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Oral Answers to Questions
(10 months, 3 weeks ago)
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Jim Shannon (Strangford) (DUP)
The Economic Secretary to the Treasury (Andrew Griffith)
The Financial Ombudsman Service offers a proportionate and informal resolution of disputes that is cost-free for consumers. Where it upholds a complaint against a firm, it can award redress for that concern to that consumer. I work very closely with my officials and with the Financial Ombudsman Service to make sure consumers have the justice they require.
Jim Shannon
I thank the Minister for that that response. This has been an ongoing issue in the House for some time, and I spoke to some of the Minister’s colleagues beforehand. The Chancellor and the Minister will know that the parliamentary ombudsman found that 1 million Equitable Life savers lost money as a direct result of Government decisions. Why, then, are the Government holding themselves to a different standard and ignoring the wishes of the parliamentary ombudsman, having paid victims of the Equitable Life scandal only 22% of the money they lost from their pension funds? I say that with great respect, but I do think we need an answer.
Andrew Griffith
I respect the hon. Member for raising this issue. It has however, been raised many times before in this House, and answered from this Dispatch Box as well.
Ian Byrne (Liverpool, West Derby) (Lab)
Patricia Gibson (North Ayrshire and Arran) (SNP)
Richard Thomson (Gordon) (SNP)
The Chancellor of the Exchequer (Jeremy Hunt)
We know the pain that households up and down the country are going through as a result of the cost of living pressures at the moment, and have announced one of the largest support packages in Europe, worth around £3,300 per household this year and last.
Ian Byrne
The latest report from Which? highlights that even supermarkets’ own budget brands of food have increased in price by 26.6%. There are security locks on baby formula milk, at the same time as corporations are making vast profits. The Government have signed up to the United Nations’ sustainable development goal of eradicating poverty by 2030. Surely, in the light of those commitments, now is the time for the Chancellor to act. Will he cap essential food prices and tackle the grotesque profiteering in the food industry that is driving many of my constituents in Liverpool, West Derby into poverty?
Jeremy Hunt
I totally respect the hon. Gentleman for raising the concerns of his constituents in the way that he has done. I do not believe that capping prices is the right long-term solution, but we are doing a lot, including payments of £900 per household for people on means-tested benefits, £150 for households with someone disabled living in them and £300 for households with pensioners living in them, precisely because we want to help the people that the hon. Gentleman is talking about. I will be meeting the regulators next week to talk further about what needs to be done with respect to supermarkets.
Patricia Gibson
Over the weekend, the former Governor of the Bank of England, Mark Carney, spoke about how before the Brexit referendum, the Bank of England had set out that the likely consequences of Brexit were
“a weaker pound, higher inflation and weaker growth”.
Does the Chancellor think it is fair that the UK Government’s decision to ignore the stark warnings from the Bank of England are now being paid for by the households who can least afford it?
Jeremy Hunt
I am afraid that I do not buy this Brexit narrative from the SNP. Food price inflation has been around 20% in Germany, Sweden, Portugal and Poland in recent times, so this is not a UK-specific issue. We are all dealing with the consequences of Putin’s invasion of Ukraine and the aftermath of the pandemic, and we are all tackling it with one central focus, which is to bring down inflation as our overriding priority.
Richard Thomson
The former US Treasury chief said earlier this month that Brexit was a “historic economic error”, and described the UK Government’s economic policy as having been
“substantially flawed for some years”.
Will the Chancellor finally face up to what the rest of the world can see, and admit that leaving the world’s largest single market has not only had a significant impact on inflation, but a deleterious impact on household finances across the country?
Jeremy Hunt
The issue with that argument is that the UK has actually grown faster than France or Italy since we left the single market, and according to the managing director of the International Monetary Fund, the UK economy is “on the right track”.
Sir Jake Berry (Rossendale and Darwen) (Con)
I thank my right hon. Friend for all he has done for people in Rossendale and Darwen to help them through this cost of living crisis, but people are very concerned about what is being described as the mortgage bomb about to go off. Is now the time for him to look at reintroducing the bold Conservative idea of mortgage interest relief at source? If we do not help families now, all the other money that we spent to help them will have been wasted if they lose their home.
Jeremy Hunt
No one in Rossendale and Darwen could have a more doughty champion than my right hon. Friend, and I listen to what he says carefully, but I think he will understand that those schemes that involve injecting large amounts of cash into the economy right now would be inflationary. So much as we sympathise with the difficulties and will do everything we can to help people seeing their mortgage costs go up, we will not do anything that would mean we prolonged inflation.
Stewart Hosie (Dundee East) (SNP)
The cost of a two-year fixed mortgage in March 2021 was 2.57%; this week, it reached 6%. The Chancellor and the Economic Secretary have said there are no plans to change the Bank of England inflation target, meaning that the base rate that drives the mortgage rate will continue to rise as inflation stays stubbornly high, and mortgages will go up. In the absence of such a change, what do the Government plan to do to actually tackle the mortgage pain people are suffering?
Jeremy Hunt
First, I would say to the right hon. Member that he is talking about something that is being experienced across the world. In fact, interest rates have risen faster in the United States and Canada than they have here. The answer is that we will look at doing everything we can to help people under pressure, but we will not do things that would prolong the inflationary agony that people are going through. We have to be very careful, because a lot of the schemes that are being proposed would actually make inflation worse, not better.
Stewart Hosie
On the issue of inflation, the Office for Budget Responsibility said in March that inflation was due to peak at 2.9% at the end of this year. By May, the Bank of England had forecast that it would be 5% at the end of this year, so it had almost doubled in the space of two months. Given that headline inflation is still 8.7% and food inflation is 16.5%, will the Chancellor guarantee today that inflation will be halved to 5%, as promised by the Prime Minister in January of this year?
Jeremy Hunt
The IMF, the OBR and the Bank of England all predict that we will hit our target to halve inflation, and I give the right hon. Member this guarantee: we will stick to the plan to do so.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Janet Daby (Lewisham East) (Lab)
Christine Jardine (Edinburgh West) (LD)
The Economic Secretary to the Treasury (Andrew Griffith)
We recognise that this is a concerning time for homeowners and mortgage holders, but we cannot ignore the fact, much as some may wish to, that interest rates have risen across western economies as a result of the covid pandemic and the impact of the war in Ukraine. The Bank of England sets the base rate, which can have an effect on mortgage pricing, and the Bank has been independent since the decision of the then Labour Government in 1997. We remain committed to responsible management to bring inflation under control, which is the only sustainable way to lower interest rates and lower mortgage rates.
Gerald Jones
The former Prime Minister has apologised for the mistakes in her so-called growth plan and the damage it caused. Families across the UK will soon start paying thousands more in mortgage interest payments. Given the Prime Minister’s comments yesterday, it appears that there is little or no further support coming. Will the Minister join the former Prime Minister and apologise to the nation for the impact of the Conservative party’s misguided economic experiment?
Andrew Griffith
Much as the Opposition would prefer this not to be the case, it is a fact that this is impacting across western economies. Although market-to-market comparisons are not always easy, in the United States of America the average 30-year mortgage has now increased to above 6%. As I have said, this Government will do what we can sustainably to lower interest rates, and thereby ease the burden on mortgage holders.
Janet Daby
This is the second time I am putting it to the Government that the Conservatives are no longer the party of home ownership, and I do not think it will be the last time either. I say this because the average interest rate on a new two-year fixed mortgage is now above 6%. The Chancellor has already said that they will do everything they can, but what does that actually mean, because the public would like to know?
Andrew Griffith
I thank the hon. Lady for her question. Not only are we taking action and taking the tough decisions to sustainably improve the nation’s finances, but we are working with lenders—the Chancellor and I regularly meet the mortgage industry—on the support they can provide to mortgage holders if they do get into financial difficulties. There is a range of measures, which includes term extensions and switches to interest-only payment holidays. The Financial Conduct Authority guidance is very clear that any repossessions—and they are currently running at a historical low—should be an absolute last resort.
Christine Jardine
As a result of the 6% rate that we have heard about, more than 1 million households on flexible-rate mortgages have already faced increases this year, and 1.8 million more will see their fixed-rate deals come to an end and face increases in this year. It is not just homeowners. The knock-on effect has meant that in my constituency in Edinburgh, we have had the highest rental inflation anywhere in the country at 13.7% in the last financial year, because landlords are facing increases in their mortgages. The Government have said that they are willing to support people, so would they be willing to consider the Liberal Democrat idea of a mortgage protection fund to protect those on the lowest incomes, and support those who are struggling?
Andrew Griffith
I thank the hon. Member for her question, but regrettably the proposal that she and her party put forward would not only delay the point at which we are able to bear down on inflation and deliver the nation’s mortgage holders the lower interest they need but, as I understand, it would do nothing for the plight of private renters.
Harriett Baldwin (West Worcestershire) (Con)
The growth plan in September obviously had an impact on the mortgage market, but is the Economic Secretary to the Treasury aware that by November, the Governor of the Bank of England said, when he gave evidence to our Committee, that the increases in mortgages henceforth were down to the Bank of England’s own increases, because that temporary effect from the growth plan had dissipated? Increases since then have been largely due to the fact that inflation has been worse than the Bank was forecasting. Did the Economic Secretary note that this week I received a letter from the Chair of the Court of the Bank of England, saying that they are going to undertake the request that I sent for them to look at their inflation modelling and at why it has been incorrect?
Andrew Griffith
Not for the first time, the Chair of the Treasury Committee is on the money in her understanding of what is driving the markets, and in her advocacy and championing of the fact that our lending banks need to do a good job not just for mortgage holders, but also for savers. I am happy to meet her to talk about how we can ensure that they do the best job they can.
Richard Fuller (North East Bedfordshire) (Con)
In his earlier reply the Minister talked about mortgages in the United States. He will know that in the United States it is common to fix a mortgage for 15 or 30 years, which gives certainty about monthly repayments and can of course be refinanced if mortgage rates go down over the term of the mortgage. I understand that the UK Treasury looked at the UK mortgage markets and at introducing long-term fixed rates, and found that at that time there was not much potential. Will he consider looking at that again?
Andrew Griffith
As ever, my hon. Friend’s question is apposite when it comes to Treasury matters. There are indeed long-term fixed-rate mortgages on the market, and I have taken advice from officials on that. The constraining factor is consumer demand, and that is not a pattern of behaviour we have seen. Clearly for some mortgage holders such mortgages do offer long-term certainty, and it is certainly my objective for us to see the broadest range of choices for householders and for their own individual patterns in the market.
Jonathan Gullis (Stoke-on-Trent North) (Con)
Mortgage payers in Stoke-on-Trent North, Kidsgrove and Talke are rightly worried at this moment in time, with the impending re-brokering that they are facing. To support what my right hon. Friend the Member for Rossendale and Darwen (Sir Jake Berry) said earlier, is it time to return to a Conservative principle of introducing a mortgage interest relief at source-type scheme, which allows borrowers tax relief for interest payments on their mortgages?
Andrew Griffith
I always listen enormously carefully to my hon. Friend’s powerful advocacy for Stoke-on-Trent, and his constituents put their trust in this Government. One thing they put their trust in, is that this Government would not come forward with the sort of unfunded spending commitments that we see on the Labour Benches. That would be disastrous for my hon. Friend’s constituents because it would see inflation remain higher for longer.
Mr Pat McFadden (Wolverhampton South East) (Lab)
The only thing that grew as a result of what the Government did last September was people’s mortgage payments. Two-year fixed rates are now more than 6%, and payments for householders are up £2,900 over the next year. Have the Government learned the lesson from the previous Prime Minister’s decision—I stress that word; it is nothing to do with international events—to use the country as a giant economic experiment that hurt homeowners, pushed up interest rates and shook international confidence in the United Kingdom? If they have, will the Minister now apologise to the householders who are paying the price for that mistake?
Andrew Griffith
As ever, I listened carefully to the right hon. Gentleman’s rhetoric. I ask him whether he has learned the lesson from what we saw with the last Labour Government, who spent their way through the nation’s finances and whose most lasting contribution to the economy was a note that we inherited from the then Chief Secretary to the Treasury saying there was no money left.
Mr McFadden
Back to 2023. This is a real crisis, affecting real people as a result of the real decisions of the Minister’s Government. Figures out today show that the average UK tenant is spending more than 28% of their income on rent, and rents have gone up by more than 10% in the past year. Rents are being forced up because the landlords who people rent from are seeing their mortgages go up, too, and sometimes even faster than mortgages in general. The Chancellor and the Prime Minister were supposed to be the team that would come in and sort everything out. Can the Minister tell us what went wrong?
Andrew Griffith
What went right is the fact that we on the Government Benches not only always focus on the stability of the nation’s finances to get inflation and interest rates falling further and faster than the Opposition would, but even within that envelope, we found £3,300 on average to support households over last winter and the upcoming winter. That will have a significant impact on the difficulties that mortgage holders and renters are facing because of the higher interest rates that are a feature across the western world.
Rachel Hopkins (Luton South) (Lab)
The Chief Secretary to the Treasury (John Glen)
The Government undertake extensive assessment of the effectiveness of the sanction regimes, which are eroding Russia’s financial base. We have sanctioned 28 Russian banks, covering 80% of Russia’s banking sector, and frozen more than £18 billion of Russian assets, and we have implemented unprecedented trade sanctions in addition.
Rachel Hopkins
Constituents in Luton South have raised concerns about the financial sanctions regime with me. Can the Government confirm whether it is still the case that Russian account holders in the UK can hold £50,000 or more in their accounts? What is to prevent individuals of concern simply parcelling up assets through proxies into a large network of accounts below the permitted level?
John Glen
The Office of Financial Sanctions Implementation works closely with our allies across the G7 to ensure that we have co-ordinated action among our international partners on this unprecedented package of sanctions. We have frozen the assets of 1,600 individuals and entities. We have implemented 35 different sanction regimes across government. I would be happy to take away the specific question that she has asked, because it is technical, and respond.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
A multimillion-pound start-up project that could be transformational in my constituency is now at risk because the Office of Financial Sanctions Implementation is yet to process an asset freeze licence application in respect of just 0.002% of the company’s capital, which was submitted in April. What steps is the Minister taking to ensure that such applications are dealt with swiftly? If I provide him with details of the company, will he ensure that the application’s progress is expedited?
John Glen
I am happy to take up my right hon. Friend’s case. We have expanded the OFSI resources. We have a monthly monitoring and efficiency dashboard. I accept how frustrating it can be for constituents’ businesses when such situations arise, and I am happy to take the matter away and get back to him swiftly.
James Murray (Ealing North) (Lab/Co-op)
As the war in Ukraine continues, we must not let up for a second on efforts to tighten the net on the accomplices and beneficiaries of Putin’s regime. We welcome the direction of the measures announced yesterday. Can the Minister confirm whether those measures will close all the loopholes and specifically the ownership thresholds, which Russian oligarchs and their enablers have been able to exploit to evade the bite of sanctions?
John Glen
The Government will be relentless in their pursuit of illicit assets. As I said, we have sanctioned 24 banks with global assets of over £940 billion and 120 elites with a combined worth of £140 billion. Working closely with our allies, we have incrementally and sequentially tightened that net and immobilised more than 60% of Putin’s war chest of foreign reserves worth £275 billion. We continue to work closely with our allies to intensify those measures as opportunities arise.
Sir Robert Syms (Poole) (Con)
I have one or two constituents in Poole who lost their jobs because they were in companies owned by Russians who were sanctioned, and they have found it difficult to have an orderly wind-up because banks run a mile from loaning those businesses a reasonable amount of money to sort them out. I know of one situation where people have not been able to get P60s as the business cannot get money from any of the banks—they do not want to be involved in anything to do with sanctions—so it cannot pay the accountants who would produce them. May I have a word with the Minister about that? In some cases, we are going over the top, and it is affecting our constituents.
John Glen
Those points demonstrate how serious and extensive the Government’s actions are, but I recognise that sometimes unfortunate situations arise and I am happy to look at that case and take it back to the Office of Financial Sanctions Implementation.
John Cryer (Leyton and Wanstead) (Lab)
To pursue the issue of proxies raised by my hon. Friend the Member for Luton South (Rachel Hopkins), am I right in thinking that the Minister said a few minutes ago that he was prepared to examine the possibility of taking action against proxies and those persons of interest who use proxies?
John Glen
What I would say is that the Government are committed to an ever-tighter grip on illicit finance and those individuals close to Putin who make a material contribution to his regime. Obviously, I will not commit on the Floor of the House to individual extensions to what we have already done, but I have set out the range of sanctions regimes that exist across multiple Departments of Government and I am happy to receive representations on whatever case the hon. Member wishes to bring to me.
Bob Blackman (Harrow East) (Con)
The Economic Secretary to the Treasury (Andrew Griffith)
My hon. Friend is a strong champion of consumers who have suffered financial loss, particularly through his chairmanship of the all-party parliamentary group on personal banking and fairer financial services. He understands that the UK does not operate a zero-loss regime where consumers of financial services are automatically compensated, but it is important that regulators make very clear where the scope of protection lies and who is eligible for compensation.
Bob Blackman
I thank my hon. Friend for that answer. It is clearly important that where the ombudsman recommends that compensation be paid, banks pay it. Equally, the Government should pay compensation, such as when the parliamentary ombudsman found against them on Equitable Life policyholders, as was mentioned by the hon. Member for Strangford (Jim Shannon). I understand that the budget to pay compensation to those policyholders has been underspent by some £300 million, so rather than return the money to the Treasury, will my hon. Friend use it to compensate the Equitable Life policyholders who have suffered in the long term?
Andrew Griffith
We set out the terms of that settlement in 2010 and there is nothing to update the House on today.
Nick Smith (Blaenau Gwent) (Lab)
For over five years, I have campaigned on behalf of steelworkers who were part of the British Steel pension scheme. Many were ripped off by sharks posing as financial advisers. While a redress scheme is now in place, legal advisers for steelworkers report claim processing delays of six months at the Financial Conduct Authority, 12 months at the Financial Services Compensation Scheme and two years at the Financial Ombudsman Service, which suggests that all is not right. Delays to cases can have a big impact on possible payouts, so will the Minister please look into the performance of those organisations? Steelworkers and other financial consumers deserve much better than this.
Andrew Griffith
Yes, I will. I have had conversations with the hon. Member about that, and I will take up the case of any unwarranted delays.
Alexander Stafford (Rother Valley) (Con)
Laura Farris (Newbury) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
I have set out our national ambition to be the world’s next silicon valley. We are making good progress; last year we were ranked the world’s third largest technology market after the United States and China.
Alexander Stafford
Ultimate Battery in Thurcroft in Rother Valley is developing groundbreaking battery technologies and is on track to create 500 new jobs by 2025. What help can the Department give me and my constituents to help burgeoning businesses such as Ultimate Battery, to make Rother Valley and other places across the north technology hubs?
Jeremy Hunt
I thank my hon. Friend for his support for this really important sector in Rother Valley. We have a number of schemes, including £541 million of funding available in the Faraday battery challenge. We also have the £1 billion automotive transformation fund. As a result of the efforts that he and many others have made, we now get 40% of our electricity from renewable sources—the second highest in Europe—and much more progress is to come.
Laura Farris
I recently convened a roundtable in my constituency with the Minister for Science, Research and Innovation, my hon. Friend the Member for Mid Norfolk (George Freeman) and a number of science and tech businesses. Their No. 1 question was what fiscal support was available for their sector. I am aware that there are numerous schemes, grants and tax relief, but it was notable that they were not well understood by the businesses, and I could not find them published anywhere on the new Department’s website. Could my right hon. Friend put together and publish a package of all the support available to investors and innovators, and how it can be applied for, to maximise the potential of this vital new frontier in west Berkshire and beyond?
Jeremy Hunt
That is a fair point. I thank my hon. Friend for the fact that Newbury is a hotbed of technology businesses, with Roc Technologies, Stryker, Edwards Lifesciences and a range of other businesses that she gives a lot of support to. I will write to her listing all those things and I will make sure that it is available on the website of the Department for Science, Innovation and Technology.
Tim Farron (Westmorland and Lonsdale) (LD)
The tech sector in rural Cumbria depends on reliable broadband. Communities in Warcop, Sandford, Coupland Beck, Blea Tarn and Ormside in Westmorland have signed up to the community interest company and volunteer group B4RN to provide a gigabit connection for just £33 a month, but the communities have been suddenly designated a low priority area, which means that their vouchers have been removed, putting the whole project at risk. Will the Chancellor commit to supporting those communities, residents and businesses to ensure that they get the vouchers that they were initially promised?
Jeremy Hunt
I will happily look into what has happened. We strongly support all rural areas having access to gigabyte broadband, as an important part of our policy. We have made a lot of progress on that. I will look into detail of what is happening in the hon. Gentleman’s area and get back to him.
Ben Lake (Ceredigion) (PC)
The Financial Secretary to the Treasury (Victoria Atkins)
Hospitality businesses play an important role in local communities and the UK economy. They will benefit from business rates support worth £13.6 billion over the next five years, which includes increased generosity from the retail, hospitality and leisure relief scheme from 50% to 75% in 2023-24. There is also our Brexit pub guarantee, which means that the duty on a draught pint in a pub will always be lower than its equivalent in the supermarket.
Ben Lake
The Minister will be aware of long-standing calls from the sector to reduce VAT to bring it into line with European equivalents. Will the Treasury undertake an assessment of the economic benefits of doing so? Will it consider that as part of a package, alongside increasing the threshold for VAT registration from £85,000 to £100,000 to support smaller businesses?
Victoria Atkins
The hon. Gentleman poses many questions for me, some of which are very complicated. VAT relief for the hospitality sector was important in the aftermath of the pandemic, but it cost us a great deal of money and we have had to raise it back up to 20%. We keep the other VAT matters under review, and I would be delighted to meet him to discuss the complexities behind them.
Stephen Crabb (Preseli Pembrokeshire) (Con)
A great many of the new job opportunities and career paths being created in Pembrokeshire are in the tourism and hospitality sector. Does my hon. Friend agree that the very last thing that business people who are creating those growth opportunities need right now is a tourism tax of the kind being brought forward by the Welsh Labour Government in Cardiff, which will hit businesses with new burdens and raise the cost of going on holiday in Wales?
Victoria Atkins
The sun always shines in my right hon. Friend’s corner of Pembrokeshire when he speaks up for it. He is quite right to identify how the Conservatives in Government are trying to help businesses through our business rates relief in England, through our energy support scheme over recent months and, of course, through the Brexit pub guarantee. Welsh Labour, on the other hand, wants to call last orders and have higher taxes for the businesses he is so keen to support.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
The 2019 Conservative manifesto, some three Prime Ministers and four Chancellors ago, promised a fundamental reform of business rates. This is another broken Tory promise. Will the Minister admit that only a Labour Government will end the chaos, scrap business rates and replace them with a fairer system, so that our amazing hospitality sector can thrive and grow faster?
Victoria Atkins
I have a great deal of respect for the hon. Lady, but I must point out to her gently that we have, in fact, conducted that review. In the autumn statement, we were able to announce a £13.6 billion package of help over the next five years, including a multiplier freeze for all ratepayers, large and small; a transitional relief cap funded by the Exchequer; retail, hospitality and leisure relief; and a small business support scheme, which will help to cap bill increases at £600 per year for any business losing eligibility for some or all small business rate relief or rural rate relief at the 2023 revaluation. We have done that review and are supporting businesses that need help.
Alan Brown (Kilmarnock and Loudoun) (SNP)
David Duguid (Banff and Buchan) (Con)
The Exchequer Secretary to the Treasury (Gareth Davies)
Advanced economies around the world share the challenge of high inflation from the energy shock, and the UK has been affected by those global factors. The Government have taken significant action to help households with rising energy prices and the cost of living by providing a significant support package totalling £94 billion. That includes supporting households with energy bills by extending the energy price guarantee and removing the premium paid by 4 million households using prepayment meters. Overall, the Government have paid about half of a typical household bill since October 2022.
Alan Brown
Many people in the highlands and islands of Scotland will have had their taxes used to help pay for the construction of the gas grid, despite the fact that they are off the gas grid themselves and do not get the benefits of being connected to it. Their area supplies the oil and gas, and now the cheap renewable energy, that is facilitating lower energy bills across Great Britain, yet they are more likely to be fuel poor. To rub salt in the wounds, many pay a surcharge on their electricity bills. When will the UK Government address those inequities?
Gareth Davies
I would simply point out that across the United Kingdom we have provided extensive support, as I said in my answer to the substantive question. I am very happy to write to the hon. Gentleman with details on his specific point.
David Duguid
When the energy profits levy was introduced to help the Government’s support of household energy bills, I welcomed the investment tax allowance that was introduced along with it on new oil and gas for energy security. In recent weeks, I also welcomed the Exchequer Secretary’s announcement in Aberdeen of a price floor in the form of an energy security investment mechanism, at which the EPL will be removed. The devil, of course, will be in the detail. I welcome the Treasury’s ongoing engagement and dialogue with the oil and gas industry, but will the Minister commit to a regular, perhaps quarterly, fiscal forum with the industry, as used to happen prior to covid? Does he agree that Labour’s plans to ban all new oil and gas is based on ideology and not a pragmatic approach to this country’s energy security and net zero?
Mr Speaker
Order. The hon. Gentleman ought to put in for an Adjournment debate. It would be easier for all of us.
Gareth Davies
I can think of few better advocates for the oil and gas industry than my hon. Friend. I was very pleased to meet industry leaders and the chair of the oil and gas forum in Aberdeen recently. We had a very good discussion and I am grateful to the industry for its ongoing engagement with Ministers and officials. I can assure him that the Government are very committed to engaging with the oil and gas sector, as we have been doing for a long time.
Patrick Grady (Glasgow North) (SNP)
The Financial Secretary to the Treasury (Victoria Atkins)
As per my previous response to the same question by the hon. Gentleman in the last Treasury oral questions, I note that the UK has grown at a similar rate to comparable European economies since 2016, and that it still remains challenging to separate out the effects of Brexit and wider global trends on the UK economy. We remain absolutely committed to seizing the opportunities we now have, free from the EU.
Patrick Grady
That is very convenient. Only the UK has to deal with Brexit. Everyone has had to deal with covid and everyone has had to deal with Ukraine, but only the UK has had to deal with Brexit. That is why, according to the London School of Economics, customers have collectively paid nearly £7 billion extra in their food bills as a direct result of all the checks and frustrations that have come with Brexit. Is the Minister honestly saying that it was a good idea, and that it has not hurt the UK economy?
Victoria Atkins
Let me again gently remind the hon. Gentleman to look at what is happening in the rest of the EU. For example, the eurozone is suffering from the effects of mild recession. All this is due to the global headwinds that we are all facing. However, I know that the hon. Gentleman will be delighted by the recent growth upgrades from the Office for Budget Responsibility, the Bank of England and the OECD. We do face challenges, and of course we have to work with our global counterparts to try to deal with those global headwinds, but we are focusing very much on the Prime Minister’s priority of halving inflation, because that is what will make a real difference to our constituents.
Mr John Baron (Basildon and Billericay) (Con)
Does the Minister agree that, despite “Project Fear” forecasts, we have record employment, very low unemployment, good inward investment and trade deals in abundance? Perhaps the Scottish National party should focus on its poor record on the economy and, indeed, on financial transparency, and get over the fact that we have left the EU.
Victoria Atkins
May I take this opportunity to congratulate my hon. Friend on his recent honour, which is extremely well deserved? He has made his point very succinctly. We have an exciting future ahead of us—we are already signing trade deals with non-EU countries, and we have a fantastic deal with the EU—and it is now up to us to make a real success of it.
Peter Aldous (Waveney) (Con)
The Financial Secretary to the Treasury (Victoria Atkins)
The Government recognise the challenges facing households as a result of the elevated cost of living, and we took further action in this year’s spring Budget to provide targeted support to protect the most vulnerable. That included the new cost of living payments this year, help with the cost of essentials through a further extension of the household support fund in England, and the uprating of benefits in line with inflation in April this year.
Peter Aldous
One of the best ways of supporting those on lower incomes is to remove the barriers that prevent them from acquiring the new skills that are necessary for better-paid jobs. Will my hon. Friend confirm that the Treasury is working closely with the Department for Education and the Department for Work and Pensions to ensure that the Lifelong Learning (Higher Education Fee Limits) Bill gets rid of those obstacles, and can she provide an update on the progress of the Barber review?
Victoria Atkins
I know that you like Ministers to answer briefly, Mr Speaker, so, if I may, I will answer my hon. Friend’s first question now and respond in writing to his question about the Barber review.
My right hon. Friend the Chancellor made employment one of the four Es in his drive for growth in the spring Budget, and we are working closely with the Department for Education to invest in exactly the way that my hon. Friend describes. That includes investment in free courses for jobs, which enable people to study high-value level 3 subjects and gain free qualifications, and employer-led skills bootcamps in high-growth areas—a phrase that I never thought I would find myself uttering—which, apparently, involve sectors such as digital, and are available to those who are either unemployed or in work and wanting to retrain.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
Food banks, playgroups and warm spaces are among the services provided by mosques, temples, synagogues and churches for all our constituents to help them cope with the cost of living crisis, but many of the buildings are creaking and falling apart. Will Ministers consider extending Gordon Brown’s policy of VAT relief on building works for listed places of worship to all such places, to recognise their role in providing social good and to alleviate the pressure on multiple systems?
Victoria Atkins
I thank the hon. Lady for raising an important point. There has been an incredible outpouring of support across communities—not just in religious communities, but at village and town halls around the United Kingdom—in an effort to help people with the cost of living pressures that we face in the winter. The picture is quite complicated, but perhaps I can write to the hon. Lady with a fuller response to her question, because I want to do it justice and I know I will get in trouble with you, Mr Speaker, if I do so now.
Richard Burgon (Leeds East) (Lab)
The Chief Secretary to the Treasury (John Glen)
The Government are doing three things to reduce inflation. First, we remain steadfast in our support for the independent Monetary Policy Committee of the Bank of England as it takes action to return inflation to its 2% target. Secondly, we are making difficult but responsible decisions on tax and spending so that we do not add fuel to the fire. Thirdly, we are tackling high energy prices by holding down energy bills for households and businesses, alongside investing in long-term energy security.
Richard Burgon
The rich and powerful have repeatedly sought to blame workers for high inflation, even though workers’ real wages have been falling as inflation soars. Many leading economists now say that profiteering by certain corporations, not wages, is driving price rises. The French Government have taken action to limit food prices, and Spain has introduced rent controls. When will this Government start targeting the profiteering that is helping to drive inflation?
John Glen
We continue to have constructive dialogue with industry and different sectors. I met supermarket representatives a few weeks ago, and the Chancellor and others in the Treasury will continue to have these conversations. I think most people recognise that we face common global challenges and that different economies will respond in different ways.
Mr John Baron (Basildon and Billericay) (Con)
The Chancellor of the Exchequer (Jeremy Hunt)
We will not hesitate in our resolve to support the Bank of England as it seeks to strangle inflation in the economy, and the best policy is to stick to our plan to halve inflation. I also want to make sure that we do everything possible to help families paying higher mortgage rates in ways that do not themselves feed inflation, so later this week I will be meeting the principal mortgage lenders to ask what help they can give to people who are struggling to pay more expensive mortgages and what flexibilities might be possible for families in arrears.
Mr Baron
Despite being the gateway to most financial services in the City, I suggest that the London stock exchange is ailing, with CRH and Arm being the latest canaries in the coalmine. While welcoming the Edinburgh reforms, what further consideration has the Chancellor given to my suggestion that tax incentives be introduced to encourage our British pension funds—the big beasts—to invest more in UK equities, given that, since the financial crisis of 2008-09, they have reduced their exposure to equities by 90%, unlike in most other developed economies?
Jeremy Hunt
My hon. Friend always speaks extremely wisely on financial matters, and he is absolutely on the money when he talks about the opportunity that would present itself by unlocking £3 trillion of pension fund assets, many of which would get a better return for pensioners if they were invested more in our high-growth businesses, as well as that being a good outcome for the London stock market. All I will say is: watch this space.
Rachel Reeves (Leeds West) (Lab)
While the Government squabble over parties and peerages, mortgage products are being withdrawn and replaced by mortgages with much higher interest rates. This is a consequence of last year’s Conservative mini-Budget and 13 years of economic failure, with inflation higher here than in similar countries. Average mortgage payments will be going up by a crippling £2,900 this year, so where does the Chancellor think families will get the money to pay the Tory mortgage penalty?
Jeremy Hunt
At the autumn statement, we announced £94 billion of support to help families going through very difficult times. That is more support than was ever proposed by Labour. The answer to these pressures is not borrowing an extra £28 billion a year, as people like Paul Johnson are saying that more borrowing means higher inflation, higher interest rates and higher mortgage rates.
Rachel Reeves
Is the Chancellor for real? These are the real-life consequences of what is happening under the Conservative Government today, so do not try to pass the buck.
Let me bring this home. In Selby and Ainsty, 12,000 households will be paying, on average, £2,700 more on their mortgage. In Uxbridge and South Ruislip, 10,000 households will be paying, on average, £5,200 more. Each and every family know who is responsible for trashing the economy: the Conservative party. Will the Chancellor apologise for the harm that his Government have caused with the Tory mortgage penalty?
Jeremy Hunt
I am proud of our economic record, which has seen our economy grow faster than those of France and Japan since 2010, and at the same rate as Germany. Those mortgage holders in Selby, Uxbridge or Mid Bedfordshire will be paying even more for their mortgages if a Labour Government borrow £100 billion more in the next Parliament, and we will not let that happen.
Craig Tracey (North Warwickshire) (Con)
The Economic Secretary to the Treasury (Andrew Griffith)
I can give my hon. Friend the assurance he seeks. He will know from his significant contribution to the Financial Services and Markets Bill as it has gone through this House that it introduces a new duty on our financial regulators to promote the growth and international competitiveness of the United Kingdom. Thanks to him, the Bill also contains specific reporting measures as to how they are going to achieve that important objective.
Ian Byrne (Liverpool, West Derby) (Lab)
Jeremy Hunt
I will be happy to write to the hon. Gentleman to talk to him about that initiative. We are making great progress in our schools—we have risen to fourth in the global league table for reading—but we can always do more.
Sir David Evennett (Bexleyheath and Crayford) (Con)
Jeremy Hunt
My right hon. Friend is absolutely right; the answer to inflation is to tackle it, not to make it worse.
Ian Lavery (Wansbeck) (Lab)
Jeremy Hunt
We understand the pressures that families are going through up and down the country, but we have responded with generous support this year and last of more than £3,000 for the average household. Not only that, but since 2010 the number of children in absolute poverty has fallen by 400,000.
Theresa Villiers (Chipping Barnet) (Con)
The Chief Secretary to the Treasury (John Glen)
Controlling public spending and ensuring that the interventions we are making prioritise growth enablement is a relentless activity. The household support fund of £2.5 billion continues to be an additional source of support for households, but there are no quick fixes; there is a relentless pursuit of the goals that we have set out at the start of this year.
Chris Elmore (Ogmore) (Lab)
Jeremy Hunt
With respect to the hon. Gentleman, he should get his facts right before making that kind of suggestion. He got them wrong.
Anna Firth (Southend West) (Con)
In-person banking facilities are vital to everyone in Southend West, yet in recent years we have lost all but one of our bank branches. A new community-based post office banking hub model is being rolled out, so will the Minister support my efforts to get one of those into Leigh-on-Sea?
Andrew Griffith
I thank my hon. Friend for her question. She will be aware of what is in our Financial Services and Markets Bill, and I can update the House by saying that the Government have tabled an amendment to protect free access to cash withdrawal and deposit facilities. I would be happy to meet her to discuss her constituency’s needs.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
John Glen
As the right hon. Gentleman knows, the farming support payment is ported to Scotland and operates on a different basis because it is devolved. We have committed to the sum of £2.4 billion for the duration of this Parliament and there are a number of schemes where the uptake is now increasing. I will continue to engage with my colleagues at DEFRA as those schemes develop further.
Mary Robinson (Cheadle) (Con)
The last bank in the entire constituency of Cheadle is about to close, so I was delighted when, following my interventions and direct conversations with LINK and appeals from the community, Bramhall was chosen to be LINK’s 100th banking hub recommendation. It will be invaluable for residents, but they will be left without banking services until it is open. Will the Minister look into bridging options in the interim, between the bank closing and the hub opening, or consider imposing requirements on banks to remain open until a hub is implemented?
Andrew Griffith
I would be happy to meet my hon. Friend to talk about the range of options. I am delighted about the solution proposed for Bramhall, in her constituency. Last week, I visited the new banking hub in the constituency of the hon. Member for Ealing Central and Acton (Dr Huq). I hope the whole House will wish the operator, Vip Varsani, well in that new endeavour.
Sir Chris Bryant (Rhondda) (Lab)
For the first time in my 20 years as an MP we have a real housing crisis in the Rhondda. Two thirds of people own their own homes, but lots of people who have relied on the commercial rented sector are finding that landlords are selling their properties because of decisions made about taxation and, because there is a cap on housing benefit, they do not want to continue in that market. Dozens of people are being evicted week in, week out. Will the Government look closely at what is happening to protect people in constituencies such as mine, so that they can keep their own homes?
