bolster our capacity to deliver interventions by recruiting more specialist psychologists and trained chaplains.
The Government plan to make an oral Statement that will explain more fully the important work to rehabilitate terrorist offenders in prison, including an overview of the new centre’s strategy and programme of work. I hope that noble Lords will agree that these demonstrate this Government’s commitment to transparency and sharing as much as we can.
On proposed new subsection (1)(c) in the amendment, in relation to the polygraph, as I mentioned earlier in this group, we will be conducting an evaluation of its use after two years. This will add to our evidence of its effectiveness and value, which has already been established through independent evaluation, and I submit that a further review is not needed.
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
I have received a request from the noble Baroness, Lady Hamwee, to ask a short question of the Minister.
Baroness Hamwee (LD) [V]
My Lords, on that last point, I take it that the post-legislative scrutiny referred to is separate from the review of polygraph testing after three years, to which the Minister referred. On that, while I take his point about parliamentary scrutiny of regulations, codes of practice may not be statutory and therefore not subject to that sort of scrutiny. Might the Minister take back the suggestion that, following the very helpful sessions that the MoJ arranged during the course of the Bill on a number of matters, for which we were very grateful, Ministers might consider communicating with—and possibly even consulting—noble Lords in framing the review in three or so years’ time? I do not expect him to make a commitment now, but I would like to put that idea in his and his colleagues’ heads.
Lord Stewart of Dirleton (Con)
My Lords, I assure the noble Baroness that that suggestion has lodged in my skull and will have been noted by others, and we will come back to it in due course. On her specific question on whether the post-legislative scrutiny of the Bill is distinct from the review of polygraph testing, I am happy to confirm that that is the case.
Lord Marks of Henley-on-Thames (LD) [V]
My Lords, this has been a helpful debate as it has moved forward the process of keeping these new provisions under parliamentary scrutiny. I am very grateful, as I expect all noble Lords are, to the noble and learned Lord, Lord Stewart, for the comprehensive and careful way in which he set out the work of evaluation and research into the evidence concerning the treatment and punishment of terrorist offenders, and the arrangements for them within the prison estate.
The noble Baroness, Lady Jones of Moulsecoomb, expressed the need for constant review. She warned us of the possible dangers of long-term imprisonment and the risk of radicalisation. As well as making a number of points and raising questions about polygraphs, my noble friend Lady Hamwee stressed the distinction between the “talk tough” language of the Government and the more considered, balanced and careful language of officials and Ministers that we hear in private. My noble friend called it “nuanced”. I add that the careful and cautious language she spoke of is also the language of nearly all the professionals in the system to whom we speak, be they in the Prison Service, probation service, inspectorates or elsewhere.
The important point is that longer sentences, while they may be necessary, are neither the only answer nor a complete answer. The “talk tougher” approach, leapt upon with enthusiasm by the press, has struck many of us as having had too little consideration. In his response, the Minister demonstrated that he certainly is determined to take an evidence-based and cautious approach to the issues raised by the Bill, including polygraph testing.
I accept the Minister’s point that the inclusion of these amendments in the Bill is not essential to provide that the work, which he described to us in some detail, is consistently explained to parliamentarians in both Houses. The important point about reviews, which I invite him and others to bear in mind—though not to lodge in their skulls—is that reviews which report to Parliament enable noble Lords here and MPs in the other place to consider and weigh up the evidence as it becomes available.
The Minister was completely right that there is no simple cure, but it is an important part of the role of Parliament to consider the evidence as it develops. The Bill puts before us a set of new and radical measures of particular severity. They need to be kept under constant attention. On the basis that they will get that attention because of work done by the Government and promulgated to Parliament, I beg leave to withdraw my amendment.
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
My Lords, we now come to the group beginning with Amendment 14. Anyone wishing to press this or any other amendment in the group to a Division should make that clear in debate.
Clause 34: TPIMs: condition as to involvement in terrorism-related activity
Amendment 14
Member’s explanatory statement
This amendment would change the proposed new test for the imposition of a terrorism prevention and investigation measure from one of reasonable suspicion of involvement in terrorism-related activity to one of reasonable belief of such involvement.
Lord Parkinson of Whitley Bay (Con)
My Lords, in moving Amendment 14, I will speak also to Amendment 22; both stand in the name of my noble friend Lord Wolfson of Tredegar. I will respond to the other amendments in this group at the end if the noble Lords in whose names they stand speak to them.
The Government have listened to the mood of your Lordships’ House as expressed in Committee, specifically the concerns of a number of noble Lords about lowering the standard of proof for imposing a TPIM to “reasonable grounds for suspecting” involvement in terrorism-related activity. The Government have reflected on those concerns and tabled these amendments. On behalf of my noble friends and myself, I thank all noble Lords who engaged with us since Committee as we did so.
Amendment 14 will lower the existing standard of proof for imposing a TPIM of “balance of probabilities” to “reasonable belief”. However, this is a higher standard of proof than originally proposed by the Bill, and a higher standard than was applied under the previous control order regime.
As a result of this amendment, the Home Secretary will need to “reasonably believe”, rather than hold “reasonable grounds for suspecting”, that an individual is, or has been, involved in terrorism-related activity before she can impose a TPIM. In practice, and as noted by the noble Lord, Lord Anderson of Ipswich, in Committee, “reasonable belief” is closer to the current “balance of probabilities” standard than it is to “reasonable suspicion”. It is the standard that applied when TPIMs were first introduced in 2011 and the standard that is in place for other key tools used to counter terrorism, including proscription and asset-freezing orders.
Baroness Hamwee (LD) [V]
My Lords, Part 3 of the Bill raises for these Benches some considerable points of principle regarding terrorism prevention and investigation measures. I know some noble Lords may hear that as not appreciating threats posed by some and the devastation caused by actions that are more than threats. They may hear that we do not appreciate what is achieved by the agencies protecting us from harm—harm that we, the public, did not even understand we were in the way of.
None of that should be read into what we say on these amendments. What should be understood is our concern for principles regarding detention without trial and the presumption of innocence. These are principles of which our country is proud. There are principles and interests to be balanced here.
We asked to group together all the amendments regarding TPIMs, other than those regarding polygraphs, because we thought that that would be more convenient for the House and because Part 3 appears to be a package. The noble Lord, Lord Parkinson, has spoken to government Amendments 14 and 22. I will start with Amendment 22, which proposes an additional clause. We are certainly not opposing it. I wanted to understand what this proposed new clause will provide for that cannot be done now by the Independent Reviewer of Terrorism Legislation. On the last group the noble and learned Lord, Lord Stewart, stressed the importance of the independent reviewer being able to set priorities, so imposing the obligation on him is interesting. Yesterday I had the opportunity, for which I thank him, to ask the noble Lord, Lord Wolfson, about this. He confirmed that the reviewer can carry out an annual review and that this addition is due to the Government wanting to be certain about how all this is going; I hope I have that right. I welcome that the Government want to be clear, but I would not have thought that they needed the amendment.
We have had a series of energetic, diligent and what in current jargon is often called “curious” reviewers, all of whom have juggled the work of the reviewer with other professional commitments. Their time, resources and capacity are necessarily limited, so we do not regard this government amendment as some sort of concession. I should express the concern that this specific, quite narrow, statutory commitment could well limit the ability of the independent reviewer to undertake work on the very many other aspects of terrorism legislation.
As regards government Amendment 14 and our amendments to leave out certain clauses, our starting point is that there is no need to extend TPIMs, such that, taken together as they are intended to be, they amount to the possibility of house arrest for individuals who have not been found guilty of anything. The House heard in Committee, as did the House of Commons, that neither the current independent reviewer nor the police see the need for this change. No one could argue that the measures currently permitted—those imposed on individuals—are not stringent, and no one should argue that the measures should be more stringent so that they are more of a sanction or punishment, because investigation and prevention measures are not intended to be punishment. They were introduced as temporary measures. This is not a tool in the toolbox for which we see a justification for extending.
Amendment 14 changes suspicion to belief—a judgment which still must be made by the Secretary of State. Belief is a higher threshold than suspicion, and to that extent it is welcome. But it is not as high as satisfaction on the balance of probabilities that an individual is, or has been, involved in terrorism-related activity. I appreciate that there are other safeguards but, as the noble Lord, Lord Anderson, put it at the last stage, it would be a brave court that would second-guess evaluation by an elected Minister who has full access to intelligence.