John Glen
I am happy to meet the hon. Gentleman to discuss what is happening in his constituency. Obviously, there have been a series of changes since the section 24 change in the Finance Act 2015 and there are particular pressures in the housing economy at the moment, but I am happy to meet him to discuss that further.
Matt Hancock (West Suffolk) (Ind)
I welcome the work that the Chancellor and the Prime Minister have done to promote work on artificial intelligence done here, and in developing an ecosystem for that. It is clear that the UK has an opportunity to lead on this, especially on regulation, if we get it right, but only if we seize that opportunity now. What is the Chancellor doing to make that happen?
Jeremy Hunt
My right hon. Friend is right to say this is a big opportunity. We are home to a third of Europe’s AI start-ups, but we are very aware of the risks of AI. The Government are hosting a global AI summit, with the support of President Biden, this autumn, to ensure we get that regulation absolutely right.
Sammy Wilson (East Antrim) (DUP)
Quite rightly, this Question Time has been dominated by questions about inflation and the cost of living. One policy that has not been mentioned is the Government’s net zero policy and the inflationary costs included in it, from green levies of £12 billion to the cost of strengthening the infrastructure and the favourable treatment given to renewable energy firms. While the Minister may condemn the Labour party for its £29 billion green policy spending plan, what is the cost of the Government’s net zero policies to consumers? Are they not picking their pockets dry?
The Exchequer Secretary to the Treasury (Gareth Davies)
We have a world-leading track record on net zero, but we must balance that correctly with who bears the cost. Critical to the nature of the right hon. Gentleman’s question is mobilising more private capital, and we are making great strides on that front.
Peter Gibson (Darlington) (Con)
Can my hon. Friend update the House as to when we will see spades in the ground on the Brunswick site in Darlington for the Darlington economic campus?
Gareth Davies
My hon. Friend is a great champion of Darlington, and Darlington’s economic campus is a critical part of levelling up. The Government Property Agency has been working hard to finalise commercial negotiations. I would be happy to write to my hon. Friend when I have a more substantive update.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Ever-increasing food prices mean that some families are having to cut down on the amount they eat. Will the Minister support Labour’s plan to negotiate a new veterinary agreement for agriculture products to reduce the cost for food producers and bring down those crippling food prices?
Jeremy Hunt
We will always look at Labour policies, but they are normally not right.
Alun Cairns (Vale of Glamorgan) (Con)
Clear policy direction and a strong regulatory framework have led to the UK being the world’s leading centre in financial technology. Does my hon. Friend agree that the crypto industry offers the same opportunity for the UK to exploit?
Andrew Griffith
My right hon. Friend is absolutely right. I was pleased to join him in a Westminster Hall debate about the regulation of the cryptoassets sector. I commend the work done in this House by the crypto and digital assets all-party parliamentary group. He might join me in welcoming the decision by Andreessen Horowitz, one of the world’s largest technology companies, to locate its only international office outside of San Francisco here in the UK and to run its 2024 cryptoassets school here.
Clive Efford (Eltham) (Lab)
In 2016, Exercise Cygnus tested the country’s preparedness for a pandemic. Was the Government’s response at that time adequate, and what can the Chancellor do in his current role to make sure that we are properly prepared in the future?
Jeremy Hunt
I am looking forward to answering questions about that tomorrow afternoon at the covid inquiry. We did what was recommended following Exercise Cygnus. Certainly, Ministers did what they were advised to do, but the operation was focused on pandemic flu. The question that we must ask ourselves is why we did not have a broader focus on the different types of pandemic that could have happened, such as covid.
Daisy Cooper (St Albans) (LD)
The Government’s business rates review last autumn was anything but fundamental, because it did not even look at the calculations for fair and maintainable trade, which are hammering the viability of pubs in St Albans. If the Chancellor has in fact abandoned his commitment for a fundamental review of business rates, which he himself called for last summer, will he at least look at the calculations for fair and maintainable trade before any more of our valuable pubs have to close?
The Financial Secretary to the Treasury (Victoria Atkins)
We conducted a review and put in place the £13.6 billion package of support to help businesses on our high streets. If the hon. Lady is able to look at, for example, the multiplier freeze, she will see that that has had a significant impact on those rates, as has the retail, hospitality and leisure business rates relief, which will help raise the rate of relief from 50% to 75%. We have targeted this very carefully at exactly the businesses that she mentions.
Patrick Grady (Glasgow North) (SNP)
The Chancellor was shaking his head during my question earlier on, so will he say whether he accepts the findings from the Centre for Economic Performance at the London School of Economics that shows that Brexit is responsible for a third of UK price inflation since 2019? Regulatory sanitary checks and other border checks added almost £7 billion to total domestic grocery bills over the period from December 2019 to March 2023. Does he accept that?
Ugandan School Attack
(10 months, 3 weeks ago)
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Jim Shannon (Strangford) (DUP)
(Urgent Question): To ask the Minister of State, Foreign, Commonwealth and Development Office to make a statement about the attack on the Lhubiriha Secondary School in Uganda on 16 June.
The Minister of State, Foreign, Commonwealth and Development Office (Mr Andrew Mitchell)
At the outset, I thank my friend the hon. Member for Strangford (Jim Shannon) for raising this important matter and for his courtesy in taking the trouble to inform my office.
On Thursday 16 June, there was an horrific and cowardly attack on Lhubiriha secondary school in Mpondwe in western Uganda, which borders the Democratic Republic of Congo. The Government of Uganda have confirmed that 42 people were killed, of whom 37 were students from the school. Six people were injured. There are also reports that a further five to seven people, which may include children from the school, were abducted. The Ugandan authorities believe that the perpetrators are from the Islamic State-affiliated armed group the Allied Democratic Forces, or ADF, which operates in the DRC. The Ugandan military is pursuing the attackers. Those responsible for the attack must be brought to justice.
I issued a tweet on 17 June expressing my horror at the attack, which took the lives of so many innocent schoolchildren. My condolences go out to all the victims and to their families. The British Government strongly condemn this attack. We have confirmed that no British nationals were caught up in the attack. In response to the attack, the Foreign Office updated its travel advice for Uganda on 17 June with a factual update. The British high commissioner in Kampala issued a tweet sending her condolences to all those affected and the British high commission in Kampala remains in close touch with the Ugandan authorities.
Jim Shannon
First of all, I thank the Minister very much for his response. He encapsulates our horror and our concerns. I also thank him for his obvious interest, which we know he has anyway, but which he has proven today. I am sure the whole House will join me in expressing our deepest sorrow and sympathies for the victims of Friday’s abhorrent attack.
I want to put on record the full magnitude of what occurred. On Friday 42 people, including 37 students, were killed when militants from the ADF, affiliated with IS Central Africa Province, attacked the Lhubiriha secondary school. Some victims were murdered with machetes, while others were killed in their dormitories when terrorists threw bombs and set the building alight after students had barricaded the doors to try to protect themselves. Six additional students were kidnapped to carry loot stolen from the school and it is estimated that some of those may be some young girls and ladies.
The effect of this act of terror is clear: many of the town’s residents have fled since the attack, and yesterday schools across the region were empty, as teachers and students feared turning up. While IS Central Africa Province has yet to claim the attack, that is not unusual, and the attack carries all the hallmarks of ISCAP. Moreover, it is part of a trend of escalating attacks by the group, targeting Christian villages in the DRC since March, resulting in some 400 deaths. This attack in Uganda spells an alarming development.
The attack is part of a wider trend of violence against Christian and religious minority communities stretching across central Africa, including attacks from Daesh, Boko Haram and Fulani militants in Nigeria and intentional targeting of places of worship by al-Shabaab in Somalia, Kenya and Ethiopia.
I want to ask the Minister four questions. First, what steps can the Foreign, Commonwealth and Development Office take to help recover those who were kidnapped? Secondly, what scope is there in the current UK aid budget to provide emergency relief to displaced communities and help to create a safe environment for schools to reopen? Thirdly, when was the latest joint analysis of conflict and stability assessment carried out for the region by the FCDO, and does it reflect the current threat from IS Central Africa Province to Christians and minority communities? Fourthly, what can we do to prevent future attacks?
Mr Mitchell
The hon. Gentleman sets out the position extremely well. He asks me a number of questions. First, in respect of the aid budget, Britain has a significant partnership with Uganda, which last year was in the order of £30 million. That is spent principally on humanitarian and reproductive health-related issues, but we always keep the humanitarian situation under review and we will continue to do so in this specific case. He asks me about the latest JACS report; it is not recent, but I can tell him that before these horrific events we were looking at commissioning another one and we will pursue that. In respect of what more Britain can do, we are in very close touch with the Ugandan authorities and will do everything we can to help them.
Alicia Kearns (Rutland and Melton) (Con)
I congratulate my very good friend the hon. Member for Strangford (Jim Shannon) on securing the urgent question. My condolences go to all those parents who are suffering unimaginable horror and fear. The abduction of children is cowardly in the extreme, and I am sure that the Minister is doing all he can to exert pressure to bring those six children home to their families.
The Foreign Affairs Committee is gravely concerned about the current situation. We have launched an inquiry into counter-terrorism so that we can look at the position in countries such as Uganda. We are aware of links between the Allied Democratic Forces and Daesh. Will the Minister please explain what we are doing to discourage any engagement with the Wagner Group? Increasingly, too many African countries are turning to the Wagner Group in a misplaced effort to counter the rise of organisations such as Daesh. Will the Minister also explain what we are doing to tackle border insecurity between Congo and Uganda? The situation is grave.
Mr Mitchell
I thank my hon. Friend the Chair of the Foreign Affairs Committee for what she has said. On her third point, I make it clear that we work closely together on counter-terrorism and regional security, which is a shared priority.
On my hon. Friend’s first point, she is right: this was a horrendous attack on young people and students. A fire bomb was thrown into the male student dormitory, and six and possibly as many as 12 mostly female students appear to have been abducted. Two others, who were taken to a nearby health centre, died owing to a lack of blood supplies. My hon. Friend was right to emphasise the cohort that has suffered so much.
On the disorder at the border, we give strong support to the Luanda and the Nairobi peace processes, which are designed to try to do something about the disorder in the eastern DRC, of which I know my hon. Friend is well aware.
Ms Lyn Brown (West Ham) (Lab)
I am grateful, Mr Speaker. I thank the hon. Member for Strangford (Jim Shannon) for securing the urgent question.
Forty-two people are dead, including 37 children, and students remain in terrible danger after being abducted. I struggle to understand the mentality of anyone who deliberately seeks to murder children. The Opposition, and I know the whole House, stand in solidarity with the people of Uganda in their grief.
Last month, the shadow Foreign Secretary and I discussed these issues with His Excellency the Ugandan Minister of Foreign Affairs. Insecurity in the region is a serious threat to many lives. It is also a threat to sustainable development, and to UK interests. Sadly, it lacks the international attention that it deserves.
The ADF is responsible for frequent massacres and brutality in DRC. It seems most likely that it is responsible for this atrocity too. The security situation could grow still more complex as elections in DRC approach this December. May I press the Minister on what plans the Government have to update our sanctions on the ADF? Is he confident that he has the right resources to map illicit financial flows? Do we understand where we have leverage over those who support the ADF and other armed groups in the area?
How are we engaging with the African Union, the East African Community and the Southern African Development Community to support consensus against insecurity among regional states? The ADF and hundreds of other armed groups that terrorise the region must be held to account. Surely the Government must update our offer of support, in solidarity with the people of Uganda.
Mr Mitchell
The hon. Lady makes several important points, and I thank her for the tone and content of her comments. She asked a number of questions. We are in very close touch with the African Union and the SADC. I should emphasise that Uganda has designated the ADF a terrorist organisation, and the Ugandan defence forces are tracking the perpetrators, as the President has made clear.
The hon. Lady asked about illicit financial flows. She will know from the “Integrated Review Refresh” that tackling those flows of stolen and dirty money is a high priority for the Prime Minister. We are actively engaged in working out how we can do more on that front.
Finally, on the processes that Britain is engaged in supporting, the Nairobi process, to which we have provided funding, is a very important aspect of how we bring some sort of order to the eastern DRC, which, as the hon. Lady implied and knows well, is a source of enormous worry to all the surrounding countries, as well as to us and many others.
Vicky Ford (Chelmsford) (Con)
I thank my good friend, the hon. Member for Strangford (Jim Shannon), for securing this urgent question. I have visited schools in Uganda. They should be happy and safe places. This is yet another tragedy. I am concerned about rising violence throughout the region. Since the war started in Sudan, there have been ominous reports of waves of ethnic violence in El Geneina in Darfur. It may be that the Rapid Support Forces are rekindling genocide in Darfur. Genocide has happened there before, and it may be happening again.
It is incredibly important that the international community keeps shining a spotlight on this and that we break this culture of impunity, because when one violent organisation thinks it can get away with it in one part of Africa, another violent organisation thinks it will get away with another atrocity in another part of Africa. Will my right hon. Friend agree to meet members of the UK’s Darfur community who are desperate to tell people what is going on there so that they can whistleblow on what might be genocide again?
Mr Mitchell
My right hon. Friend will know that I have met recently with the Darfur community, but things have changed since that meeting, so I take on board her final point. She also made a point about the war in Sudan, which means there is the possibility—perhaps the likelihood—that this area of disorder, conflict and humanitarian disaster could stretch from the middle east right the way down to southern Africa. She is completely right about that.
My right hon. Friend is also right to say that impunity must not be allowed to stand on this or any other violent acts. The Ugandans are pursuing the perpetrators. The Ugandan commander-in-chief of land forces has been to the area and was joined by the commander of Operation Shuja, which is the Ugandan deployment in the eastern DRC specifically to combat the ADF. I hope that that, in part, answers her question.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
This is a shocking terrorist crime, and I put on record my party’s condolences to the families of those murdered in this horrific attack. I congratulate the hon. Member for Strangford (Jim Shannon) on bringing attention to this crime, which has had too little of that.
The people who carried out this atrocity are not an unknown group. They have already been proscribed as a terrorist organisation by Uganda and the United States of America. When will the UK Government finally join those countries in proscribing them too? What will the UK Government do to support Uganda in response to this attack and to the ongoing threats that clearly exist there?
Lasting solutions can only be achieved by Governments in this region with outside support investing in peacebuilding and civic society building. Military cannot be the only option, so does the Minister agree that it would be a mistake to continue cutting aid in the sub-Saharan area and, indeed, worldwide?
Mr Mitchell
On the hon. Gentleman’s final point, we are deploying very large amounts of British taxpayers’ money in the area, as he suggests, and we are ensuring that we are light on our feet and using that to good humanitarian effect. If he looks at some of the programmes I have announced recently, he will see that they directly affect the humanitarian position, particularly for girls and women.
In respect of what Britain is doing to try to ensure greater security in the eastern DRC and on the border to which the hon. Gentleman refers, although we never discuss proscription and other security measures in advance, he may rest assured that the British Government are fully engaged, not least through the Nairobi peace process, in doing anything that we can to bring back stability to this very troubled part of the world.
Mary Robinson (Cheadle) (Con)
I thank the hon. Member for Strangford (Jim Shannon) for bringing this really important question before the House. It is a dastardly and awful attack—it is desperate—and the people living along that border will be fearful for their lives and living with a heightened sense of fear and danger. Could my right hon. Friend set out what measures we are taking across that border between Congo and Uganda to help those people who are living in fear every day?
Mr Mitchell
Britain has been heavily engaged through both the Luanda and the Nairobi peace processes in trying to tackle that very problem, and we will continue that engagement until we are finally successful.
Sammy Wilson (East Antrim) (DUP)
I also congratulate my hon. Friend the Member for Strangford (Jim Shannon) on securing this urgent question. I know that he has been diligent in highlighting these issues, as have so many organisations—such as Open Doors—that have also highlighted the persecution of Christians and other minority religious groups across the world. I chide him in just one way: do not fall into BBC-speak. These people are not militants, but terrorists. They are terrorists who have blood on their hands and engage in the cruellest activities to promote their cause.
May I ask the Minister two questions? First, we have a foreign aid budget, and this is not just about Uganda, but Nigeria and other parts of central Africa where these occurrences are happening almost daily. How can our aid budget be targeted in such a way as to help those who are victims or potential victims? Secondly, it seems that some Governments—either because they do not have the resources or do not have the willpower—are not pursuing these terrorists in the way they should. What discussions has the Minister had to ensure that those Governments take action where possible, and get help from our own Government in doing so?
Mr Mitchell
On the right hon. Gentleman’s last point, as I said, the Ugandan commander-in-chief of land forces has been there, and the Ugandan army is pursuing the perpetrators. The right hon. Gentleman added very eloquently to the statement and comments of our hon. Friend the Member for Strangford, and I very much agree with what he says. On how the British development budget is spent, we spend a great deal of time and taxpayers’ money on trying to stop conflicts from starting, stopping them once they have started, and reconciling people once they are over. That is the aspect of the budget to which he was referring, and I think it is very effective and gives very good value to the British taxpayer.
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
I congratulate the hon. Member for Strangford (Jim Shannon) on tabling this urgent question on a topic that I know he is passionate about. We learned from Michela Wrong’s excellent article in a recent issue of Foreign Affairs how the M23 paramilitary organisation, which is actively destabilising areas of both the DRC and Uganda, has been given direct economic and military aid supported by the Rwandan Government in a deliberate strategy of President Paul Kagame, similar to that which they abandoned under pressure in 2012. Given the leverage that this Government now have with that regime, what assurances has the Minister—who I believe is an admirer of President Kagame—sought from the Rwandan Government that they will respect the sovereignty of their neighbours in the region, lest we provoke a wider humanitarian crisis in the great lakes?
Mr Mitchell
I expect to see the Foreign Minister of Rwanda within the next 24 hours, and I will say to him what we say to all of those who are engaged in fighting, profiteering or causing human misery in the eastern DRC: that we urge everyone to be part of the Nairobi and, indeed, the Luanda peace processes. We urge everyone to lay down their weapons and allow a peace process, which can also ensure that humanitarian aid reaches people who desperately need it.
Cost of Living Support
(10 months, 3 weeks ago)
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The Minister for Disabled People, Health and Work (Tom Pursglove)
With permission, Mr Speaker, I will make a statement on the progress of delivery of cost of living support.
The Government understand the pressures that households face in the current climate. We are all familiar with the global factors that are the root causes of costs being higher, including President Putin’s illegal war in Ukraine and the aftermath of the pandemic. We are committed to delivering on our priority to halve inflation, which will help ease those pressures for everyone and raise living standards.
Alongside that important work, we continue to implement our wide-ranging and significant package of cost of living measures to support the most vulnerable during 2023 and 2024. We have increased benefits and state pensions by 10.1%, and increased the benefit cap by the same amount so that more people are helped by the uprating. For low-paid workers, we have increased the national living wage by 9.7% to £10.42 an hour. That represents an increase of more than £1,600 to the gross annual earnings of a full-time worker on the national living wage. That increase, and the increases we made to the national minimum wage in April, have given a pay rise to about 2.9 million workers.
To help parents, we are undertaking a significant expansion of childcare, including a rise, later this month, of nearly 50% in the maximum amount of childcare payments for people on universal credit. For the most vulnerable, the £842 million extension of our household support fund into 2023-24 means that councils across England can continue to help families with the cost of groceries, bills and other essentials. Taking into account the extra money that we have provided through Barnett funding for Scotland, Wales and Northern Ireland, who can decide how they allocate that money, we have committed an extra £1 billion. That is on top of what we have provided since October 2021, and brings total funding to £2.5 billion.
With energy bills being one of families’ biggest worries, the energy price guarantee will also remain in place as a safety net until the end of March 2024, should energy prices increase significantly during that period. Since that energy bills support began in October 2022, the Government have covered about half of a typical household energy bill this past winter, and by the end of June will have saved a typical household around £1,500. We are also building on and extending the one-off cash payments we provided during 2022-23 that saw us make more than 30 million cost of living payments, including a £150 disability cost of living payment to 6 million people, up to £650 for more than 8 million households on means-tested benefits, and an additional £300 on top of the winter fuel payment for more than 8 million pensioner households. Those payments put hundreds of pounds directly, and at pace, into the pockets of millions of people.
However, we recognise that cost of living pressures continue, particularly for the most vulnerable households. That is why we continue to provide targeted support to help those most impacted by rising prices throughout this financial year, including more support for people on means-tested benefits such as universal credit, with up to three cost of living payments totalling up to £900. The Government have already delivered the first £301 payment to 8.3 million households—support worth £2.5 billion. The two further payments of £300 and £299 will be made in the autumn and the spring, and pensioner households will get an additional £300 on top of their annual winter fuel payment this winter, as they did last year.
I am pleased to be able to confirm to the House that from today, to help with the additional costs that disabled people face, more than 6 million people across the UK on eligible extra-costs disability benefits will start to receive a £150 disability cost of living payment. Those cash payments, which we estimate will be worth around £1 billion, will be automatically transferred into people’s bank accounts, with those eligible for the support not needing to take any action. By the end of Monday 26 June, we plan to have made 99% of payments to those already eligible—that is millions of payments being made in just seven days. Most remaining already eligible people will receive their payment by 4 July. We estimate that nearly 60% of individuals who receive an extra-costs disability benefit will also receive the means-tested benefit cost of living payment, and more than 85% will receive either of, or both, the means-tested pensioner payments.
This Government will always protect the most vulnerable, but we are also helping to improve living standards for everyone by getting more people into, and progressing in, better-paid jobs. That is the surest and most sustainable way to raise incomes and grow the economy. The number of people in employment has increased to a record high, but by removing the barriers that stop people from working, we are reducing the number of people who are economically inactive—those who are neither working nor actively looking for work. It is encouraging that last week’s labour market statistics show a further fall in inactivity of 140,000, or 0.4%, on the quarter.
We are tackling inflation to help to manage the cost of living for all households and providing extra targeted support for those that need it. The disability cost of living payments, landing in millions of bank accounts from today as part of our wider support package, underline our commitment to supporting disabled people. That is reflected in how we are stepping up our employment support for disabled people and people with health conditions; ensuring people can access the right support at the right time and have a better overall experience when applying for and receiving health and disability benefits; and transforming the health and disability benefits system so that it focuses on what people can do, rather than on what they cannot. It is also reflected in the fact that we expect to spend over £78 billion in 2023-24 on benefits to support disabled people and those with health conditions, which is 3.1% of GDP.
With the Government’s significant package of cost of living support, worth over £94 billion in 2022-23 and 2023-24, we are ensuring that those most in need are protected from the worst impacts of rising prices, putting more pounds in people’s pockets and providing some peace of mind to the most vulnerable in society.
Jonathan Ashworth (Leicester South) (Lab/Co-op)
I thank the Minister for advance sight of his statement, but let us be clear: he has come to the House today and is asking us to congratulate him on this payment when, after 13 years, the number of disabled people living in poverty is up by over 1 million. He is asking us to congratulate him on this payment when, almost every day now, we hear stories of disabled people cutting back on hot meals, showers and washing their clothes, because otherwise they would not be able to afford to use the equipment that helps them get by in life. He is asking us to congratulate him when, after 13 years of Conservative Government, child poverty is up by 600,000 and pensioner poverty is up by 400,000. He is asking us to congratulate him when we have a cost of living crisis now so severe that the Joseph Rowntree Foundation today reports that nearly 6 million of the poorest households are forced to skip meals and 7 million of the poorest families are going without food, heating or even basic toiletries.
The Minister talks about employment, but there are 2.5 million people out of work for reasons of sickness or disability. The working-age disability benefit bill is going to go up to around £25 billion, but many people out of work want to work. That is why we proposed an “into work guarantee” welfare reform to help people to move off sickness benefits and into work. Instead of offering help now to people out of work, the Government are actually cutting disability employment advisers by 10%. Because the Government are failing to do their part in helping to tame inflation, disabled people in work and families are seeing the value of their wages ravaged by inflation. In fact, the value of this disability payment is worth £5 less in real terms than when the Chancellor announced it in the autumn statement because of inflation.
The Government are failing to play their part in helping to tame inflation. When combined with them running the economy off the cliff last autumn, policies that led to turmoil on the markets and a run on pension funds, that means that thousands of disabled people, thousands of working families and even pensioners are living in fear of the letter they will soon be getting this year telling them it is time to remortgage. Disabled people and families are facing hundreds or indeed thousands of pounds more on their refinanced mortgage over the coming years, with 1.3 million homes this year collectively paying £10 billion extra on mortgages—a Tory mortgage premium. Disabled homeowners and families are paying the price—literally paying the price—for 13 years of Tory economic failure. So my question is very simple: when so many disabled people and so many families are facing more on their mortgage because of decisions taken by this Government, how on earth does the Minister expect them to cope?
Tom Pursglove
I obviously appreciate the shadow Secretary of State taking the time to come to respond to this statement today. On the fundamental point of supporting people properly, I do not think that there is disagreement between us. We disagree on the detail of this and I think it is substantial and significant that, as I set out earlier, we are providing £94 billion of comprehensive cost of living support to people over 2022-23 and into 2023-24. That is structured support that is hitting people’s bank accounts in the way I have described, including the latest tranche of support through the disability cost of living payment, but there is also the discretionary support that can be provided through local authorities to meet the needs that exist, where they do not necessarily neatly fit into those structured support packages. That is significant support and he should welcome it.
I was very interested to hear what the shadow Secretary of State had to say about our employment-related measures. I would be absolutely delighted if he were to come forward and welcome the structural reform that this Government are determined to make to help to support more disabled people and people with health conditions into work, removing the jeopardy they feel around the benefit system to smooth that journey.
There is also the tailored support that we want to provide alongside that to improve the journey through the system and to unlock people’s aspirations—namely, universal support, that tried and tested supported employment model through individual placement and support in primary care in the first year, but growing beyond that. That is welcome support that will identify people’s needs and support them on a case-by-case basis to meet those objectives, with of course all the benefits that that brings, as well as keeping people well in work.
The Work Well partnerships are building capacity alongside NHS services. They are meaningful interventions on the supply side that this Government are making, and I think they are to be welcomed. It would have been nice for him to welcome the structured and more permanent support that we want to provide to help people to live more fulfilling lives, with employment at the heart of that.
The shadow Secretary of State also said, effectively, that the United Kingdom stands alone in these challenges. That is absolutely not the case. I was at the United Nations last week representing our country and it is fair to say, from many of the conversations I had with others, that the challenges we are facing are repeated in their countries—not just in Europe, but much further afield. For example, in the US, the Federal Reserve has increased rates at the fastest pace since the 1980s and in Europe interest rates are at their highest level in more than two decades. What we will do is take a responsible approach. The Chancellor of the Exchequer set that out in questions just now. What we will not be doing is making unaffordable spending pledges that will simply lead to higher rates in the long term. That is not the way to address these issues effectively.
On the specific issue of mortgages, again, we must not do anything that only fuels the challenges that households face. We have made a number of changes, including through support for mortgage interest and the scheme around that. For example, from April this year, claimants can be eligible for SMI from three months instead of nine. We have also abolished the zero earnings rule to allow claimants to continue receiving support while in work and on UC. The interest rate we pay is based on the Bank of England-published average mortgage rate, which increased from 2.09% to 2.65% on 10 May 2023. We of course continue to have important and receptive engagement with lenders about that support.
What is clear is that the Opposition have either no plan or an uncosted plan. The latter would simply fuel inflation and make matters worse. In contrast, what we will get on and do is provide the support that we have outlined, which is comprehensive and is meeting people’s needs, but of course we keep that package under constant review. We are also focused on our fundamental mission, which is to bring inflation down in the way we have described.
Sir Jake Berry (Rossendale and Darwen) (Con)
I congratulate the Minister on what is a meaningful package, which particularly will be of help to disabled constituents of mine in Rossendale and Darwen, but will he accept that the measures that put money back in people’s pocket when they rely on benefits will not dent the challenges people are facing when it comes to their mortgage going up by hundreds of pounds a week or a month? Will he talk to his friends at the Treasury about reintroducing mortgage interest relief at source, which is a true Conservative way of tackling the cost of living crisis by cutting taxes and putting money back in the pockets of the squeezed middle?
Tom Pursglove
My right hon. Friend is trying to tempt me to make commitments on behalf of the Treasury today that of course I am not able to do, but what I am able to do is ensure that the point he has made in this debate is relayed to Treasury colleagues. Again, there are ongoing conversations being had involving the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Mid Sussex (Mims Davies), who leads on housing within the Department for Work and Pensions, and colleagues in the Department for Levelling Up, Housing and Communities, for example, around some of the challenges that people are facing with housing. She is working proactively on this, along with colleagues elsewhere.
David Linden (Glasgow East) (SNP)
I too thank the Minister for advance sight of his statement, although in reality it is a nine-page press release rehash of previous Government announcements. The only new thing today is the £150 disability payment. Will the Minister reflect on the excellent report from Scope, “Disability Price Tag 2023: the extra cost of disability”, which shows that, on average, disabled households have expenditure that is £975 higher per month? We know that, for example, as a result of specialised diets, higher transport costs, higher energy costs and higher insurance premiums, there is a cost to disabled people.
Unfortunately, the Government do not have a good record when it comes to disabled people, particularly the 2.5 million legacy benefit claimants who were so cruelly overlooked during the pandemic and did not get the equivalent of the £20 uplift. I welcome the £150, but I ask the Minister to reflect on the wise words of Scope, which says that that will not touch the sides. To that end, as the Government are not quite getting this, may I invite the Minister to come to Glasgow to meet me and the Glasgow Disability Alliance, where he will hear the message, loud and clear, that this simply does not go far enough and that far too many people are going to struggle unless the Government up their game?
Tom Pursglove
The key point I would make, which I set out in my introductory statement, is that there is a significant alignment; people receiving the disability cost of living payment are also receiving various other parts of the support package. Eight-five per cent of those who qualify for the disability cost of living payment are also receiving a mean-tested or the pensioner cost of living payment. They are receiving various parts of the package of support. We continue to keep those matters under constant review, as Members would expect. I have a meeting later today with a Minister in the Scottish Government and no doubt matters relating to the cost of living will come up. As a Minister in the Department for Work and Pensions, I am committed and determined to visit all parts of the United Kingdom and I will take away the hon. Gentleman’s suggestion about where I might go.
Bob Stewart (Beckenham) (Con)
Can I re-emphasise the point made by my right hon. Friend the Member for Rossendale and Darwen (Sir Jake Berry)? Huge numbers of constituents are coming to me about the mortgage changes. They are absolutely terrified. I know that the Government are doing all they can, but can I ask them to redouble their efforts because this is going to have a huge impact on the cost of living?
Tom Pursglove
I thank my right hon. and gallant Friend for his question. This is a significant issue in his constituency and a challenge in constituencies across the country. Ministers across the Government are mindful of it. It draws focus back to the key, overarching mission of this Government and the economic plan that the Chancellor and Prime Minister are advancing. That is why it is so critical that we tackle the inflationary pressures. We must not add to those inflationary pressures. If we can deal with that root cause, that is the best way to help people in that situation.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the Chair of the Work and Pensions Committee.
Sir Stephen Timms (East Ham) (Lab)
The cost of living payments have made a vital contribution to millions of families in supporting people through the current crisis and I welcome the contribution they have made. However, the need for them does reflect, particularly following the removal of the £20 a week uplift from universal credit, the historically low headline level of benefits—at the moment, in real terms, the lowest for 40 years. What consideration are the Minister and his colleagues in the Department giving to consolidating those occasional one-off payments into the mainstream benefits— universal credit and the rest—so that people can budget with confidence, week by week?
Tom Pursglove
The right hon. Gentleman will recognise that my right hon. Friend the Secretary of State has his annual review of benefits and pension levels, where all matters are properly considered in the usual way. Decisions are made and announced through those formal processes. It is worth saying in relation to disability spending more generally that in 2027-28 total disability spending is forecast to be over £41.6 billion higher in real terms compared with 2010. We are spending very significant sums of money on support for disabled people. We also have those cost of living packages of support in place for them. We will continue to be on the side of helping people through this difficult time, supporting where we can and cushioning the impacts of those challenges. Again, I invite Opposition Members to join the support for the overarching mission of this Government, which is to get inflation down and to relieve those pressures.
Aaron Bell (Newcastle-under-Lyme) (Con)
I welcome my hon. Friend’s statement and the £150 that is going into the bank accounts of 6 million people, including many of my constituents in Newcastle-under-Lyme. I welcome all the support that he outlined, including on energy bills for the entire country, households and businesses, over the winter. I welcome that energy bills are about to start falling at last, which I know will be welcome to everybody across the House. However, does he agree that the best way for us to help the most vulnerable is to help them into well-paid, sustainable jobs, whether part-time or full-time? We should look for support from employers for adaptations and managing conditions in doing that.
Tom Pursglove
I totally agree with my hon. Friend. Work is such an important part of relieving some of those pressures, but it is also important for people in the longer term. We want more people to unlock their potential and access all the benefits and opportunity that work brings. We see that as a partnership, and we want to continue to deepen that commitment as a Government, working collaboratively with employers to unlock those opportunities. Schemes such as Access to Work Plus, which we have piloted, evaluated, and are now rolling out, are all about crafting roles, working with an individual and an employer, where there is a determination to employ a disabled person. We see massive benefit to that approach, not just for the business and our economy, but also for the disabled person in question.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I rise to support what my right hon. Friend the Member for East Ham (Sir Stephen Timms) has just said. We cannot underestimate the impact of the last 12 years of cuts to the baseline in support and social security, with £33 billion taken out of working-age budgets. The temporary one-off payments do not even touch the sides, and that is resulting in one in three disabled people living in poverty, which is twice the number of non-disabled people. Let me again ask the question that my right hon. Friend the Member for East Ham put to the Minister: when will he be increasing the uplift?
Tom Pursglove
I repeat what I said in response to the Chair of the Work and Pensions Committee. We are determined to try to get to grips with the longer-term pressures that people face. The hon. Member for Glasgow East (David Linden) mentioned the “Disability Price Tag” report by Scope. One of those pressure is energy costs, and one thing that colleagues in the Department for Energy Security and Net Zero are currently looking at is the wholescale market reform of our energy market. As part of that, they are considering the issue of social tariffs and support, to see how we best support those costs in the longer term. The best way to tackle those issues in the round and get those pressures down, is by addressing the inflationary challenge that we are currently experiencing. That is what the Government are focused on at the moment, and that is the right approach. On the wider matter in response to the question from the Chair of the Committee, we will take that away and it will be considered in the usual way as part of the annual process.
Wendy Chamberlain (North East Fife) (LD)
Scope’s “Disability Price Tag” report has already been mentioned, but the £975 a month means that the extra payment of £150 does not cover even a week of additional costs, and it points to the lack of sufficiency for social security that the Chair of the Work and Pensions Committee referred to. My private Member’s Bill recently became the Carer’s Leave Act 2023, and when I met constituents they had either had to give up work because of their caring responsibilities, or they had lost carer’s allowance because of the hours they were working. The Minister talks about a transformation of the system. Does he agree that carer’s allowance is ripe for reform?
Tom Pursglove
The hon. Lady and I have previously had exchanges on carer’s allowance, and the approach we take is to consider that when we have our deliberations on annual uprating. We will make modification to that when it is affordable and appropriate, but I hear her representation. I also congratulate her on the Carer’s Leave Act 2023, which introduces an important change. I know that a lot of effort went into that behind the scenes, and I congratulate her on it.
Derek Twigg (Halton) (Lab)
I cannot recall a time when so many families and individuals have contacted my office because they cannot afford to live, whether that is being able to buy food, heat the house, or do other things as a family. We have seen the start of a fall in energy prices, but the fact remains that for the foreseeable future they will be much higher than they were before the start of this crisis. We are also seeing problems with interest rates and various other pressures on families. In particular, rents are outstripping local housing allowance by a considerable amount in my local area, and people are being evicted. On the housing front, pressures from interest rates are starting to bite, and people cannot afford the rents that are now being charged in the private sector. What is the Minister going to do about that?
Tom Pursglove
On that specific point, I draw the hon. Gentleman’s attention to the points I made earlier about some of the ongoing work, but I will also ask my hon. Friend the Member for Mid Sussex (Mims Davies) to provide him with a response to that question, because I know she is engaging with colleagues elsewhere in the Government around those challenges.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
The Minister has already acknowledged the additional costs of nearly £1,000 a month that disabled households have over able-bodied households, but those costs are disproportionately higher in rural areas such as the highlands, which I represent with my constituency. People there have extra costs for transport, energy and so on. Is it not time that the Government did more to compensate people with those extreme costs? Would a start not be to make up for what they lost with the universal credit mismatch during the pandemic and, indeed, to restore the £20 a week on universal credit immediately?