The noble Lord, Lord Parkinson, may say, as he said in Committee, that the Government are given flexibility by this reduction in the threshold. I think that saying flexibility is a soft way of saying wider powers. That is why we are registering our opposition to the change in the requirement under Section 3 of the 2011 Act by our amendment to leave it out.
I cannot detach Clause 34 from Clause 35, which would effectively make a TPIM and its various measures, including “residence”—or detention—indefinite. The point was made pithily by the noble and learned Lord, Lord Thomas of Cwmgiedd, in Committee. My noble friend Lord Strasburger talked about the double whammy, reminding us of the extension of the requirement as to where an individual is to live. In Committee, the noble Lord, Lord Parkinson, referred to “an enduring TPIM.” Enduring? Indefinite? That is what Clause 35 would allow. Having no hope is a terrible thing. My noble friend Lord Marks referred to “no-hope sentences” in the context of explaining to your Lordships' House the panel’s views on rehabilitation that we had heard. No hope can have an outcome completely opposite to what is intended. It can lead to an attitude of “What have I got to lose?” It could lead to not having anything to lose and managing to get involved in terrorism, with catastrophic effect.
The noble Lord, Lord Parkinson, said yesterday, in a discussion, that the current limit gives the subject an endpoint at which he can aim, so he can spend his experience of the measures planning what to do when he is released from them. We are not persuaded by that view.
If the noble Lord, Lord Anderson, presses the amendment of up to three extensions—six years, that is—we will support it, as that is clearly an improvement on indefinite detention. If the House agrees it, we will recognise that that is what the House wishes and not divide to leave out the clause. But if it is not agreed nor put to a Division, we will seek the opinion of the House on the clause, and this is my giving notice of that.
Clause 37, on the residence measure, changes Schedule 1 to the Act to allow for the imposition of a requirement to remain at a specified residence, which is
“applicable overnight between such hours as are specified.”
Taking away the word “overnight,” as is proposed, will mean that the requirement will be “applicable … between such hours” with no specified limit. In Committee, we heard two examples of what the Government want to address with this. The first is that if a subject is thought to be a radicalising threat to children, he should be confined during hours at which young people arrive at and leave school. Frankly, I would have thought that an individual with that in mind would be rather more subtle, but that is not the point. The second example is that if an individual is a suspected attack planner, he should be curfewed for weekends during local football games—as well as, presumably, any other big local gatherings, but football games were the example. Again, in parenthesis, given that very few major matches seem to still kick off at 3 pm on a Saturday, I wonder about this. But I acknowledge that the Minister referred to the weekend, and anyway, again, that is not really the point.
Lord Anderson of Ipswich (CB) [V]
My Lords, nostalgia is the theme of the Government’s amendments in this group, because each of them takes us back to the wording of the original TPIM Act 2011. I am nostalgic enough for those days to have put my name to both amendments.
Amendment 14 on the standard of proof, in the name of the Minister, is a tribute to those noble Lords from all parts of the House who spoke so compellingly to the similar amendment that I had the privilege of moving in Committee. They include the noble Lord, Lord Paddick, and the noble and learned Lord, Lord Falconer, each of whom advised—rightly as it turned out—that my amendment did more than was necessary to accommodate the Government’s legitimate concerns. Gift horses should not be looked in the mouth, still less kicked in the teeth. Ministers have listened and have acted decisively. I thank them for that and welcome the retention of a standard of proof, whether expressed as reasonable belief or as balance of probabilities—between which I see no real distinction in practice—that has by the Government’s own account caused no unnecessary difficulties and exposed us to no avoidable danger over the past 10 years.
With a little more hesitation, I put my name also to the Government’s Amendment 22. This reinstates the original requirement in Section 20 of the TPIM Act 2011 for an annual review of the operation of the Act by the independent reviewer, which in turn succeeded a similar requirement in relation to control orders. Section 20 was amended in 2015 to allow the independent reviewer an increased degree of discretion as to the timing of those reviews. That was not unwelcome to the independent reviewer at the time—I declare an interest—who had, as I recall, been given a number of commissions additional to his normal annual duties. However, I understand that the current independent reviewer is content, and on that basis I support Amendment 22 on two conditions. The first is that the independent reviewer should have the necessary resources to perform his various important tasks with the frequency that will now be required and with the promptness that is so desirable. The second condition is an acceptance that, useful as these reports are to those of us concerned with policy in this area, they can be no possible substitute for the scrutiny of individual cases on the evidence that is properly the function of the TPIM review group, to which the Minister alluded, and of the courts.
However, this group is concerned with more than nostalgia. TPIMs have moved on since 2011. These notably harsh measures are harsher than they were then and will soon become harsher still. The toughest measure of all, relocation, with or without one’s family, to a distant town or city—colourfully described by Liberty as “internal exile” and removed by the 2011 Act —was restored on my recommendation in 2015. A range of other new obligations has been added to the list of available measures. Assuming that Clause 37 goes through, notwithstanding Amendment 18, TPIM subjects will for the first time be able to be confined to their houses for substantial parts of the day, while no doubt being tagged, limited in their social contacts and obliged to report to the police station during the periods that they are allowed out. That is rather a different proposition from observing a night-time curfew only in one’s home borough, which is how things were in 2011.
The cumulative effect of numerous measures under a TPIM, even under the existing law, was explained in this way by LF—a TPIM subject, anonymised like the others into a pair of initials—in recent evidence to the High Court. That evidence was summarised by Mrs Justice Farbey in the judgment handed down on 10 February this year:
“He says that he felt as if he was being asked to do something which is not humanly possible: to fulfil multiple and often changing obligations over possibly a two-year period without making one single mistake. He felt as if he was in a trap: if he were to breach any of the TPIM, he would be convicted and imprisoned. The TPIM would then be re-imposed, perhaps with even more requirements, and he would once again be at risk of breaching them.”
For, of course, while the basis for a TPIM can include conduct falling short of the criminal threshold—support, assistance and encouragement more broadly understood than in the criminal law—even the most trivial breach of a curfew or reporting requirement is a criminal offence for which the maximum penalty is five years in prison.
That is the context in which we have to consider the remaining amendments, Amendments 16 and 17. Your Lordships have three options, and I emphasise that none of them is a liberalising option. The Liberal Democrats, with their Amendment 17, offer a continuation of the status quo: a two-year maximum limit in the absence of new intelligence, as initially proposed by my predecessor, the noble Lord, Lord Carlile, save in exceptional cases, and as supported by the current independent reviewer.
The Government, with Clause 35, offer an unlimited extension, which would allow radicalisers in particular—whom the Government told the independent reviewer are
“the likely targets of enduring TPIMs”—
quite simply to endure forever, even if the intensive monitoring of the subject turns up not a single scrap of evidence or intelligence suggestive of re-engagement.
My Amendment 16 takes the middle path. It recognises that, as I reported in 2013, it is tempting to wish for longer than two years in the most serious cases. However, it recognises also that TPIMs must not be allowed to become a more attractive option than prosecution, that the authorities must be incentivised to work on an exit strategy—and not simply to warehouse TPIM subjects—and that in a free country, our fellow citizens, however odious we might consider them, cannot be indefinitely confined by the state in the absence of any attempt to put them on trial.
It is said that TPIMs of indefinite duration will in reality be no such thing because Ministers will volunteer their discontinuance and because the courts can be counted on to intervene if they do not. Yet, with respect, the evidence casts doubt on both propositions. I understand from the independent reviewer, who on his own initiative asked officials about this, that every TPIM imposed since 2015, unless revoked for extraneous reasons, such as imprisonment or a court order, has been extended by the Secretary of State on the one and only occasion that this is normally permitted under the existing law. That is hardly surprising. If a released TPIM subject were subsequently to reoffend, who in active politics would want to be the Home Secretary who had chosen voluntarily to release him from constraint?
As to court proceedings, it is not just that closed material proceedings make them slow and cumbersome, that they do not allow the subject to instruct his special advocate or to call evidence on the full national security case against him, or that the Home Secretary asks for and is generally accorded—as her predecessor was by the Supreme Court last week in the Shamima Begum case—a high degree of judicial deference for her decisions relating to national security. There is also, most regrettably, a funding and hence an access to justice issue. I am again grateful to the independent reviewer for the information that of the handful of current TPIM subjects, no fewer than three—JD, HB and HC—sought funding from the Legal Aid Agency to enable them to be represented in review hearings but were turned down, after which they requested the court to discontinue those review hearings.
It is said that indefinite TPIMs will keep us safer. On that, I first invite noble Lords to reflect on the severity of my own amendment. It would mean that the Secretary of State’s initial belief that a subject has probably been involved in terrorism is enough to justify four years on a TPIM, with every move tagged and every conversation potentially monitored. If further intelligence emerges of involvement in terrorism, at any stage during those four years, under my amendment a fresh TPIM could still be imposed, again extendable up to a further four-year limit—and so on, ad infinitum. That, surely, is draconian enough.
Would we be kept safer by the indefinite warehousing of TPIM subjects beyond the four-year mark, without the need for intelligence derived from what is, after all, not just a terrorism prevention measure but a terrorism investigation measure? Such people could readily become martyrs to a certain audience as, in a small way, one or two control order subjects did. As my noble and learned friend Lord Thomas of Cwmgiedd said in Committee, by reference to the IPP regime, of which he has great experience,
“indefinite detention often makes someone more dangerous because you take away hope.”—[Official Report, 9/2/21; col. 273.]
This country has a long tradition of combining high levels of national security with a vigorous defence of individual liberty. We never imposed indefinite house arrest, relocation and other similar restrictions on those who preached communist revolution, and we have never imposed TPIMs, although we have the power to do it, on radicalisers of the extreme right wing or the Irish republican persuasion. Nor are we where we were in 2005, when it was widely feared that al-Qaeda-directed plots would take tens of thousands of innocent British lives. Existing measures have helped ensure that the total death toll from terrorism this century, in Great Britain, stands at less than 100. To introduce indefinite executive detention in response to this miserable bunch of ideologues would, I suggest, be a signal not of strength but of what the terrorists most want to see from us: fear and overreaction.
National security law must be more than a series of proportionality assessments performed by the Executive and observed by respectful courts. Something more is needed—checks and not just balances—or how else can Parliament offer guidance on where the limits should be? Your Lordships’ House has already this year greatly improved the Covert Human Intelligence Sources (Criminal Conduct) Bill, whose original version suggested that this important truth may have been forgotten. This Bill, on a similar theme, was described by the independent reviewer as
“conspicuous for its lack of safeguards.”
Amendment 16 extends the reach of these always controversial TPIM measures, but it at least retains a tangible check on the executive power to constrain—a power of which the TPIM is the strongest example known to our law. I hope that the good sense of this amendment will commend it to your Lordships. With that in mind, my intention is to test the opinion of the House.
Baroness Jones of Moulsecoomb (GP)
My Lords, I feel much more educated than I did half an hour ago. Today, I found myself not only supporting but signing a government amendment, which is a first for me—what a pleasure. I was in the prestigious company of two QCs and a privy counsellor. I will support any and all amendments that are moved. I find the four-year limit a little tougher to accept than that of two years, but anything that is not indefinite is an improvement.
In normal times, this issue would get much more coverage, but Brexit, Covid and everything else are taking the public’s attention away from these issues. Anything that would implement unending government surveillance and intrusion on someone’s life is, frankly, terrifying.
The amendments of the noble Lord, Lord Paddick, to remove various clauses, and those of the noble Lord, Lord Anderson, would significantly improve this Bill. I hope that noble Lords who have been involved in this Bill will continue to work with us. They have shown that they are prepared to improve the Bill and I think that further improvements are possible. I hope that they are listening and will accept these amendments.
Lord Strasburger (LD) [V]
I speak in support of Amendments 15, 17 and 18, which would remove Clauses 34, 35 and 37 from the Bill. Each of those clauses would, if retained, significantly increase the severity of the TPIM regime or reduce the safeguards against the misuse of TPIMs and miscarriages of justice. Their combined effect would result in a dramatic increase in the powers of the Secretary of State, all to the detriment of fairness, justice and the freedom of those subjected to TPIMs.
The existing TPIM regime gives the Home Secretary the power to confine an individual to a property, perhaps located a long distance from their home, with a plethora of restrictions on how they live their lives and communicate. These clauses would give the Secretary of State new powers to impose a total 24/7 curfew, which is effectively house arrest, and to make this non-stop detention unending, permanent or until the person dies.
The subjects of TPIMs, who may never have been convicted of anything, could be condemned to a far longer period of incarceration than violent criminals and terrorists who have been convicted and sentenced by a court. That could happen without them knowing the allegations against them and without them having had any chance to see the evidence on which those assertions are based, let alone to challenge and refute them. Clause 34, even after being amended by the Government, makes it even easier for the Secretary of State to decide, at the stroke of a pen, to put an individual under this tough house arrest regime.
As the law now stands, she needs to believe, on the balance of probabilities, that the person is or has been involved in terrorism. I am no lawyer, but I can still do arithmetic and I take “on the balance of probabilities” to mean that there is a greater than 50% chance that she is right and the person is a terrorist. The clause changes the threshold from “on the balance of probabilities” to “reasonable belief”. Since the Government accept that this change lowers the burden of proof, I calculate that that means that the probability of them being a terrorist could be less than 50%, but they could still be locked away indefinitely. That means that the probability of them not being a terrorist threat could be greater than the probability that they are.
How could that come about? It could just be an honest mistake, based on flimsy evidence. We had a very strong hint that this does happen, when the current Independent Reviewer of Terrorism Legislation, who has access to classified material, gave evidence to the Public Bill Committee. He said:
“There is a risk that mistakes can be made about assessing intelligence. I have reason to believe that. My concern is that you are opening up a greater margin of error if the standard of proof is lowered. It is a fairness issue based on the authorities having all the cards.”—[Official Report, Commons, Counter-Terrorism and Sentencing Bill Committee, 25/6/20; col. 6.]
Answering another question, he said that he knew of instances where the intelligence had been misunderstood. There you have it: a highly reputable and well-informed person is warning us that innocent people are being punished under the current standard of proof, let alone the lower standard to which the Government would have us agree, under Clause 34, as amended.
What sort of country are we becoming if we are prepared to lock somebody away, all day and all night, indefinitely, even if the chance of them not being a threat is greater than the chance that they are, and having given them no chance to defend themselves? Why, you might ask, are the Government seeking to tilt the scales, not once but three times, towards even more draconian powers, with less justice and fewer safeguards against mistakes or abuse? You would think that there must be strong and compelling reasons for this triple assault on the fairness of our justice system, but the sad truth is that the explanations that have been offered during the passage of the Bill are utterly threadbare and unconvincing. They have the appearance of having been retrofitted, long after these clauses were added to the Bill, in a forlorn attempt to justify the unjustifiable.
The Independent Reviewer of Terrorism Legislation, with all his inside knowledge, searched for a good reason to lower the burden of proof and failed to find one. He said that
“it is not clear why there is any need to change the law in the manner proposed …where harsher measures are to be imposed, safeguards should be encouraged, not jettisoned.”
He also said that
“there is reason to doubt whether there exists an operational case for changing the TPIM regime at this … time.”
That is as forthright a condemnation of these three clauses as we are ever likely to hear from someone in his position.
What reasons have the Government come up with to justify lowering the burden of proof and therefore diminishing the safeguards against mistakes and misuse? We have been told that it will be easier to impose a TPIM, which frankly is a transparently circular argument. We have been told how hard it is to gather evidence to satisfy the current burden of proof. We have been told about pro-ISIS fighters returning from Syria being difficult to investigate. We have been told that it would simplify administration, although that is hardly a good reason for increasing the probability that innocent people are incarcerated by mistake.
All of these supposed justifications and all the others that have turned up and disappeared along the way were comprehensively holed below the water line by the Government’s star witness giving evidence to the Bill Committee. Assistant Chief Constable Tim Jacques gave evidence of behalf of the police and the intelligence services on 25 June last year. In answer to a question from Joanna Cherry MP, he made it clear that the current standard of proof is not an impediment to authorities getting a TPIM when they want it. His exact words were:
“MI5 has pointed out that there is no case thus far where the standard of proof has been a blocker.”
We have been told by the police and the agencies that there is currently no problem to be solved. The Government’s last resort in devising an excuse for these clauses is to tell us that we do not know what problems are coming down the track, and that it would be nice to have another tool in the toolbox. Well, on that basis we can justify just about anything—we could use the prospect of impending but unknown doom to excuse all manner of assaults on our liberty and our lives. This “just in case” style of legislation is fraught with dangers. Powers that we were told would never be used can quickly become heavily used and set the new standard. We cannot, in all conscience, allow the Government to get away with such slapdash explanations for making their powers even more draconian while reducing the safeguards against injustice.