Tom Pursglove
There is no plan to restore that £20 uplift in the way that the hon. Gentleman describes, but in relation to disability benefits, I draw his attention to the statistics and figures I set out earlier. There will also be, as I have announced, an evaluation of the cost of living payments in the autumn, which will no doubt take into account a whole host of factors and be thoroughgoing in that. I am also working with the disability unit to take a close look at the costs that people are experiencing during this cost of living challenge, because we want to learn from those challenges for the future.
Ms Lyn Brown (West Ham) (Lab)
When visiting schools, I am told by young children that it is not their turn to eat tonight. Schools tell me that pupils take leftovers from school friends so that they can eat a lunch. Rents are rocketing and households are paying almost £1,000 a year more on food than they did in 2021. Does the Minister honestly think that the support that the Government are offering is enough to stop rising hunger in constituencies such as mine?
Tom Pursglove
I of course recognise that food prices are a challenge not just here in the UK, but abroad, too. For example, I am aware that food inflation here is 19%, but within the EU it is 19% and in the euro area it is 18%. People are experiencing these significant challenges not just here, but abroad. I have seen reports just today of retailers discounting products to try to help with some of these pressures, which goes beyond the package of support that the Government are providing. That £94 billion figure is not insignificant. We also continue to support families on a case-by-case basis through the household support fund, and I encourage the hon. Lady to signpost her constituents to that support, because where people have particular needs and challenges, they can be supported through that help.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
In his statement, the Minister mentioned support with energy bills. Earlier this week I received an email from a constituent in the village of Capel Hendre in my constituency, which is on the mains gas network, but a large proportion of households use alternative fuels such as heating oil. The payment on alternative fuels was not made directly through electricity bills, but people had to apply for it. She has missed the deadline for the alternative fuels payment scheme. I know this is not the Minister’s direct responsibility, but will he raise with the responsible Minister the fact that a cohort of people have missed out? Is there a possibility of reopening the scheme so that constituents can get the support to which they are entitled?
Tom Pursglove
I commend the hon. Gentleman for his nifty way of getting that important question into the proceedings this afternoon. If he could share those details with me, I will gladly make sure that that reaches the Minister responsible at the Department for Energy Security and Net Zero.
Marsha De Cordova (Battersea) (Lab)
It is worth noting that the UK Government were the first Government to be investigated by the UN Committee on the Rights of Persons with Disabilities for their treatment of disabled people. We all know the additional costs that disabled people face—they are a fact—with higher energy bills and so forth. The disability price tag is around £975 extra a month. The woeful support of the cost of living payments will not go anywhere near meeting those additional needs, so why on earth does the Minister think it is enough? We do not need any more analysis—the evidence is there, so why can he not take action now?
Tom Pursglove
I reiterate the point that people often receive multiple parts of the comprehensive cost of living support that we are providing. The hon. Lady also made a point about the UN, but my experience from speaking to counterparts from across the world at the UN last week and being involved in the discussions there was that people often look to the United Kingdom as being a world leader on these matters. It is important to make that point in the context of the comment she just made. The fact is that we are continuing to keep under review the package of support that is provided, but it is worth recognising that people often receive multiple parts of the package alongside the disability cost of living payment.
Marion Fellows (Motherwell and Wishaw) (SNP)
It was a real pleasure to listen to the hon. Member for Battersea (Marsha De Cordova), who is always eloquent when it comes to disabled people. We have heard already about the support with the £150 extra. I thank the Minister for that; it is literally better than nothing. Many disabled people are trying to get into work, because they have to work to be able to afford the basics in life. There is a disability income gap, as the Minister will be aware. Will he look back on his White Paper, because he missed out the delays that people are now facing to get support from Access to Work? It is impossible, almost. Disabled people are losing jobs daily, because they cannot get the support they need when they need it. Will the Minister review that and try to help disabled people be able to afford more?
Tom Pursglove
The hon. Lady knows, because we meet regularly to talk about these issues, my absolute determination to deliver on greater employment opportunities for disabled people. In fact, as I said earlier, I am meeting the Scottish Minister later today, where this issue is on the agenda. I hope that we can move forward with our reforms in a constructive, collaborative manner, so that they benefit people across the United Kingdom to their fullest extent. We are putting additional resource into Access to Work to get through applications quicker, and a number of process changes have also been made. Those are in the early stages, but the anecdotal commentary I am receiving from officials is that with some of these changes, we are seeing cases processed much more quickly.
Clive Efford (Eltham) (Lab)
The Resolution Foundation estimates that mortgage payers will pay an average of £2,900 more in the next year due to increases in interest rates. Some 13% of retirees are still paying mortgages at the time of retirement, and 770,000 households are not claiming pension credit, so do not qualify for pension credit payments. This Government have been a disaster for pensioners, particularly those with mortgages. If the Minister has done his research, can he tell us how many people on pension credit applied for mortgage interest support? How many pensioners are facing interest rates rising faster than their pensions?
Tom Pursglove
I do not have those figures to hand for this debate, but I will take that request away and ask ministerial colleagues in the Department to respond.
Rachael Maskell (York Central) (Lab/Co-op)
There is no room for complacency. Our constituents are absolutely desperate. On Saturday night, I got another email from a constituent who literally had no money left. She was spiralling into debt, and she could not afford her rent, food or energy. Today’s announcement will do nothing to help her, and it will do nothing to help so many of my constituents who are in such desperation. What steps has the Minister taken to look at the essentials guarantee that the Joseph Rowntree Foundation is putting forward, which would see a consistent uplift in all benefits to help people such as my constituent?
Tom Pursglove
I am obviously not familiar with the circumstances of the individual in question, so it is impossible for me to comment on the support that he or she may or may not be eligible to receive. I always encourage people to apply for any support to which they might be entitled. Benefit calculators are available on the gov.uk website to help people to do that. The household support fund is being delivered in the hon. Lady’s community, but if she wishes to share some details with me about that specific case, I will gladly take that away to look at. As I said earlier, there is also the opportunity, with the annual decisions taken within the Department, for all these issues to be considered.
Patrick Grady (Glasgow North) (SNP)
The Minister said rather dismissively to my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) that the Government have no plans to reinstate the universal credit uplift. Has he done any analysis of the really positive impact that that uplift had on people and the negative impact of taking it away? At the very least, will he look at replicating across the whole of the UK the Scottish child payment of £25 a week, which is made to the people who need it most?
Tom Pursglove
We have no plans to replicate the Scottish child payment here in England. I will happily look at the wider report to which the hon. Member referred.
Christian Wakeford (Bury South) (Lab)
The cost of living crisis has had an impact on businesses in my constituency such as Lomas News, whose energy bills went up by 400%. In April, it got relief of £4.93. With food inflation up, rents up, mortgages up and bills still high, the support is not enough, is it?
Tom Pursglove
We are continuing to provide comprehensive support to both individuals and businesses to get them through this difficult time, and we have done that consistently. Of course, the hon. Member stood on the same manifesto that I did, so I very much hope that he will subscribe, as I do, to the Government’s overarching mission to get inflation down, which will relieve the very challenges to which he alludes.
Bill Presented
Outdoor Education Bill
Presentation and First Reading (Standing Order No. 57)
Tim Farron presented a Bill to require that every child be offered at least one outdoor education experience during primary school years and at least one such experience during secondary school years; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 24 November, and to be printed (Bill 329).
Children in Hospital for Extended Periods (Report to Parliament)
Tuesday 20th June 2023
(10 months, 3 weeks ago)
Commons ChamberRead Full debate Children in Hospital for Extended Periods (Report to Parliament) Bill 2022-23 View all Children in Hospital for Extended Periods (Report to Parliament) Bill 2022-23 Debates Read Hansard Text Watch Debate
A Ten Minute Rule Bill is a First Reading of a Private Members Bill, but with the sponsor permitted to make a ten minute speech outlining the reasons for the proposed legislation.
There is little chance of the Bill proceeding further unless there is unanimous consent for the Bill or the Government elects to support the Bill directly.
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Sir Oliver Heald (North East Hertfordshire) (Con)
I beg to move,
That leave be given to bring in a Bill to require the Secretary of State to report to Parliament on the merits of providing financial support for parents of children receiving care in hospital for extended periods.
My constituent Ceri Menai-Davis contacted me after the loss of his six-year-old son Hugh to a rare cancer on 18 September 2021. He and his wife Frances are in the Gallery today. They had a terrible ordeal for more than 10 months, attending hospital and at times commuting daily, as they watched their son rapidly decline over a number of months in hospital from a sporty youngster to his sad passing. When Mr Menai-Davis contacted me at the end of 2021, he and his wife had just set up a charity called It’s Never You, which are the words that Mrs Menai-Davis said to her husband when they got the diagnosis. They wanted to help parents of very ill children in hospital with mental and physical support and to call for some financial help.
Cases where children are in hospital for extended periods are rare. The reply I received to a written question showed that about 4,000 children a year spend more than two months continuously in hospital. Of course, not all of those are cases where the parents go to hospital every day or stay there.
Mr Menai-Davis asked if I could arrange for him to meet a Health Minister to lobby for better care of parents. I did that, and the then Minister of State, my right hon. Friend the Member for Charnwood (Edward Argar), held a meeting with us on 24 March 2022, where he heard about a range of practical problems with care for parents in hospitals, including the availability of food and mental support. The Minister asked for full details, and we prepared documents, which we sent to him, to inform the work on the new generation of children’s hospitals, including on facilities for parents of very sick children. He responded constructively on issues of outreach to parents, food for parents staying in hospital with children, improved facilities for families in the new hospitals programme and linking NHS charities with the work of It’s Never You.
Through my constituents’ charity, parents or guardians of sick children benefit by connecting with a community of peers, finding support, including moral support, sharing experiences, and getting professionally sourced and reliable information via a social network. That is done not by the statutory authorities but through the Children’s Cancer Platform, which is the UK’s only platform built exclusively to support parents in this difficult situation. The charity has started to put wellbeing bags into hospitals such as Addenbrooke’s and Great Ormond Street; they are about to go into Oxford University Hospitals as well. The bags are well received. The charity is also present in Manchester, Birmingham, Cardiff, Leeds and many more places. It has partnered with several charities across the UK and aims to form an umbrella, whereby all relevant charities can be found in one place.
Addenbrooke’s in Cambridge is, of course, the major hospital for East Anglia, and it is also the site for a new children’s hospital. The team there have had productive meetings with Mr Menai-Davis in which he has shared insights, which the team have described to me as “inspiring”. However, the aspect of this ten-minute rule Bill raised by my constituent is the financial impact on parents of having to spend months in hospital supporting sick young children. My constituent is self-employed, and it cost him a lot to put his child first. He was able to manage only because of his strong personal position economically, but he feared for others who were less fortunate and found themselves in the same position. He gave me examples of people his charity is helping.
I have raised the financial issue with Ministers in the Department for Work and Pensions and the Department of Health and Social Care and have been pointed to some limited help, such as a parent being able to use their annual leave entitlement or unpaid parental leave for dependants. There is also bereavement leave, but there is not any specific state support for parents whose finances are affected because they have been unable to work due to spending so much time with their child in hospital.
A family in that situation may be able to claim universal credit or, if they are already on universal credit, to get an increase to compensate partly for the drop in their income, depending on the individual circumstances. Parents who have worked for the same employer for at least a year are entitled to 18 weeks’ unpaid parental leave for each child, which can be taken until the child’s 18th birthday, but there is nothing specific to deal with a situation such as occurred here.
In the Bill, I am asking for a report to be made to Parliament by the Secretary of State on
“the merits of providing financial support for parents of children receiving care in hospital for extended periods.”
That would not cost a great deal as there are so few cases of this sort, but it would mean that, in tragic circumstances such as these, all parents could concentrate on helping their children rather than worrying about money. In a way, the Bill is also about Ceri Menai-Davis and his wife Frances being able to help other parents who find themselves in the situation that they found themselves in. In some ways, it is a legacy for Hugh.
Question put and agreed to.
Ordered,
That Sir Oliver Heald, Dr Caroline Johnson, Dame Margaret Beckett, Sir Robert Syms, Valerie Vaz, Sir Paul Beresford, Gareth Thomas, Mrs Flick Drummond, Clive Efford, Selaine Saxby, Stephen McPartland and Jackie Doyle-Price present the Bill.
Sir Oliver Heald accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 24 November, and to be printed (Bill 328).
Business of the House (Today)
Ordered,
That, at this day’s sitting, the Speaker shall put the Questions necessary to dispose of proceedings on the Motion in the name of the Chancellor of the Exchequer relating to the Finance (No. 2) Bill: Procedure not later than 45 minutes after the commencement of proceedings on the motion for this Order; such Questions shall include the Questions on any Amendments selected by the Speaker which may then be moved; proceedings may continue, though opposed, until any hour, and may be entered upon after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.—(Julie Marson.)
Finance (No. 2) Bill (Procedure)
Ordered,
That (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision (including provision having retrospective effect) may be made about the application of section 12 of the Investigatory Powers Act 2016.—(Victoria Atkins.)
Finance (No. 2) Bill
Tuesday 20th June 2023
(10 months, 3 weeks ago)
Commons ChamberRead Full debate Finance (No. 2) Act 2023 View all Finance (No. 2) Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 20 June 2023 - (20 Jun 2023)
15:44 - The House divided: - Ayes: 202 / Noes: 296 - Question accordingly negatived.
15:59 - The House having divided: - Ayes: 192 / Noes: 294 - Question accordingly negatived.
The Financial Secretary to the Treasury (Victoria Atkins)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Dame Rosie Winterton)
With this it will be convenient to discuss the following:
Amendment (a) to new clause 4, at end insert—
“(2) The Treasury may by regulations amend subsection (1) by substituting a later date for the date for the time being specified there.”
Government new clause 5—Communications data.
New clause 1—Review of alternatives to the abolition of the lifetime allowance charge—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed—
(a) conduct a review of the impact of the abolition of the lifetime allowance charge introduced by section 18 of this Act and other changes to tax-free pension allowances introduced by sections 19 to 23 of this Act, and
(b) lay before the House of Commons a report setting out recommendations arising from the review.
(2) The review must make recommendations on how the policies referred to in subsection (1)(a) could be replaced with an alternative approach that provided equivalent benefits only for NHS doctors.”
This new clause requires the Chancellor to review the impact of the tax free pension allowance changes and to recommend an alternative approach targeted at NHS doctors.
New clause 2—Reports to Treasury Committee on measures to simplify tax system—
“(1) The Treasury must report to the Treasury Committee of the House of Commons on steps taken by the Treasury and HMRC to simplify the tax system in the absence of the Office of Tax Simplification.
(2) Reports under this section must include information on steps to—
(a) simplify existing taxes, tax reliefs and allowances,
(b) simplify new taxes, tax reliefs and allowances,
(c) engage with stakeholders to understand needs for tax simplification,
(d) develop metrics to measure performance on tax simplification, and performance against those metrics.
(3) A report under this section must be sent to the Committee before the end of each calendar year after the year in which section 346 (abolition of the Office of Tax Simplification) comes into force.”
This new clause would require the Treasury to report annually to the Treasury Committee on tax simplification if the Office of Tax Simplification is abolished.
New clause 3—Review of public health and poverty effects of Act—
“(1) The Chancellor of the Exchequer must review the public health and poverty effects of the provisions of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.
(2) The review must consider—
(a) the effects of the provisions of this Act on the levels of relative and absolute poverty across the UK including devolved nations and regions,
(b) the effects of the provisions of this Act on socioeconomic inequalities and on population groups with protected characteristics as defined by the 2010 Equality Act across the UK, including by devolved nations and regions,
(c) the effects of the provisions of this Act on life expectancy and healthy life expectancy across the UK, including by devolved nations and regions, and
(d) the implications for the public finances of the public health effects of the provisions of this Act.”
New clause 6—Review of business taxes—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed—
(a) conduct a review of the business taxes, and
(b) lay before the House of Commons a report setting out recommendations arising from the review.
(2) The review must make recommendations on how to—
(a) use business taxes to encourage and increase the investment of profits and revenue;
(b) ensure businesses have more certainty about the taxes to which they are subject; and
(c) ensure that the system of capital allowances operates effectively to incentivise investment, including for small businesses.
(3) In this section, ‘the business taxes’ includes any tax in respect of which this Act makes provision that is paid by a business, including in particular provisions made under sections 5 to 15 of this Act.”
This new clause would require the Chancellor to conduct a review of business taxes, and to make recommendations on how to increase certainty and investment, before the next Finance Bill is published.
New clause 7—Statement on efforts to support implementation of the Pillar 2 model rules—
“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, make a statement to the House of Commons on how actions taken by the UK Government since October 2021 in relation to the implementation of the Pillar 2 model rules relate to the provisions of Part 3 of this Act.
(2) The Chancellor of the Exchequer must provide updates to the statement at intervals after that statement has been made of—
(a) three months;
(b) six months; and
(c) nine months.
(3) The statement, and the updates to it, must include—
(a) details of efforts by the UK Government to encourage more countries to implement the Pillar 2 rules; and
(b) details of any discussions the UK Government has had with other countries about making the rules more effective.”
This new clause would require the Chancellor to report every three months for a year on the UK Government’s progress in working with other countries to extend and strengthen the global minimum corporate tax framework for large multinationals.
New clause 8—Review of energy (oil and gas) profits levy allowances—
“(1) The Chancellor of the Exchequer must, within three months of the passing of this Act—
(a) conduct a review of section 2(3) of the Energy (Oil and Gas) Profits Levy Act 2022, as introduced by subsection 12(2) of this Act, and
(b) lay before the House of Commons a report arising from the review.
(2) The review must include consideration of the implications for the public finances of the provisions in section 2(3)—
(a) were all the provisions in section 2(3) to apply, and
(b) were the provisions in section 2(3)(b) not to apply.”
This new clause requires the Chancellor to review the investment allowances introduced as part of the energy profits levy, and to set out what would happen if the allowance for all expenditure, apart from that spent on de-carbonisation, were removed.
New clause 9—Review of section 36—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact on the public finances of the measures provided for by section 36 of this Act (‘the section 36 measures’).
(2) The assessment must include details of any analysis by the Treasury or HMRC of—
(a) the amount of additional tax raised by the section 36 measures and,
(b) the number of individuals who are required to pay additional tax as a result of the section 36 measures.”
This new clause requires the Chancellor to review the impact of the measures in the Act that affect people with non-domiciled status, including by setting out how many people will be required to pay additional tax and how much this will raise in total.
New clause 10—Review of new bands and rates of air passenger duty—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the changes to air passenger duty introduced by this Act on—
(a) the public finances;
(b) carbon emissions; and
(c) household finances.
(2) The assessment under subsection (1) must consider how households at a range of different income levels are affected by these changes.”
This new clause requires the Chancellor to publish an assessment of this Act’s changes to air passenger duty on the public finances, carbon emissions, and on the finances of households at a range of different income levels.
New clause 11—Review of impact of tax changes in this Act on households—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the changes in this Act on household finances.
(2) The assessment in subsection (1) must consider how households at a range of different income levels are affected by these changes.”
This new clause requires the Chancellor to publish an assessment of the changes in this Act on the finances of households at a range of different income levels.
New clause 12—Review of Part 5—
“(1) The Treasury must conduct a review of the provisions of Part 5 of this Act (electricity generator levy).
(2) The review must consider the case for ending or amending the charge on exceptional generation receipts when energy market conditions change.
(3) The report of the review must be published and laid before the House of Commons within six months of this Act being passed.”
This new clause would require the Government to conduct a review into the energy generator levy with a view to sunsetting the levy when market conditions change.
New clause 13—Review of effects of Act on the affordability of food—
“The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons an assessment of the impact of the measures of this Act, and in particular sections 1 to 4 (income tax), on the ability of households to afford the price of food.”
This new clause would require the Government to produce an impact assessment of the effect of the Act on the affordability of food.
New clause 14—Review of effects of Act on small businesses—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the likely impact of the measures of this Act on small businesses.
(2) The report must assess the effect on small businesses of any taxes charged under this Act, in the context of other financial pressures currently facing small businesses including—
(a) the rate of inflation, and
(b) b) the cost of energy.”
This new clause would require the Government to produce an impact assessment of the effect of the Act on small business with particular regard to inflation and the cost of energy.
New clause 15—Review of effects of Act on SME R&D tax relief—
“(1) The Chancellor of the Exchequer must lay before Parliament within six months of the passing of this Act a review of the impact of the measures in section 10 relating to research and development tax relief for small and medium-sized enterprises.
(2) The review must compare the impact of the relief before and after 1 April 2023, with regard to the following—
(a) the viability and competitiveness of UK technology start-up and scale-up businesses,
(b) the number of jobs created and lost in the UK technology sector, and
(c) long-term UK economic growth.
(3) In this section, ‘technology start-up’ means a business trading for no more than three years; with an average headcount of staff of less than 50 during that three-year period; and which spends at least 15% of its costs on research and development activities.
(4) In this section, ‘technology scale-up’ means a business that has achieved growth of 20% or more in either employment or turnover year on year for at least two years and has a minimum employee count of 10 at the start of the observation period; and spends at least 15% of its costs on research and development activities.”
This new clause would require the Government to produce an impact assessment of the effect of changes to SME R&D tax credits in this act on tech start-ups and scale-ups.
Government amendments 9 to 13.
Amendment 1, page 12, line 30, leave out clause 18.
Amendment 2, page 12, line 37, leave out clause 19.
Amendment 3, page 13, line 31, leave out clause 20.
Amendment 4, page 14, line 1, leave out clause 21.
Amendment 5, page 14, line 11, leave out clause 22.
Amendment 6, page 14, line 20, leave out clause 23.
Government amendments 14 to 16.
Amendment 22, in clause 115, page 74, line 10, at end insert—
“(1A) The Chancellor of the Exchequer must, within one month of this Act coming into force, lay before the House of Commons an assessment of the impact of extending the provision of subsection (1) to wine which—
(a) is obtained from the alcoholic fermentation of fresh grapes or the must of fresh grapes and fortified with spirits,
(b) is included in one or more of the United Kingdom Geographical Indication Scheme registers, and
(c) is of an alcoholic strength of at least 15.5% but not exceeding 20%.”
This amendment requires the Chancellor to lay before the House an assessment of the impact of providing comparable transitional relief to fortified wine made from fresh grapes, such as port and sherry, as has been made available to other forms of table wine.
Amendment 20, in clause 264, page 188, line 7, at end insert—
“(2) The Treasury may by regulations amend subsection (1) by substituting a later date for the date for the time being specified there.”
Amendment 23, in clause 278, page 198, line 9, after “costs” insert “and relevant investment expenditure”.
This amendment is linked to Amendment 24.
Amendment 24, in clause 278, page 198, line 12 at end insert—
“Where the generating undertaking is a generator of renewable energy, determine the amount of relevant investment expenditure and also subtract that amount.”
This amendment, together with Amendments 23, 25 and 26 would allow generators of renewable energy to offset money re-invested in renewable projects against the levy.
Amendment 25, in clause 279, page 199, line 21, at end insert—
“a ‘generator of renewable energy’ means—
(a) a company, other than a member of a group, that operates, or
(b) a group of companies that includes at least one member who operates a generating station generating electricity from a renewable source within the meaning of section 32M of the Energy Act 1989;
‘relevant investment expenditure’ means any profits of a generator of renewable energy that have been re-invested in renewable projects;”.
This amendment is linked to Amendment 24.
Amendment 26, in clause 279, page 199, line 26, at end insert—
“a ‘renewable project’ is any project involving the generation of electricity from a renewable source within the meaning of section 32M of the Energy Act 1989;”.
This amendment is linked to Amendment 24.
Government amendments 17 to 19.
Amendment 7, page 265, line 2, leave out clause 346.
This amendment would leave out Clause 346, which abolishes the Office of Tax Simplification.
Amendment 21, in schedule 16, page 399, line 27, at end insert—
“(2A) The Treasury may by regulations amend subsection 2(a) by substituting later dates for the dates for the time being specified there.”
The aim of this amendment is to enable the Treasury to extend the permitted period for multinational groups to make transitional safe harbour elections, reducing the compliance burden, in the event that other countries are slow to follow suit in implementing these rules.
Victoria Atkins
Let me first thank all right hon. and hon. Members who have taken part in debates on the Finance Bill so far. Today is Report stage, but there has been intense scrutiny of many measures in the Bill, not just line by line in Committee on the Committee Corridor but, importantly, in Committee of the whole House. I hope that I will hear from right hon. and hon. Members on some of those discussions.
We are focusing on a number of proposed amendments to the Bill, which I will address in turn. Many of the Government’s amendments focus on ensuring the proper functioning of the legislation in response to scrutiny from businesses, business representative groups, parliamentarians and feedback. Others take forward responses to substantive issues that have emerged during the Bill’s passage. This is an exercise of how scrutiny in this place works, and I hope it works well. I will address each Government amendment in turn in this part of the debate. To reassure colleagues, I want to listen to the debates that will follow on non-Government amendments and proposed new clauses, and I hope to deal with points raised by right hon. and hon. Members when I wind up.
Government amendments 9 and 10 seek to ensure that our policy of full expensing achieves its intended affect. The existing wording can result in balancing charges being incorrectly calculated by not applying the correct apportionment to the disposal receipts. This is a straightforward and necessary technical adjustment to a policy that will help businesses to invest with confidence and boost UK productivity.
Government amendments 11, 12 and 13 provide that both the decarbonisation allowance and the existing investment allowance in the energy profits levy work as intended. They correct unintended exclusions by revising definitions to ensure that the investment allowances apply throughout the UK, in UK waters and on the United Kingdom continental shelf.
Government amendment 14 is a minor technical amendment that concerns the lifetime allowance—specifically, in clause 23, which allows modifications of certain existing transitional protections to ensure that stand-alone lump sums can continue to be paid to those who are entitled. The amendment clarifies the tax treatment for any amount above the limited 5 April maximum. The amendment is required to avoid an unintended outcome that would otherwise arise as a result of the removal of the lifetime allowance charge, whereby those who are entitled to stand-alone lump sums may not have been able to access their full benefit. The amendment corrects that. We are grateful to members of His Majesty’s Revenue and Customs pensions industry stakeholder forum for raising the issue.
New clause 4 relates to the domestic minimum top-up tax, which is part of the global minimum tax agreement. That agreement protects against large multinational groups and companies using aggressive tax planning and shifting their UK profits overseas. The amendment simply puts beyond doubt that the commencement date for the domestic top-up tax aligns with the multinational top-up tax and the internationally agreed timings, and no earlier. The start date is for accounting periods beginning on or after 31 December 2023. We will discuss the global minimum tax agreement in more detail later, precisely because it is of particular interest to right hon. and hon. Members. I will respond to those further arguments and suggestions when I wind up.
Stewart Hosie (Dundee East) (SNP)
The subparagraphs that new clause 5 intends to delete were not in the original Finance Act 2008 but were added by the Investigatory Powers Act. I am at a loss as to why it is necessary to remove them from that Act to make it work in the way intended.
Victoria Atkins
That gives me the opportunity to declare that I sat not only on the Joint Committee for that Bill but on the Select Committee. There was a great deal of concentration and discussion, as I recall—the House will have to forgive me as I am rolodexing back several years in my memory—about the meaning of communications data, because of the sensitivities in relation to some of the powers rightly given to our security services in order to safeguard national security and for other purposes.
There has been some debate about how the General Data Protection Regulation and the Data Protection Act apply in the years that have fallen since. The clarification has been made because the Home Office wanted to ensure that it defines that accurately, protects citizens’ rights and permits Government agencies, law enforcement agencies and other agencies to collect and review the data necessary to protect us all. We are tabling this amendment now at the first opportunity we have had, to ensure that that phrasing still permits HMRC to collect the vital data that we need to ensure that our taxes are collected properly. To sum up my point on new clause 5, the civil information powers allow HMRC to continue to collect vital revenue to fund our public services.
In conclusion, the Government’s proposed amendments will ensure that the legislation works as it should and that HMRC has the powers it needs to continue collecting tax revenue that is vital to fund our public services that so many in our country rely on. I will, of course, address all amendments tabled by other Members when I wind up later. I very much want to listen closely to the debate that will now follow. In the meantime, I commend amendments 9 to 19 and new clauses 4 and 5 to the House. I urge hon. Members to accept them in due course.
James Murray (Ealing North) (Lab/Co-op)
It is important, briefly, to first recognise the context in which we consider amendments and new clauses to the Bill. Yesterday we heard the news that the average rate for a two-year fixed-rate mortgage has now breached 6% for the first time since December. That news will leave the 400,000 people across the country whose existing fixed deals end between July and September feeling anxious and fearful. They face the prospect of having hundreds of pounds less in their pockets each month when their current deal expires and they have to re-mortgage. That is not to mention all those on variable rates, who have already seen their payments rise relentlessly as a result of interest rates going up again and again.
Across the country, mortgage payers are facing interest rate rises above 6% for the second time in 12 months. The first time came in the wake of the Conservatives’ disastrous mini-budget last autumn; now it is because inflation means that banks expect interest rates to stay higher for far longer than anyone feared. The truth is that mortgage payers are feeling pain because the Tories crashed the economy and have no plan to fix it. What is more, we know the current increases in mortgage payments come after 13 years of low growth and stagnant wages. They also come after 25 tax rises by the Government in this Parliament alone, increases that have pushed the tax burden in this country to its highest level in 70 years.
I will begin considering the detail of our amendments on Report by focusing on something very rare indeed: a tax cut from this Government. That tax cut is included in clause 18. Through that section of the Bill, the Government will be spending £1 billion of public money a year to benefit the 1% of people with the biggest pension pots. Ministers may claim that their decision was driven by a desire to get doctors back into work, but since the policy was first announced the Government have flatly rejected any call to consider a fairer and less costly fix targeted at doctors’ pensions.
It is not just Labour who have been questioning the Government’s approach; the Conservative Chair of the Treasury Committee, the hon. Member for West Worcestershire (Harriett Baldwin), said that even she was surprised that Ministers had opted for a blanket cut rather than a bespoke policy for doctors. That is why we will be voting today for our amendment 1, which deletes clause 18, thereby abandoning plans for this blanket change that fails to spend public money wisely. As our new clause 1 makes clear, the Chancellor should finally do what so many have been calling on him to do and produce an alternative approach to pensions that is targeted at NHS doctors and provides taxpayers with value for money.
Harriett Baldwin (West Worcestershire) (Con)
I put on the record that while the hon. Gentleman quotes me correctly, I underline that I was pleasantly surprised.
James Murray
I thank the hon. Lady, I think, for that intervention. I am trying to work out exactly what point was being made there, but I think the overall point is clear. There is concern from all sides at £1 billion a year of public money being spent on a blanket change, rather than something targeted at NHS doctors.
That failure to spend public money wisely is evident again in the Bill’s proposal to reduce air passenger duty for domestic flights, the impact of which our new clause 10 seeks to uncover. Again, at a time when public finances are under severe pressure, household budgets are being stretched in all directions and the cost of inaction on climate change grows by the day, it is baffling that a tax cut for frequent flyers is the Government’s priority for spending public money.
Kit Malthouse (North West Hampshire) (Con)
I just want to take the hon. Gentleman back, if I may, to the point he made on pensions. Can he not see the difficulty of having a specific regime for NHS doctors? For example, if he were to bring in a specific regime, would it apply to doctors who also work in the private sector? What would happen if an NHS doctor changed career and became an accountant? There are other areas where we have difficulty securing the services of public servants beyond a certain point, for example judges, prison governors or senior police officers. Is he proposing that each of those areas should have their own specific scheme and that therefore we should build a sort of rats’ nest of complexity around pensions?
James Murray
I thank the right hon. Gentleman for his comments, but I feel he is misguided in claiming that it is somehow only Labour calling for a doctors-only pension scheme to be investigated. I referred to the Chair of the Treasury Committee, but I could also refer to the current Chancellor—the current Chancellor—who less than a year ago suggested that we should go for a doctors-only scheme. All we are asking is for the current Chancellor to do what he told himself to do less than a year ago and investigate the possibilities. That is important, because that is how we spend public money wisely.
To return to air passenger duty, Ministers may try to point out, when we discuss it later in the debate, that the lower rate of domestic air passenger duty has been accompanied by the introduction of an ultra long-haul rate. But when taken together, the air passenger duty changes in the Bill are set to cost the taxpayer an additional £35 million a year. That cannot be the right priority for spending public money. In Committee, we tried to get to the bottom of why this tax cut is being prioritised.
Alun Cairns (Vale of Glamorgan) (Con)
I am grateful to the hon. Gentleman for giving way on that point. How does the shadow Minister square his comments with those made by the Welsh Government calling for air passenger duty to be devolved and abolished to support Cardiff Airport, which they have purchased?
James Murray
I will leave matters for the Welsh Government to the Welsh Government to set out their position. We are trying to challenge the position of the UK Government on air passenger duty.
Whatever the UK Government say, the reasoning behind air passenger duty changes have been hard to come by. In Committee, we wanted to understand why the cost of domestic flights is so high up the agenda of this Government under this Prime Minister. I asked the Minister whether, if someone were to travel by helicopter around the UK, for instance from London and Southampton, that would be subject to air passenger duty. I could equally have asked if that would be the case if someone were to get a helicopter ride from London to Dover. At the time, the Minister clarified that there is no air passenger duty other than on fixed-wing aircraft, so that anyone wanting to make short hops in a helicopter can rest assured that this tax would not apply.
I also asked the Minister whether, if someone travelled on a private jet around the UK from, say, London to Blackpool, what rate of air passenger duty would apply in that case. The Minister confirmed that private jets will not benefit from the domestic air passenger duty cut—something the Chancellor may want to let his neighbour on Downing Street know. Finally, I asked the Minister what rate of air passenger duty would apply if someone lived in the UK but was travelling to another home of theirs, let us say in Santa Monica, California. The Minister did not say at the time whether such a flight would attract the ultra long-haul rate, but my understanding is that it would not, so anyone on the Government Benches who needs to fly to their Los Angeles home will not be hit.
It is clear from the Tories’ approach that they have no idea how to spend public money wisely, and that their judgment over what to prioritise is at odds with the British people. Under the Conservatives in this Parliament alone, people across Britain have faced 25 tax rises and 12 interest rate rises. Yet the Tories think the priorities for taxpayers’ money in the middle of a cost of living crisis should be tax cuts for frequent flyers and for those with the very largest pension pots. The truth is that under the Conservatives, working people always end up paying the bill.
Richard Drax (South Dorset) (Con)
On the Government Benches, we get tired of hearing from the Opposition Benches about taking taxpayers’ money. This is money the poor taxpayer is having to pay in the first place and should not be taxed on. So far as pensions are concerned, surely the aim for all of us is to have, if we can afford to, sufficient money to live free of the state and off the state at the end of our years, thereby allowing taxpayers’ money to be effectively used for those who really do need it.
James Murray
I thank the hon. Gentleman for his intervention. At one point I thought he was touching on a point that we might agree on, which is that spending public money is about priorities. It is about making choices on how to spend public money wisely. That is important at any stage for any Government, but in the middle of a cost of living crisis, when household budgets are being stretched and people are facing mortgage payments going up relentlessly, it is more important than ever that we prioritise the spending of public money and spend taxpayers’ money wisely. That is really at the heart of the argument I am making. We need a fairer tax system in this country, but time and again the Conservative Government have ignored chances that were in front of them to do something about it. Our new clause 9 relates to the Government’s approach to non-dom tax status—the £3.2 billion a year loophole that the Prime Minister called “that non-dom thing”.
Craig Mackinlay (South Thanet) (Con)
Does the hon. Gentleman really believe that non-doms who could pay zero inheritance tax in other places around the world and need not spend money any at all in the UK will just stay here and be taxed under his plans? Or will they up sticks and go elsewhere—which they are very capable of doing—in which case we would lose the VAT and everything else that comes with non-dom spending in the UK?
James Murray
I would welcome a more extended debate about non-dom tax status. That might be slightly outside the remit of today’s debate, but I refer the hon. Gentleman to some very good research conducted by the London School of Economics and Warwick University on the impact of people potentially leaving the UK as a result of any changes in non-dom status. Getting rid of non-dom status would still net £3.2 billion a year according to the work done by the LSE and Warwick, which is based on HMRC data which they have looked at and which constitutes reputable evidence showing what would happen in that event. As I have said, we would replace non-dom status with a modern system like the one that operates in many other countries around the world.
Let me link the hon. Gentleman’s point to the point made earlier by the hon. Member for South Dorset (Richard Drax). This is about priorities. What is the priority for expenditure of £3.2 billion a year? Is it protecting non-dom tax status, or is it strengthening the NHS and childcare? That is at the heart of the question we are asking today.
As well as closing the non-dom loophole—about which I could speak at length— we will keep pressing the Government to close gaps in their approach to the windfall tax on oil and gas giants. Our new clause 8 presses them to think again about their investment allowance loopholes. We believe it is wrong for Ministers to leave billions of pounds of windfall profits for oil and gas giants on the table when some of that money should be helping to support families through the cost of living crisis.