Clauses 34, 35 and 37 are not needed. The Government have not come close to finding a cogent and convincing justification for them. They have no place in the Bill and must go. As Jonathan Hall QC, the independent reviewer put it so eloquently in his evidence to the Bill Committee:
“If it is right that the current standard of proof is usable and fair, and I think it is, in a word, if it ain’t broke, why fix it?”—[Official Report, Commons, Counter-Terrorism and Sentencing Bill Committee, 25/6/20; col. 7.]
I invite noble Lords to support Amendments 15, 17 and 18 should the House divide on them.
Lord Thomas of Cwmgiedd (CB) [V]
My Lords, I thank the Minister for the time he has given to speak about this Bill and for government amendment 14 on the burden of proof. I welcome the change of heart in that respect.
As to the other area on the potential length of TPIMs, I very much hope that the Minister will accept what is essentially the compromise in Amendment 16 between indefinite periods for TPIMs and the current period. It seems to me that the gap that divides us is not that great. TPIMs can be imposed not merely because criminal conduct is suspected, but also because of activities that may not be criminal. It is imposed by the Executive. Although, of course, there is a right of review to the court, a right of review is very different from the decision of a court or independent tribunal in deciding whether the grounds exist.
It is therefore important to appreciate that the very significant restrictions on liberty are imposed by the Executive, something generally alien to our tradition. It would be even more alien to our tradition to go to the extent of enabling the Executive to impose such a restriction for an indefinite period of time. Such restrictions should only be available on people’s liberty where people are convicted of serious criminal offences. Quite apart from the humanitarian and liberty and traditional aspects of that argument, there is the further argument which I raised, and will not repeat, on Second Reading: namely, indefinite orders can, as experience has shown, give people a loss of hope, and in effect make them more dangerous and less susceptible to being reformed.
The compromise that we have put forward in this amendment is further emphasised by the fact that of course if there is new evidence of activity during the period, the four years is not an absolute cut off.
Finally, there is a great deal of sense in having a cut-off period. It is very easy for any decision-maker, particularly one who is worried about the consequences of not extending the TPIM, to go on extending and extending it. It is very wasteful of resources, because enforcing a TPIM is very expensive. It is also fundamentally unfair that someone should be subject to a decision that can go on being rolled over indefinitely rather than someone—to put it in the vernacular—having to put up and charge with an offence or to shut up.
I very much hope that the Minister will think again about the compromise offered in this amendment and accept it.
Lord Paddick (LD) [V]
My Lords, this group deals with changes to TPIMs. The current Independent Reviewer of Terrorism Legislation, someone who has unique access to secret intelligence, operational partners and government officials, has previously stated that the changes proposed in the Bill to the TPIM regime were not necessary. We agree, as my noble friend Lord Strasburger so powerfully set out in his speech.
In relation to Clause 34, the current independent reviewer says that he is not aware of any case where operational partners had wanted to impose a TPIM but were unable to do so because the burden of proof was too high, as confirmed by the representative of operational partners in the Bill Committee in the other place.
Lord Falconer of Thoroton (Lab) [V]
This is an incredibly important debate, because it goes very much to the heart of the views we take on what the Executive can do. It is anathema to our system that the Executive can impose restrictions on individual citizens on the basis of either the balance of probabilities or, worse, reasonable suspicion. Any restrictions placed must be justified, normally in a criminal court or, in the context of the current pandemic, by an exceptional event such as the pandemic.
All those who have engaged in this debate have accepted the need for some form of TPIM. On behalf of my party, I accept that too, but all our instincts should say that it should be on the most limited ground necessary at any point. I strongly opposed, as my party did, the idea that one can impose a TPIM on the grounds of suspicion alone and welcome Amendment 14, in which the Government reject that approach and go for a situation where the Minister “reasonably believes” that the person has been engaged in terrorist activity. The difference between “reasonably believes” and “balance of probabilities” seems in practice quite difficult to define; the Minister has to believe that the person has been engaged in terrorist activity and he or she must have reasonable grounds for believing so. What is the difference between having reasonable grounds on one hand and believing it on the balance of probabilities on the other, when the person who will test that is the courts? I think it is quite fine, but we will support government Amendment 14. I am grateful that they have listened; it is a very significant shift. The difference between honestly and reasonably believing something and suspicion is significant.
I am very disappointed that the Government persist in the idea that, once you have the basis for a TPIM, you can roll it over indefinitely. As various noble Lords have pointed out, the inclination of the Executive will be to roll these things over without further evidence. Therefore, we on this side of the House will also support Amendment 16.
Four years is a long time, longer than allowed at present and, what is more, the four years can be extended if new evidence emerges during that four-year period. We think there should be a limit on when a TPIM can be granted, where there is evidence for it. We would need new evidence to extend it beyond the four years. We think that four years is a long time, but we recognise that if the House backs this four years, that is the basis for a compromise we very much hope the Government will accept.
Amendment 22 would compel the Independent Reviewer of Terrorism Legislation to conduct an annual review in relation to TPIMs. I think that is right. I agree with everybody who has said that the independent reviewer has to be properly resourced to do it. This is such an exceptional power that I think it is right that the independent reviewer should look at it every year.
On the proposition that there needs to be a limit on the period of restriction that is required in a particular home, because the power is going to be amended to remove the reference to “overnight”, the Government have given assurances that there will be such a limit, because of the courts’ imposition of limits to ensure that nobody is imprisoned in their house for 24 hours a day, which is what the noble Lord, Lord Strasburger, said the consequences of the section would be. That is not my understanding, legally, of the consequence of the removal of “overnight”, but I would like the Minister to repeat that assurance and also to say that if the court protection went, the Government would come back to ensure that it could not involve 24-hour imprisonment, in effect, in a particular house.
These are exceptional powers. Our role in this House is to ensure that they are subject to specific limits. I think the combination of government Amendment 14, Amendment 16, in the name of the noble Lord, Lord Anderson, and government Amendment 22, which would compel an annual review, is a workable compromise. I am very disappointed that the Government are not accepting it at the moment.
Lord Parkinson of Whitley Bay (Con)
My Lords, before I turn to the amendments to which I have not yet spoken, I will address a question from the noble Baroness, Lady Hamwee, on government Amendment 22, about the requirement for the independent reviewer to produce an annual report every year for the next five years. She is right to say that the independence of the independent reviewer means that he could, if he so wished, provide such a review, but we want to ensure that he does so, because of the changes that are being made by the Bill. We, like a number of noble Lords who cited his work and that of his predecessors, find them useful and would find it useful to receive them over the next five years. We do not think that is unduly burdensome, as the noble Baroness suggested it might be. Indeed, that is evidenced by the support of the current independent reviewer, Jonathan Hall, for the amendment. I hope that that reassures her on that point.
I turn to the amendments. Amendment 15, in the name of the noble Lord, Lord Paddick, and the noble Baroness, Lady Hamwee, would remove Clause 34 in its entirety, and in doing so prevent the Government lowering the standard of proof for imposing a TPIM to “reasonable belief” of involvement in terrorism-related activity. As I set out earlier, the Government have listened to the concerns raised in Committee and brought forward a compromise, by lowering the standard of proof to a lesser extent than originally envisaged; namely, “reasonable belief” instead of “reasonable grounds for suspecting”. We are confident that this approach represents an appropriate middle ground, one that ensures we are taking action to protect the public from an evolving and more diverse terrorist threat, while addressing the concerns that were expressed in Committee. Of course, “reasonable belief” is a standard which has been used in the past, having first been introduced in 2011 by the coalition Government, which included the Liberal Democrats as well as my own party.
The Deputy Speaker (Lord Faulkner of Worcester) (Lab)
I have received a request from the noble Baroness, Lady Hamwee, to ask a short question.
Baroness Hamwee (LD) [V]
The Minister just referred to the number of hours in the day for which the restriction may apply. Why have the Government decided, assuming that the decision is positive, not to include in the Bill a total limit per day? He referred to Article 5 but would it have been more convenient for the Government, let alone TPIM subjects—the noble Lord, Lord Anderson, had a good deal to say about the problems of pursuing applications to the court—not to allow the prospect of getting caught up in proceedings challenging the total number of hours?
Lord Parkinson of Whitley Bay (Con)
My Lords, the simple answer for not including that in the Bill is that we do not think that it is necessary to do so. The case law exists and has established that in practice the residence measure placed on a TPIM subject could not likely exceed 16 hours a day without constituting an unlawful deprivation of their liberty. However, measures are imposed and tested in the courts on a case-by-case basis, and that is the appropriate way to proceed.
Lord Anderson of Ipswich
Member’s explanatory statement
This amendment would impose a four-year limit for TPIM notices.
Lord Paddick
Member’s explanatory statement
This would remove Clause 37 (TPIMs: extension of residence measure) from the bill.
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
My Lords, we come now to the group beginning with Amendment 19. Anyone wishing to press this or any other amendment in this group to a Division should make that clear in debate.
Clause 38: TPIMs: polygraph measure
Amendment 19
Baroness Hamwee
“(2A) The Secretary of State must publish a code of practice relating to—(a) the conduct of, and(b) the use of reports on the results of,polygraph sessions.(2B) Before publication of the code of practice under section (2A), the Secretary of State must consult appropriate persons.”Member’s explanatory statement
This amendment would require the Secretary of State to publish a code of practice relating to the conduct and use of polygraph sessions.
Baroness Hamwee (LD) [V]
My Lords, in moving Amendment 19, I will speak also to Amendments 20 and 21. Clause 38 raises a rather different issue from the other clauses in Part 3, which deals with TPIMs. The clause introduces the use of polygraphs—so we are not affected here by nostalgia for 2011.
Amendment 19 requires the Secretary of State, after consultation, to publish a code of practice about polygraph sessions, both how they are conducted and how reports on them are used. New Section 10ZA, introduced by Clause 38, provides for regulations on limited matters, as set out in that clause. The requirement imposed is
“to participate … with a view to … monitoring … compliance with other … measures”
and
“assessing whether any variation of … measures is necessary”.
TPIM subjects are a different cohort from terrorism offenders, not having been convicted. Not everything, I would think, can be a direct read-across from the processes applied to terrorism offenders. In the case of an offender on licence, the tests are to assess compliance; in the event of a breach, the offender can be returned to custody. For a TPIM subject—of course there is no Parole Board here—it is not just about monitoring compliance but assessing necessity. This is a much less tight objective; in fact, if one were to use “objective” as an adjective, I am not sure that it would really meet that test. What if the subject’s reaction is ambiguous?
From the helpful briefings that we have had, as polygraph sessions are used currently and will be used in the case of terrorist offenders, the questions that are asked are closed questions: “Did you do such-and-such?”, or “Have you contacted so-and-so?” I had some difficulty thinking of the questions that might be asked, because so much of potential interest is likely to have been prohibited. I suppose that if there is a measure saying that a person will not visit whatever the nearest urban centre is, that is capable of a yes or no answer.
I wondered whether it is thought that polygraphs are an alternative to electronic monitoring, or a supplement. If there are to be polygraphs applied to TPIM subjects, it seems necessary that there should be a relevant code of practice—tailor-made, if you like—including a reminder that the subject is not an offender.
Lord Anderson of Ipswich (CB) [V]
My Lords, the noble Baroness, Lady Hamwee, appears to be right that the legislation in its current form does not place express limits on the use of information obtained from a polygraph for the purpose of extending a TPIM, yet my enthusiasm for Amendment 20 is limited. The reality is that TPIMs can be made and extended on the basis of a wide range of intelligence fragments, some of which may be little more than straws in the wind. It may none the less be important to take such matters into account. I think back to the Manchester Arena bomb and the ambiguous and potentially unreliable intelligence that, as I reported at the time, might, if it had been interpreted in a different way, have resulted in some sort of pre-emptive action.
An intelligence picture is typically a complex mosaic of multiple indications and assessments, of which polygraph material, depending on the circumstances, will not necessarily be the least reliable component. While it seems to me both unlikely and undesirable that a TPIM would ever be extended predominantly on the basis of polygraph material, I am wary of Parliament seeking to dictate the relative weight that is to be given to different sources of intelligence. The Executive and the courts are the bodies with expertise in this area, and I suspect that we should leave it to them.
I look forward to hearing what the Minister has to say about Amendment 19, which seems not without merit.
Lord Paddick (LD) [V]
My Lords, my noble friend Lady Hamwee has explained Amendments 19 and 20 to the House, and it would serve little purpose to repeat that as we will not be dividing the House on them.
As my noble friend has said, compulsory polygraph tests for those convicted on licence from prison are one thing, but such tests for those not convicted of any offence, who have a right to silence when being questioned, is quite another. It is a long-established principle that a suspect in criminal proceedings should be protected from any adverse consequences of remaining silent. Clause 38 allows the Secretary of State to impose a requirement for an individual subject to a TPIM to participate in polygraph sessions and to comply with instructions given to the individual by the polygraph operator. Although any statement made by the individual while participating in the polygraph session cannot be used against them in any proceedings for an offence, a failure to answer questions could be taken as contravening a measure specified in a TPIM notice—that is, to comply with the instructions of the polygraph operator, so, in this case, the instruction to answer questions. Remaining silent during a polygraph session could therefore be an offence under Section 23 of the Terrorism Prevention and Investigation Measures Act 2011, for which the individual is liable on conviction to imprisonment for a term not exceeding five years.
If the person is convicted of a terrorism offence and is on licence and subject to a TPIM—unlikely but possible—it would be possible for them to be subjected to polygraph tests under Clause 32 of this Bill, and a failure to answer questions in those circumstances would be a breach of the licence. While we have reservations about that, we do not object to it being part of the Bill. However, if the person is not convicted and is subject to a TPIM, they have the right to silence and to be protected from any adverse consequences of remaining silent. Potentially being imprisoned for five years for failing to answer questions during a polygraph session is an adverse consequence, and we therefore intend to test the opinion of the House on whether Clause 38 should be part of the Bill.
Lord Falconer of Thoroton (Lab) [V]
My Lords, the effect of the Bill at the moment is that a condition of a TPIM can be that the subject takes a polygraph test, and that a failure to do that could be a breach of the TPIM’s provisions. Amendment 21 raises the question of whether that should be part of a potential TPIM. In answering that question, it is important to try to find out what the Government have in mind regarding the use of that provision. First, to what extent do they regard polygraph answers as reliable? There is a general view that they cannot be taken on their own. What is the Government’s view on that?
Secondly, will the Government introduce a code of practice, as envisaged by Amendment 19? If so, could they give some indication of what that would contain? In particular, would it be based on the American Polygraph Association’s code of practice?
Thirdly, in December 2020 Her Majesty’s Prison and Probation Service announced that it would be seeking a long-term commercial partner to deliver polygraph equipment, training and support services for the sum of £2 million. When this was announced by the Government, it was noted that any partners must provide training to the standard approved by the American Polygraph Association, which is a trade body. Can the Minister give an indication of how that is going?
Will the Minister confirm that the Government will not act solely on the basis of any physiological reaction of the individual while being questioned in the course of a polygraph examination, and that the effect of a “significant reaction” in a polygraph examination will simply lead to further inquiries being made?
There has been, over quite a long time, a legitimate—in the sense of authorised by legislation—use by the Home Office of polygraph tests in relation to sexual offenders. According to Home Office figures, over the last five years 5,228 mandatory polygraph examinations have been carried out on 2,249 sexual offenders. Will the Minister describe to the House what benefit has been obtained from this and the basis of any assertions of that benefit?
Lord Parkinson of Whitley Bay (Con)
My Lords, the three amendments in this group stand in the names of the noble Lord, Lord Paddick, and the noble Baroness, Lady Hamwee. Amendment 19 would oblige the Secretary of State to publish a code of practice on the conduct of, and use of results from, polygraph examinations, with a requirement to consult appropriate parties on the code before its publication.
We think that such an amendment is not necessary, since equivalent provision is already made by new paragraph 10ZA, which Clause 38 of the Bill will insert into Schedule 1 of the TPIM Act 2011. As the noble Baroness, Lady Hamwee, noted, Clause 38 includes a regulation-making provision for the conduct of TPIM polygraph examinations. The new polygraph measure will not be used within the TPIM regime unless and until such regulations have been made.
These regulations are expected to include detail on, for example, the qualifications and experience needed by polygraph operators; how records of the polygraph examinations should be kept; and how reports on the results of the examinations should be prepared. This will ensure transparency in how the polygraph measure in the TPIM regime will be applied in practice.
This approach follows the practice already established by the Ministry of Justice, which has set out its use of the polygraph in licence conditions of sex offenders in the Polygraph Rules 2009. Parliament will have the opportunity to scrutinise these future regulations and they will, of course, be subject to annulment by your Lordships’ House or the other place. As such, we believe that Amendment 19 is unnecessary, and I urge the noble Baroness to withdraw it, as she indicated she might.