We know, of course, that making our tax system fairer is not just a question of having the right legislation in place domestically; it is also a question of working with other countries to end the race to the bottom among large multinationals around the world. As our new clause 7 makes clear, we want the Government to remain committed to implementing the global agreement on a minimum rate of corporate tax. This landmark deal from the OECD is an important step towards ending the international race to the bottom on tax, as it calls time on large multinationals which operate in the UK but use low-tax jurisdictions overseas to avoid paying their fair share of tax. When large multinationals do that, it flies in the face of the British sense of fairness, it deprives public services in our country of much-needed funding, and it undercuts and undermines British businesses that play by the rules.
As we have made clear throughout consideration of the Bill, we are glad to see this legislation being implemented. We want to see the global agreement in place so that large multinationals pay a minimum level of 15% tax in each jurisdiction in which they operate. We have raised the need for such an international deal many times with the Government. Indeed, I first pressed Treasury Ministers on the subject more than two years ago, on 13 April 2021, during Second Reading of an earlier Finance Bill. At the time, we suspected that the Government might be dragging their feet because they wanted to keep alive the possibility of a race to the bottom in the future, but now, with Ministers having finally agreed to implement the deal—albeit in a version that they allowed to be weakened from what was originally proposed—opposition to it has galvanised those on the Tory Back Benches.
Two days ago, the right hon. Member for Witham (Priti Patel) published an opinion piece in The Sunday Telegraph. The headline described the common-sense approach taken with the global minimum corporate tax rate—the approach that her colleagues on the Conservative Front Bench want to implement—as a
“radical plan for permanent worldwide socialism”.
The right hon. Member has tabled an amendment to this part of the Bill, which she said in her piece on Sunday was
designed to be helpful and easy to adopt.”
I would be interested to hear whether the Minister agrees, and how helpful she thinks the amendment is, because we believe that it is designed to undermine fatally the implementation of the landmark deal on a global minimum corporate tax rate. Efforts to scupper the implementation of the deal constitute an astonishing act of self-sabotage on our public finances. The reality is that if the UK walks away now from implementing these rules, businesses will simply be taxed by other countries which have implemented the deal. Let me reassure the Minister that if the amendment is pushed to a vote by Conservative Back Benchers, we will oppose it, so Ministers need not worry about whether they will be able to vote it down even if they lose their majority through a Back-Bench rebellion.
What on earth does this situation say about the state of the Conservatives and about the weakness of the Prime Minister? The amendment, which brazenly undermines the Government’s position, has been signed by right hon. and hon. Members who, within the last 12 months, have held the offices of Prime Minister, Chief Secretary to the Treasury, Secretary of State for Levelling up, Housing and Communities, Secretary of State for Business, Energy and Industrial Strategy, and a raft of other ministerial positions. What would happen to the implementation of these rules if the right hon. Member for Richmond (Yorks) (Rishi Sunak) became the third Conservative Prime Minister to be forced from office in 12 months, and an MP who supports this amendment took over his role? The truth is the Conservatives have now become totally incapable of offering any certainty or stability, but that certainty and stability is what businesses and investors so desperately want so that they can play their part in growing our economy and raising living standards for people across Britain.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
Has the shadow Minister seen today’s report from the Institute for Public Policy Research? It states that the UK is in the middle of an economic growth “doom loop” as a result of decades of under-investment by Government and businesses. Recent statistics indicate that the UK has the lowest business investment in the G7, ranking 27th among the 30 OECD countries. Does that not suggest that businesses have no confidence in the Government’s strategy, and that alarm bells should be ringing in the Treasury?
James Murray
The hon. Gentleman is right to describe the state of the economy as a doom loop. It is on a managed path of decline, which even the former Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng) described as a “vicious cycle of stagnation”. The fact is that without any stability or certainty and without a plan for growth, we cannot get the economy out of that doom loop, which is exactly what we are pressing the Government to do.
I know that Conservative Members may be feeling rebellious today, so perhaps they will consider supporting our new clause 6, which requires the Chancellor to follow Labour’s lead and set out a plan for business taxes that increases certainty and investment. The truth is, however, that even if the Conservatives did set out a plan, no one would believe that they would or could stick to it. Everyone knows that this Prime Minister is weak, hostage to his party, and unable to lead. Only a new Labour Government can bring the stability and certainty that businesses need.
That is what we need in order to boost investment, create jobs and grow Britain’s economy. That is what we need to get us off this path of managed decline, to provide security for family finances once again, and to make people across Britain better off.
Harriett Baldwin
I rise to speak to new clause 2 and amendment 7, which were tabled in my name and those of all the other members of the cross-party Treasury Committee.
“Taxes are far too complex.”
Those are not my words but the words of the Chancellor of the Exchequer when he gave evidence to our Committee. The amendments to which I am speaking would give legislative effect to the recommendations of the report we published last week on the work of the Office of Tax Simplification. The report is on the Table, and I encourage all hon. and right hon. Members to read it.
Across the House, I think we can all agree that, regardless of the level of tax, the tax system itself has become far too complex. To give an example, as a result of the Committee’s current inquiry on tax reliefs, we have finally found out how many tax reliefs there are in the tax code—1,180. The unnecessary complexity in our tax code makes the tax system expensive and difficult for HMRC to administer, makes the tax system confusing and makes it difficult for taxpayers to understand the choices on offer and the consequences of those choices for their after-tax income.
A complex tax system can be hugely costly for taxpayers and for those responsible for compliance with the tax code. The Financial Secretary to the Treasury was kind enough to give evidence to our Committee on the VAT system last week, and she described it as the “most complex” part of the tax system. VAT creates a crippling compliance burden for small businesses and, as a result, there is a massive pile-up of companies just underneath that £85,000 turnover threshold. This shows that small, potentially dynamic, growing businesses—the engines of our economy—would rather stay under the threshold than deal with the VAT system.
Unfortunately, the VAT threshold is far from the only cliff edge in our tax and benefits systems. At worst, these cliff edges result in people being worse off for earning more money. In recent evidence to a joint session of the Treasury Committee and the Work and Pensions Committee, we heard how people can suddenly find themselves much worse off, after losing entitlements such as free school meals and council tax support, when they earn only a little more money. Indeed, next winter a person who earns an extra £1 will take home £900 less because they lose the cost of living support entitlement, which we reflected in a recent report. People would actually be better off by working less, or perhaps not working at all, and surely that is something we do not want to see in our tax and benefits systems.
Kit Malthouse
My hon. Friend is making a powerful point, but does she accept that complexity can lead to gaming of the system? It often feels as if the accountancy profession and tax planners are streets ahead of the Revenue, to the extent that we now have to have a general anti-avoidance measure so that, if they find something we do not like, they are not allowed to do it, even though it may be within the rules. That is a direct product of this complexity, which is creating a whole other industry around finding loopholes.
Harriett Baldwin
I agree with my right hon. Friend’s excellent point. Not only do the wealthiest get the best tax advice, but general financial advice has now become so expensive in this country that only 8% of our constituents can afford to pay for it.
Bob Stewart (Beckenham) (Con)
I am ignorant about tax affairs, but trying to sort it out might make it even more complicated.
Harriett Baldwin
My right hon. Friend highlights that this is not an easy task. The point I am trying to make with my amendments, which I hope he will support, is that, by abolishing the Office of Tax Simplification, we lose not only a source of valuable advice on how to simplify the tax system but the message that we want to do so, which I know the Chancellor wants to convey.
Higher up the income scale, the £100,000 income bracket triggers the withdrawal of the very welcome steps we have taken on tax-free childcare and the personal allowance. This means that a family with two children in full-time childcare, if they happen to live in London, would be better off earning £99,999 than earning more than £150,000 because they would have a more than 100% withdrawal of extra earnings in that income bracket, which is very distorting. It provides disincentives to work, and we see that obstacle to economic growth reflected in the workforce numbers produced by the Office for National Statistics.
The Chancellor agrees that
“the tax system is overcomplicated and the trend of ever more complication must be reversed.”
It is surprising that, on coming to office, he chose not to reverse the abolition of the Office of Tax Simplification. It was established in 2010, and it was given a ringing endorsement by the Treasury in its 2021 statutory review. Disbanding the independent champion for simpler tax sits very uncomfortably with the Government’s insistence that tax simplification is a priority.
However, the most important factor in securing tax simplification in practice would be for the Chancellor to take on the personal responsibility for simplification that he pledged to take, which brings me to the Treasury Committee’s new clause 2. We have heard that, while the Treasury and HMRC focus on new taxes, the Office of Tax Simplification did important practical work seeking to simplify the existing tax system. We also heard in our evidence session that the Office of Tax Simplification did good work listening to taxpayers to understand how the complexity of the tax system works against them. The reports of the Office of Tax Simplification were published very transparently, unlike the private advice given to Ministers, and they facilitated parliamentary scrutiny of tax simplification efforts.
The Chancellor told us that he intends to be a Chancellor who makes “progress on tax simplification.” I welcome the simplification of the lifetime allowance, which the Opposition opposed earlier, but the Committee wants the ability to hold him accountable for that. Under new clause 2, the Treasury would report to the Committee annually on the Chancellor’s promise to simplify taxes.
Victoria Atkins
I have genuinely enjoyed my hon. Friend’s contributions not just today but at earlier stages, and I enjoyed being grilled with the Committee’s very thoughtful questions last week. In the spirit of agreement and co-operation, would it meet with her and the Committee’s approval if I committed to write to the Committee once a tax year, including this tax year, on the subject of simplification? The Committee could look at that report, decide for itself how the Government of the day are doing and, of course, call Ministers to account before the Committee.
Harriett Baldwin
I thank the Financial Secretary for that intervention, which is very much in the spirit of what we are calling for in our new clause. Our report set out the sorts of things we would like to see. The report from the Treasury should be annual and it should include international comparisons, where available. It should also set out what the Treasury has done within that year to simplify taxes for our constituents and those who run businesses.
Dame Andrea Leadsom (South Northamptonshire) (Con)
Let me add that we want to see real examples of simplification, as the tax code is so incredibly long and confusing. Just today, I was talking to people from some businesses that have found it impossible and extremely expensive to work their way through that tax code. As the Chairman of the Treasury Committee has set out, some concrete examples would be crucial in any report that came to the Committee.
Harriett Baldwin
I thank my right hon. Friend for that intervention, which made me think immediately of the measures in this Bill on the increased rate of corporation tax. That in itself is controversial, but we now have these ladders between 19% and 25%. Our Committee would be interested to see the letter that the Financial Secretary has undertaken to write to us annually include an assessment of not only new measures such as that on the behaviour of businesses—I highlighted the impact of the VAT measures just now—but of the existing body of tax law. As with the simplification of the lifetime allowance, we must ensure that this Treasury and these Treasury Ministers focus relentlessly on how they can simplify the complexity and the behavioural signals that our tax system is sending, which are deterring people from entrepreneurialism, taking on extra work and earning higher incomes. With that, I am happy to have spoken to those two amendments.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I wish to speak to my new clause 3, which would compel the Chancellor to assess the impacts of the Bill on poverty and inequalities, and, subsequently, our health. It states:
“The Chancellor... must review the public health and poverty effects of the provisions of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.
(2) The review must consider—
(a) the effects of the provisions of this Act on the levels of relative and absolute poverty across the UK…
(b) the effects of the provisions of this Act on socioeconomic inequalities and on population groups with protected characteristics as defined by the 2010 Equality Act…
(c) the effects of the provisions of this Act on life expectancy and healthy life expectancy across the UK…
(d) the implications for the public finances of the public health effects of the provisions of this Act.”
Most notably, it must consider those implications on the NHS. So the ask is simple: that the Government should disclose their evaluation of the impact of their economic policies on the health of our constituents—that is it. It is fairly straightforward, and I think we are all aligned on that; these are ambitions the Government have professed to have in their levelling-up agenda. My new clause would contribute to that and to the achievement of the reduction in health inequalities to which the Government say they aspire. They should have nothing to fear from the transparency that this new clause would bring.
As we know, there is overwhelming evidence that socioeconomic inequalities are the key determinants of our health and, consequently, our health service use; inequalities in income, wealth and power will determine how long we are going to live and to live in good health. It is, therefore, only reasonable that the Government report on how the Finance Act will have an impact on those inequalities. For example, life expectancy for men is four years lower in Oldham than it is in the Prime Minister’s constituency. In the past 13 years, Oldham Council has had £230 million in funding cut from its central Government funding—that is 29% of its total budget in 2010. It has received funds through the competitive bidding processes for the towns fund and levelling-up fund totalling £44 million. A GCSE in maths is not required to see the shortfall there. However, in Surrey, where the Chancellor is an MP, people have seen their council budget cut by just 8.3%. The issues are clear when we compare that 8.3% with that 29%.
How can it be right that in the sixth richest country in the world people are dying younger because of their socioeconomic position? Poverty and inequality are not inevitable; they are political choices that can have deadly consequences. The pandemic revealed that stark reality, exposing how our structural socioeconomic inequalities impacted on who was infected by covid and their experience of the disease. People on low incomes were more likely to be infected and to die of covid; within that, and at every other level of the income hierarchy, people of colour and people with disabilities were disproportionately represented in case numbers and deaths. If we are to prevent the same mistakes from happening, the Government must listen. If they do not listen to me, they should listen to Professors Sir Michael Marmot, Clare Bambra and Kate Pickett, and to countless others. There is overwhelming evidence to show that structural inequalities in our country drove the unequal death toll from covid.
Michael Marmot revealed that instead of narrowing, health inequalities, including how long we are going to live and to live in good health, were getting worse; prior to covid, our life expectancy and healthy life expectancy was getting worse. Most significantly, his analysis showed that unlike the situation in the majority of other high-income countries, our life expectancy was flatlining. For the poorest 10% of the country, including in my part of the world, it was actually declining, with women being particularly affected. He showed that “place matters”; living in a deprived area in the north-east was worse health-wise than living in an equally deprived area in London.
Sir Michael also emphasised that it is predominantly the socioeconomic conditions that people are exposed to, not the NHS, that will drive their health status and how long they will live. Analysing the abundant evidence available, he attributed the shorter lives that people in poorer areas such as my north-west constituency are predominantly living to the disproportional Government cuts to local public services, support and income that they have experienced since 2010—and then the pandemic hit. As the National Audit Office and others have outlined, it was always a question of when, not if, there would be a pandemic. Like many of us, Sir Michael has pointed out that the Government’s hubris can be seen not only in their pandemic management but in the high and unequal covid death toll. Improving our health and wellbeing must be a priority of this Government and an outcome of our economic—and other—policies.
Matt Rodda (Reading East) (Lab)
My hon. Friend is making an excellent, powerful speech. Does she agree that the inequality she has described also extends across a range of other fields, such as the quality of housing and of food?
Debbie Abrahams
My hon. Friend is absolutely right on that. When we look at the socioeconomic inequalities and the social determinants of health, we see that they include both the quality of housing and people’s opportunities for healthy living. That all has an impact, but we know that our socioeconomic determinants are the key drivers—the most important ones—of our health outcomes. There is indisputable evidence about that, which is unfortunately not reflected in some of the choices the Government are making.
I am glad that my party has recognised that, along with the importance of tackling socioeconomic determinants of health, in our health mission. We will take a health-in-all policies approach to tackle the socioeconomic inequalities driving health inequalities across our country. We will create a Marmot England and introduce new mission-delivery boards to ensure Government Departments work together to tackle health inequalities. My new clause is about ensuring that the Chancellor also recognises this and publishes a review into the impacts on poverty, inequality and, ultimately, health. After covid, that is the least the Government can do.
Priti Patel (Witham) (Con)
I am grateful for the opportunity to speak to amendment 20, tabled in my name, which has the support of more than 25 right hon. and hon. Members.
It is not breaking news that I remain concerned about the introduction of a global minimum corporation tax. We have debated the issue in the House, in Committee— Ministers, the Chancellor and colleagues, including the hon. Member for Ealing North (James Murray), the Opposition spokesperson, are aware of my views—but I think it is right that we have the right level of scrutiny of the policy because I have concerns about the implementation, which I have raised consistently.
Before I come to the range of concerns about the policy, I will touch on the remarks made by the Chair of the Treasury Committee, my hon. Friend the Member for West Worcestershire (Harriett Baldwin). She spoke about the need for business certainty, which is crucial, as did the hon. Member for Ealing North. I believe that the implementation of this tax policy creates challenges for businesses and for business certainty. As she highlighted, it also exacerbates the complexities that businesses face when it comes to administering these policies. There are also implications for capital allowances.
Richard Drax
I congratulate my right hon. Friend on amendment 20. The only certainty that the Opposition can offer to businesses is that taxes will be so high that businesses will fail—that is about the only thing the Opposition can do. So far as this measure is concerned, can she tell the House what the Americans think of the idea? Where are they in their thinking?
Priti Patel
I thank my hon. Friend for his support for the amendment and for his comments. As we have discussed previously—I was going to touch on this—the United States is not in a position to introduce the policy. It is a fact—politics in the US is like politics here or anywhere in the world—that the Republican party has made it abundantly clear that it will not allow this policy to go through. It wants to go further and to bring in legislation that will put retaliatory measures in place against countries that impose the new tax and burdens on US businesses and multinationals.
Returning to the amendment, I will come on to some specifics with regard to the dialogue I have been having with the Minister and the Chancellor on this subject. It is right that we scrutinise the policy, which the amendment seeks to do. It is right for the Government to pursue international agreement to address the complex tax arrangements, which hon. Members have referred to, that exist with multinational corporations and businesses operating in multiple jurisdictions. That is vital and makes sense.
Richard Foord (Tiverton and Honiton) (LD)
On the point about multinational corporations, does the right hon. Member think that it is right that we treat multinational corporations that produce oil and gas in a different way from the way we treat renewable energy companies, including companies that produce renewable energy and invest in renewable energy projects? At the moment, it seems that the energy profits levy treats those things in different ways. Will she be supporting Liberal Democrat amendments to the Bill to encourage investment in renewable energy projects?
Priti Patel
I thank the hon. Gentleman for his comments. I would rather businesses had zero taxation policies. I should declare an interest: when I was a Treasury Minister many years ago, I undertook the fiscal review of oil and gas. Frankly, we need to do everything to stimulate investment in both oil and gas and renewables. I would like to see consistency in policies on that.
Specifically to my point about multinationals and how they are taxed in jurisdictions, I support the Government in the sense that it is right to look to close tax loopholes where we see companies operating in multiple jurisdictions, but the plans for a global minimum tax are wrong, as I have raised in the House before. They are wrong and flawed for a number of reasons.
No one would deny that the introduction of such a measure is complex—it is not straightforward. I paid attention to the comments made by the hon. Member for Ealing North. There is no point just saying that we need to crack on and implement this; we have to do it in the right way, which is why I put forward the amendment. It even gives the Government scope for more time to look at the complexities around its implementation and to look at what our competitors are doing. We should not rush headlong into this. These are complex changes that will be challenging to enforce; I will speak about that, too.
I believe the measure is anti-competitive. It undermines our fiscal sovereignty. Without labouring the point too much, we have left the EU. The Government have the ability to make their own tax laws and fiscal sovereignty is crucial to this, too. Why are we are now going to surrender tax powers to the will of the OECD?
Economic growth has already been mentioned by my hon. Friend the Chair of the Treasury Committee. We do not want to undermine our ability to be a low-tax global beacon of free trade. The Government are pursuing policies such as freeports. We all welcome that when it comes to competition, but we do not want to encourage a culture of subsidies, which this policy will do.
I believe that Governments and Parliaments must have flexibility to set their own fiscal policies and tax rates, striking a balance across all sectors, including multinational companies and small and medium-sized enterprises. Speaking as an MP for Essex, which is known to be an entrepreneurial county, SMEs are the backbone of our economy. We have to strike a balance between being competitive and having low tax rates to attract investment, and generating revenue to support public services—I agree with the hon. Member for Ealing North about that. If we are not competitive, we will not have the tax revenues to support public services. However, a minimum corporate tax would prevent us from doing that.
There are problems with the OECD’s plan, which is why I want to have greater scrutiny on implementation. The enforcement and implementation mechanisms are unclear and countries could find ways around them, which should concern us. They could find loopholes to circumvent the policy. The UK looks set to gold plate measures. We follow rules and standards when we sign up to them, which is the right thing to do when it comes to our Government policies. The same cannot be said for more than 130 countries that have taken an interest in the matter. For many, agreeing to the OECD framework appears to be more about rhetoric and the ability to take action on taxing multinationals, than making the changes necessary and following the committed approach that this Government plan to take. I have no doubt that the Minister will want to speak about that, because the Government are being diligent in their approach and more scrutiny is required.
Moreover, limiting fiscal freedoms opens the door for countries to entice investment from big businesses with big subsidies, which distorts the market. All hon. and right hon. Members will understand that in a subsidy race we simply cannot compete with the United States or even China. Some countries can pump millions of dollars into supporting investment from multinationals. That is not what we do in this country.
We are more competitive as a country in being able to deploy a full range of fiscal and tax-cutting powers, than we are in a race to the bottom with subsidies. There are serious concerns about how these plans will be enforced and, importantly, how disputes between countries will be resolved. I understand that negotiations with the OECD are taking longer than expected, which is not a surprise, and I think it will be some time before an agreement is reached, but by baking into primary legislation a requirement for us to implement without any further flexibility, we risk blindly signing up to a package where foreign officials could overrule decisions and interpretations in our own jurisdiction and in on our own Government.
The peer review panels, being set up to review implementation, could be made up of representatives from China or other hostile states—for example, Russia—all countries which are involved in the process and states that have concerning records on human rights, war crimes and other conflicts, which we debate in this House day in, day out. Frankly, they do not meet our standards and we should be cognisant of that. Our tax affairs could be judged by representatives from states that many in this House are concerned about.
There is then the issue of the date of implementation, which I have referred to in my amendment. The Government have been clear that they will implement the policy by the end of this year— as clause 264 states, from 31 December 2023. This measure, despite the concerns I am raising, can only have a chance of succeeding in the way the Government hope if it is implemented in a constituent manner by all states—or, if not that, by a critical mass—at the same time. This is where we have concerns. We are just not seeing this right now in other countries and among our competitors, because they are not as wedded to the date as we are. I understand why we have to put down the date to enshrine it in law.
The United States, as my hon. Friend the Member for South Dorset (Richard Drax) has mentioned, will not be able to take this through to implementation by 2024. The Republicans in the House of Representatives are opposing those plans. But as well as opposing and preventing the US—our largest trading power—from introducing them, they are threatening retaliatory measures on countries that implement the policy, and in doing so will penalise US-based companies. So we could have a situation where this Government introduce a tax measure that adversely impacts on our trade and investment with the US. Of course, that could have an impact on trade negotiations and some of the work that other Departments are doing—such as Business and Trade, for example.
It would be interesting to know from the Minister whether this issue was discussed by the Prime Minister and the President in their recent bilateral talks. The US is crucial in this, but it is not just the US that will not implement the policy. The EU members are not going to implement the policy fully on day one. They have been given six years to implement tit. In Asia, major economies and competitors are setting dates behind the UK: Japan, Singapore, Thailand and Hong Kong. Although that the Government have been clear about their intent, we need to know what they intend to do on implementation. I have put my own concerns about this tax on the record. I think the date is wrong.
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
My right hon. Friend knows that I have signed her amendment. It is a good amendment because the compromise, as it stands, gives the Government more time to think carefully about what we are doing here. As she said, the Americans are almost certainly not going to implement this measure. That means that the single largest trading nation in the world will not play a part in this. What assurances has she secured from the Government? Will she press her amendment tonight? If she does so, I will support her. If she does not press it, I will understand that she has some assurances. Can she spell out what the assurances from the Government are?
Priti Patel
This is important. The purpose of scrutinising the Bill and discussing the amendment is about the implementation and how the Government will pursue that. We have big concerns. Other countries are not moving forward, so we will be the first. We need a sensible and practical course of action. My amendment is reasonable.
I have had discussions with the Chancellor in particular. He has given some very clear assurances that, in the light of the points that I have raised, not just today but previously, and the conversations that I and all colleagues who have signed the amendment have had, in respect of the implementation of the tax, the Government have committed to bring to this House regular updates on what the OECD is proposing with regards to policing pillar 2. That speaks to my point about how all the enforcement mechanisms will work and about whether countries will be circumventing the rules and the structures of pillar 2. Also, before the summer recess, they will bring forward some detailed assumptions and modelling. The Treasury has forecast and scored, as I understand it, the expected tax revenues from pillar 2. That is something that I have been pursuing and asking specific questions about. It is important that we understand not only what revenues are gained, but the costs that will be incurred, particularly by businesses.
I have received clear assurances that the Government will publish, ahead of the autumn statement, details on the compatibility—or even the lack of compatibility—and interoperability of the US’s global minimum tax legislation and that proposed by the OECD. That, of course, has an impact of double taxation for companies.
Madam Deputy Speaker (Dame Rosie Winterton)
I gently remind colleagues that if they want to intervene on a speaker, it is important that they are in the Chamber at the beginning of the speech, just in case the point that they wish to raise has already been made. It is also important to stay until the end. I call the SNP spokesperson.
Stewart Hosie
Before I turn to the new clauses and amendments before us, it is worth reminding ourselves briefly about the debate so far, not least that the Bill was derived from a Budget that had the stated intention of seeing the debt, borrowing and inflation all fall. As the Financial Secretary has said previously, debt servicing costs are down, and indeed they are—they are down from last November, but massively up from the previous year. She said that the fiscal targets are to be met. Again, indeed they are. The debt target in particular is forecast to be met in five years’ time measured against the fiscal charter, but it will be at 0.2% of GDP. That is £6 billion out of a GDP approaching £3 trillion. As I have said before, these are very fine margins.
Although it is true that having a weather eye on debt and deficit—the big macro-economic indicators—is important, so too is immediate help for families suffering from high inflation, high energy prices and spiralling mortgage costs. Those things, however, are all sadly absent from the Bill. That is important because the OBR has told us that living standards will fall by 6% over this fiscal year. That will be the largest two-year fall since Office for National Statistics records began in the 1950s. It is important because inflation is still at 8.7%, and it is far worse for certain essentials such as sugar, at nearly 50%. Remember that inflation was forecast to fall to 2.9% by the end of this year. Since then, it has been revised up to 5% by the end of this year. That means that the forecasts and the pain keep rising.
We know that real pay is not keeping pace with inflation. Troublingly, the Government are keeping their head in the sand regarding the inflationary impact of Brexit, ignoring even the former Bank of England Governor, Mark Carney, who could not have been clearer about the contribution Brexit has made to the soaring inflation we face.
I turn to the amendments and new clauses we are considering on Report. New clause 1 calls for a review of alternatives to the abolition of the lifetime allowance, and amendments 1 to 6 delete clauses associated with the abolition. On Second Reading, I suggested the need to probe this matter in Committee. The decision to remove the cap on lifetime pension allowances, which will cost around £3 billion, will benefit a tiny number of already pretty comfortably off or very well-off people. I also suggested that, if the measure was genuinely designed to lift certain categories of worker—doctors in particular—out of a pension and employment trap, the Government should, to be brutally honest, have come up with a much better and far narrower solution.
My hon. Friend the Member for Aberdeen North (Kirsty Blackman) also raised the matter in the Committee upstairs. She made the point that a significant number of questions have been raised in the House and elsewhere about the lifetime allowance and the problem it has caused, particularly for NHS doctors, but went on to quote Torsten Bell of the Resolution Foundation, who noted that 20% of those who will benefit from the change in the lifetime allowance work in the finance industry, meaning that nearly as many bankers as doctors will benefit. That surely cannot have been the intention. We are pleased to support new clause 1, because it seeks not simply a review, but a review that will make recommendations about how a more focused alternative could be delivered.
Amendment 7 seeks to remove entirely the abolition of the Office of Tax Simplification, and new clause 2 seeks reports based on metrics to measure the performance of tax simplification. We will support both if they are voted upon. My hon. Friend the Member for Dunfermline and West Fife (Douglas Chapman) provided some excellent context in Committee, arguing that
“the OTS achieved a significant amount during its 12 years of existence and, with greater ministerial support for its proposals, could have achieved much more.”—[Official Report, Finance (No. 2) Public Bill Committee, 18 May 2023; c. 136.]
He also quoted George Crozier of the Chartered Institute of Taxation, as many have done over many years, who said that there had been
“useful reforms to employee expenses and inheritance tax reporting,”
and that
“every Finance Act of the last decade has had measures in it which owe their genesis to the OTS, and which have made navigating the tax system easier for one group or another.”
My hon. Friend also made the rather important point that it was the independence of the Office of Tax Simplification that made it stand out from anything that can be provided in-house. We will back amendment 7 and new clause 2 if they are pressed to a Division.
If I may say a few words about Government new clause 4 and Government amendments 9 to 13, they appear to come under the category of tidying up and clarification. New clause 4 in particular ensures that both domestic and international top-up taxes commence at the same time, and the other amendments ensure that reliefs and charges operate as intended.
However, I am rather less sanguine about Government new clause 5. Ostensibly, it is required to deal with the situation where
“financial institutions are regarded as telecommunications or postal operators”.
For example, subsection (5) of Government new clause 5 suggests that paragraph 19(4) and (5) of schedule 36 to the Finance Act 2008 be removed, but paragraph (19)(4) says:
“An information notice does not require a telecommunications operator or postal operator to provide or produce communications data.”
That is a protection against the requirement to produce data in certain circumstances. Paragraph 19(5) defines “communications data”, “postal operator” and “telecommunications operator” as per the Investigatory Powers Act 2016—the very legislation that inserted those protections into schedule 36 to the Finance Act 2008 in the first place. Government new clause 5 not only affects the financial institutions regarded as telecoms or postal operators but, it would appear on my reading, removes protections in the Act for all telecommunications and postal operators not to be required to provide certain information in certain circumstances.
The Financial Secretary said she would answer questions at the end in her summing-up, and my questions are rather simple. What problem is Government new clause 5 designed to address? Why has a potentially significant amendment such as this come so late in the day? Is it even remotely appropriate that a criminal justice measure, the Investigatory Powers Act, should be amended in a potentially significant way through a late-delivered new clause on Report of a Finance Bill?
New clauses 3 and 8 to 14 call for reviews or reports of one form or another on the public health and poverty effects of the Bill, the oil and gas profits levy allowance, the impact of those with non-dom status, the bands and rates of air passenger duty, the impact of tax changes on households, and the effect of the Bill on the affordability of food and on small businesses. We are happy to look on those positively, although I am not certain that new clause 12 should really be opening the door to reducing the electricity generator levy. The Lib Dems have disappeared, but I would have said to the hon. Member for Tiverton and Honiton (Richard Foord), had he been in this place, that if one opens the door to a tax cut to the Tories, they by and large take it.
We will also support new clause 7, which requires a statement of progress on the pillar 2 reforms, seeking
“to extend and strengthen the global minimum corporate tax framework”.
It is important that we have a global minimum corporate tax framework, and I am not convinced by the arguments made by the right hon. Member for Witham (Priti Patel) about offering the opportunity for implementation to be delayed.
Again, the Lib Dems are not in their place, but I am also not yet convinced by new clause 15 because, while there are issues with the Government’s research and development framework, which I have raised before—namely, the stated intention to limit attributable expenditure for data and cloud computing licences—the new clause seeks to make the regime more restrictive and introduces the extraordinarily subjective viability clause in subsection (2)(a).
It is, however, true that none or few of the amendments and new clauses tabled substantially alter the Bill. It is also sadly true that none of the Government changes offer any hope of substantial help for the cost of living crisis any time soon. I fear that the Bill, and the Budget it derived from, will go down in the missed opportunity category.
Alun Cairns
I will speak to part 2 of the Bill, clauses 46 to 60, to which Government amendments 15 and 16 refer. In general, they relate to duty rates and any exemptions that apply thereafter. The Government’s objectives have been to simplify the system, to have an emphasis on health and healthy consumption, and, of course, to support pubs. In general, these are significant changes that have a positive impact on the hospitality sector.
When the Exchequer Secretary’s predecessor, my hon. Friend the Member for South Suffolk (James Cartlidge), said at the Dispatch Box that the Bill delivers the Brexit pub guarantee, there was significant enthusiasm within the sector to recognise and interpret a long-term commitment. There are two elements that immediately stem from that. The first is that these are changes that can be delivered as a result of Brexit; there were difficulties, challenges and nonsensical structures in the sector that could not be amended while we were a member of the EU. That is a major positive impact. However, the significance of the Brexit pub guarantee is that it will be long-term and we look for it to be ever extended.
I pay tribute to the Exchequer Secretary, who has engaged with me on some of the points that I have already made, but also to his predecessor, to the Chancellor, and to the Prime Minister when he was Chancellor, for recognising the opportunities to amend duty rates. That can genuinely help the hospitality sector, particularly pubs.
The original draft duty relief, which was in the Budget two years ago, was set to be 5% and to come into force this year. This year’s Budget and the Bill increased that to 9.1%, which will make a real difference. It follows the theme, all being well, of a continuing differential between rates that apply to the off-licence trade and those that apply to pubs and the general hospitality sector. The Government have therefore taken important, positive steps, which are welcomed far and wide.
Nigel Mills (Amber Valley) (Con)
It is pleasure to speak to amendment 21, which stands in my name. I also want to speak to the amendments on the Office of Tax Simplification, which my hon. Friend the Member for West Worcestershire (Harriett Baldwin) tabled and I was happy to put my name to.
In my more naive and mischievous days, I occasionally tabled amendments to Finance Bills that called on the OTS to review elements of tax. The last time I tried that was on corporation tax in about 2014 and the amendment was accidentally passed in the Bill Committee. I say “accidentally” because neither side knew that we were voting for the amendment. We thought we were voting to withdraw it and we had to rewrite history quickly and pretend that the amendment had not been passed. I have not been able to serve on a Finance Bill Committee ever since, or indeed any Bill Committee, so perhaps I could recommend that as a tactic for Members who do not enjoy them as much as I used to.
If we were being slightly mischievous, we could say that 13 years of the OTS has not resulted in a tax system that is a great deal simpler than the one we have now, but that is probably more the Treasury’s fault than the OTS’s. The serious point is that we need to find a mechanism whereby we can simplify our tax regime. It has got ever more complicated, and at some point we will see taxes start to fall over, because the complexity of different policy ideas over time that conflict with one another leaves us with a system that is incredibly hard to follow and to comply with and is putting undue costs on individuals and businesses.
We could, in a rolling programme, find a way of taking out some of this complexity by being a bit clearer in our policymaking about what we are trying to do. Are we trying to raise income? Are we trying to encourage or discourage certain behaviours? Are we trying to virtue-signal? Are we trying to win votes? Sadly, we do all those things at the same time, sometimes in conflicting ways, and end up with a rather strange system.
The amendments I want to speak to are about the global minimum corporate tax. I think I am the lone voice on the Back Benches who likes to speak in favour of this. I remember looking at this issue before I came here. The OECD has spent a very long time trying to find a solution to base erosion and profit shifting. A few years ago, it produced 15 or so ideas that were quite worthy but made absolutely no progress. The Government then introduced the diverted profits tax in the UK to try to tackle this issue on a domestic basis. It would be a terrible signal if the UK, having been one of the countries that signed up to this, now decided that we want to delay implementation and not go ahead with it.
To be fair, no other solution has been found to how we can stop certain large multinationals trying to hide revenue in low-tax jurisdictions that has no commercial basis for being there. We have tried changing transfer pricing rules, we have tried country-by-country solutions, and we have tried more reporting—we have tried all manner of things, but none of them has managed to fix the problem. That is why the two pillars in the most recent OECD deal, while far from perfect, are the best we are going to get. If we do not go ahead with those, we might see some even more radical, less consensual, less well thought-through ideas being brought in. We even see the UN starting to play in this space, and there is a real risk that what it produces may not be consistent with a coherent tax regime.
I am not the biggest fan of the OECD. I once described it as the “Organisation for Excessively Complex Drivel.” If we read the rules that we are putting through today, there is a real sign that it is excessively complex, and that was my motivation for tabling amendment 21. We probably could have found a better way of achieving the same thing, rather than UK-headquartered groups having to go through a very complicated series of calculations for every subsidiary they have in an overseas regime to try to work out whether they have paid the 15% minimum tax, when the headline rate in those countries is 25% or 30%, and it is extraordinarily unlikely that they will not have paid that 15% tax, and there may well have been timing differences that have to be worked through to try to prove that. That will be a huge compliance burden, and it will not add very much. It will not collect any tax, and it will just make these rules look a lot worse than they are.
The purpose of amendment 21 is to offer the Government the chance to extend the power that the transitional, lighter-touch regime we are allowed to use for the first three years of the rules that has been agreed by the OECD and use it for a bit longer, especially if not every country in the world is following our early implementation of these things, to try to avoid us imposing a compliance burden in the UK that will not exist elsewhere. I accept that that is not currently in the OECD agreement.
As more and more countries try to put these rules into their own domestic law, I think we might see them realise how fiendishly complicated they are and start to look for simpler ways of implementing them, so that we can focus on working out where real tax abuse—avoidance and evasion—is taking place and go and collect the tax that is not being paid, rather than having a big compliance burden. There are plenty of precedents for how we can do that in our own tax rules. We had the worldwide debt cap, which we do not need any more, so we scrapped it, but that had a gateway test. Companies went through a simple test, and if it was clear that they were innocent, they did not have to go through the full detail of the rules. I am sure that we could find some way around that. Our old foreign-controlled company rules had a list of territories that were treated as good unless there was any avoidance going on, and we could use a model like that.
I want to touch on why it is important that the UK takes a lead on this. I think it is fair to say that our overseas territories and Crown dependencies have been among those that have behaved the naughtiest around the world in terms of certain tax behaviours that they have encouraged or permitted in their jurisdictions. We are not going to get global progress on this issue if the UK is not at the forefront. If we say we will wait for the pack, half the world will think, “Well, they’re the ones that have been responsible for a whole chunk of this. If they’re not going to do it, we’re certainly not going to do it.” It is important that we are seen to take a lead in tackling this. Getting this right is hugely popular. Our constituents do not want to see large multinational corporations hiding their profits in low-tax jurisdictions. This sort of relatively moderate measure that we are opting into as part of a global deal does not have any sovereignty concerns.
Victoria Atkins
I should have known by now that my hon. Friend the Member for Amber Valley (Nigel Mills) would put his points succinctly and with expertise. He has taken me a little by surprise in ending as he did, but I thank him greatly for his comments.
May I conclude this stage of the scrutiny of the Bill by first of all genuinely thanking all right hon. and hon. Friends and Members for their contributions on Report? It has genuinely been the sort of scrutiny that shows this House in its best light: although there has been a certain amount of party politicking in certain parts of the Chamber, a very detailed set of questions and concerns has been raised about some of the most complex parts of the Bill. When I responded to the Chair of the Treasury Select Committee, my hon. Friend the Member for West Worcestershire (Harriett Baldwin), in giving evidence last week, I said that VAT is the most complex part of tax law, which in itself is incredibly complex. I think I am about to prove that pillar 2 may be joining that very elevated rank.
If I may, I shall concentrate on some of the amendments that have been the focus of the House this afternoon; I hope colleagues will understand if I do not address some amendments that have not been spoken to, or will not be pushed to a Division. First and foremost, I will deal with tax simplification—in new clause 2 and amendment 7, which have been tabled by my hon. Friend the Member for West Worcestershire. Again, I very much thank our Treasury Select Committee colleagues for their interest, their expertise and their commitment on this issue, and their scrutiny of opportunities for tax simplification. I have read the report already, which I hope shows my commitment to simplification. I hope my hon. Friend will understand if I do not respond in detail to the report now; we will of course respond formally to it in due course.
My right hon. Friend the Chancellor and I remain deeply committed to simplifying the tax system. My right hon. Friend the Member for North West Hampshire (Kit Malthouse) intervened earlier on: he is a chartered accountant, so he knows with great expertise just how complicated some aspects of the tax system can be. I very much share the Chancellor’s ambition and determination to try to bring some simplicity to some of these reliefs and rules. We very much want to engage constructively with the Treasury Select Committee and, indeed, the whole House in our efforts to do so.
If I may, I will just touch on amendment 7. We have introduced through this Finance Bill our determination to put simplification at the heart of the tax system and our consideration of it, which is why we will not be able to renege on our commitment to abolish the Office of Tax Simplification. We are going to stay the course with that policy, but we genuinely see the Bill as an opportunity to enable us to put simplification at the heart of the Treasury.
With regard to new clause 2, the Chancellor has set a clear mandate to Treasury and HMRC officials to focus on both the simplicity of new tax policy design and simplifying the existing tax rules and administration at all times. At spring Budget, the Chancellor announced the first steps of that work, including a range of improvements to make it easier for businesses, especially small businesses, to interact with the tax system. That includes—this is by no means an exhaustive list—a systematic review to transform HMRC guidance and key forms for small businesses, and a consultation on expanding the cash basis, which is a simplified way for over 4 million sole traders to calculate and pay their income tax. As my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) said, these need to be practical simplification measures. I very much hope that the consultation on the cash basis will provide some of that practicality that she and others so wish for.
We are also taking further action to simplify the tax system through the Bill. A great example of that is the permanent £1 million limit to the annual investment allowance, which provides 100% first-year relief for qualifying main and special-rate investments in plant and machinery, simplifying the tax treatment of capital expenditure for 99% of businesses. The Bill will also simplify the process of granting share options under an enterprise management incentive scheme. We also announced at spring Budget our efforts to simplify the customs import and export processes. That includes opportunities to streamline customs declaration requirements and engage with traders on plans to rationalise and digitise HMRC’s authorisation processes, all of which is obviously essential with our bright new future out of the EU.
The Chancellor has also set out that he is asking officials to consider tax simplification ahead of every fiscal event. Of course, hon. Members will have ample opportunity to scrutinise the Government’s progress on simplification through the finance Bill process each year. We also continue to publish tax information and impact notes, which set out the expected impact of tax policy changes on individuals and businesses, and HMRC’s annual customer experience surveys, which measure taxpayers’ overall experience of interacting with HMRC.
Dame Andrea Leadsom
Just to clarify, will the Minister include in her assessment a simplification of the cliff edges that the Chair of the Treasury Committee raised? We have taken quite a lot of evidence on that, and it really does create disincentives to invest, to work and so on.
Victoria Atkins
That is a very interesting point. I hope the Chair will not mind my saying so, but when I gave evidence last week, quite rightly I was challenged about how we measure success. This is incredibly complex, as my right hon. Friend will appreciate. For example, with the corporation tax rises, we have introduced the tapering because we have the policy intent of trying to help businesses that are small or perhaps finding their feet, and we do not want to be charging them 25% corporation tax if they have not reached the levels of profit set out in the Bill. The metrics we will use are very much being considered. I am not in a position to commit to those metrics at the moment, but I promise I will come back to her when we have a settled package that we think will address not only the concerns of the Committee but the wider concerns beyond simplification, such as fairness and encouraging growth.
HMRC also reports annually in its reports on its objective to make it easy to get tax right. As I have just set out, we are actively considering how to develop a suite of metrics to measure progress on that. Precisely because we recognise the concerns and the thoughtful considerations of the Treasury Committee and others across the House, I was very pleased at being able to intervene on my hon. Friend the Member for West Worcestershire to commit today to reporting annually—that is, in each tax year—to the Committee to provide an overarching summary of the Government’s progress on the simplification. To be very clear, I intend that to start this tax year, because I take this very seriously and I very much hope that Committee members and others in the House will share my intentions in so doing. I therefore hope that my hon. Friend and Committee members will not feel the need to press their amendments and new clauses.
I turn now to the subject of the global minimum tax legislation, which is again a complicated area. If I may, Madam Deputy Speaker, with your munificence, I will just spend a little bit of time on it, precisely because I understand the concerns that my hon. Friends have and, indeed, the level of scrutiny they have quite rightly given it as the Bill has made its journey through the House. First and foremost, if I may—I am very keen to get this on the record, because I know that my right hon. Friend the Member for Witham (Priti Patel) will rightly expect such commitments on the record—before I make the commitments that the Chancellor has made in his letter, I will set out the background to pillar 2. Although my right hon. Friend the Member for Witham clearly has a great deal of knowledge about this area, it is fair to say that not everybody in Parliament will have the same understanding.
By way of an explainer, pillar 2 will ensure that large multinational groups with revenues of more than £750 million pay a minimum effective tax rate of 15% in every jurisdiction they operate in. It is designed to protect against the risk of harmful tax planning by multinational groups and to promote fair and open competition on tax policy. It is really to prevent those large multinationals from shifting profit out of the UK to those parts of the world that charge far lower tax rates than us. This will help to ensure that profits generated here in the UK are taxed in the UK, and it will strengthen the UK’s international competitiveness through placing a floor on the low tax rates that have been available in some countries.
A lot of questions have been asked about implementation, and I shall go into detail on them in a moment, but if we do not implement these rules, the tax will still be collected, but by another jurisdiction. That is because pillar 2 is designed as an interlocking set of rules ensuring that low-taxed profits will be taxed even if the UK or other countries do not move ahead. This is why we are determined to introduce or implement pillar 2 from 31 December this year, along with other EU member states and with Australia, Canada, Japan and Switzerland, so that we are moving in lockstep with our international peers.
Before I answer some of the questions that my right hon. Friend the Member for Witham has rightly raised, let me put on record my sincere thanks to her, and to other colleagues and friends who signed her amendment—and to whom I have spoken over many months in the run-up to today—to scrutinise what this means for the United Kingdom and for businesses. I absolutely understand why they are asking the questions. As I said, this is Parliament at its best, and I am genuinely grateful to her for raising these questions. What is more, the Chancellor is grateful. My right hon. Friend wrote to the Chancellor, and I am pleased to inform the House that he replied to her in the following way, to ensure that we all understand and appreciate the levels of scrutiny that have taken place.
The Chancellor maintains that the Government are sadly not in a position to support the amendment, but we recognise the importance of these matters to hon. Friends and Members of the House. On that basis, the Chancellor and I are happy to provide an update on pillar 2 implementation as part of the forthcoming fiscal event in the autumn, and if necessary in the spring. That update will include the latest revenue forecast from the OBR—that is an important point—and a status update on international implementation, which is a point that hon. Members are focused on. It goes without saying—I hope my right hon. Friend and others know this—that the Chancellor and I stand ready and are happy to continue to discuss such issues with her and others, as we move towards implementation towards the end of the year.
Quite rightly, my right hon. Friend and others have posed questions, and I will try to answer some of them. I was asked about implementation, which I completely understand. The member states of the EU are committed to implementation, and the EU directive in place is legally binding. The directive allows small member states—defined as those with 12 or fewer parent entities, and, therefore, those that are much smaller than our economy—more time to introduce the rules. Those countries are very few, and are not in the same economic position as the United Kingdom. They will not get an advantage from delaying implementation, as the directive requires other EU member states to collect the tax instead.
I have also looked to countries such as Thailand, Singapore and Hong Kong. The UK has a large and mixed economy, where it is appropriate for us to take action to combat aggressive tax planning and support measures that support competition. Australia, Japan and Canada, which are our peers by size and shape of economy, are also implementing that rule. Indeed, Japan’s 2023 tax reform Bill was enacted after passing Japanese procedures in March. It will be introducing the income inclusion rule from 1 April, four months after us next year.
On the States, I understand why the question is being posed, and my hon. Friend the Member for Amber Valley set out some of the history behind where America has got to. In 2017, the US introduced a minimum tax on the foreign income of its multinationals, and it has recently introduced a minimum tax on the domestic income of large groups, including foreign headed multinationals. The US already has in place rules that operate on a similar basis to pillar 2, and it has been one of the strongest advocates for developing a global standard. It has maintained its commitment to align its rules with the agreed pillar 2 template, but until that happens, the OECD inclusive framework members, including the US, have agreed how the US rules and pillar 2 rules should interact, to ensure that US multinationals are subject to the same standard as groups in other countries. That is an important context.
If it is not implemented in the UK, what does that mean? Again, the question posed is a fair one. Generally, the international top-up tax is applied at the top of the business, and at the level of the ultimate parent entity. If that jurisdiction has not implemented the rule, the taxing right passes down the ownership chain of the business, until there is an entity in a jurisdiction that has implemented the rule. This is why without UK rules, this tax—chargeable in the UK, if it did apply—would be payable to another jurisdiction unless and until we implement the rules.
I very much understand the concerns raised about sovereignty. We retain the sovereignty to set our corporation tax rate. It is still the lowest in the G7, and we can use important tax levers to boost investment, including the UK’s world-leading R&D credit and full expensing regimes announced in the Budget. We have also ensured that UK tax reliefs such as the refundable R&D credit will not be treated as depressing the effective tax rates of claimants. We have been able to achieve that because we have been at the forefront of discussions and negotiations on these rules.
On the point about how these rules are agreed, implemented and who holds who to account, the model rules were agreed by consensus requiring the agreement of each country and jurisdiction. It is then up to each country and jurisdiction to implement the rules. There is not a higher body than jurisdictions here to do so. I very much understand the concern about innovation and growth. We will remain free to use the corporation tax system to support innovation, business investment and regional growth through R&D tax credits, enhanced capital allowances and tax reliefs in investment zones. We must continue to work together with our partners to avoid a subsidy race that could distort trade or impact sectors.
In answering those questions, I hope I have addressed some of the issues that Members have raised in relation to pillar 2. I very much hope that my right hon. Friend the Member for Witham, having brought the scrutiny which would be expected from her, will feel able not to press her amendment to a vote.
On the lifetime allowance and the Opposition’s new clause 1 and amendments 1 and 6, the Opposition just do not seem to get it. This measure has been brought forward to help the NHS retain those doctors and consultants whom we are so desperate to have in our NHS looking after our constituents and helping to cut the backlogs, as the Prime Minister has set out as one of his five priorities. That is why we have introduced this policy. The hon. Member for Ealing North (James Murray) seems to think—and we have had this conversation many times before—we could have dreamt up a proposal dealing just with doctors in the same amount of time it took us to bring in this policy—two weeks. The fact is that this measure started having an impact on our doctors, our consultants, our chief constables and others this tax year, as hon. and right hon. Friends have set out. We want to make that change precisely because we believe that our NHS and public services deserve it, and that is why we are bringing that lifetime allowance forward.
Moving to the non-doms point, this is again a conversation we have had repeatedly with those on the Opposition Front Bench. The hon. Member for Ealing North asked about the £830 million and seemed to question it. I am sorry to break it to him, but that has been scorecarded by the Office for Budget Responsibility. It has certified it, costed it and said that it will bring in £830 million over the scorecard period.
My right hon. Friend the Member for Vale of Glamorgan (Alun Cairns) raised important questions regarding alcohol duty. He welcomes the changes in the round, but as the chair of the all-party parliamentary beer group, it is understandable that he is asking whether the draft relief is designed to apply to off-trade pints as well as on-trade pints. I am afraid that it is not, because we want to support consumption of beer in pubs. It is one of many ways not only to support our local pubs, but also to secure opportunities arising out of our exit from the European Union. Only pints in pubs will be subject to this measure, not pints poured into takeaway containers. The industry body the Campaign for Real Ale has lobbied to ask that that could happen. We have looked at the idea carefully, as has the Economic Secretary to the Treasury, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith), but we have serious concerns that it would overcomplicate the draft relief. I hope to reassure my right hon. Friend and CAMRA that takeaway services can continue so long as the beer comes from a full-duty barrel. I am reminded that takeaway off-trade beer accounts for 0.1% of beer sales, but, when the Bill passes its Third Reading today, I am sure that we will all be raising a pint in celebration.
We touched briefly on the electricity generator levy, which is payable only on the portion of revenues that exceeds the long-run average for electricity prices. We have done that carefully to try to ensure that we achieve the Government’s wanted net zero ends while looking after customers. New clause 12 perhaps misunderstands how the EGL operates, so we urge colleagues to reject it. In relation to the energy profits levy, it is important to note that the Government expect it to raise just under £26 billion between 2022 and 2028, helping to fund the vital cost of living support that we have discussed.
In relation to air passenger duty and new clause 10, we have made changes to take advantage again of our post-EU freedoms and to support the United Kingdom. We want friends and family to be able to fly to see each other across the United Kingdom. I am not quite clear whether Labour understands that or is now against helping friends and family across the UK to reunite. I am sure that all will become about as clear as its £28 billion U-turn.
I turn to new clause 5. The right hon. Member for Dundee East (Stewart Hosie) asked why are we making this change on Report. It became apparent that a welcome clarification by the Home Office on how information is obtained for criminal investigations means that some data that is genuinely needed by His Majesty’s Revenue and Customs to check a person’s tax position is deemed as communications data. The clarification aims to secure that into law. We are trying to do it as quickly as possible, which is why it is in the Finance Bill.
The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) raised the duty to report on public health and the poverty effects of the Bill. We already publish data on people in both relative and absolute low-income households each year through the “Households below average income” publication. The Welfare Reform and Work Act 2016 also requires us to publish statistics on the percentage of children in relative and absolute low income, combined low income and material deprivation and persistent low income. I very much hope that she will welcome the £3,300 on average of help that we are securing for families across the United Kingdom in these difficult times.
To conclude—[Interruption.] I thought that the House might be interested in some of the details; apologies for that. The Bill contains a number of important measures that will support the UK economy, people and businesses. I therefore urge the House to reject the proposed non-Government amendments for the reasons that I detailed, and agree to the Government’s amendments and new clauses. In closing, I thank everybody involved for their contributions to our discussions not just today but in the months that have led up to this.
Question put and agreed to.
New clause 4 accordingly read a Second time, and added to the Bill.
New Clause 5
Communications data
‘(1) Section 12(2) of the Investigatory Powers Act 2016 (restriction of powers to obtain communications data) does not apply to a power falling within subsection (2).
(2) A power falls within this subsection if it is conferred (whether before, on or after the passing of this Act) by or under—
(a) any Finance Act of any year (including this Act and any other numbered Finance Act);
(b) the Taxes Acts (within the meaning of TMA 1970);
(c) the customs and excise Acts (within the meaning of CEMA 1979);
(d) any enactment relating to value added tax;
(e) any enactment, not falling within paragraphs (a) to (d), that relates to tax.
(3) But subsection (1) does not apply in relation to the exercise of such a power by a public authority in the course of a criminal investigation by the authority.
(4) In section 12 of the Investigatory Powers Act 2016, after subsection (2) insert—
“(2A) Subsection (2) is subject to section (Communications data)(1) of the Finance (No. 2) Act 2023 (no restriction on tax related powers).”
(5) In Schedule 36 to FA 2008 (information and inspection powers), in paragraph 19, omit sub-paragraphs (4) and (5).
(6) In consequence of the repeal made by subsection (5), omit paragraph 10 of Schedule 2 to the Investigatory Powers Act 2016.
(7) The modification and amendments made by subsections (1) to (6) are to be treated as having always had effect.
(8) Subsections (9) and (10) apply where—
(a) before the day on which this Act is passed, a public authority imposed a requirement on a person under a power falling within subsection (2), and
(b) as a result of section 12(2) of the Investigatory Powers Act 2016 the public authority did not, ignoring this section, have the power to impose it.
(9) The requirement is to be treated as having been imposed on the day on which this Act is passed (and accordingly the period in which it must be complied with is to be treated as starting on that day) unless—
(a) the requirement was withdrawn by the public authority before that day, or
(b) the person complied with the requirement before that day.
(10) Where, before the day on which this Act is passed, the public authority imposed a penalty on the person for contravening the requirement—
(a) the penalty is of no effect, and
(b) if already paid, the authority is liable to repay it.’—(Victoria Atkins.)
This new clause removes a restriction on the exercise of civil information powers (for example, Schedule 36 of the Finance Act 2008 which HMRC use to obtain information from, and about, taxpayers) which otherwise might prevent their use in certain cases (for example, where online banks or other financial institutions are regarded as telecommunications or postal operators).
Brought up, read the First and Second time, and added to the Bill.
New Clause 7
Statement on efforts to support implementation of the Pillar 2 model rules
“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, make a statement to the House of Commons on how actions taken by the UK Government since October 2021 in relation to the implementation of the Pillar 2 model rules relate to the provisions of Part 3 of this Act.
(2) The Chancellor of the Exchequer must provide updates to the statement at intervals after that statement has been made of—
(a) three months;
(b) six months; and
(c) nine months.
(3) The statement, and the updates to it, must include—
(a) details of efforts by the UK Government to encourage more countries to implement the Pillar 2 rules; and
(b) details of any discussions the UK Government has had with other countries about making the rules more effective.”—(James Murray.)
This new clause would require the Chancellor to report every three months for a year on the UK Government’s progress in working with other countries to extend and strengthen the global minimum corporate tax framework for large multinationals.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Madam Deputy Speaker (Dame Eleanor Laing)
I am aware that the card readers are not working in either Lobby. I can assure the House that steps are being taken to count this Division manually, in the old-fashioned way. We will have the result quite soon.
Victoria Atkins
I beg to move, That the Bill be now read the Third time.
My right hon. Friend the Chancellor delivered a Budget for growth. He was clear that this Government’s focus is not just growth from emerging out of a downturn, but long-term, fiscally sustainable, healthy growth.
The Finance (No. 2) Bill, which Members of this House have had the opportunity to scrutinise and debate over the last three months, delivers on these commitments. It takes forward measures to support enterprise and grow the economy by encouraging business investment and helping to increase employment. It legislates for announcements made at previous fiscal events, which take advantage of our opportunities outside the EU, and it implements the tax measures needed to continue improving and simplifying our tax system to ensure that it is fit for purpose.
As the Bill has received such scrutiny, I do not propose to go into a detailed summary of the Bill. I just wish to thank the many people involved in bringing such a piece of legislation forward, because they work tirelessly behind the scenes and rarely receive the thanks they deserve.
First and foremost, I thank officials across the Treasury and HMRC for all their help, advice and expertise in creating the Bill and the proposals within it. In particular, I thank the Bill manager, Mikael Shirazi, who has navigated the Bill with great aplomb, often managing teams of tens of officials on my screens as I was having briefings. I am extremely grateful to him and all the Bill team for their very hard work.
I must also thank my private office—again, the unsung heroes of any ministerial office. They have worked extremely hard, particularly Holly, a member of my private office. I thank the Parliamentary Counsel; the Bill Committee Chairs on the Committee Corridor; the Doorkeepers; the Clerks; the Whips, of course; other Treasury Ministers who have helped in this; and, of course, you, Madam Deputy Speaker, for your consideration. I thank your fellow Deputy Speakers for their consideration, too.
Finally, I thank all hon. and right hon. Friends and Members across the House who have contributed to the scrutiny of this important Bill. I hope that, at the end of this, we can be very proud of the measures that have been taken forward as part of our Budget for growth.
James Murray
I take this opportunity to thank the many people who have supported me and my colleagues throughout the consideration of this Bill, not least all my colleagues on the shadow ministerial team, the Whips and the Opposition Back Benchers. I also thank the Clerks and parliamentary staff, and third parties, including the Chartered Institute of Taxation, which always provides invaluable support and evidence for us and all Members of the House.
Let me speak briefly to this Bill, which we have considered in detail over recent months. Our feeling as we approach the end of this is that it could have been a chance to make the tax system fairer. A fairer tax system is desperately needed after 13 years of low growth and stagnant wages, and after 25 tax rises by the Government in this Parliament alone—increases that have pushed the tax burden in this country to its highest level in 70 years. But instead, we see the Government prioritise £1 billion of public money a year to benefit the 1% of people with the biggest pension pots. They are prioritising a tax cut for frequent flyers. They are refusing to scrap the non-dom tax status. They are refusing to close windfall tax loopholes. And they are spending their time battling their own MPs over implementing common-sense plans to stop multinationals race to the bottom on tax.
Beyond any individual tax changes, what British businesses and families need now is a credible, ambitious plan from the Government to grow the economy and to make everyone in every part of our country better off. The failure to do that is perhaps the greatest failure of this Bill and the approach of this Government.
The Conservatives have had 13 years and they have failed. As long as they stay in power, the vicious cycle of stagnation stays, too. It is time for a new Government who will get us off this path of managed decline and make sure that people and businesses in Britain succeed.
Stewart Hosie
Loth as I am to disagree with the Minister, there was little by way of substantial growth in the Budget and there is almost nothing by way of immediate cost of living support in this Bill. We can only hope—although it is hope over expectation—that the Bill at least delivers some of the growth and some of the investment that the Government’s rhetoric would suggest they expect to see. I hope that happens, even though I doubt it will, and that the forecasts we see at the next fiscal event will be rather better than the ones we have seen over the past three or four years.
Madam Deputy Speaker (Dame Eleanor Laing)
I am pausing in case there is a speech about to erupt, but there is not. Therefore, I will put the Question.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Business without Debate
Planned closure of the Bank of Scotland’s Pollokshields Branch
Alison Thewliss (Glasgow Central) (SNP)
I rise to present a petition on behalf of my constituents on the planned closure of the Bank of Scotland’s Pollokshields branch. The Bank of Scotland in Pollokshields is due to close its doors, should the Bank of Scotland not reconsider, on 27 July 2023, to the upset of many in the community. I thank in particular Bill Lawns, the manager of the Nan McKay Community Hall, Tabassum Niamat of The Bowling Green Together and the wider Pollokshields community, whose wonderful spirit and kindness is shown on a daily basis.
The petition of residents of Glasgow Central,
Declares that the proposed closure of the Pollokshields Branch of Scotland in Glasgow will have a detrimental effect on local communities and the local economy; notes that this closure would negatively affect the large elderly population in the area, alongside those from ethnic minority backgrounds who prefer to transact in cash and deal with people they know; further notes that Albert Drive has been hit by two serious fires in recent years, and the Bank was an anchor holding footfall to the rest of the street.
The petitioners therefore request that the House of Commons urge the Government and the Bank of Scotland to take into account the concerns of petitioners and take whatever steps they can to halt the planned closure of this branch.
And the petitioners remain, etc.
[P002839]
Transport Accessibility: Bolton West
(10 months, 3 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Chris Green (Bolton West) (Con)
It is a pleasure to get this Adjournment debate on public transport accessibility in the Bolton West constituency. Public transport is important to so many of my constituents who use it on a regular basis, whether for leisure reasons, to go to work or to go to the shops. However, it is immensely important for those people in the constituency who do not use it that we use the infrastructure overall to make sure that public transport can take a substantial load off the transport needs in and around the constituency.
This Government have a very good story in recent years in terms of investment. A few years ago, the Liverpool to Manchester electrification project was completed. It was part of the Government’s ambition to level up and get the northern powerhouse going. The electrification of our railways is key to that. Not only that route, but the Manchester to Preston route, which goes right through the constituency, was electrified. There were huge technological challenges with tunnelling and historical concerns about our industrial heritage, but the Department and the wider team ensured that the project was delivered. We could then get rid of the ancient trains and have new, modern coaches on our tracks, which has made a significant difference. They are quieter, cleaner and far more attractive. If we want to encourage people to use public transport, we should deliver an attractive service that they feel happy and comfortable using.
There was also significant investment—£85 million—in the Ordsall Chord. That is part of the wider investment we need in Greater Manchester to ensure that the railway system works better, given that the city of Manchester is such an important hub for the wider railway system in the north-west of England and a key part of north-south connectivity.
More work needs to be done in the city of Manchester on, for example, the digitalisation of the railways. Even as we are improving services in many ways, there is congestion, and there are challenges in getting around Manchester and into Manchester from Bolton West and further afield. Improving services in the city of Manchester will enable Bolton West and neighbouring areas to improve their services too.
The Ordsall Chord is a magnificent structure, which is visually impressive. A huge amount of talent is responsible for the engineering behind it. The structure was made by Severfield steel in Lostock at the heart of Bolton West. One reason why I am so enthusiastic about the Government’s actions on railways throughout the country—there is obviously a huge plan for HS2—is that much of that transport upgrade will require Severfield and other manufacturers to increase their output to deliver those magnificent projects. It is not just about the railways in Bolton West or the city of Manchester and beyond, but about manufacturing jobs in the steel industry, which rely on such investment.
I am looking forward to the delivery of the Daisy Hill accessibility project. The platform is currently not accessible to people in wheelchairs or with mobility challenges. When the project is started and rolled out later this year, it will give those people the opportunity to use the railway station in Daisy Hill. It will also enable people to come to Westhoughton and that part of the constituency.
Significant challenges can be produced by success. One big concern is about car parking spaces in the constituency. The car parks at Lostock railway station, Blackrod, Horwich Parkway and Westhoughton are often full. That is partly because they are used by people who have a short drive to the railway station, from where they carry on their commute, perhaps up to Preston or down to the city of Manchester. However, the problem is not only down to local commuters.
Car parks are also full because of the commuters who travel from further away in Lancashire. People will drive into the Greater Manchester administrative area because there is a distinct drop-off in rail fares there. From talking to my hon. Friend the Member for High Peak (Robert Largan), I know about the concerns that exist there. Railway passengers should get on at their local stations, but they have to drive into Greater Manchester to avoid parking fees and to pay lower fares. I therefore believe that this is a problem for not just Bolton West, but constituencies across the Greater Manchester area and constituencies and areas around Greater Manchester.
Resolving the parking problems would be useful for local residents, but if we want a more environmentally friendly public transport system, it must reflect the concerns and interests of car drivers, many of whom use public transport as a stage in their journey to and from work.
The electrification project is ongoing. The Liverpool to Manchester and Manchester to Preston electrification has been of benefit to my constituents. We also have an ongoing electrification project between Bolton and Wigan. In the short term, it causes some disruption. When communication about these projects is well delivered—and Members have a role to play in ensuring that we get the information from the Department or the railways and share it more broadly—it gives a positive view of what we are doing, and people can buy into and appreciate the wider project. I think constituents are looking forward to getting these improved services and improved rolling stock.
I remember going to school in Widnes from Liverpool on the Pacer trains. People complained about them at that point, and as a Member of Parliament I have heard people complaining about them in the constituency in recent years. It is a relief to see them gone, and that demonstrates the progress we are making.
I think more of my constituents use the bus to get to work than the railway, so in many ways, bus services are more important. As part of the devolution strategy, this project has been handed to the Mayor of Greater Manchester. I appreciate that it will take time for the Mayor to develop his plans and ideas and to work with Ministers and the bus companies. He is now rolling out his devolution plan for Greater Manchester in the boroughs of Bolton and Wigan. I may be the Member for Bolton West, but my constituency also covers part of the Borough of Wigan, so this is of great interest to me and my constituents.
I look forward to seeing how the Mayor will deliver his plan. For me, the mark of success will be if we have a more comprehensive service covering a better geography, with more point-to-point travel, so that people can get to work early in the morning, late in the evening or on Saturdays and Sundays. It is not just about the main routes. Some routes in Greater Manchester have very good bus services, where one bus is chasing after the other. We need to ensure there is a comprehensive system of bus services wherever people are, whether it is in a poorer neighbourhood or a wealthier neighbourhood, so that they can get to their place of work, be it in the town centre, the city centre or on a trading estate.
This is my challenge to the Mayor of Greater Manchester: now that he has the power—and it is a power he has wanted for a long time—he has to make sure he can deliver that comprehensive bus plan for my constituents in Bolton West, so that not only Bolton but Wigan and all the parts of them are better connected. Buses ought to be part of the plan, so that when we look at investment in Greater Manchester it is not always about getting to the centre.
One of my concerns about devolution is that it seems to be focused on the city of Manchester; it is only about having a railway network and a bus network to the city of Manchester. It is immensely important that we develop the radial aspect as well. We want to be able to go from Bolton over to Bury or down to Trafford. We want that radial aspect and to be able to reach out from Bolton West over to Chorley, Wigan and other places. That is what good public transport ought to be delivering. It should not just be about bringing people to the centre of Greater Manchester; it ought to enable people to go wider.
I appreciate that the Mayor does not necessarily have responsibility for the railways broadly or the bus services. That is where I would ask my hon. Friend the Minister and the wider team to make sure that they work with him, the other Mayors across the north of England and the boroughs and councils, as well as the providers of these services, to make sure that the system does not have artificial barriers, such as the barrier I mentioned between my constituency and the Chorley constituency. People should not feel as though they have to get in their car and drive, which to a certain extent would defeat the point of having that comprehensive transport system or public transport system—one where people can get on the bus or the train and relax, look out the window, or perhaps do a little bit of work on the way to work. They should not feel the need to get in their car to start that public transport journey.
My understanding is that there is multi-modal smart ticketing between buses and trams at the moment, which will become increasingly important; although it is quite technologically challenging in many ways, I look forward to that opportunity when it also applies to the railway system. I realise that it is really rather complicated, but the trams do not reach the Wigan or Bolton boroughs, so when that system applies to us, that will be one of the things making public transport far more convenient.
I appreciate the ongoing work on walking and cycling routes, with Government investment from Westminster being given to the Mayor, so that people do not have to drive to the railway station. They will feel comfortable with walking routes, or more so with cycling routes, if they are delivered well and there are appropriate facilities at the railway stations, giving people that comfortable option of being able to cycle to the railway station, whether they have a fold-up bike that they can take on the train or they leave their bicycle at the station. I think those options are immensely important. I appreciate that some parts of Greater Manchester are rather more hilly and perhaps rather more rainy than Oxford and Cambridge, but I do think that if people are given that option, there will be significantly more take-up over time.
I will just talk about three other projects that are not in the narrow sphere of public transport but are immensely important. About 15 years ago there was a move to get a congestion charging zone in Greater Manchester, and the suggestion at that time under the Government in 2008 was that a further expansion of the tram network was dependent on a congestion charging zone being imposed on Greater Manchester. It was very frustrating that that investment was contingent on a congestion charging zone. There was a referendum in Greater Manchester in 2008, and every single borough opposed a congestion charging zone—even the city of Manchester, which would have had the least negative impact.
That scheme has been revisited, admittedly in a distinct form as a clean air zone, but fundamentally much of the practice is very similar to what we had before. Initially, it does not apply to cars—it applies to buses, vans and lorries—but one of my concerns is that it will evolve over time. We want to be positive about public transport, but if this modern iteration of that congestion charging zone is imposed, people will feel—and do feel at the moment—that they are being told to stop using the vehicle they normally use because it is convenient, and have no choice but to use public transport. They are almost coerced into using public transport. I appreciate that the initial plans for the congestion charging zone in Greater Manchester do not cover cars, but I suspect that in the very near future they will, and many people see that project as coercive. I think it is the duty of the Mayor of Greater Manchester to make sure that in Greater Manchester public transport is a choice that people want to take, rather than a choice that they feel coerced into taking.
My final note on this topic is similar: I know the Mayor has raised a point about workplace charging zones, where people driving to work have a tax on them, or perhaps a tax on their business. Again, I can see why the Mayor would want to have that revenue-generating system, but the emphasis should be on improving the railway system—as this Government are doing—upgrading it, and making it cleaner and more efficient. We should be building that capacity, not just in the Bolton West constituency but across Greater Manchester and beyond, and improving the bus system. I appreciate that the Government have given immense powers, ability and support to the Mayor of Greater Manchester to deliver on that.
There is a lot of discussion about the tram system and how it is going to be expanded, but I am not tempted at the moment to say that it should come to my constituency from Greater Manchester, though many constituents would be. Perhaps its coming to Bolton North East would be more appropriate, because that links with Bury far more effectively than it perhaps would with Bolton West. We are actually blessed with railway stations right across the constituency. I have mentioned Horwich Parkway and Blackrod, and we have Westhoughton, Daisy Hill, Hag Fold, Atherton and Lostock, which link in with the wider network. I as a local Member of Parliament and many other colleagues right across the country champion the cause of the local public transport network. It is my judgment: I enjoy using the buses and the trains, because I so often find driving so frustrating. It is far more relaxing and far more comfortable and, when I come into work and I do what I do, I am often in a better and more relaxed state of mind.
I ask the Minister to continue his good work with what he is doing in promoting the railways, to continue working with colleagues on the overall transport infrastructure and to make sure that the ongoing delivery between Bolton and Wigan is delivered on time.
The Parliamentary Under-Secretary of State for Transport (Mr Richard Holden)
I begin by congratulating my hon. Friend the Member for Bolton West (Chris Green) on securing this debate, and on speaking so passionately about the issues not just in his constituency, but across Greater Manchester and the wider region. He made the point at the very start of his comments that the transport infrastructure should not be a funnel towards Manchester city centre, but a fanning out, with a radial approach right across the region. As a Lancashire lad from not very far up the road in Blackburn, I am fully aware of many of the issues he has raised. I used to trundle through on those Pacer trains down the Ribble Valley line through Bolton and into Manchester, and we can see the transformation over the last few years with the investment from this Government. I have visited Bury recently, but I will be coming to Bolton soon, so I look forward to seeing some of the upgrades my hon. Friend has talked about, particularly around Daisy Hill station as I am the accessibility champion for the Department.
My hon. Friend talked about the radial movement of traffic around Greater Manchester, and I think it was particularly important what he said about the need to avoid any of the artificial barriers that council boundaries can sometimes create. I am really glad to see that he and other Conservative Members from across Greater Manchester are happy to work with the Mayor. Just yesterday, I had a meeting with the Mayor and my hon. Friend the Member for Leigh (James Grundy) about some of the projects the Mayor is pushing forward. I am just so glad to see Conservative Members leaning forward on that. I know that some Opposition Members, if any had been here today, would not perhaps have wanted to talk about the Mayor of Greater Manchester, given that we know the relationship between him and the Leader of the Opposition could perhaps be improved, if I can put it like that. However, it is Conservative MPs who are really leading the fight for their constituencies right across the region. Given the long-standing nature of the career of my hon. Friend the Member for Bolton West compared with that of some of his colleagues in Greater Manchester, I am sure he will be able to guide them and help them.
My hon. Friend is right to talk about the broader issues of economic opportunity, because that is what transport is really about. Yes, it is about getting from A to B, but it is also about why someone wants to get from A to B. It is about cultural connections, economic growth and delivering opportunity for people across the country, and I think that was at the heart of what he was really saying. It is about the broader levelling-up approach that the Government have taken in that space, and we need to continue that and do more of it.