Amendment 20 seeks to prohibit the extension of a TPIM notice on the basis of information derived from a polygraph test. Again, we do not think this is necessary. Clause 38 specifies the purposes for which the Home Secretary may impose a requirement on an individual subject to a TPIM notice to participate in polygraph examinations. These are, first,
“monitoring the individual’s compliance with other specified measures”
and secondly,
“assessing whether any variation of the specified measures is necessary for purposes connected with preventing or restricting the individual’s involvement in terrorism-related activity”.
The reference in new heading (ii) to
“variation of the specified measures”
means variation of the measures set out in Schedule 1 to the TPIM Act 2011, and the duration of the TPIM is not one of those measures. Extension of the TPIM for a further year can be done only by relying on the power in Section 5 of that Act, not by way of varying measures. Therefore, any attempt to use information derived from a polygraph examination to extend the duration of a TPIM notice would be unlawful. I hope that provides some assurance to the noble Lords and that they will therefore be willing not to press Amendment 20.
Finally, Amendment 21 would remove the addition of a polygraph measure to Schedule 1 to the TPIM Act 2011 entirely. The Government cannot accept that. Adding a polygraph measure to Schedule 1, where the measure is assessed to be necessary and proportionate, will help our operational partners to assess an individual’s compliance with his or her TPIM notice. This might include being asked whether engagement with rehabilitation programmes is genuine or whether someone is, for instance, meeting prohibited associates. The insights gained from a polygraph examination will support decision-making on whether the TPIM notice should be varied, including the relaxation of measures or further restrictions.
The polygraph measure will not be mandatory for all TPIM subjects. It will be used sparingly and only where necessary and proportionate to restrict a subject’s involvement in terrorism-related activity. Whether it is judged necessary will be determined by the Security Service on a case-by-case basis and a recommendation will be made to the Home Secretary.
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
My Lords, the noble Lord, Lord Paddick, is not available, so I call the noble Baroness, Lady Hamwee.
Baroness Hamwee (LD) [V]
Our views are very close, but we have not actually changed personalities yet. The noble and learned Lord, Lord Falconer, asked some extremely pertinent questions as the basis for an assessment of whether it was appropriate for the clause to remain in the Bill. It is a great shame that we have not had the answers to that list of questions; I do not think any could have come as a surprise.
May I pursue one point? Because there is a regulation-making power in new paragraph 10ZA, it is not necessary to have a reference to a code of practice. I have sat through many debates when we have been told that codes of practice are so useful because they are flexible; they can be tweaked without having to go through the legislative process. I have to say that I am quite surprised by that answer. I do not know whether we are being told that the rules that apply under the Offender Management Act in other situations when polygraph sessions are used are the rules that will apply. It is my fault; I got slightly lost during that part of the debate. It may be my perception only but, as I heard the answers, there seemed to be a lot of repetition of what is in the Bill, not answers to concerns which underlie the amendments.
When we get to it, depending on who the broadcasters go to, one of us will move Amendment 21. For now, I beg leave to withdraw Amendment 19.
Lord Paddick
Member’s explanatory statement
This would remove Clause 38 (TPIMs: polygraph measure) from the bill.
Lord Paddick (LD) [V]
I beg to move Amendment 21, which has already been debated, and I wish to test the opinion of the House.
“TPIMs: annual review
(1) In section 20 of the Terrorism Prevention and Investigation Measures Act 2011 (reviews of the operation of that Act)—(a) after subsection (1) insert—“(1A) The independent reviewer must carry out a review under this section in respect of each calendar year starting with 2022 and ending with 2026.Each review must be completed as soon as reasonably practicable after the year to which it relates.”;(b) in subsection (2), after “calendar year” insert “after 2026”;(c) in subsection (4), for “subsection (2)” substitute “this section”;(d) after subsection (6) insert—“(7) Subsection (1A) does not require a review to be carried out in respect of any calendar year during the whole of which the Secretary of State’s TPIM powers (within the meaning given by section 21(8)) do not exist because of their expiry or repeal under section 21.”(2) Subsection (1) does not affect any duty to carry out a review further to a notification given under section 20(2) of the Terrorism Prevention and Investigation Measures Act 2011 before the coming into force of this section.”Member’s explanatory statement
This amendment would reinstate the requirement for an annual review of the Terrorism Prevention and Investigation Measures Act 2011 by an independent reviewer for a period of five years beginning with 2022 (with reviews at the discretion of the reviewer after that period).
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
We come to the group consisting of Amendment 23. Anyone wishing to press this amendment to a Division should make that clear in the debate.
Clause 44: Persons vulnerable to being drawn into terrorism: timing of independent review
Amendment 23
Lord Paddick
“(1) In section 20(9) of the Counter-Terrorism and Border Security Act 2019 (persons vulnerable to being drawn into terrorism) omit the words from “within the period” to the end and substitute “by 31 December 2021”.”Member’s explanatory statement
This amendment would reinstate the deadline for the independent review of the Prevent strategy.
Lord Paddick (LD) [V]
My Lords, I move Amendment 23 in my name and that of my noble friend Lady Hamwee. This House voted for there to be a deadline for the publication of an independent review of the Government’s Prevent strategy in what became Section 20 of the Counter-Terrorism and Border Security Act 2019. In this Bill, the Government seek to remove any deadline for the publication of this review. In Committee, the Minister said that the Government hoped that the report would be published in the autumn of this year and that he hoped to get confirmation of this from the newly appointed independent reviewer of Prevent. On the basis of the estimate given by the Government in Committee, our Amendment 23 seeks to reinstate the deadline but with a generous margin of publication by the end of the calendar year. I beg to move.
Lord Anderson of Ipswich (CB) [V]
My Lords, there seems to be a recurring issue with the timeliness of independent reviews in the field of national security. The chief problem as I observe it relates not to the speed with which independent reviewers do their job but to the speed with which those reviews are commissioned on the one hand, and the speed with which reports are published and laid before Parliament on the other.
As to delays in commissioning, in addition to the remarkably long time that it has taken to replace my noble friend Lord Carlile as the independent reviewer of Prevent, I note that it was only on 25 February this year that the long-awaited review was announced of closed material procedures under the Justice and Security Act 2013. That review was required by Section 13 of that Act to be completed as soon as reasonably practicable after June 2018. Yet, despite regular inquiries by the indefatigable Angus McCullough QC and others, and at least one Written Question in my own name, it was commissioned only two and a half years after that point. That seems simply unacceptable.
On the second of those points, there is the pre-election saga of the Russia report of the Intelligence and Security Committee, on which I made my views clear at the time, and an occasionally elastic interpretation of the Secretary of State’s statutory duty to lay reports of the Independent Reviewer of Terrorism Legislation before Parliament “on receiving a report”.
In the Public Bill Committee on the original TPIM Bill in 2011, James Brokenshire, during his first stint as Security Minister, said on this subject:
“There is no desire to sit on reports. It would be foolish and inappropriate for Government to do so, particularly with a report from an independent reviewer … It is not our intention to sit on reports; that is not the practice. If it gives comfort to the Committee and to the public, reports received from the independent reviewer will be published on receipt or promptly—whatever the appropriate phrase is. That is what I expect to happen, and I would expect any successor of mine to take the same approach.”—[Official Report, Commons Terrorism Prevention and Investigation Measures Bill Committee, 30/6/11; col. 253.]
Will the Minister take this opportunity to endorse the principled approach set out by James Brokenshire almost 10 years ago and apply it not only to reports of the Independent Reviewer of Terrorism Legislation but to the report of the independent reviewer of Prevent? If he can, he will go some way to setting my mind at rest not only on the subject matter of this amendment but more generally.
Lord Ponsonby of Shulbrede (Lab) [V]
My Lords, this has been an extremely brief debate and quite a blunt one. The noble Lord, Lord Paddick, was very clear: during the passage of a previous Counter-Terrorism Act this House voted for a deadline and this current legislation is seeking to remove it. The Government commissioned an independent review back in January 2019, which has been repeatedly delayed and postponed, and the initial statutory deadline of 12 August 2020 will now be missed. The Government have said that they intend to have a report ready by summer 2021. Indeed, as the noble Lord, Lord Paddick, said, he has been very generous by putting in his amendments a deadline of the end of this current calendar year.