The Government recognise the importance of transport to Greater Manchester, its people and the economy, and we have demonstrated that in the commitments made through the “trailblazer” deeper devolution deal, and our significant funding commitments, such as the electrification projects that my hon. Friend talked about. Indeed, when I was a special adviser in the Department for Transport a few years ago, I remember visiting Bolton with the then Secretary of State and my hon. Friend, to see some of that fantastic work in progress. It goes to show that over the past 13 years there has been a huge amount of electrification, compared with what happened in the previous 13 years.
Chris Green
Many tens of miles have been delivered under this Government, with about seven or so miles during 13 years of the previous Government. We are delivering, and we have more ambitious plans to carry on rolling out electrification.
Mr Holden
My hon. Friend is right about the seismic shift in electrification. I cannot quote the exact number off the top of my head, but I will write to him with that. We are talking about a magnitude of 10, 20, or 30 times what happened under the last Labour Government. That shows a real commitment to transport in this country, and to faster, more reliable transport. Electric trains are also lighter, which reduces wear and tear on the network because they do not have to drag a full diesel engine. There are all sorts of benefits to electrification.
However, it is not just electrification. We have put more than £1 billion into Greater Manchester through the city region sustainable transport settlement over five years. Most areas of local government love the prospect of a five-year plan, but we have delivered it. We have delivered it because we need that long-term vision, and we want to back that long-term thinking for Greater Manchester, to ensure that it can properly level up. There are also local public transport and active travel networks. On top of that, we have invested £94.8 million to support the implementation of Greater Manchester’s bus service improvement plan, and another £35.7 million for the zero-emission bus network.
Just in the past fortnight, the Secretary of State and I signed off an additional £18 million in extraordinary funding for Greater Manchester, to help maintain local transport services until the end of 2024. Two weeks before that we announced a further £72.3 million infrastructure package for rail services in Greater Manchester and the north-west, with upgrades to Manchester Victoria, and a third platform being built at Salford Crescent. That will help to ease those bottlenecks into Manchester, and particularly on the Manchester to Bolton corridor that my hon. Friend will know well. Those works support future service improvements to a range of destinations across, and not just into, Greater Manchester and beyond, including the constituency of my hon. Friend. That forms part of much wider plans to transform rail services in the area and across the north of England, including the trans-Pennine route upgrade and electrification of the Wigan to Bolton route that my hon. Friend mentioned. All those schemes build on in excess of £1 billion investment completed in 2019, which upgraded and electrified many railway lines across the north-west, and introduced that crucial new fleet of trains for Northern and the TransPennine Express for which we had waited so long.
Let me turn to the specifics of the electrification on the Wigan to Bolton line, which my hon. Friend mentioned. In September 2021, the Government invested £78 million to electrify the railway lines between Bolton and Wigan by the middle of this decade. That vital project will enable the Bolton to Manchester corridor, which is one of the busiest rail routes in the area, to host longer electric trains with a greater seating capacity—that is often a concern mentioned by our constituents up and down the country, particularly at peak hours. The work will electrify 13 miles of track and lengthen platforms for six-car capacity at Westhoughton, Hindley and Ince stations. Line closures have been happening since January, delivering the early works, including replacement of bridges. Indeed, as I speak the new Ladies Lane concrete bridge spans over Hindley station are being readied for installation this weekend. Project plans to ensure delivery at the earliest opportunity are in progress so that passenger benefits can be realised swiftly.
My hon. Friend will be pleased to note that in December 2022 the timetable successfully implemented a number of changes developed through the Manchester taskforce, to improve on the performance levels experienced in 2018 and 2019 when delays marred a significant number of journeys. The Bolton corridor saw an increase in train lengths to provide sufficient capacity to meet demand, a standardised timetable pattern and the re-routing of the Barrow-Windermere airport service via the Bolton corridor. The Manchester taskforce is currently looking at the next stage of service development to maximise the benefits of the Wigan-Bolton and Victoria-Stalybridge electrification schemes and the recently announced improvements around Manchester. That is more of those tentacles spreading out, as my hon. Friend mentioned.
My hon. Friend spoke extensively about buses in his speech. Given that I am the local transport and roads Minister, it is one of my favourite forms of transport. Not only do I look after it directly, but it also uses roads, which are the other part of my brief, so buses are particularly important to me. I echo his comments. The Government know how important local bus services are to ensuring communities can stay connected and people can access vital local services, particularly many of the elderly, who for a variety of reasons may no longer be able to use their own transport. That is why we have invested more than £3.5 billion in buses since March 2020 to keep services running in the face of plummeting levels of patronage during the pandemic and to drive long-term improvements to bus services up and down the country. That includes our recently announced package of long-term support of £300 million over the next two years to provide the long-term certainty that the sector requires to deliver sustainable bus networks that better reflect the needs of those who rely on these vital services every day.
Part of that funding was for the measures to ensure we have cheaper bus fares with the £2 cap on single fares from 1 January, which is currently available on more than 5,000 routes across England outside London, including ones from my hon. Friend’s constituency out to other parts of the country. Sometimes our Metro Mayors take full credit for the bus service support locally, but it is only right that my hon. Friend takes some of the credit, because it is only his votes in this place that have allowed us to deliver that money for the Mayor of Greater Manchester. It is important that we recognise that.
The measure to cap fares is helping to encourage more people to use buses and is saving passengers money during what everyone in the House acknowledges are difficult economic times. That is why we recently announced that the scheme will be extended until 31 October this year, with a further £2.50 fare cap all the way through to 30 November 2024. The funding we have provided over the past three years is the largest Government investment in buses for a generation.
In the past three years alone, Greater Manchester has received around £135 million from this Government purely in pandemic-related support to keep the buses running. That is in addition to the £95 million to deliver Greater Manchester’s local bus service improvement plan and almost £36 million to support the roll-out of zero-emission buses in Greater Manchester. We have stepped up to support Greater Manchester’s local transport network as it implements the franchising of bus services and delivers the Bee Network. Giving local transport authorities greater control over the provision of bus services in their area, either through an enhanced partnership or through franchising, is a key part of the Government’s levelling-up agenda. For areas that decide to take on franchising, that means they are taking on the farebox risk, so they need to ensure that their plans are right, and they will rightly be held accountable by the public for the decisions they take.
We are clear that franchised services must deliver a more comprehensive service for passengers, so I am pleased that my hon. Friend’s constituents will be some of the first to benefit from the newly franchised services in Bolton and Wigan when they commence this September.
My hon. Friend raised the workplace parking levy. On local charging, I am aware of the attempts in 2008 by the Greater Manchester authority to introduce a congestion charge as part of a bid to the then Government’s transport innovation fund. That was rejected by a local referendum, as my hon. Friend mentioned, and has not been resurrected since. Any consideration of a workplace parking levy would be for local authorities to promote and is a matter for local judgment and debate.
However, workplace parking levy schemes cannot be implemented without formal approval from my right hon. Friend the Secretary of State, who will consider in full the merits of any proposals and listen to hard-working local MPs from across the Greater Manchester area. I recognise that a workplace parking levy scheme may have wider impacts on local residents and businesses. We would expect the local authority to explain those impacts in full to the Secretary of State as part of any proposal, along with any mitigations proposed to the negative impacts where a local authority has concluded that there is no feasible alternative to such a levy.
My hon. Friend also mentioned the Mayor’s plan for a clean air zone. Greater Manchester local authorities provided revised air quality proposals on 1 July last year. We have written requesting further evidence from the Greater Manchester authorities to enable us to consider their plans further. The Government have already allocated nearly £170 million to Greater Manchester to help reduce nitrogen dioxide levels. That is on top of the money we put into the zero-emission bus plan and into the city region sustainable transport settlement. Some of the comments that he made were particularly important. We should be providing that positive choice of a public transport alterative to people and not trying to coerce them into doing things. That is what is most important and that is what the Government have stood behind with more than £1 billion put in through a five-year package. I urge local government across the country, including in Greater Manchester, to think about the message that it is sending to people when it proposes some of these plans.
I turn to the important issue of accessibility to transport. There are more than 14 million disabled people in the UK—a fifth of the country—and that number is set to rise further as the population grows and people develop more issues in their old age. Today, disabled people make fewer journeys than non-disabled people and are significantly less likely to be employed. Transport can act as a powerful enabler, connecting people with places and unlocking access to education and employment, but it can do that only if it is designed and provided with disabled people in mind.
It is vital that the transport services we rely on can be used easily and confidently by everybody. That is at the core of the Government’s inclusive transport strategy, published in 2018, and it is just as relevant today as when it was first released. The strategy outlines a number of commitments, and the progress that we are making to address them will support disabled people across Bolton West to make the journeys that are important to them, as it will for millions of disabled people across the country. That will also provide broader benefits for the rest of the travelling public.
For example, in May—just last month—Parliament approved the Public Service Vehicles (Accessible Information) Regulations 2023, which I took through Committee. They will require the provision of audible and visible information on board local bus and coach services in Britain, so bus users in Bolton should be able to travel with as much confidence as those in other parts of the country. That is a small but important part of levelling up for many people in the country.
We also continue to invest in the accessibility of our railway stations. I am pleased to say that, as my hon. Friend said in his speech, a new lift will be installed later this year at Daisy Hill to provide a step-free route between the station entrance, ticketing facilities and platforms. In March, we launched the inclusive transport leaders scheme, inviting transport operators from across the country to share their knowledge of improving service accessibility and to celebrate their progress in supporting the creation of an inclusive transport system. Those are just three examples of how the Government are levelling up accessibility across our country, including in Bolton West.
In 2020, we launched the “It’s everyone’s journey” campaign, encouraging all passengers to travel with a little more awareness of each other’s needs, and in so doing seeking to increase disabled people’s confidence to travel. Last year, we supported the Bill introduced by my right hon. and learned Friend the Member for Kenilworth and Southam (Sir Jeremy Wright) that aimed to eliminate discrimination against all disabled taxi and private hire vehicle users. Later this year, we will publish updated best practice guidance for local licensing authorities, including strengthened recommendations on providing an inclusive service.
On buses, local authorities entering into partnership arrangements with their local bus operators are required to actively reflect the needs of their disabled passengers in their plans, and new bus charters should ensure a shared understanding of the rights of all bus users to access services. So, across the piece, whether on private hire vehicles and taxis, on our buses or on our rail network, the Government are at the forefront of ensuring that accessible public transport options are available to everybody.
Greater Manchester now faces a significant opportunity as it prepares to franchise bus services later this year, to redefine what an accessible transport system means and to ensure that services, including in my hon. Friend’s constituency, genuinely reflect the needs of local people and passengers. We rightly seek improvements in accessibility at a national level, but I am keenly aware that inaccessibility is deeply individual and a localised experience. It is about the buses, taxis and trains that disabled people take every day, and the extent to which they are respected as individuals and their needs anticipated.
I am clear that together as a Government, working with transport authorities and operators and the mayoral combined authorities, we must strive to listen to passengers, whatever their needs are. We must seek to improve transport provision so that it truly works for everyone, every day.
Question put and agreed to.
Energy Bill [ Lords ] (Twelfth sitting)
Tuesday 20th June 2023
(10 months, 3 weeks ago)
Public Bill CommitteesRead Full debate Energy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 20 June 2023 - (20 Jun 2023)
The Committee divided: - Ayes: 6 / Noes: 8 - Question accordingly negatived.
The Chair
Before we begin, I remind colleagues that Hansard would be grateful if Members could email their speaking notes to hansardnotes@parliament.uk. Once again, I am happy to unilaterally give my permission for the removal of jackets, because it is hot in here. Please switch electronic devices to silent. Tea and coffee are not permitted, but there is a lot of water around—fizzy as well as still.
Clause 256
Application to the territorial sea of requirement for nuclear site licence
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendments 120 and 121.
Clauses 257 to 259 stand part.
Government amendments 124 to 126.
Government amendment 132.
Government amendments 127 to 129.
That schedule 20 be the Twentieth schedule to the Bill.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)
It is a genuine pleasure to serve under your chairmanship, Dr Huq, and to be back here for day seven of this Bill Committee.
A geological disposal facility, or GDF, is a highly engineered facility capable of isolating and containing radioactive waste within multiple protective barriers deep underground, so that no harmful quantities of radioactivity ever reach the surface environment. It is vital to the successful decommissioning of the UK’s civil nuclear legacy and to our new-build nuclear programme, which will support the UK Government’s net zero ambitions and energy security strategy.
Clause 256 makes it clear that certain nuclear sites—including a GDF, once prescribed in regulations—located wholly or partly in or under the sea, and within the boundaries of the UK’s territorial sea, require a licence and are regulated by the Office for Nuclear Regulation. I want to make it clear that no part of a GDF will be in the sea itself, nor will radioactive waste be dumped in the sea—that is banned by international conventions, including the London convention and protocol. The process to find a site for a GDF is under way, so it is vital that we have a clear legal framework to ensure that such a site will be licensed and subject to oversight by the Office for Nuclear Regulation.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Given the Government’s plan for a quarter of electricity to be generated by nuclear by 2045, how much additional nuclear waste does the Minister predict? How much additional nuclear waste will be stored at the new geological disposal site, and what is the estimated cost of the new facility?
Andrew Bowie
The costings of any geological disposal facility will be presented to Parliament for scrutiny, but the process is under way to find a site that will be large enough to cope with any increase in waste from our civil nuclear fleet. The hon. Gentleman might be interested to learn that Finland has just opened, and is beginning to utilise, a new GDF. That is the model that we in the UK would like to follow.
Mark Jenkinson (Workington) (Con)
I hope the Minister is going to propose that the Committee visit the facility in Finland. Does he agree that it is unhelpful that our detractors cannot seem to distinguish between legacy waste from a number of programmes and waste from new nuclear establishments, for which we have well-established protocols?
Andrew Bowie
Absolutely—I could not agree more with my hon. Friend. I would be delighted to propose a trip to Finland for all Committee members, but it is not within my gift to organise such a trip. If anybody who is able to host us is listening, I would be keen to engage on that.
I agree with my hon. Friend’s comments regarding new nuclear waste. The excellent work being done in Sellafield—I know that is not in his constituency, but it is certainly in his part of the country—is an example to the world of how we regulate and dispose safely of nuclear waste that has been created. When we talk about a GDF, we are talking about new nuclear waste, which will come about as part of the exciting, new, world-leading and revolutionary investment in a civil nuclear fleet that the United Kingdom is engaged in right now. The north-west of England will be at the very heart of that.
Alan Brown
Will the Minister explain the process for looking for a new geological disposal site? Will consultants do it? Will it be desktop-based to start with, and then involve intrusive site investigations? Will people bid to have a site? How will the process work?
Andrew Bowie
That is a good question. In fact, I was just coming to the process. The GDF siting process is a consent-based approach that requires a willing community to be a partner in the project’s development. The siting process is already under way. Four areas have entered the process: three areas in Cumberland—in Copeland and Allerdale—and one in East Lindsey in Lincolnshire.
Government amendment 120 removes superfluous wording in new section 3A of the Nuclear Installations Act 1965. A licensed disposal site, as defined for the purposes of the new section, is not a nuclear installation within the meaning given by section 26(1) of the Act, so does not need to be mentioned explicitly in subsection (3). The amendment therefore removes it from the clause to correct this error. Amendment 121 is consequential on amendment 120 and removes the unnecessary definition of a licensed disposal site from new section 3A of the Nuclear Installations Act 1965.
The UK’s nuclear decommissioning programme is accelerating as older nuclear sites approach the end of their life cycle. As the first major nuclear sites will reach their final stages of decommissioning in the 2030s, it is essential that our nuclear legal framework is fit for purpose, while continuing to ensure an absolute focus on safety and security as the key priority. The Nuclear Installations Act 1965, which provides such a framework for nuclear safety and nuclear third-party liability, was written before serious consideration was given to decommissioning.
Clause 257 will amend the procedures for exiting nuclear third-party liability. Currently, the 1965 Act has the effect of requiring nuclear sites to remain subject to nuclear third-party liability for longer than is required by internationally agreed standards. The clause implements an alternative route based on internationally agreed recommendations and will apply to nuclear installations in the process of being decommissioned. It adopts a simpler and equally safe route out of the NTPL regime for non-nuclear parts of the nuclear site, such as laboratories, workshops, offices, car parks and land.
Clause 257 changes procedures for ending nuclear licences and regulation by the Office for Nuclear Regulation. It will require the licensee to apply to the ONR to end the licence and will require the ONR to consult the Health and Safety Executive before accepting an application. The ONR will accept an application when it considers that all nuclear safety matters have been resolved. Once the licence has ended, the ONR’s regulation of the site will cease. HSE will pick up responsibility for regulating the health and safety of work activities, while the relevant environmental agency will continue to regulate environmental matters for years or even decades after the end of the nuclear licence.
The clause has the effect of removing a barrier to the on-site disposal of suitable low or very low-level radioactive waste and avoiding the unnecessary excavation and transport of this material. Demolition work results in the creation of large amounts of rubble and waste, a small percentage of which may be lightly contaminated with radioactivity. Excavating that material can create radioactive dust, which is a hazard for workers. Transporting waste to disposal facilities can have noise and traffic impacts for local residents.
The existing environmental legislation, which the clause does not modify, was developed with land remediation in mind. It allows the operator to apply to the relevant environmental agency for a permit to dispose of suitable low or very low-level radioactive waste on site. Applications are subject to robust analysis, and an environmental permit would be granted only if disposing of the waste on site would be a safer and more sustainable option than excavating it and transporting it to disposal facilities elsewhere.
Finally, the clause will allow operators to apply to the ONR to exclude those disposal facilities for nuclear waste that do not require a nuclear licence from the nuclear licensed site boundary. To be clear, the clause does not constitute a relaxation in the standards for public protection. It aligns with UK radiological protection law, international standards and UK Health Security Agency guidance.
Clause 258 will bring an international agreement on nuclear third-party liability into UK law. Its aim is to lower the financial and regulatory burden on low-risk radioactive waste disposal facilities. Sites that meet the criteria will be exempted from the requirement to make provision for third-party claims. Injuries or damages will instead be covered by ordinary civil law, which is robust, proportionate and established. The clause allows the Secretary of State to set out by regulation the conditions that must be met to be excluded from nuclear third-party liability under the OECD Nuclear Energy Agency’s criteria.
The clause includes limits for radioactivity concentration that disposal facilities must meet. Only facilities with sufficiently low concentrations of radioactivity and negligible nuclear risk will be exempted from the requirement to hold nuclear third-party liability. The measures will help to ensure that the UK has sufficient disposal facilities for low and very low-level waste as the decommissioning of the UK’s legacy facilities accelerates and new nuclear projects are developed.
Clause 259 gives effect to schedule 20, which amends the Nuclear Installations Act 1965 to enable UK accession to a second international nuclear third-party liability treaty called the convention on supplementary compensation for nuclear damage. Nuclear third-party liability regimes aim to ensure that victims of a nuclear incident have access to adequate compensation. They also support investor and supply chain confidence by channelling liability to the nuclear operator and placing limits on their liability. The UK already has a robust nuclear third-party liability regime, being party to the Paris and Brussels agreements. The schedule 20 amendments to the 1965 Act that enable UK accession to the CSC will enhance the existing UK regime. Accession to the CSC enhances several of the benefits of our current nuclear third-party liability regime.
Government amendments 124, 125, 126, 127, 128, 129 and 132 make minor and consequential changes to schedule 20 to ensure the accurate implementation of the CSC. They will ensure that, following accession to the CSC, the UK does not inadvertently close off routes to compensation for nuclear damage. That applies to countries and victims that are currently able to claim under our existing nuclear third-party liability regime. To establish that, they seek to remove unnecessary consequential amendments as a result of the further amendments tabled. The changes also ensure that victims from a non-nuclear CSC state can claim under the appropriate conventions.
Dr Alan Whitehead (Southampton, Test) (Lab)
It is a pleasure to serve under your chairmanship again, Dr Huq. It is also a pleasure to hear the Minister rattle through the Government amendments at really high speed. As he identified, this part of the Bill is about civil nuclear sites. Among other things, it is about the repository that we do not have at the moment—in other words, we have not yet found a repository. It would be helpful if the Minister were able to tell us where we are in that search. Does he think the clauses take that process further forward? Or do they impede or lengthen that search?
I am sure the Minister recalls that, some while ago, his party indicated that no new nuclear development would be signed off and authorised until a repository had been located and established. Now, of course, two civil nuclear sites are under active development. Hinkley C is under active development—the reactor core is in place and connected works are under way. I visited the site a little while ago and it really is in a very advanced state, so we can anticipate that nuclear power will come on stream in, I guess, about 2026. I have been guessing that it will come on stream every year since 2017, but we hope that will happen.
Advance discussions and some initial site works have been done for Sizewell C. The reactor that is going in is essentially the twin of the Hinkley C reactor, and a lot of the site works are being replicated to speed up that process a bit. I have not visited Sizewell C yet because—rather like in the story I told a while ago about the underground cable—there is not a great to deal to see at the minute, but we can anticipate that we will have four new nuclear reactors onstream by the early 2030s. All that is taking place alongside a process for a nuclear repository—a final solution for the issue of long-term nuclear waste.
Alan Brown
Does the hon. Gentleman agree that there is a real paradox here? Allegedly the site rate for Hinkley Point C already has built into it the decommissioning costs for the storage of nuclear waste at the end? We are told that the estimates for Sizewell C will include all the costs of decommissioning and disposal up front, but how can EDF properly allow for those costs when it does not even have the new geological disposal facility that it needs to access?
Dr Whitehead
The hon. Member makes a good point. I would think that it is very difficult under the present circumstances. I was about to talk about that briefly. On both those sites the question arises, as he alluded to, of what we do with the nuclear waste from their operation, and what plans are in place for their eventual decommissioning at the end of their lifetime. Having served on various Bill Committees with me, the hon. Member will recall that in a recent nuclear Bill the question was raised of ensuring that a reasonably accurate built-in planning arrangement for decommissioning would be in the programmes that are agreed for nuclear power plants. The plans both for decommissioning and for what happens to nuclear waste as we go along are rather important to get right, given that there is no geological repository either under way, unlike the new nuclear power stations, or finally identified.
We could say that the provisions apply to something that is not really there. It may be there in a little while, or it may not be there for quite a while. Meanwhile, the two nuclear power stations are getting under way and being build. We know that quite a lot of the nuclear waste that has arisen from activities around Sellafield is stored in ponds, which are open to the surface and are safe to the extent that the nuclear waste is firmly stored underwater and there is no risk of it spilling out, except if someone planted a bomb in the pond. The pond would then disperse its contents, but obviously a geological facility is proofed against that occurring. The question is about what sort of planning the new nuclear power stations are likely to undertake for the storage of nuclear waste during their operation, and for its storage and disposal when they are eventually decommissioned.
Mark Jenkinson
May I suggest that the hon. Gentleman arranges a visit to Sizewell B to see exactly how we store new nuclear waste from relatively new facilities? Sizewell B was also under an obligation to deal with the cost of its waste in advance.
Dr Whitehead
I appreciate that Sizewell B is already storing nuclear waste, and I understand that it is doing so quite effectively, although I have not actually been to see it. Obviously, Sizewell B is the newest nuclear power station in the fleet, even though it is not that new. The storage of newer nuclear waste is pretty good and, as the hon. Member rightly points out, the amount of nuclear waste is much lower than in, say, the old Magnox reactors. The issue of the storage of nuclear waste is largely about legacy waste, not new waste, but that is not to say that a fair amount of both high-level and low-level nuclear waste will not arise in the operation of new power stations—Sizewell C and Hinkley C—and, as is clear in the amendments that the Bill makes to nuclear legislation, there is still an obligation, upon full decommissioning, to ensure that there is no hazard whatever on the site from any radiation. That is quite a high bar. I am sure that is something we would all support.
Do the planners and organisers of new power stations—Hinkley C and Sizewell C—plan for on-site storage over the next period and for forms of disposal upon decommissioning that are not geological disposal sites, as a contingency in the event that we still do not have a geological disposal site when those plants are up and running? Or do they rely on the idea that there might be a geological site coming along, although we do not quite know when? We think it might be in the not-too-distant future, but we have not quite got there yet.
As the hon. Member for Kilmarnock and Loudoun correctly points out, that creates quite a difficulty in planning contingency, when building a nuclear power station in the first instance, for decommissioning and the safe storage and disposal of waste nuclear material. I am not sure how that has been resolved in the protocols that have been agreed with the power stations that are under way at the moment, and nor am I exactly up to date with where we are on the geological disposal site. I think I am up to date to the extent that we have not actually found one yet and that, although we have offered favourable terms to several communities to host a nuclear geological disposal site, we have yet to receive support to get it under way.
It would help us to judge the clauses a little better to get a brief rundown of where we are in that process and what plans the Government have either to accelerate it or to determine it in the end, so that as we develop our new nuclear programme we can be reasonably certain that the protocols in place for disposal and decommissioning will be reliable in future. I would be grateful if the Minister would let the Committee know that information.
I have a query and concern of a rather different order about schedule 20. As the Minister said, schedule 20 is about accession to the convention on supplementary compensation for nuclear damage. That international convention, which eventually came into force in 2015, having been agreed, I think, in 1997, sets out the supplementary compensation for nuclear damage on an international tariff basis, so that there is consistency in how compensation is dealt with in the event of accidents or other problems at civil nuclear installations in different parts of the world. So far, so good—it is a good convention and it is important that we are part of it. Indeed, the schedule ensures that we are fully a part of that convention.
There is a bit of a puzzle here. The Government have inserted into the Nuclear Installations Act some proposed new subsections about
“further non-CSC-only claims to compensation”
and have denominated all those claims, and how the provisions about them work, in euros. That is in the Bill. Proposed new subsection (3BA), for example, states that
“the appropriate authority may be required to satisfy them up to the equivalent in sterling of 1,500 million euros”.
Proposed new subsection (3BB) states:
“To the extent that further non-CSC-only claims for compensation are CSC claims, the appropriate authority may be required to satisfy them up to the equivalent in sterling of the aggregate of 700 million euros”.
Proposed new subsection (3BC) states:
“To the extent that further non-CSC-only claims for compensation are both special relevant claims and CSC claims, the appropriate authority may be required to satisfy them up to the equivalent in sterling of the aggregate of 1,500 million euros”.
I do not know whether this is the secret explanation for why the then Secretary of State for Business, Energy and Industrial Strategy, the right hon. Member for North East Somerset (Sir Jacob Rees-Mogg), withdrew the Bill during its passage through the Lords—because he thought that this was a plot to move against Brexit—but it is a bit odd that compensation is denominated in euros, when of course the rate is variable and we would be in a position to vary claims according to the relationship of sterling to euros. In any event, this is an international convention. Perhaps there is a simple explanation, which I hope the Minister has in front of him, but we are signed up to an international convention, not a European convention.
It may be—I do not know—that these measures are a hangover from our membership of Euratom, which we of course de-acceded from at the time of Brexit. It be that if we were a party to Euratom, Euratom would take the place of national membership of the convention and therefore everything would be denominated in euros, but of course we are not now a member of Euratom—we are our own actor, as far as various conventions relating to nuclear safety and activity are concerned—yet we are still denominating things in euros.
While I do not wish to amend the Bill so that we do not denominate claims in euros—I am concerned that the Minister’s career may be in jeopardy if he does not do the job of creating instruments that get us out of being in thrall to the EU and euros—I gently point out that it looks a bit odd. Is there an intention at any stage to regularise that procedure?
Andrew Bowie
The hon. Member’s concern for my career is welcome, and I thank him for expressing it in such kind terms. However, I reassure him and every person in this room—and, indeed, anybody else who might be following the proceedings—that the Government are not secretly taking us into the eurozone through accession to the CSC. It is not an EU treaty. The reason that the sums involved are denominated in euros is simply that the moneys referred to in the treaties that we are currently signed up to—the Paris convention and the Brussels supplementary convention—are expressed in euros. This is just a continuation of the same process. The CSC is an international convention, and we are therefore using the same denominations as in those other conventions. I am sure the hon. Member will be relieved to hear that there is no secret plot. The CSC, of course, is under the International Atomic Energy Agency.
Dr Whitehead
So the Minister can state that all signatory countries to the CSC denominate their compensation in euros, just the same as we do.
Andrew Bowie
I would think that those that are signatories to the Paris and Brussels conventions may. I am led to believe very strongly that it is not the case that all signatories denominate in euros, but we do, as a result of our current membership of the Paris and Brussels conventions.
Dr Whitehead
So we do not have to denominate these things in euros, because a number of signatories to the CSC do not, and presumably their membership of the CSC is not in jeopardy as a result. Presumably, we would have the opportunity not to use euro denomination, like those other members, but we nevertheless we do.
Andrew Bowie
I feel that we may be going round in circles. The Paris convention is a base convention. That is why there is carry-over into the new convention that we are acceding to—the CSC—to maintain the denomination in euros. However, I would suggest that those who are seeking compensation do not really care in which denomination their compensation is paid as long as they receive it in the end for any damage that is caused. I think we have spent quite enough time debating the denomination in which people will receive compensation.
Dr Whitehead
I hope that my comments about the fact that we do not yet have a community that has said it will support a geological waste facility does not necessarily mean that there is not support for the facility to be sited in various parts of the country. It is just that, as I understand it, no authority has actually said, “Yes, we’re happy to have this facility in our area and we wish to proceed with it.” I assume that that is a factor in the question I was trying to get at: when can we expect a geological facility to be timetabled, developed and finally established, and to what extent does that timeline cohere in the context of the nuclear power stations that we are presently commissioning and will bring online in the future?
Andrew Bowie
I thank the hon. Gentleman for his question and for clarifying his earlier comments. As I said, we are at the beginning of the process of identifying a geological disposal facility. Surveys are under way. We are working with communities that have already expressed an interest and we will continue to do so as we move forward.
Question put and agreed to.
Clause 256 accordingly ordered to stand part of the Bill.
Clause 257
Decommissioning of nuclear sites etc
Amendments made: 120, in clause 257, page 223, line 15, leave out
“or a licensed disposal site”.
This amendment corrects a minor and technical drafting error in new s.3A of the Nuclear Installations Act 1965: a licensed disposal site (as currently defined for the purposes of the new section) is not a nuclear installation (within the meaning given by s.26(1) of the Act) and so the carve out in subsection (3) is not necessary.
Amendment 121, in clause 257, page 224, leave out lines 5 to 8.—(Andrew Bowie.)
This amendment, consequential on Amendment 120, removes the unnecessary definition of “licensed disposal site” from new section 3A of the Nuclear Installations Act 1965.
Clause 257, as amended, ordered to stand part of the Bill.
Clauses 258 and 259 ordered to stand part of the Bill.
Schedule 20
Accession to Convention on Supplementary Compensation for Nuclear Damage
Amendments made: 124, in schedule 20, page 374, line 9, leave out sub-paragraph (4).
This amendment and the Minister’s other amendments to Schedule 20 make minor and consequential changes to that Schedule to ensure accurate implementation of the CSC.
Amendment 125, in schedule 20, page 375, line 7, leave out
“, (3BA), (3BB), (3BC), (3BD) or (3BE)”
and insert
“or, in a case where the relevant reciprocating territory is also a CSC territory (as defined by section 16AA), (3BB)”.
See the Minister’s explanatory statement for Amendment 124.
Amendment 126, in schedule 20, page 377, line 4, at end insert—
“(c) a country mentioned in section 26(1B)(b),
(d) an overseas territory mentioned in section 26(1B)(c) or (d), or
(e) a relevant reciprocating territory.”
See the Minister’s explanatory statement for Amendment 124.
Amendment 132, in schedule 20, page 378, line 11, at end insert—
“(as amended or supplemented from time to time)”.
This amendment ensures that the definition of “the CSC” in Schedule 20 is to the Convention on Supplementary Compensation for Nuclear Damage as amended or supplemented.
Amendment 127, in schedule 20, page 379, line 13, leave out
“In section 26 of the 1965 Act (interpretation),”
and insert—
“(1) Section 26 of the 1965 Act (interpretation) is amended as follows.
(2)”.
See the Minister’s explanatory statement for Amendment 124.
Amendment 128, in schedule 20, page 379, line 27, at end insert—
“(e) after the definition of ‘overseas territory’ insert—
‘“the Paris Convention” means the Convention on Third Party Liability in the Field of Nuclear Energy of 29 July 1960, as amended by the Additional Protocol of 28 January 1964, by the Protocol of 16 November 1982 and by the Protocol of 12 February 2004;’.”
This amendment sets out a definition of the Paris Convention for the purposes of the amendments to the Nuclear Installations Act 1965 to which Amendment 129 relates.
Amendment 129, in schedule 20, page 379, line 27, at end insert—
“( ) In subsection (1A)(a)—
(a) in the opening words, for ‘a relevant international agreement’ substitute ‘the Paris Convention’;
(b) in sub-paragraph (i)—
(i) for ‘relevant international agreement’ (in each place it appears) substitute ‘Convention’;
(ii) for ‘agreement’ (in the third place it appears) substitute ‘Convention’;
(iii) for ‘agreement’s’ substitute ‘Convention’s’;
(c) in sub-paragraph (ii), for ‘relevant international agreement’ substitute ‘Convention’.”—(Andrew Bowie.)
See the Minister’s explanatory statement for Amendment 124.
The Chair
We now come to the Question that schedule 20, as amended, be the Twentieth schedule to the Bill. [Interruption.] Dr Whitehead, anything else?
Dr Whitehead
Sorry, Dr Huq, I was making a comment from a sedentary position.
The Chair
Chuntering is a bad habit.
Schedule 20, as amended, agreed to.
Clause 260
Provision of additional police services
Dr Whitehead
I beg to move amendment 162, in clause 260, page 230, line 23, at end insert—
“(d) the provision of the additional police services in question is within the competence and in accordance with the usual operational practices of the Civil Nuclear Constabulary”.
The Chair
With this it will be convenient to discuss the following:
Amendment 163, in clause 260, page 230, line 33, after “Secretary of State”, insert “or the Police Authority”.
Clause stand part.
Clauses 261 to 263 stand part.
Dr Whitehead
I remain quite amused that we smuggled a euro or two into our flexibility structure a moment ago. I am sure that that will go down in history.
Clauses 260 to 263 relate to the Civil Nuclear Constabulary. For those who do not know too much about that constabulary, as I must admit that until recently I did not—
Mark Jenkinson
I am sorry for taking up so much of the hon. Gentleman’s time this morning, but on that note, I have a drop-in with the Civil Nuclear Police Federation at 12 o’clock today in room Q in Portcullis House. I encourage all colleagues to attend.
Dr Whitehead
That is a very helpful intervention, because among other things it means that our business will have to be finished by 12 o’clock this morning to facilitate our collective visit to the drop-in to be better informed about the Civil Nuclear Constabulary.
The Civil Nuclear Constabulary was established under the 1965 Act. It has about 1,500 officers nationally; they occupy eight sites in England and three in Scotland. There is a headquarters in Culham, with a chief constable and so on. It is just like a police authority, only not geographically in one place. Its prime responsibility is not guarding nuclear sites—that is for the Ministry of Defence police and the Army, basically—but the security of the sites and all that goes with policing around nuclear sites. I think it has jurisdiction up to 5 km away from nuclear sites. I will be interested to hear more about this, but as I understand it, it is a very specialised force.
All members of the Civil Nuclear Constabulary are routinely armed and are trained to that extent. They undertake virtually no arrests. A couple of years ago, they made a total of 24 arrests; last year I think they made 10, two of which turned out not to be arrestable. In comparison, an ordinary police force of the same size, such as Dorset police, would make about 7,500 arrests in an average year. The profile of the Civil Nuclear Constabulary’s activity and specialities is very different from that of an ordinary police force.
That is not saying very much about the Civil Nuclear Constabulary, other than that it is a specialist force, has jurisdiction relating to nuclear sites and, as far as I understand it, does a very good job at what it is asked to do. The clauses before us are not about the Civil Nuclear Constabulary itself, but about the extent to which its officers might, as it were, be rented out to other police forces. “Rented out” sounds a rather pejorative way of putting it; it is not intended to be, but that is really the only way I can describe it.
The clauses concern the circumstances under which officers can be seconded—I would say rather more than seconded—to other forces, subject to a decision of the Secretary of State. Clause 260(1), which will amend the Energy Act 2004, states:
“The Constabulary may, with the consent of the Secretary of State, provide additional police services to any person”,
which basically means to any other police authority.
Clause 260 also states that the Secretary of State
“must not give consent for the purposes of subsection (1) unless satisfied, on an application made by the Police Authority”,
which I assume means the Civil Nuclear Police Authority, that the application
“is in the interests of national security”
and
“will not prejudice the carrying out of its primary function under section 52(2)”
of the 2004 Act.
The establishment of the Civil Nuclear Police Authority is a little anomalous, by the way. It was originally under the jurisdiction of the Department for Business, Energy and Industrial Strategy and has now effectively been transferred to the jurisdiction of the Department for Energy Security and Net Zero, rather than the Home Office, as is the case with ordinary police forces.