In the contribution of the noble Lord, Lord Anderson, to this short debate I noted a tone of exasperation, and I do not blame him or the noble Lord, Lord Paddick, for using such a tone. I really do not see why the Government cannot reaffirm their commitment to a deadline and I will be very interested to hear the Minister’s response to both noble Lords.
Lord Parkinson of Whitley Bay (Con)
My Lords, this amendment, in the name of the noble Lord, Lord Paddick, and the noble Baroness, Lady Hamwee, would add a new statutory deadline of 31 December this year for the completion of the independent review of Prevent. I am happy to say once again that we share the noble Lord’s and noble Baroness’s commitment to a successful independent review and the opportunity that it provides to learn lessons from what is and is not working—as well as to listen to a wide range of voices about how best to safeguard those who may be vulnerable to being drawn into terrorism.
The review restarted on 26 January, with the appointment of William Shawcross as the new independent reviewer. As I undertook to do in Committee, I am pleased to say that my noble friend Lady Williams of Trafford has had a conversation with Mr Shawcross about the timescale for his review. He certainly agrees with the need to complete it as swiftly as possible, while affording it the consideration that it requires. He hopes to complete his work well before the end of 2021, and of course there will then need to be time for a government response to be prepared and laid before Parliament. However, it is out intention to set out the date of his report and, indeed, the Government’s response in the revised terms of reference, when they are published shortly.
The noble Lord, Lord Anderson of Ipswich, referred to the remarks of my right honourable friend James Brokenshire, made in his first stint as Security Minister, about government responses being swift and timely. I hope the greatest reassurance to the noble Lord is the fact that my right honourable friend is back in that important post, albeit currently recuperating from his operation, from which we all wish him a speedy recovery. I am sure his remarks then stand now, as they do for my noble friend Lady Williams of Trafford, who is covering while he recuperates.
We all agree that it is necessary to have a thorough, evidence-based review that engages communities and sees Prevent delivery in action and that has practical recommendations for improvement at the end of it. We fear that, at a time when fleetness of foot is vital, a statutory deadline could limit this. We referred in Committee to the ongoing pandemic; alas, it continues now we are on Report, and I hope noble Lords will all be mindful of the need for flexibility in light of it.
Mr Shawcross is keen to proceed at pace, as I say, but reintroducing a statutory deadline for the completion of his independent review would mean that, if he encountered a challenge to his timeline because of the pandemic, we would have to revisit the legislation or he might be forced to compromise in how he meets his objectives. Of course, we hope that there will not be any difficulties, but there remains a risk of further or ongoing restrictions, with all the unpredictabilities of the pandemic and the implications that that could have for Mr Shawcross, his team and those who wish to provide their input into the review. As such, we think that that remains sensible.
We believe that it is achievable for Mr Shawcross to complete his work quickly, while undertaking a thorough and robust piece of work—but it is important for the legislation to retain the flexibility for the reviewer, should he need it, to ensure that the valuable work of his review is not undermined. I hope that the noble Lord, Lord Paddick, will agree and, therefore, withdraw his amendment.
Lord Paddick (LD) [V]
My Lords, I thank the noble Lords, Lord Anderson of Ipswich and Lord Ponsonby of Shulbrede, for their support for this amendment. The frustration that I and the noble Lord, Lord Anderson, expressed about the Government’s tardiness in reporting to Parliament on these issues has been reinforced by what the Minister has just said.
Not only has the Minister now turned away from what he said in Committee—that the Government anticipated that the report would be complete by the autumn—but he is now saying, “Of course, but then the Government will need time to respond to it.” This is absolutely the reason why we wanted this amendment in the Bill, and the Minister is showing complete contempt for what the noble Lords, Lord Anderson and Lord Ponsonby, and I have been saying.
I am sorely tempted to divide the House on this, simply to make the point. However, bearing in mind the time, I will reluctantly beg leave to withdraw the amendment.
The Deputy Speaker (Baroness Watkins of Tavistock) (CB)
We now come to Amendment 26. Anyone wishing to press this amendment to a Division must make that clear in debate.
Clause 48: Extent
Amendment 26
Lord Wolfson of Tredegar
“(4A) Nothing in subsections (1) to (4) limits the extent within the United Kingdom of any provision made, or inserted, by or under this Act so far as it is applied (by whatever words) by or under the Armed Forces Act 2006. (4B) Subsections (1) and (2) of section 384 of the Armed Forces Act 2006 (extent outside the United Kingdom) apply to the armed forces provisions as those subsections apply to the provisions of that Act.(4C) The following are “armed forces provisions”—(a) a provision made, or inserted, by or under this Act so far as it is applied (by whatever words) by or under the Armed Forces Act 2006;(b) an amendment, modification or repeal made by or under this Act of—(i) a provision of or made under the Armed Forces Act 2006,(ii) a provision that amends, modifies or repeals a provision of, or made under, that Act, or(iii) any other provision, so far as the provision is applied (by whatever words) by or under that Act.”Member’s explanatory statement
This amendment clarifies that provisions of the Bill which have a limited extent within the United Kingdom (such as amendments of the Sentencing Code) have UK-wide extent so far as they are applied by the Armed Forces Act 2006. It also provides for the provisions of the Bill that relate to the armed forces to extend, or be extended, outside the United Kingdom in the same way as the Armed Forces Act 2006.
Lord Wolfson of Tredegar
My Lords, I apologise for the short break in proceedings while I came back to my place. I am afraid that the convention of not moving while the Chair is standing, and social distancing, do not go too well together.
This rather technical amendment to Clause 48 clarifies that the provisions of the Bill have UK-wide extent in so far as they are applied by the Armed Forces Act 2006. That is the burden of proposed new subsection (4A). The amendment also rectifies an oversight in the original drafting of the Bill, to make Section 384 of the Armed Forces Act 2006 apply to provisions in the Bill if they amend or modify the Act, and when they are applied by that Act. This means that they will extend to the Isle of Man and the British Overseas Territories, except Gibraltar, and can be extended to the Crown dependencies. That is the burden of proposed new subsection (4B). That ensures that the same version of the Armed Forces Act 2006 will be in force in all the jurisdictions to which that Act extends.
I apologise for the fact that this amendment has not been brought forward until now. That was an oversight, but I hope that noble Lords will accept that it was an understandable one, given the number of issues that the Bill deals with, and their frequent complexity. The interrelationship between sentencing provisions and armed services issues adds a further element of complexity. The amendment itself, as I have said, does those two things, in proposed new subsections (4A) and (4B). I beg to move.
Lord Thomas of Gresford (LD) [V]
My Lords, Clause 48 deals with the extent of the Bill. It provides that
“A provision of this Act which amends, repeals or revokes an enactment has the same extent within the United Kingdom as the enactment amended, repealed or revoked.”
Under subsection (2), provisions that do not amend, repeal or revoke an existing enactment extend to all four nations—England, Wales, Scotland and Northern Ireland—save for two limited exceptions, in that Clauses 21(2) and 44(2) are of a limited nature, referring to retrospectivity.
It is not easy to extract the purpose of Amendment 26. Someone in the Ministry of Justice has concluded that there are problems under the Armed Forces Act 2006. Proposed new subsection (4A) suggests that, in the context of jurisdiction under the Armed Forces Act 2006, all the provisions of the Bill extend to all four countries. This is so even if an amendment repeals or revokes a provision of an existing Act that does not have that extent.
Under proposed new subsection (4B), the provisions of the Act extend outside the United Kingdom to the extent set out in Section 384(1) and (2) of the Armed Forces Act. That section applies to the Channel Islands, the Isle of Man and overseas territories excluding Gibraltar. British Overseas Territories do not include Cyprus, Belize or Gibraltar itself, which is specifically excluded. Those are all venues where I, as chairman of the Association of Military Court Advocates, know that courts martial take place.
Those are three places, and I am sure there are more, where courts martial take place—not to mention Germany, where the facilities have ceased. Courts martial can, of course, take place anywhere in the world, if properly constituted, and if charges for service offences are brought against anyone who is subject to the Armed Forces Act.
Terrorism exists outside the overseas territories. I would very much welcome clarification as to what happens if a court martial is held outside the United Kingdom, but not within those overseas territories to which the Armed Forces Act applies. I cannot help feeling that I am missing something, but the statement attached to the amendment is not at all clear—even though it states that the purpose of the amendment is to clarify the position. I look forward to the Minister doing so.