Dr Whitehead
If we go to room Q, we will find out more, but civil nuclear constables are special police. They are recruited and trained in a different way, their responsibilities are different, and the activities they undertake are normally different. That gives rise to questions about whether civil nuclear constables can easily be transferred to other police authorities. I assume that the rental agreement would state whether they should undertake the ordinary activities that constables in comparable authorities undertake. Are they to be rented out on the basis that they will become ordinary police constables in a particular authority, or on the basis that they have special arrangements? They clearly will not have special arrangements concerning arresting people, so I imagine that the arrest rate of a police authority that had recruited police constables from the Civil Nuclear Constabulary for additional services would not go through the roof. Such constables are routinely armed, so there is also a question about whether they would be disarmed for the purpose of undertaking their duties in other police forces.
The answers to such questions do not appear in the clauses before us. There is just an arrangement that police constables can be rented out, that compensation can be paid for them, that the Secretary of State can intervene if he or she thinks there are problems, and that the police authority has to be consulted about renting out and, as it were, de-renting—that is all that the clauses cover.
I do not necessarily imagine that our amendments will be pursued to a great extent, but I would very much like to hear the Minister’s response to what they are trying to do. On the renting out of police, amendment 162 would clarify that
“the provision of the additional police services in question is within the competence and in accordance with the usual operational practices of the Civil Nuclear Constabulary”.
That is, those police who are rented out are not to be turned into ordinary police, and the circumstances of the renting out should be within the competence of the Civil Nuclear Constabulary, so we should not reasonably expect them to turn out to be ordinary policemen in other police authorities.
Also, we want the Civil Nuclear Police Authority to be rather more involved in decisions as to whether to continue renting out, so amendment 163 would add the words “or the Police Authority” after “Secretary of State”. We are trying to tighten up both the concept and the practice of these arrangements, to ensure that there is respect for the fact that the Civil Nuclear Constabulary is a specialist service, with staff who have special skills, qualities and qualifications that may differ from those of police in other forces. Renting-out arrangements should respect that. We should be a little careful to ensure that we do not put a square peg in a round hole through this renting out, even though there may be circumstances where a freer interchange of police between the Civil Nuclear Constabulary and county police forces could take place, and would benefit both sides.
I appreciate that clauses 260 to 263 to some extent supply what was left out from the Energy Act 2004, in which the Civil Nuclear Constabulary was defined, but I am not sure that the clauses do the job completely, and make sure that the strengths and qualities of the Civil Nuclear Constabulary are properly reflected in any renting-out arrangement, and that its constables are not expected to do things for which they are not trained, or in which they do not have experience, if they are seconded to other constabularies.
Andrew Bowie
First, as the Civil Nuclear Constabulary will be in room Q, Portcullis House, at midday today, at a meeting hosted by my hon. Friend the Member for Workington, I pay tribute to all the officers and staff who serve so diligently in that constabulary. I had a very enjoyable and informative meeting with Chief Constable Simon Chesterman and the chairman of the Civil Nuclear Police Authority, Susan Johnson, a couple of weeks ago. The constabulary serves this country and does incredibly important work protecting our civil nuclear fleet. It is incredibly well trained for that.
The hon. Member for Southampton, Test, referred to “ordinary” policing. Yes, Civil Nuclear Constabulary officers are highly trained in armed policing, and in the specialties that they have to be trained in to carry out their job, but they are also trained in what he described as ordinary—unarmed—policing, and are held to stringent College of Policing standards, such as those set out in the authorised professional practice armed policing guidance. That is consistent across the organisation, regardless of which site an officer is deployed to, and that would remain the case if there was any expansion of the constabulary’s services.
The Secretary of State must consult the chief constable before providing consent to the constabulary providing additional services. That ensures that the views of the person who is arguably best placed to assess competence and operational arrangements is taken into consideration. Should the CNC take on additional responsibilities outside the civil nuclear sector—we have been talking about that today—the chief constable will be responsible for ensuring that any additional training requirements are identified and delivered. I hope that addresses the concerns of the hon. Member for Southampton, Test, on that point.
The Civil Nuclear Constabulary is a crucial component of our civil nuclear security system, as the specialist armed police force dedicated to the protection of our most sensitive civil nuclear facilities, and of civil nuclear material in transit. In the evolving national security and energy landscape, we want to ensure that we are making the best use of our resources to protect the UK’s essential services and critical national infrastructure, as well as our wider national security interests.
Dr Whitehead
The Minister addressed the overall subject of the Civil Nuclear Constabulary well, but I do not think that he entirely addressed our questions, which were not about the competency of the constabulary, or its establishment or function. Our questions were about the new provision that the Government are seeking to introduce regarding the extent to which police personnel could perform a wider function, depending on circumstances in the Civil Nuclear Constabulary.
By the way—this may be a reasonable topic for discussion in a drop-in—I would not like the Civil Nuclear Constabulary to be assumed to be an ancillary police force with some special responsibilities. It is clearly a very specialised and highly trained police force with a particular set of duties. By and large, it should have the necessary number of police constables to perform its duties. If over time—this may be something for the Department to consider, since it has special responsibility for the constabulary—the general conclusion is reached that this is a police force to which, to put it a bit unpleasantly, other forces can help themselves when they are in periods of stress, that would not be very good for the future of the constabulary.
There is another alternative. As the Minister mentioned, the police authority has to carry out three-year reviews. If during those reviews it is thought that substantial numbers of the police force had been rented out over the review period, there may be a temptation for a future Secretary of State—not present Ministers; I am sure they have a very close eye on what the Civil Nuclear Constabulary is doing and how it carries out its role—to say, “The Civil Nuclear Constabulary does not need all these people. Let’s reduce its size. Let’s cut it down to a smaller number, because that will do for its operations—we can see that it is renting out quite a lot of its force for other purposes.” That would be a retrograde step.
The Minister prayed in aid, as a reason not to pass the amendment, proposed new section 55A(4)(c) of the Energy Act 2004, in which the Secretary of State must judge that
“it is reasonable in all the circumstances for the Constabulary to provide those services.”
That is a bit of a problematic, I would have thought; how do we judge what is
“reasonable in all the circumstances”?
For that to apply, the officers must be “surplus to requirements”, but most reasonable judgments would be, “Well, they are not surplus to requirements. They are a key part of the Civil Nuclear Constabulary and they are doing a good job.” I would therefore expect that there would be a fairly high bar as to what was
“reasonable in all the circumstances”,
but that is not defined. Our amendment attempts to define that effectively, by saying that the release of these officers would be
“within the competence and in accordance with the usual operational activities of the Civil Nuclear Constabulary.”
We do not want to press the amendments to a vote, but I would like the Minister to give some assurance on the record that the
“reasonable in all the circumstances”
judgment would, in practice, be a full and close partner to the definition we attempted to apply to the leasing arrangement through amendment 162. Unless that is stated on the record, we will worry about the temptation to play fast and loose with the Civil Nuclear Constabulary when there are pressures elsewhere.
Andrew Bowie
To clarify, the expansion of the CNC will not in any way affect the CNC’s core mission. We are absolutely not playing fast and loose with the Civil Nuclear Constabulary. The CNC’s priority and core function will remain the protection of civil nuclear sites and material, in line with the UK’s international obligations. Before granting consent for the CNC to take on additional services, the Secretary of State must be satisfied that the CNC’s core nuclear supervision will not be prejudiced in any way. This legislation includes an ongoing statutory duty for the CNC’s chief constable to ensure that that remains the case. I hope the hon. Member will withdraw his amendment on that basis.
Dr Whitehead
I thank the Minister for that intervention. Following the assurances he has given on that basis, among others, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 260 to 263 ordered to stand part of the Bill.
Clause 264
Civil nuclear industry: amendment of relevant nuclear pension schemes
Kerry McCarthy (Bristol East) (Lab)
I beg to move amendment 103, in clause 264, page 234, line 31, at end insert
“, or on benefits in deferment or pensions in payment;”
This amendment means that the Secretary of State may not put a cap on revaluation of benefits in deferment or pensions in payment.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Clauses 265 to 269 stand part.
Kerry McCarthy
It is a pleasure to see you in the Chair, Dr Huq. These clauses relate to nuclear pension schemes, and the amendment would provide certainty that Nuclear Decommissioning Authority pensions would not be capped. There is some ambiguity in the drafting of the Bill, and the door has been left open for the introduction of regulations to cap pension increases when that is not part of what has been agreed in the past among Government, unions and nuclear workers.
I say the door has been left open for such regulations because subsection (3) (c ) of the clause specifies that only increases for revaluation—that is, active deferred members—cannot be capped. It does not mention pensions in payment. The wording is
“not involving imposing a cap on any revaluation or revaluation rate”.
The amendment would mean that the Secretary of State could not put a cap on revaluation of benefits in deferment or pensions in payment, as well as the other schemes I have mentioned.
The provision as it stands is contrary to the heads of terms agreement between BEIS and the NDA, which explicitly states that pension increases will be in line with inflation, as measured by the consumer prices index, with no reference to any cap. It is also important to note that, although members of recognised trade unions in the NDA group voted in favour of the reforms that these measures facilitate, I am told that there was by no means an overwhelming endorsement. Many voted in such a way because they feared the Government would impose even worse reforms, which had been threatened, if they did not agree to what is now on the table. They felt that that was the best deal they could get, but they feel that the promises made to them have been broken and they are not happy. Given that, it is even more important that we ensure that the Bill reflects the compromise agreement that was reached.
It is also wrong to say that these reforms would bring pension provision across the NDA group into line with wider public sector pensions, which I think is what the Minister in the Lords said. Those pension schemes underwent much more radical reform long before Lord Hutton’s review of public sector pensions, and they have been closed to new entrants for many years. Lord Hutton recommended that public sector pension accrual remain on a defined-benefit basis, but pension provision across the NDA group is mostly on a defined-contribution basis. I have been approached by representatives of trade unions who are eager to meet the Minister to ensure that reforms are fully consistent with Lord Hutton’s review. I do not know whether the Minister can offer today to meet those representatives, so I can take that back to them.
An amendment is necessary to remove any doubt about the status of nuclear workers’ pensions. I am sure we all agree that the effectiveness of the Civil Nuclear Constabulary is essential to maintain the UK’s nuclear security, and that the work of everyone at the NDA is really important, as we have already heard this morning. Those people are integral to keeping the public safe, and that should be recognised when legislation is being determined.
I hope the Minister accepts that the amendment has been tabled in a constructive spirit. It is designed to remove any uncertainty, and I hope he will accept it.
Andrew Bowie
I am searching in vain for a second Minister to take some of this Bill. Unfortunately, they do not seem to be available. I thank the hon. Member for Bristol East for moving her amendment and allowing us to debate an important issue, especially for employees of the Nuclear Decommissioning Authority. I recently had a constructive meeting with trade unions representing workers from the NDA and was happy to discuss the issues they are concerned about in depth and specifically the one we are debating today.
The Nuclear Decommissioning Authority agreed with unions as part of negotiations that the consumer price index should be used for revaluations and that it should not be capped. Both the reference to the CPI and that revaluations should not be capped are referenced in the clause. As the clause sets out, revaluations include pensionable earnings, benefits in deferment and pensions in payment. Pensionable earnings relate to the pension payments contributed by employee and employer while they are working. Benefits in deferment are those benefits that have been built up by an employee who has left the pension scheme but has not yet accessed it. Pensions in payment relate to those receiving their pension.
The Government are content, therefore, that the legislation as drafted does not exclude benefits in deferment and pension in payment from the non-capping of the revaluation of earning by CPI. It is therefore in line with the agreed scheme. However, I am happy to put on record that in the new scheme, both benefits in deferment and pensions in payment will be uprated by CPI and will not be capped. While I appreciate the hon. Member for Bristol East raising the issue and the importance of ensuring that those with benefits in deferment and pensions in payment do not have their revaluations capped, I do not think the amendment is necessary.
Kerry McCarthy
Can the Minister confirm that when he discussed this with the trade union representatives, they were happy to accept his assurances that that is what the Bill says? Certainly, they have not communicated that to us. As far as I am concerned, they still believe that getting our amendment into the Bill is still important.
Andrew Bowie
That specific element was not discussed or brought up in the meeting, but I am happy to meet trade unions again to continue the discussion on the matter.
Kerry McCarthy
If there is some ambiguity, is there a reason why he feels that putting a clarification in the Bill to spell it out and give those reassurances would not be acceptable? The amendment does not seek to change his position as I understand it; it just seeks to make sure that that is clear.
Andrew Bowie
I understand why some Members, including the hon. Lady and trade unions, would find that helpful. We do not believe it is necessary because I have stressed today on the record—it will be in Hansard—that it is the Government’s position that those benefits in deferment and pensions in payment do not have revaluations capped and that they will be uprated by CPI. We do not think it is necessary because that is already the Government’s position. It is on the record and I am happy to stand by that.
Turning to clause 264, the 2011 report by Lord Hutton of Furness started the Government on the road to the reform of public sector pensions. While the Public Service Pensions Act 2013 made a large number of reforms, it did not cover all public sector bodies, including those within the NDA group. The NDA is the statutory body responsible for the decommissioning and safe handling of the UK’s nuclear legacy, with 17 sites across the United Kingdom, including Sellafield. Even though the NDA was created in 2005 via the Energy Act 2004, many of its sites have been operating since the middle of the 20th century. That lengthy history has led to a complicated set of pension arrangements, which include two pension schemes that, while closed to new entrants since 2008, provide for final salary pensions and are in scope for reform. They are the combined nuclear pension plan and the site licence company section of the Magnox Electric Group of the electricity supply pension scheme.
In 2017, the Government and the NDA engaged with trade unions to agree a reformed pension scheme that was tailored to the characteristics of the affected NDA employees. That resulted in a proposed bespoke career average revalued earnings scheme which, following statutory consultation with affected NDA employees and a ballot of union members, was formally accepted by the trade unions. Subsequently, a formal Government consultation was launched in 2018, with the Government publishing a response in December of that year confirming the proposed change.
The reformed scheme still offers excellent benefits to its members. Notably—and unusually compared with other reformed schemes—it still includes provision for members to retire at their current retirement age. For nearly everybody, that will be 60 years old. However, the complicated nature of the pension schemes, in the context of the statutory framework that applies to pension benefits across the NDA estate, means that specific legislation is needed to implement the new scheme.
Clause 264 provides the Secretary of State with the power to make secondary legislation designating a person who will be required to amend the provisions of a nuclear pension scheme. That is necessary, as at the current time the scheme rules limit the NDA’s ability to make changes to pension scheme arrangements. Clause 264 uses the phrase “relevant nuclear pension scheme” to describe the types of schemes that a designated person could be required to amend by virtue of that amendment. Clause 265 explains what is meant by that phrase. Clause 265 also clarifies the UK Atomic Energy Authority pension schemes and pension schemes that benefit persons specified in the Public Service Pensions Act 2013 are not relevant pension schemes.
Clause 266 relates to the provision of information. In order to implement the proposed pension reforms, the NDA—and, in the case of the MEG-ESPS, Magnox Limited—will need information from others. Clause 266 gives a person who has been required to amend a relevant nuclear pension scheme the power to require persons holding any information they might reasonably require to provide that information. That could include the number of members in a pension scheme, and the salaries and ages of those members.
Data protection legislation may still prevent the information from being shared. The clause specifies, however, that in making that assessment, the requirement to disclose imposed by the clause must be taken into account. The clause also provides that disclosure does not constitute a breach of confidence or breach of any other restriction on the disclosure of information.
Clause 267 sets out definitions relevant to the clauses about amendments of relevant nuclear pension schemes. Clause 268 relates to the protection that is in place that would currently block any change of pension. Although the reformed pension to be provided to affected NDA workers is still excellent, it has always been clear that the reforms to public sector pensions would result in lower levels of benefits to members than is currently the case. Although that is the acknowledged effect of Government policy in this area, it does bring it into conflict with existing legislation. Both schedule 8 of the Energy Act 2004 and regulations made under schedules 14 and 15 of the Electricity Act 1989 effectively mean that any change to NDA pensions must be “no less favourable”.
Clause 268 effectively expands a power made under an earlier clause, providing the ability for regulations made by the Secretary of State to amend or disapply schedule 8 of the Energy Act 2004 and regulations made under schedules 14 and 15 of the Electricity Act 1989. Given that this is not a hybrid Bill, we believe it is more appropriate for those powers to be exercised via regulation rather than primary legislation.
Clause 269 relates to the procedure for the regulations under this chapter. The Government believe it is right and proper for regulations under this chapter to be subject to the affirmative procedure. We also believe that these regulations should not be subject to the hybrid instrument procedure. There has been considerable consultation with those affected, and the policy is in line with pension reform across the public sector.
Kerry McCarthy
I welcome the Minister’s assurances and his offer to meet the unions to discuss this point. I have spent a lot time looking at the wording. Although I agree that it could be interpreted in the way the Minister says, that is arguable. I still feel it would be best to have clarity in the Bill and, therefore, would like to press the amendment to a vote.
Question put, That the amendment be made.
The Chair
With this it will be convenient to discuss the following:
Clauses 271 to 273 stand part.
Government new clause 52—Principal objectives of Secretary of State and GEMA.
Andrew Bowie
I will start with the good news and first speak to clause 271 and Government new clause 52. The Government have maintained the view that Ofgem’s principal objective makes its role in achieving the net zero target clear. However, we have carefully considered the effect of clause 271 with Ofgem and sought legal advice to ensure that the Lords amendments would not impact the hierarchy and intended effect of Ofgem’s duties. We are therefore content to clarify Ofgem’s duties by making specific reference to the net zero target in the Climate Change Act 2008.
The Government new clause is equivalent in substance to clause 271, but includes some minor drafting changes to ensure that the duty works in practice. First, it clarifies the authority’s role in supporting, rather than enabling, the Government to meet their net zero target. Secondly, it clarifies the net zero targets and carbon budgets specific to sections 1 and 4 of the 2008 Act. The new clause does not change the intention of clause 271. I thank my right hon. Friend the Member for Kingswood (Chris Skidmore) for the recommendation in his report entitled “Mission Zero”, Baroness Hayman in the other place and the energy industry for working constructively with the Government to bring forward this significant change.
I now turn to clause 270, which was also added to the Bill in the Lords on Report. The clause would prohibit the opening of new coalmines and extensions to existing coalmining in Great Britain. After carefully considering this addition, I tabled my intention to oppose the clause standing part of the Bill on 17 May. The Government are committed to ensuring that unabated coal has no part to play in future power generation, which is why we are phasing it out of our electricity production by 2024. Coal’s share of our electricity generation has already declined significantly in recent years—from almost 40% in 2012 to around 2% in 2021.
Alec Shelbrooke (Elmet and Rothwell) (Con)
Does my hon. Friend the Minister agree with me that although, as he rightly says, electricity production by coal has been as little as 1% and huge amounts of work can be done to reduce that carbon dioxide output, it is vital, with electricity generation, to maintain a baseload? As we saw recently when a gas turbine power station was turned off and we were relying on wind power, the baseload could not be maintained and the system tripped out for a large area of the country. Does the Minister agree with me that the objectives are fine, but physics and reality come in at some point?
Andrew Bowie
I could not agree any more wholeheartedly with or put it any better than my right hon. Friend. For energy security reasons, it is vital that we maintain all options that are open to us. That does not in any way impede, get in the way of or stand contrary to our overarching net zero ambition.
Alan Brown
On that point, as the Minister agrees with his colleague, is the Minister saying that he needs to keep coal generation as an option, on the table, beyond the planned phase-out date? Because that is what I just heard.
Andrew Bowie
No, the planned phase-out date of October 2024 is extant and something that we are working towards. However, it is important that we ensure that, as part of our electricity baseload, we have access to the relevant energy sources so that we ensure this country’s energy security. Given the situation with energy security in central Europe and, indeed, worldwide, that should be understood by everyone.
Alan Brown
If the Government allow the licensing of a new coalmine, how will that help energy security? The Minister has just committed to phasing out the use of unabated coal by October 2024, so, by the time a new coalmine is operational, it certainly will not add any energy security.
Andrew Bowie
The hon. Gentleman heard my answer to that very point. I do not think I need to labour it much more.
Dr Whitehead
Is the Minister saying that we should have access to those supplies in order to back the system up? And by the way, I do not think that tripping out, which came up a little while ago, was just about coal.
Dr Whitehead
It was a gas turbine that tripped out. It was not about coal, as far as I understand.
Is the Minister saying that we should have access to those supplies until, but not after, 2024? We will not have anywhere to burn them after 2024 because the intention is to have phased out coal by then. What exactly is the Minister saying? By the way, coal is unlikely to be burned in a UK power establishment in the future, if such establishments survive.
Andrew Bowie
This is the Energy Bill, so I understand why the focus has been on energy and energy security. However, coal is not just required for energy purposes, and that is another reason why we will vote against the clause.
Mark Jenkinson
I have a constituency interest in a new coalmine in a neighbouring constituency in west Cumbria. Its planning condition is to produce metallurgical coal, which is used in steel plants. The Minister was recently in Sweden, as I was just a couple of months ago. We hear a lot about HYBRIT—hydrogen breakthrough ironmaking technology—which is a green steel project. I was relieved to hear that HYBRIT requires coking coal, even in electric arc furnaces with direct reduced iron, and that it will continue to be used for some time. Does the Minister agree that we should not close off avenues for UK-sourced coking coal?
Andrew Bowie
I entirely agree with my hon. Friend. His expertise in the area, his experience in Sweden and his constituency interest have proved invaluable in ensuring that everybody is fully aware of the situation, the technology and, indeed, the science behind all of this.
Even when we phase out coal power stations, domestic demand for coal will continue in industries such as steel, cement and heritage railways, and that demand can be met by domestic resources on existing lines of deployment. A full prohibition of coal extraction, regardless of the circumstances or where that coal is going to be used—be that in steel, cement or a heritage railway—is likely to prevent extensions to existing operational mining, even where an extension would enable site restoration or deliver public safety benefits; cut across heritage mining rights in the Forest of Dean, which are important to its tourism offer; and, importantly, prevent domestic coal extraction projects from progressing that are seeking to supply industries that are still reliant on coal.
Andrew Western (Stretford and Urmston) (Lab)
The Minister has set out a series of perceived advantages. On the flipside, the proposed new coalmine at Whitehaven would emit 9 million tonnes of carbon dioxide each year, so does he agree that that would have serious implications for our net zero ambitions?
Andrew Bowie
I very much question the figures that the hon. Gentleman has just put to the Committee. I stress that it is really important that we ensure that the industries in the United Kingdom that rely on coal are able to rely on a domestic source for that coal—British coal—and not on imports from overseas, which will actually increase carbon emissions.
The Chair
Order. May I just point out that some of these interventions are getting a little bit lengthy? We have a whole debate—one other Member has already indicated that she wants to speak—so colleagues can make speeches if they wish.
Alan Brown
I will be brief, Dr Huq. On the Minister’s point, is it not the case that up to 85% of the coke that will be exported to the EU is coming out of coal in Cumbria? Does he agree with the figures of Lord Deben, the chair of the Committee on Climate Change, which state that the new Cumbrian coal mine will emit about 400,000 tonnes of CO2 a year, equivalent to 200,000 cars being added to the road?
Andrew Bowie
Now I am getting confused, because I have some figures coming from over there and other figures coming from over there. It is important that we ensure that industries that rely on a source of coal are able to rely on domestic sources of coal. This clause, proposed by the Labour party, would prevent that from happening, harm future investment, harm jobs and harm our progress.
Katherine Fletcher (South Ribble) (Con)
This is one of the most jaw-dropping moments I have ever had in my parliamentary career. The Scottish National party and the Labour party are arguing against domestic jobs, our proud coalmining heritage and energy security for this country. Is that not flabbergasting?
Andrew Bowie
I am actually close to speechless. Labour likes to describe itself as the party of the workers. Well, it is anti-workers, anti-jobs and anti-investment in British industry.
Andrew Bowie
That is demonstrated by the clause, and that is why I believe that now is not the right time to make the changes suggested by the Labour party. We will oppose the clause.
Finally, I will address clauses 272 and 273 on community energy, which I also oppose. I recognise that several Members spoke in support of these clauses on Second Reading. However, the Government continue to believe that this is a commercial matter that should be left to suppliers, and further work is needed before considering whether primary legislation is needed.
In evidence submitted to the Committee and published on 13 June, Energy UK set out its in-principle support, much like the Government, for community energy, and recognised the role that it will play in our energy system. However, it asks that
“these measures be removed to give the Government, the regulator, and the industry time to fully consider the best approach to integrating community energy effectively, protecting consumers and preventing additional costs being added to all consumers’ energy bills on behalf of a currently small portion of the population.”
Kerry McCarthy
Does the Minister accept that the wording inserted in the Bill by the Lords reflects the exact same wording of a private Member’s Bill—I think it is the Local Electricity Bill—that more than 120 Conservative MPs previously pledged to support? I checked to see whether any members of the Committee supported that Bill, and apparently the hon. Members for Hyndburn and for West Aberdeenshire and Kincardine were among those 120 MPs. I think the rest of the Committee gets off the hook on that. Would the Minister like to explain why he has changed his mind?
Andrew Bowie
The hon. Lady is hearing me explain at great length why the position of the Government is what it is.
Clause 272 seeks a minimum export guarantee scheme. Community energy projects can already access power purchase agreements, which are arrangements for the continuous purchase of power over a given period with market-reflective prices. For example, Younity, a joint venture between Octopus and Midcounties Co-operative, already purchases electricity from more than 200 community groups of all sizes. It has PPAs of varying contract lengths, from six months to five years. Renewable Exchange has also enabled more than 100 community projects to sell electricity via PPAs since 2018.
When we introduced the smart export guarantee, we consciously moved from a consumer-funded subsidy model to a competitive market-based system with cost-reflective pricing. That was in line with the vision to meet our net zero commitments at the lowest net cost to UK taxpayers, consumers and businesses. Introducing a fixed price would be a step backwards, as it requires all energy consumers to pay more than the market price for electricity to subside local communities that benefit from community energy projects. An electricity export guarantee indexed to the wholesale price is inconsistent with the Government’s aim to decouple renewable generation from a wholesale price linked to the marginal cost, usually fossil fuel generation or gas. A static export price could also dampen price signals needed in the system, for example, in the use of intraday batteries.
History suggests that such a support scheme would have only a minimal impact on deployment. For example, deployment of community energy projects over the final five years of the much more generous feed-in tariff subsidy scheme was still very low. These projects are also typically more expensive than larger utility-scale renewable projects, with small solar and onshore wind projects between 50% and 70% more expensive. The proposal would be mandatory for suppliers with more than 150,000 consumers, and would therefore introduce a huge new administrative burden. Suppliers would face the additional one-off costs of putting in place process and IT infrastructure, as well as ongoing costs of managing the scheme, which would be passed on to consumers in higher bills. It is likely that it will disproportionately impact smaller suppliers, sitting just above the 150,000 customer threshold.
Similarly, on clause 273 it is the Government’s view that a local tariff is unlikely to result in a better price for consumers. Suppliers would incur potentially significant costs in setting up and delivering the scheme. They would also have to recoup the additional costs, which we anticipate would be via the service fee and would therefore be recoverable only from local consumers. A small-scale low-carbon generator is also unlikely to guarantee a supply of electricity to local consumers at all times. Suppliers would have to buy additional wholesale energy to cover all local consumer demand, while continuing to charge for all other supply costs incurred. The local tariff would also need to reflect the export price paid to the generator. Presumably that is intended to ensure that local consumers benefit from cheaper export prices, but it would create an unintended outcome whereby higher export prices benefit the generator and increase the tariff price.
I hope that I have explained at length why I, as the Member for West Aberdeenshire and Kincardine, am espousing this position. I reassure the Committee that I am working with my officials to explore what other credible options are available to support the community energy sector. Indeed, work continues as we speak. We are taking these issues seriously, but for the reasons that I have provided I will oppose the clauses.
Alan Brown
The Minister says that he is working with his officials, but assuming that the Government majority on the Committee will reject clauses 272 and 273, what opportunity is there for mechanisms to be introduced to support local energy?
Andrew Bowie
As much as I know that we are all aghast at the thought of the Committee finishing and the Bill going back to the House, that will not be the end of our journey together. We will gather again on Report and Third Reading, so there will be ample opportunity for the hon. Gentleman to speak on the Bill at that stage, and for any changes that might be required to it.
The Chair
There is a drop-in session in room Q in Portcullis House at noon, but it is entirely voluntary.
Ordered, That the debate be now adjourned.—(Joy Morrissey.)
Digital Markets, Competition and Consumers Bill (Fifth sitting)
Tuesday 20th June 2023
(10 months, 3 weeks ago)
Public Bill CommitteesRead Full debate Digital Markets, Competition and Consumers Bill 2022-23 View all Digital Markets, Competition and Consumers Bill 2022-23 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 20 June 2023 - (20 Jun 2023)
The Committee divided: - Ayes: 6 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 8 - Question accordingly negatived.
The Chair
To avoid anybody expiring, please remove your jackets, if that would help. Please ensure that electronic devices are in silent mode. No food or drink is permitted during the sittings of the Committee, except for the water provided. Hansard colleagues would be incredibly grateful if Members could email their speaking notes or pass their written speaking notes on to the Hansard colleague in the room.
Today, we begin line-by-line consideration of the Bill. The selection list for today’s sitting is available on the table in front of me. It shows how the selected amendments have been grouped together for debate, and I urge colleagues to examine it carefully, because some clauses are grouped together, which will make things a little more complicated as we move forward. Amendments grouped together are generally on the same or a similar issue. Please note that decisions on amendments do not take place in the order they are debated, but in the order that they appear on the amendment paper. The selection and grouping list shows the order of debates.
Decisions on each amendment are taken when we come to the clause to which the amendment relates. Decisions on new clauses will be taken once we have completed consideration of the existing clauses of the Bill. Members wishing to press a grouped amendment or new clause to a Division should indicate when speaking to it that they wish to do so. If colleagues want to speak to an amendment or take part in a stand-part debate, they should indicate that to me in the normal way, so that I can ensure that everybody who wishes to participate does so.
Clause 1
Overview
Question proposed, That the clause stand part of the Bill.
The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Paul Scully)
It is a pleasure to serve under your chairmanship, Dame Maria, and to address the Committee today. I thank all its members for volunteering to serve on this Committee, and I look forward to our discussions over the coming days and weeks.
Part 1 of the Bill provides for the pro-competition regime for digital markets. This is a targeted regime that will establish new, more effective tools for the Competition and Markets Authority and, in turn, the digital markets unit. That will allow them to proactively drive more dynamic digital markets and prevent harmful practices.
Clause 1 is purely introductory and provides an overview of part 1. I hope that hon. Members agree that this clause will therefore assist readers to navigate this part. I will briefly explain some of the language I will use in this series of debates. First, the Committee will hear me referring to the digital markets unit, or the DMU, which is a new administrative unit of the Competition and Markets Authority—the CMA. While the legal functions of the regulator under part 1 of this Bill remain those of the CMA, in practice it is likely that most of the responsibilities under part 1 will be carried out by staff within the DMU. Therefore, for consistency and ease, I will be referring to the DMU throughout the debates. The exception to that is the merger functions in chapter 5 of part 1, which will generally be carried out by those staff who deal with mergers more broadly.
Secondly, I will use the words “firm” and “undertaking” interchangeably. “Undertaking” is the word used in this part of the Bill and is an economic concept that is already used in the Competition Act 1998. The concept of an undertaking covers any person engaged in economic activity, regardless of its legal status and the way in which it is financed. “Persons” may be corporate bodies, and an undertaking may encompass multiple corporate bodies when they form a single economic unit under competition law. The Government’s view is that an undertaking will often encompass the entirety of the relevant corporate group, but it may sometimes be a smaller subset of the corporate group.
I hope that that helps to clarify the language that the Committee will hear over the coming days.
Alex Davies-Jones (Pontypridd) (Lab)
It is a genuine privilege to serve under your chairship, Dame Maria. I look forward to the weeks ahead. I imagine that the debates will be healthy but, in a real rarity for this place, relatively collegiate too. With that in mind, I will keep my comments on this clause brief. We all agree that this is an important that we will not seek to delay. Competition is vital to encourage innovation, and consumers deserve the best possible protections and value. We all want to get this right, and the Minister knows that. I want to say clearly that the Opposition welcome the Bill in principle. However, it will come as no surprise that we have some concerns that the Bill is lacking in some areas and could go further. We will explore those concerns in the hours and weeks ahead, and I look forward to debating the Bill further.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2
Designation of undertaking
Alex Davies-Jones (Pontypridd) (Lab)
I beg to move amendment 55, in clause 2, page 2, line 25, at end insert—
“(5) An SMS investigation in subsection (4) may take account of analysis undertaken by the CMA, on similar issues, that has been the subject of public consultation, within the five years prior to Royal Assent of this Act.”
This amendment and Amendments 56 and 57 ensure that the CMA is able to draw upon analysis and consultations that took place before the passing of this Act.
The Chair
With this it will be convenient to discuss the following:
Amendment 56, in clause 13, page 7, line 18, at end insert—
“(3) Consultation on matters relevant to a decision under section 14(1) undertaken before this Act is passed is as effective for the purposes of subsection (1) as consultation undertaken after it is passed, unless the CMA considers that there has been a material change of circumstances.”
See statement for Amendment 55.
Amendment 57, in clause 47, page 26, line 10, at end insert—
“(3) Consultation on matters relevant to a decision under section 14(1) undertaken before this Act is passed is as effective for the purposes of subsection (1) as consultation undertaken after it is passed, unless the CMA considers that there has been a material change of circumstances.”
See statement for Amendment 55.
Alex Davies-Jones
With your permission, Dame Maria, I will make some general points about clause 2 before turning to the amendments. Clause 2 gives the CMA the power to designate undertakings, as defined in clause 115, as having strategic market status in respect of a digital activity. Of course, only those undertakings designated with SMS will be subject to the digital markets regime.
The clause is vital in establishing the CMA’s new functions that will allow it to regulate digital markets. We welcome efforts to put the previously established digital markets unit on a statutory footing, and we see it as a key step in establishing the CMA’s responsibility for overseeing digital businesses of a certain size and status operating in the UK. As colleagues will note, this part of the Bill is seen by many as the UK’s version of the EU Digital Markets Act as it has many similarities to it. For an undertaking to be designated as having SMS, the following conditions need to be met: the undertaking carries out a digital activity, which means either providing an internet service or digital content; that digital activity is linked to the UK; and the undertaking must have substantial and entrenched market power. The latter condition requires the CMA to look five years ahead and imagine future developments. The undertaking must also have a position of strategic significance in that it generates £25 billion in global turnover or £1 billion turnover in the UK.
We see those as sensible barometers for SMS status, but I want to take this brief opportunity to press the Minister further on the CMA’s ability to look to the future. He will know—and, I am sure, agree—that the sectors we seek to regulate are often incredibly fast moving. We will debate this further shortly in clause 5, but I would be grateful for the Minister’s thoughts on this particular point, especially around his assessment of the CMA’s capacity and ability to essentially predict how changes across industries will emerge.
Amendments 55 to 57 would ensure that the CMA would be able to draw on analysis and consultations that took place before the passing of this Act. The amendments are critical to ensuring that the CMA is able to draw on the work that it did in shadow form once the Bill lands on the statute books. We cannot risk further delay to implementing this regime when we already know that the lack of competition regulation is having a significant impact on both consumers and businesses.
Last week we heard evidence from Professor Myers, who is a visiting professor in practice at the London School of Economics and Political Science. He had some interesting comments to make on the timeline for the Bill so far which I feel are worth reiterating here. Professor Myers said that
“this legislation has taken a while to come to fruition. At one point the UK looked like it was going to legislate before the European Union, but the CMA has done a lot of preparatory work, and I am sure that it recognises that it needs to hit the ground running as soon as this legislation is passed.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 46, Q72.]
That is why the amendments are so important, because they would allow the CMA to reflect on the lessons learned in the various consultations and analysis that it has already undertaken. I hope the Minister can see that these simple amendments would make sense for all involved.
The Chair
Before we proceed, I note that the shadow Minister has efficiently covered clause 2 stand part, so perhaps the Minister could also do so in his response, in the interests of time.
Paul Scully
Amendments 55 to 57 relate to ensuring that the DMU will be able to use, in its digital markets investigation, evidence that was gathered and consultations that were undertaken before the Bill becomes an Act. I am grateful for the opportunity to explain this really important aspect of the regime.
To provide some context, clause 2 will give the DMU the power to designate undertakings with strategic market status with regard to a specific digital activity. It sets out that, to designate a firm with SMS in respect of a digital activity, the DMU will need to be satisfied that a number of conditions detailed in clauses 3 to 8 are met. SMS designation is the gateway into the digital markets regime. Only the very small number of firms that are designated will be subject to the rules of the regime. The DMU will only be able to designate a firm following an evidence-based SMS investigation, which must include a public consultation that allows the firm itself and wider stakeholders to provide input on the designation decision. I explained earlier that I would use “firm” and “undertaking” interchangeably. Accordingly, when I say a “firm with SMS” or an “SMS firm”, that is the same thing as a “designated undertaking”.