Lord Falconer of Thoroton (Lab) [V]
I endorse the question so clearly put by the noble Lord, Lord Thomas of Gresford. Despite the clear explanation given by the noble Lord, Lord Wolfson of Tredegar, I am still struggling with this amendment. Can he tell us the sort of problem that proposed new subsection (4A), which Amendment 26 seeks to insert into the Bill, tries to deal with? What is the lack of clarity with which he was concerned? Can he also indicate whether there are any implied provisions put into the Armed Forces Act by this Bill?
Proposed new subsection (4C)(a) specifies:
“a provision made, or inserted, by or under this Act so far as it is applied (by whatever words) by or under the Armed Forces Act 2006”.
Can he indicate what sort of provision that is aimed at? I would find it really helpful, in relation to proposed new subsections (4A) and (4B), to have an example of a problem that these two provisions would solve.
Lord Wolfson of Tredegar (Con)
I am grateful to the noble Lord, Lord Thomas of Gresford, and the noble and learned Lord, Lord Falconer of Thoroton, for their contributions and questions. The position, so far as I can assist the House now, is that the amendment ensures that the provisions of the Bill which amend, modify or are applied by the Armed Forces Act 2006 have the same extent as that Act. That Act extends to the UK, Isle of Man, and British Overseas Territories, excluding Gibraltar, and can be extended to the Crown dependencies.
The Armed Forces Act 2006 is the main piece of primary legislation that establishes a service justice system. It uses a modified form of sentencing law of England and Wales for sentences imposed by the court martial, as the noble Lord, Lord Thomas, stated. The burden of the amendment is to ensure that the Armed Forces provisions in the Bill have the same extent as the Armed Forces Act 2006. This would ensure, therefore, that there is a correlation of the area over which the provisions apply.
On the specific question from the noble Lord, Lord Thomas, on what would happen outside the territories covered by the Armed Forces Act, I am conscious that I would probably be straying into MoD territory rather than MoJ territory. I hope that the noble Lord, Lord Thomas, will allow me to write to him on that so he gets an accurate and complete answer.
As to the point raised by the noble and learned Lord, Lord Falconer of Thoroton, on whether there is an implication in the Bill that is caught by proposed new subsection (4C), perhaps I can send him a letter on that, rather than risk getting the answer wrong, I am tempted to say that these are standard words used in Acts of Parliament about what is implied, but I understand the burden of his question and, if he will permit me, will send him a written response. I hope that I have responded to the points put to me and I commend this amendment to the House.
Lord Wolfson of Tredegar
(a) in subsection (3A),”Member’s explanatory statement
This is consequential on the amendment at page 121, line 5.
“(b) in subsection (9), after “applies” insert “to the extent that the person is serving a sentence of imprisonment imposed in respect of an offence within section 1AB(2)”.”Member’s explanatory statement
This amendment amends section 1(9) of the Prisoners and Criminal Proceedings (Scotland) Act 1993 in light of new section 1B of that Act (inserted by paragraph 52(4) of Schedule 13 to the Bill).
“(2A) In section 1AA (release of certain sexual offenders), for subsection (9) substitute—“(9) This section is subject to section 1B.””Member’s explanatory statement
This amendment amends section 1AA(9) of the Prisoners and Criminal Proceedings (Scotland) Act 1993 in light of new section 1B of that Act (inserted by paragraph 52(4) of Schedule 13 to the Bill).
“(5B) Subsection (4) is subject to sections 1A and 1B.”Member’s explanatory statement
This amendment amends section 1AB of the Prisoners and Criminal Proceedings (Scotland) Act 1993 so as to make subsection (4) of that section subject to sections 1A and 1B of that Act (section 1B being inserted by paragraph 52(4) of Schedule 13 to the Bill).
“(14) This section applies to a prisoner on whom sentence was imposed before the day on which paragraph 52(4) of Schedule 13 to the Counter-Terrorism and Sentencing Act 2021 came into force as it applies to a prisoner on whom sentence was imposed on or after that day.”Member’s explanatory statement
This amendment amends section 1B of the Prisoners and Criminal Proceedings (Scotland) Act 1993 so that it will apply in relation to sentences imposed before the date on which the provision of the Bill inserting section 1B into that Act comes into force.
“(a) in the case of a prisoner to whom section 1AB(3) applies,”Member’s explanatory statement
This amendment is consequential on the amendment at page 124, line 4.
(b) in the case of a prisoner to whom section 1AB(3) does not apply by virtue of section 1AB(2A), before the day on which the Scottish Ministers are required to release the prisoner under section 26ZA(5).”Member’s explanatory statement
This amendment prevents a life prisoner who is also serving a terrorism sentence to which section 1AB(2A) of the Prisoners and Criminal Proceedings (Scotland) Act 1993 applies from making a requirement under section 2(6) of that Act before the day on which the prisoner would otherwise be eligible for release on licence under section 26ZA(5) of that Act.
Member’s explanatory statement
This amendment amends section 5 of the Prisoners and Criminal Proceedings (Scotland) Act 1993 in light of new section 1B of that Act (inserted by paragraph 52(4) of Schedule 13 to the Bill).
“(c) in subsection (4), after “1A” insert “, 1B”.”Member’s explanatory statement
This amendment amends section 5 of the Prisoners and Criminal Proceedings (Scotland) Act 1993 in light of new section 1B of that Act (inserted by paragraph 52(4) of Schedule 13 to the Bill).
“(za) in subsection (3)—(i) after “(2) above” insert “or, as the case may be, section 1AB(4) or 26ZA(5)(a)”;(ii) after “sentence)” insert “or, as the case may be, before the date on which the sentence under section 205ZC(5) as originally imposed by the court expires”;(iii) after “so elapses” insert “or, as the case may be, the sentence under section 205ZC(5) expires;””Member’s explanatory statement
This amendment makes consequential amendments of section 7 of the Prisoners and Criminal Proceedings (Scotland) Act 1993.
“(ba) in subsection (5)(b), after “(1A)” insert “, 1B”;” Member’s explanatory statement
This amendment amends section 7 of the Prisoners and Criminal Proceedings (Scotland) Act 1993 in light of new section 1B of that Act (inserted by paragraph 52(4) of Schedule 13 to the Bill).
Member’s explanatory statement
This amendment makes consequential amendments of section 7 of the Prisoners and Criminal Proceedings (Scotland) Act 1993.
(e) after subsection (8) insert—“(9) This section is subject to section 1B.””Member’s explanatory statement
This amendment makes consequential amendments of section 7 of the Prisoners and Criminal Proceedings (Scotland) Act 1993.
“(12A) In section 26A (extended sentences: application of section)—(a) in subsection (1), after “sentences)” insert “other than an extended sentence imposed in respect of a terrorism offence.”;(b) in subsection (2), for “section 1A” substitute “sections 1A and 1B”;(c) in subsection (6), for “section 1A(c)” substitute “sections 1A(1)(c) and 1B(11)”.”Member’s explanatory statement
This amendment excludes a prisoner subject to an extended sentence under section 210A of the Criminal Procedure (Scotland) Act 1995 in respect of a terrorism offence from the scope of section 26A of the Prisoners and Criminal Proceedings (Scotland) Act 1993. It also amends that section 26A in consequence of new section 1B of that Act.
“(5B) In determining, for the purposes of subsection (5), whether a sentence passed on a person in respect of an offence (other than an offence within section 1AB(2)) is to be treated as part of a single term, any sentence passed on the person in respect of an offence within section 1AB(2) is to be ignored.”Member’s explanatory statement
This amendment inserts new subsection (5B) into section 27 of the Prisoners and Criminal Proceedings (Scotland) Act 1993 clarifying that, in determining whether non-terrorism sentences are to be treated as a single term, sentences imposed in respect of terrorism offences within section 1AB of that Act are to be ignored.
“(b) in each of paragraphs 10(2)(a) and (5)(a) and 11(2)(a) and (4)(a)—(i) after “1A,” insert “1B,”;(ii) after “21,” insert “26ZA,”.”Member’s explanatory statement
This amendment makes minor amendments of paragraphs 10 and 11 of Schedule 1 to the Crime (Sentences) Act 1997 in consequence of the insertion of sections 1B and 26ZA into the Prisoners and Criminal Proceedings (Scotland) Act 1993.
“(b) after “1A,” insert “1B,”;(c) after “10” insert “, 26ZA”.”Member’s explanatory statement
This amendment makes minor amendments of section 24(c) of the International Criminal Court (Scotland) Act 2001 in consequence of the insertion of sections 1B and 26ZA into the Prisoners and Criminal Proceedings (Scotland) Act 1993.