Turning to amendment 55, I strongly support the point that the CMA should not have to repeat work that it has already done. It is for the DMU to decide what is and is not relevant analysis to its investigations, and it should be able to draw on insight from previous analysis or consultations when carrying out an SMS investigation where it is appropriate and lawful to do so. I am happy to confirm that the Bill does not prevent the DMU from doing that, provided that it acts in accordance with general public law principles, which would, for example, require it to ensure that evidence remained relevant. As such, I do not believe this amendment is necessary to ensure the DMU can reflect its existing evidence, understanding and expertise in its designation investigations. Further, the amendment could restrict the DMU’s ability to draw on analysis that had not been the subject of consultation, even if the DMU considered that analysis to be relevant to an investigation.
Amendments 56 and 57 relate specifically to consultations on proposed decisions as part of the DMU’s SMS and pro-competition intervention investigations respectively. The DMU can launch PCI investigations into suspected adverse effects on competition. We will return to PCIs when debating the clauses in chapter 4.
Consultation is a fundamental feature of the regime. It ensures that the decisions are based on the best available evidence and that the regime is transparent. For SMS and PCI investigations, the DMU must consult on the specific decisions that it intends to take at the end of its investigation. That will ensure that all relevant parties have an opportunity to feed in views and perspectives on what the DMU is proposing on the decision at hand, not simply on the general operation of the market.
As I have highlighted, it is absolutely right that the DMU will be able to draw on broader knowledge during the course of its investigations, but it should not be able to do away with the consultations entirely. The consultations are a necessary part of the procedural safeguards that ensure good decision making. I know that the Coalition for App Fairness said that it would raise that in its evidence. I am grateful for its evidence. I totally agree with it that the consumer should not start with a blank piece of paper, but I do not think that it is necessary to amend the Bill in order to be able to be able to use that existing analysis where it is there.
I will now turn to clause 2, which will give the DMU the power to designate undertakings with SMS with regard to a specific digital activity. To do that, the DMU will need to be satisfied that a number of conditions are met. The concept of “digital activities” is detailed in clause 3. To be in scope of the regime, the turnover condition must be met. That is explained in clauses 7 and 8.
The DMU must also consider that the digital activity is linked to the UK, and that the undertakings meet the SMS conditions in respect of the digital activity. That is to say that the firm has, in respect of the digital activity, substantial and entrenched market power, and a position of strategic significance.
Jerome Mayhew
It is a pleasure to serve under your chairmanship, Dame Maria. I will deal first with whether clause 2 should stand part of the Bill. It is of course axiomatic. Right at the heart of the purpose of the Bill is the designation of undertaking. Importantly, it references clause 7, which deals with the turnover of an undertaking. I am looking forward to what the Minister has to say about clause 7, particularly with reference to the levels of revenue or turnover for an undertaking. The Minister has given definitions for “undertaking” and “firm”. I look forward to his further comments about those definitions, particularly when it comes to the classification of worldwide turnover and the revenue being undertaken within the United Kingdom. I am straying slightly into clause 7, but because there is reference to it in clause 2, I hope that is acceptable.
I am just flagging that there may be consideration under clause 7 as to the possibility of the manipulation of turnover where there is a global undertaking with global turnover of less than £25 billion, but where the turnover associated with the United Kingdom is approaching the £1 billion mark. It is foreseeable that we could start to have economically significant manipulation associated with the definition of turnover—I flag that because it is referred to in clause 2. Of course, the main body of clause 2 is right at the heart of the Bill. I welcome the constructive opening comments from the hon. Member for Pontypridd, and I look forward to engaging with her and the other Members of the Committee on that basis over the coming days and, I am afraid to say, probably weeks. [Laughter.]
I turn to amendment 55. This Bill is already hundreds of pages long, and it was often noted in my former career at the Bar that legislation gets longer and longer as it seeks to become more and more specific. However, there is a risk with seeking to list all the elements that we wish to cover. By having a list, we encourage exemptions and the seeking out of elements that are not quite on the list. Through that mechanism, undertakings can avoid the intention while complying with the letter. In my submission, the approach taken by the Government in the current drafting of clause 2 is the right one, because, as the Minister has already mentioned, it gives the DMU the wide scope it needs to take account of work that has already been done without constraining it by having a specific list, as amendment 55 would require. Proposed subsection (5), which the amendment would insert, says that an SMS investigation
“may take account of analysis undertaken by the CMA, on similar issues, that has been the subject of public consultation, within the five years prior to Royal Assent of this Act.”
Who could object to that? However, the Minister made the point that it is already encompassed within the powers of the DMU under the current drafting of the Bill. If we say that this is specifically included in the body of text, it prompts the question: what if someone is just outside that but would otherwise properly be within the consideration of the DMU? It raises arguments that will be explored via litigation, particularly by organisations that have substantial turnover and considerable economic interests to defend, as we heard in oral evidence over the past week.
The last thing we want is to have legislation that invites clarification by the courts. Although I and the Minister are very sympathetic to the intentions behind amendment 55, I fear that it might have the unintended consequence of increasing the chances of prolonged litigation as we seek to explore what exactly is and is not within scope of the DMU. For that reason, I do not support the amendment.
Alex Davies-Jones
I welcome the comments from the hon. Gentleman and the Minister, but we would like to press the amendment.
Alex Davies-Jones
We do not oppose clauses 3 to 8, on the basis that they set out what constitutes a digital activity for the purpose of part 1 of the Bill. Clause 3 is an important clause with a number of subsections that clarify the exact definitions of digital activities and provision of services. These are all critical to empowering the DMU, which, if properly supported, has the potential to be a world-leading regulator and is ultimately the critical first step in modernising our competition policy.
We can all agree that the UK has the potential to be recognised as a global leader in technology and innovation, and capitalising on that is vital to our economic growth, yet the current situation, which sees a small number of firms dominate digital markets, is reducing competition for other businesses. Ultimately, it is consumers who are paying the price in the products and services we all receive.
This clause is crucial to defining exactly which digital activity will fall under the regulation, and it is welcome. After all, Labour has been clear and has long called for measures to regulate the digital space more widely. We specifically support the clause, as it gives us all clarity on how we can define digital activity.
Subsection (3), which outlines how the regime will give the CMA the power to treat multiple digital activities carried out by a single undertaking as a single digital activity, is particularly welcome. For different activities to be grouped together, they must either have substantially the same or similar purposes—for example, a social media provider offering a number of internet services under different brands with a common function, allowing users, such as advertisers and publishers, to interact and communicate with each other; or can be carried out together to fulfil a specific purpose—for example, services and products that are part of the same supply chain, such as services selling advertisements and the provision of an advertising platform. We all know the rapid rate at which companies can develop and expand, so it is particularly welcome to see this subsection.
Subsection (4), which sets out that where the CMA is required to give or publish a notice or other document under part 1 of the Bill, it may describe the digital activity by reference to the nature of that activity, brand names, or a combination of these, is also vital to the success of the regime. We clearly support the clause, which we regard as crucial to establishing the barometers of the CMA’s regulatory powers, and we have therefore not sought to amend it at this stage.
Clause 4 sets out the ways in which a digital activity could be linked to the UK for the purposes of designation. We are pleased to see that the clause considers the number of UK users in its criteria, as we have all read the reports of tech firms threatening to leave the UK if other legislation places requirements on them in future. That is why, with regard to pro-competition law, the UK user base must be considered when it comes to implementing this regime.
Once on the statute book, the DMU will be empowered to oversee a new regulatory regime for the most powerful digital firms, promoting greater competition and innovation in these markets and protecting consumers and businesses from unfair practices. It is vital that UK-specific connections are established in the Bill. The clause is also an important opportunity to highlight the significant impact that inaction is having on our digital markets in the UK. As we know, these markets are characterised by having just a few big tech firms with entrenched market power and the ability to shape the market to the detriment of consumers and smaller businesses. The 2020 CMA market study said:
“Both Google and Facebook grew by offering better products than their rivals. However, they are now protected by such strong incumbency advantages—including network effects, economies of scale and unmatchable access to user data—that potential rivals can no longer compete on equal terms.”
The current balance of power means the big tech companies often have an unfair advantage over their competitors and dominate key markets. For example, virtually all UK smartphones run either Apple or Google operating systems. In 2018, Google had a more than 90% share of the UK search advertising market, and Meta owns 50% of the UK’s digital display advertising space. Thanks to their dominance, Apple and Google made in excess of £4 billion of profits from their mobile businesses in 2021. The CMA estimates that Facebook and Google made profits of £2.4 billion above what would be considered a fair return in the digital advertising market in 2018. On Meta’s market dominance, the CMA noted:
“Facebook’s average revenue per user in the UK has increased from less than £5 in 2011 to over £50 in 2019.”
The consequence is worse outcomes for smaller businesses and consumers. That is why we welcome the clarity in the clause and support its inclusion.
Clause 5 requires the CMA to look at the next five years when assessing whether an undertaking has substantial and entrenched market power in respect of a digital activity. Specifically, it must be satisfied that the undertaking’s market power and influence in the digital activity is neither small nor transient. Although we welcome that requirement—ultimately, none of us wants companies to be stifled to their detriment—I hope the Minister will flesh out exactly how he thinks the clause will work in practice. The CMA is clearly well placed to assess digital firms’ plans for progression and development over the next five years, but we are concerned that the clause is broadly asking the impossible, given the rate at which technological developments and expansion can occur in this space. I would therefore welcome the Minister’s assessment.
The clause further outlines that the CMA must take into account expected or foreseeable developments if it does not designate the undertaking as having strategic market status in respect of the digital activity to which the investigation relates. Again, that is the kind of welcome and balanced approach to designation that we would expect of a new regulatory regime, but will the Minister confirm how the Bill will ensure that such decisions and designations are made public so that the transparency of the regime as a whole is enhanced? It would be helpful for all of us—parliamentarians, firms, civil society bodies and stakeholders in the sector—to understand how designations are made, and transparency is central to that. I hope the Minister will address those points. We seek some assurances, but I am sure we will be happy to support the clause as it stands.
Clause 6 sets out the terms by which an undertaking has a position of strategic significance. It sets out a number of conditions, including size, scale and the role the firm plays in terms of digital activity more widely. We support the need for flexibility in the regime, so paragraphs (c) and (d) are particularly welcome. Paragraph (c) is intended to cover circumstances in which the undertaking can use its position in the digital activity to leverage or expand into a range of other activities. That is vital, because companies have to be agile to dominate a variety of markets, and they can abuse that. Paragraph (d), which is intended to cover scenarios where an undertaking’s position enables it to determine or substantially influence how other undertakings operate—in other words, to set the rules of the game—is equally important.
It would, however, be remiss of me not to highlight our slight concerns about subsection (2), which gives the Secretary of State the power to vary the conditions set out in the Bill. The success of the regime relies on scrutiny and direction from the Government, but will the Minister clarify exactly what type of scenario would require the Secretary of State of the day to vary the conditions?
As I have said, we support an agile approach to regulation. After all, even across other jurisdictions, the idea of regulation and encouraging pro-competition across our digital markets is a complex process for legislation. We wholeheartedly support the need to get this Bill on the statute book—it is something Labour has long called for—but none of us wants the regulator to be undermined or constrained by the opinions of the Secretary of State of the day, so I would appreciate some reassurance from the Minister on that point before proceeding.
Clause 7 outlines the turnover conditions that must be met for the CMA to designate an undertaking as having strategic market status in respect of a digital activity. Subsection (2) sets out that the turnover condition is met if the CMA reasonably estimates that the undertaking’s UK turnover in the relevant period exceeds £1 billion or that its global turnover in the relevant period exceeds £25 billion. We welcome the clarity that only one of these thresholds needs to be met for the turnover condition to be met and, if the undertaking is part of a group, the turnover of that pooled group should be considered, which is a matter we will come to when we debate clause 114.
I will take this opportunity to highlight the fact that while the £1 billion and £25 billion turnover figures may seem high, they show the sheer market dominance that certain firms have over our digital markets. Setting the conditions at the current rate will not act as a deterrent for growth, which, of course, none of us want to see. We particularly welcome subsection (5), which requires the CMA to keep the thresholds under review and, from time to time, to advise the Secretary of State as to whether they are still appropriate and proportionate.
It would be helpful for all of us in the room and those listening elsewhere to understand how the Minister envisions that this will work in practice. Will it be on an annual review basis, and when will we have clarity on that? Will the reviews be made public to ensure proper and appropriate scrutiny? These are small points, but given the lack of transparency around the regime as it stands, I would be grateful for the Minister’s assurances. Despite that, again, we support the clause as it stands and do not seek to amend it at this stage.
Finally—thank you for your indulgence, Dame Maria—clause 8 makes provision about the value of an undertaking’s or a group’s UK or global turnover in the relevant period for the purposes of the turnover condition. We see this as a fairly procedural clause, which outlines the definition of global turnover by which the CMA will make its decisions on designation. We note that subsection (4) gives the Secretary of State the power to make regulations providing further detail about how the total value of an undertaking’s or a group’s UK turnover or global turnover is to be estimated for the purposes of the turnover condition. Again, we feel that this could be problematic, and I would welcome the Minister’s reasoning as to why and in what instance the Secretary of State would need to make regulations to provide that further detail.
If the CMA is to be trusted to make reasonable decisions on a group’s turnover for the purposes of the turnover condition, it seems odd to give the Secretary of State the power to provide further detail when the merits or even the content of such further detail is so ambiguous. I hope the Minister can provide clarity and expand on that point. That aside, we support the clause because the turnover point is crucial for designation. The clause should remain and it should stand part of the Bill.
Jerome Mayhew
I briefly made mention of clause 7 in my earlier remarks. I am interested in the Minister’s view, particularly on clause 7(2)(b) and the definition of UK-related turnover being £1 billion or more. There is a legitimate question to be asked, because while that is a substantial amount of money, it is not that great in terms of global business. As I mentioned, I could foresee a situation whereby when a global undertaking’s global turnover is substantially less than £25 billion and its UK-related turnover is approaching the billion-pound mark, there might be a perverse incentive to direct investment and activity away from the United Kingdom because of that cliff-edge definition. I would love to propose a better alternative—it is above my pay grade—but I highlight that as being an issue we might need to take into account.
Paul Scully
I will cover most of the points in my main speech, but the reasons for designation of SMS status will be published, so that will be public. I will cover the points on the Secretary of State and on turnover. Clause 3 sets out what constitutes a digital activity for the purposes of the digital markets regime. Digital activities are defined as the provision of digital content, such as software, operating systems or applications; services provided by means of the internet, such as an e-commerce platform; and any other activity carried out for the purposes of providing digital content or internet services, such as background processes.
A firm can only be designated with SMS in respect of a digital activity. The restriction to digital activities is appropriate for the new regime, which responds to the specific characteristics of digital markets, such as network effects and data consolidation, which makes them extremely fast-changing as well as prone to tip in favour of a few firms. With all of this, the definition of digital activities has been designed so that our regime will be able to handle the complexities of different and fast-evolving digital business models, and that is reflected in the powers given to the Secretary of State.
Clause 4 sets out when the DMU will be able to consider a digital activity as being linked to the UK for the purposes of designation. As we have heard, the global nature of digital markets means that business actions in other countries can impact on consumers and businesses in the UK, so it is important to allow the DMU to address harm to competition in the UK, even when all or part of a firm’s physical operations are located elsewhere.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
The Minister may have explained this elsewhere, but I am wondering about the thresholds of £1 billion and £25 billion. Will those thresholds be assessed over time, because firms’ turnover and so on can change from year to year? When is the point at which assessment is made, and will the threshold change subsequently if turnover drops?
Paul Scully
The hon. Lady makes a good point, which relates to what my hon. Friend the Member for Broadland said about fluctuation of turnover and what companies may do with their turnover. It might be a good time to tackle that.
First, the turnover of the whole corporate group needs to be considered. That approach will help to avoid complications in revenue allocation, which could result in firms avoiding investigation and designation by virtue of their corporate structure or accounting practices. The DMU will be able to consider the past two periods of 12 months, not just the more recent one when calculating turnover—that should cover fluctuations, which the hon. Member for Feltham and Heston asked about. Markets can fluctuate, and turnover is not the same as market power; it is just part of the definition. The flexibility will also reduce the likelihood of the figures being manipulated and circumvented for the purposes of the turnover threshold.
Importantly, the use of the turnover thresholds will provide certainty to the vast majority of firms that they cannot be in scope of the regime, as they will easily be able to determine that their turnover is below the thresholds. However, if a firm meets the turnover threshold that does not necessarily mean that it will be subject to an investigation. The DMU will also need to have reasonable grounds to consider that the firm meets the two SMS conditions in respect of a digital activity that is linked to the UK—that is, that it has substantial and entrenched market power, and a position of strategic significance in respect of that activity.
Clause 7 will give power to the Secretary of State to amend those thresholds. That will ensure that they remain relevant as digital markets develop, evolve and grow over time. The DMU will be required to keep the thresholds under review and advise the Secretary of State whether they are still appropriate. The Government anticipate that the DMU may take into account factors such as inflation and currency fluctuation when doing so, using its expertise and while having its finger on the pulse of digital markets. As was the case for clause 6, the affirmative resolution procedure is the appropriate mechanism, as this is a significant power that would alter the scope of the regime.
Clause 8 relates to the turnover condition and sets out further details about the meaning of global and UK turnover. Any activity of the firm will be considered when estimating global turnover. Both digital and non-digital activities will be considered, making it easier for firms to know whether they are in scope without having to distinguish between different types of activity.
For UK turnover, any activity of the firm will be considered, but the turnover must relate to UK users or UK customers. The clause also gives the Secretary of State the power to make provision about how turnover should be estimated, including provision about amounts that should or should not be regarded as comprising turnover. That level of detail would not be suitable for primary legislation. We believe a negative procedure is most appropriate because of the technical and non-controversial nature of any regulations.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clauses 4 to 8 ordered to stand part of the Bill.
Clause 9
Initial SMS investigations
Question proposed, That the clause stand part of the Bill.
Paul Scully
Clause 9 relates to initial SMS investigations. It sets out the circumstances under which the DMU can start an initial SMS investigation. An initial SMS investigation is for circumstances in which a firm either is not designated at all or is designated but in a different digital activity. The DMU can open an investigation only if it has reasonable grounds for considering that the tests for designation may be met—that is to say, most importantly, the tests of substantial and entrenched market power and a position of strategic significance in respect of a digital activity. Clause 9 does not require the DMU to open an investigation as it should be able to prioritise investigations to ensure its resources are targeted at the most pressing competition issues.
Clause 10 relates to further SMS investigations—the other type of SMS investigation. A further investigation is an investigation into whether to revoke an existing designation or designate a firm again in respect of the same digital activity. A further SMS investigation may also look at whether to designate a firm in respect of a similar or connected digital activity. The investigation will consider whether to make provision about existing obligations, which I will say more about on clause 17.
It is important that a designation should not continue indefinitely. That is why the DMU must review any designation before the end of the five-year designation period. The DMU will need to open a further SMS investigation at least nine months before the end of the five-year designation period if it has not already done so. It will either revoke a designation, if the firm no longer meets the criteria, or decide to designate the firm again for another five-year period. The DMU will be able to open a further investigation at any point during an existing designation. For instance, if the DMU considers that a firm no longer has substantial and entrenched market power in the digital activity, then it is important that the designation can be reviewed and, if necessary, revoked early.
Clause 11 sets out the procedure that the DMU must follow for either an initial or a further SMS investigation. To ensure that the regime is fair and transparent, the DMU will be required to give the firm a notice when it starts an investigation, stating the purpose and scope of the investigation as well as its length. For initial SMS investigations, the notice must set out the DMU’s reasonable grounds for considering that the designation tests may be met. The DMU must also publish a statement summarising the notice in order to make the wider public aware that it is opening an investigation. That notice will trigger the start of the investigation period.
Clause 12 sets out that the DMU may close an initial SMS investigation at any point before reaching a final decision on designation. It is important that that option is available to the DMU for initial investigations as there may be situations where flexibility is needed. For instance, unexpected circumstances may arise while an investigation is ongoing. The Government believe that in order to reprioritise resources if needed, the DMU should have the discretion to close an initial SMS investigation before reaching a final decision.
Clause 13 sets out that the DMU must consult on its proposed decisions as part of an SMS investigation. It is important that the firm under investigation, as well as all relevant parties, has an opportunity to feed in views and perspectives to the DMU’s investigation process. That consultation is also important in providing for a transparent regime that builds on the best evidence available.
Clause 14 sets out what the DMU must do at the end of an SMS investigation. For a further SMS investigation, the DMU must decide whether the existing designation should be revoked or whether the firm should continue to be designated in the same activity. The DMU must also decide whether to make provision in relation to existing obligations. If relevant, the DMU must decide whether the firm should be designated in a similar or connected activity.
For an initial investigation, the DMU should also reach a decision when it has not closed the investigation early under clause 12. The DMU will need to give the firm a notice of its decision on or before the last day of the investigation period, which lasts up to nine months. It must also publish a summary statement. If for some reason the DMU does not give the decision notice to the firm by the deadline, by default the firm is not designated, or is no longer designated, in the relevant digital activity.
Clause 15 sets out the requirements for decision notices when the DMU decides to designate a firm as having SMS in respect of a digital activity. The decision notice needs to be given to the firm. Among other things, the notice should include a description of the firm, a description of the digital activity, any provision made regarding existing obligations, per clause 17, and the DMU’s reasons for its decisions.
Clause 16 sets out the requirements for decision notices when the DMU decides to revoke an existing designation following a further investigation. A designation will no longer be appropriate once a competitive environment has developed. The decision notice needs to be given to the firm, as set out in clause 14(2).
Clause 17 gives the DMU the power to apply transitional arrangements to obligations revoked as a result of the DMU’s ending an SMS firm’s designation in relation to a digital activity, but only for the purpose of managing impacts of the revocation on persons who benefited from those obligations, and only in a way that appears to the DMU to be fair and reasonable. That will help ensure a smooth transition for wider market participants.
Clause 17 also allows the DMU to continue to apply existing obligations, such as conduct requirements or pro-competition orders. That is for cases where the new designation is in respect of the same digital activity, or an activity that is similar or connected to the previous designated digital activity. The clause will ensure that existing obligations do not automatically end where they still remain appropriate following a further SMS designation. The power to continue to apply obligations will be subject to the DMU’s ongoing duty to monitor and review obligations, which means that the DMU cannot continue to apply obligations that are no longer appropriate.
Finally, clause 18 sets out that a firm will be designated as having SMS in respect of a digital activity for five years, beginning with the day after the day on which the SMS decision notice is given. We believe that five years strikes the right balance between giving enough time for the regulatory interventions to have an impact on the one hand, and making sure the obligations on the firm do not last longer than necessary on the other.
Alex Davies-Jones
Labour broadly welcomes this grouping. I will make some brief comments about clauses 9, 10 and 11 before addressing my amendments, and will then come on to clauses 12 to 18.
As we know, and as the Minister has outlined, clause 9 concerns initial SMS investigations. We see the clause as an important start point that will allow the CMA to have clarity over exactly how it will begin the designation process for the regulatory regime. Subsection (1) sets out that the CMA may begin an initial SMS investigation where it has reasonable grounds to consider that it may be able to designate an undertaking in accordance with clause 2. We believe that that is vital and that the CMA is given the statutory powers to investigate fully. We agree that “reasonable grounds” are an important way to capture the beginnings of the process.
It is clear that the regime will apply only to firms with significant market dominance, as we have already discussed, but it is right that the CMA should use a logical approach to establish SMS firms from the outset. We also agree that it is right that where the CMA considers that the digital activity is similar or connected to a digital activity in respect of which the undertaking is already designated, it may instead begin a further SMS investigation.
Similarly, we agree with the wording of subsection (3), which clarifies that the CMA has the power to open a designation investigation in respect of a digital activity even if it has previously decided not to designate the undertaking as having SMS in respect of that digital activity. That would include circumstances where a previous designation had ended or where a previous decision had been taken not to designate the undertaking in respect of that digital activity. It is incredibly important that the CMA should not be restricted in terms of its designations, so this clarity is welcome.
The Chair
Order. I ask the hon. Lady to restrict her comments to the stand part debate on clauses 10 to 18. We debate the amendments a little later.
Alex Davies-Jones
Yes, Dame Maria.
I turn to clause 11. We see the clause as important in establishing exactly how the CMA should carry out an SMS investigation. It is important for all involved—from the CMA to regulated firms—that there should be some transparency over exactly how the CMA will begin an SMS investigation, and under what circumstances. We particularly welcome provisions for investigation notices; it is important that all parties are given adequate time and notice in order for this regime to fully succeed.
As I have already noted, we particularly welcome subsection (5), which sets out that as soon as reasonably practicable after giving an SMS investigation notice, or a revised version of the notice, the CMA must publish a statement summarising the contents of the notice and give a copy of the statement to the Financial Conduct Authority, the Office of Communications, the Information Commissioner, the Bank of England and the Prudential Regulation Authority. That is an important point for transparency—a common theme, I am afraid, to which I will continue to return as the Bill progresses through Committee.
As we all know, there are certain aspects of digital markets that make them prone to creating tipping points, where very large online platforms have huge and entrenched market power. The lack of transparency is a particularly problematic issue, and one that the Bill must seek to address. For example, in online advertising a complicated bidding process may take place very quickly—advertisers may not able to scrutinise decisions about where their ads are placed and how much they cost. That has a knock-on impact by exacerbating other competition problems, as people and businesses are unable to make informed choices.
We see the transparency and publication of these investigation notices as an important part of the package around getting the regime right. We welcome the fact that the Financial Conduct Authority, Ofcom, the Information Commissioner, the Bank of England and the Prudential Regulation Authority will all have sight of such notices, but what assessment has the Minister made of making these notices public? Of course, Labour recognises that there is a difficult line to toe here in terms of publishing information that could impact markets and potentially cause detriment to companies’ market share or worth. However, could a sensible middle ground be reached?
I move on to clause 12. Labour welcomes clause 12, which outlines the circumstances in which an initial SMS investigation may be closed without a decision. We recognise that giving the CMA that flexibility is important. None of us wants undue time limits to be placed on its decision-making and designation process. Central to the success of the regime is that the CMA should be empowered to take decisions within its remit. We all recognise that the CMA is a proactive regulator that currently seeks to use its soft power alongside its formal powers, but it is currently being hampered by its existing legal powers. That is causing a disparity between its ability to enforce competition and consumer law—a significant issue that stakeholders, including Which?, Citizens Advice and others, have repeatedly raised, including during our evidence sessions.
We see clause 12 as an important clause that gives the CMA the ability to work in an agile manner, according to workload and priorities. As with previous clauses, we particularly welcome subsections (2) to (4), which set out that if the CMA decides to close an initial SMS investigation, it must give the undertaking under investigation notice of the closure, including the reasons, and publish a statement summarising the contents of the notice. Labour supports the clause, and we have not sought to amend it at this stage.
Clause 13 requires the CMA to consult on any decision that it is considering making as a result of an SMS investigation. Subsection (1) requires the CMA to carry out a public consultation and bring it to the attention of such persons as it considers appropriate. Of course, there is a balance to strike here: public consultation is an important part of any regulatory regime, but none of us wants to see the CMA bound by delays and, as a consequence, unable to regulate effectively. I would be grateful for some clarity from the Minister on his understanding of the “appropriate” person, as outlined in subsection (1), which reads:
“The CMA must—
(a) carry out a public consultation on any decision that it is considering making as a result of an SMS investigation (see section 14(1)), and
(b) bring the public consultation to the attention of such persons as it considers appropriate.”
I imagine the Secretary of State will be one such person, but will the Minister clarify who else he envisions will be privy to the public consultations? In addition, I would be grateful if the Minister again confirmed whether the public consultations will be published. Consultation is an important part of any regulatory regime, particularly this one, which aims to do a colossal thing in regulating our digital markets and, ultimately, to encourage competition. Labour recognises the extent of the challenge, and there is a fine balance to be struck between consultation and stifling action. We do not want to see consultations get in the way of the regime more widely. We have had enough delay as it is, and I am sure the Minister will not mind my highlighting just how many consultations the Bill has endured on its journey so far.
In 2018, the Government established a digital competition expert panel to examine competition in digital markets. In 2021, the DMU was set up within the CMA to oversee competition in the digital markets sector. Between July and October of that year, the Government ran a consultation on plans for a new regime. Almost a year on, in May 2022, the Government responded to the consultation, setting out the final position on a new regime. There has already been significant delay to getting the Bill to this stage, and we already know from its impact assessment that the regime is unlikely to be fully operational until 2025, so I would be grateful if the Minister could reassure us all that the CMA will not be delayed by consultations, as the Government seemingly have been. That point aside, we understand the value of the clause and will support it.
Clause 14 sets out what the CMA must do at the end of an SMS investigation. It broadly clarifies the actions and decisions that the CMA must take in deciding whether an undertaking will be designated as SMS in respect of its digital activity. Again, we welcome subsection (2). We also support subsection (5), which sets out that the CMA must publish a statement summarising its contents as soon as reasonably practicable after giving an SMS decision notice. This is an important clause, which we see as a practical outline of how the CMA will be empowered to act on concluding its initial SMS investigations.
Clause 15 sets out a requirement for SMS decision notices where the CMA decides to designate an undertaking as having SMS in respect of a digital activity. We welcome the clarity afforded in subsection (2), which outlines on the face of the Bill the exact contents that the SMS decision notice must include. This ranges from a description of the designated undertaking to a statement outlining the designation period and the circumstances in which the designation could be extended.
It is also worth referring specifically to subsection (4), which clarifies that giving a revised SMS decision notice to provide for the designation of an undertaking does not change the day on which the designation period in relation to that designation begins. That is a welcome clarification, which I know will be useful for undertakings and civil society to understand as we seek to establish the regime in full.
Although Labour supports the clause, I am interested to know the Minister’s thoughts on subsection (5), which states:
“As soon as reasonably practicable after giving a revised SMS decision notice, the CMA must publish a statement summarising the contents of the revised notice.”
Again, that is rather vague, so will the Minister clarify what he considers to be “reasonably practicable”? Ultimately, companies and consumers alike would benefit from a timely and transparent approach to the regulation. Although I am reassured by the CMA’s ability, we and many others have slight concerns about its capacity and resource, as I have previously outlined, so I would be grateful for the Minister’s assurances on that issue.
Clause 16 sets out the requirements for SMS decision notices where the CMA decides to revoke an existing designation as a result of a further SMS investigation. There is no need for me to repeat myself. We support the clause, and it is important for the CMA to be empowered to act flexibly, particularly given the ever-changing nature of digital markets. Again, we welcome clarification that the CMA will provide for the revocation to have effect from an earlier date—for example, where the undertaking has already ceased to engage in the relevant digital activity. None of us wants to see overregulation, so we support the clause and have not sought to amend it. While I am all for a collegiate approach to legislating, I assure the Minister and my Whip that we do not agree with the Bill in full, as can be seen from the amendment paper. However, on the points covering designation, we welcome the progress and clarity of the clauses, which we see as fundamental to the regime’s wider success.
Labour supports clause 17, which aims to define the nature of an existing obligation, which is any conduct requirement, enforcement order, final offer order or pro-competition order applying when a designation is revoked or another one is made after a further SMS investigation. We particularly welcome subsections (3) and (4), which set out that the CMA may apply any existing obligation in respect of a new designation, may modify that obligation in respect of a new designated activity, and may make transitional, transitory or saving provision in respect of that obligation. Again, we see that as standard procedure to allow the regime to operate in full and have not sought to amend the clause.
Finally—colleagues will be pleased to hear that—clause 18 establishes that where the CMA decides to designate an undertaking as having SMS in a digital activity, the designation period is five years, beginning the day after the day on which the SMS decision notice is given. We welcome other provisions later in the Bill on the circumstances in which the designation period may be extended or revoked. Labour recognises that assessing the regulatory regime in digital markets will take some time, so we believe a designation period of five years is a sensible approach. Given certain undertakings’ market dominance, we think five years is a reasonable timeframe to allow pro-competition mechanisms to take effect and consumers to see that reflected in the options and prices afforded to them. We therefore support the clause and have not sought to amend it.
Paul Scully
On the two questions of what is reasonably practical and practicable in terms of time, we do not want to set an artificial deadline but want to make sure that the DMU can act as quickly as possible. As the hon. Member for Pontypridd rightly says, and we have said all the way through, technology and digital markets move really quickly. That is why we want to make sure that decisions are out of the door as quickly as possible, so that people can see what is happening as soon as possible. The decisions will go to the appropriate persons as described, which are relevant third parties and the SMS firms themselves. It is for the CMA to determine who is a relevant third party, but that will clearly include any challenger tech companies that may be affected by the initial SMS designation.
Question put and agreed to.
Clause 9 accordingly ordered to stand part of the Bill.
Clause 10 ordered to stand part of the Bill.
Alex Davies-Jones
I beg to move amendment 46, in clause 11, page 6, line 36, at end insert—
‘(6) The CMA must provide a copy of the SMS investigation notice to any person who requests a copy.’
This amendment and Amendments 47 to 52 aim to ensure access to information relevant to the regime is available publicly.
The Chair
With this it will be convenient to discuss the following:
Amendment 47, in clause 12, page 7, line 9, at end insert—
‘(5) The CMA must provide a copy of the notice under subsection (2) to any person who requests a copy.’
See the statement for Amendment 46.
Amendment 48, in clause 14, page 7, line 36, at end insert—
‘(5A) The CMA must provide a copy of the SMS decision notice to any person who requests a copy.’
See the statement for Amendment 46.
Amendment 49 in clause 26, page 14, line 19, at end insert—
‘(3A) The CMA must provide a copy of the SMS decision notice to any person who requests a copy.’
See the statement for Amendment 46.
Amendment 50 in clause 28, page 15, line 20, at end insert—
‘(5) The CMA must provide a copy of the notice to any person who requests a copy.’
See the statement for Amendment 46.
Amendment 51 in clause 30, page 16, line 13, at end insert—
‘(4A) The CMA must provide a copy of the notice to any person who requests a copy.’
See the statement for Amendment 46.
Amendment 52 in clause 46, page 25, line 38, at end insert—
‘(5) The CMA must provide a copy of the PCI investigation notice to any person who requests a copy.’
See the statement for Amendment 46.
Alex Davies-Jones
These important amendments to clause 11 that we have tabled are designed to encourage a more transparent approach to SMS investigations. As repeatedly stated, transparency, openness and accountability have to be central to the Bill working in practice and in reality. The Minister will note that this is a simple set of amendments, which will broaden the regime’s openness. Labour firmly believes that a transparent approach where possible and where the impact on markets is limited will be vital to its success. Will the Minister share his thoughts on our amendments? They seek to make the Bill more transparent for everyone and I look forward to some clarity.
Paul Scully
Amendments 46 to 52 would require that the notices the DMU must provide to an SMS firm in respect of an SMS designation, conduct requirements and PCIs should be made available on request to third parties. We agree with the hon. Member for Pontypridd that transparency and accountability are essential to the new regime, and we will always look for ways to make sure that it is open and at the core of what we do.
The Bill already provides that the DMU will be required to publish online a statement summarising the contents of those notices whenever they are provided to a firm. That is, it will need to set out required elements of the notice, such as describing its decisions and the reasoning behind them, in a shortened form. In the statements, the DMU will provide the key information from the notice about its decisions to other businesses, consumers and the wider public, in line with public law principles. The DMU may redact commercially sensitive information.
For example, the summary notice for a conduct investigation must give details about the conduct requirement and the behaviour suspected of breaching that requirement, and it must provide information about the investigation period and the timeframe for making representations for third parties.
Peter Dowd (Bootle) (Lab)
I completely understand where the Minister is coming from, but the Labour Front Bench is trying to push this question of transparency and I am concerned about what the Minister just said. The hon. Member for Broadland talked in relation to another issue about the courts becoming involved. The last thing we want is to create a need for clarification from the courts. Is there not a danger that, unless this area is transparent and the statements are more significant than just a summary, we will get into needing clarification by the courts?
Paul Scully
Third parties can clearly get involved and approach the DMU, which I will cover in a minute, so we do not necessarily need to get to court stage. I have talked about some of the specifics that will be in the summary notices, which will have quite a considerable amount of detail anyway. We do not want to add extra resource requirements that take away from the core tasks of the DMU.
The summary statements are just one of the ways in which the DMU will inform and involve stakeholders in its decision making. The DMU will be required to publicly consult before making major decisions, which include designating a firm with strategic market status in a digital activity, making pro-competition orders, and imposing conduct requirements. It will also be required to publish guidance on how it will take those decisions.
Should a third party be unsatisfied with the DMU’s summary statement, they can request the full notice through a freedom of information request. As a public authority, the CMA is required under the Freedom of Information Act 2000 to provide the public with information it holds when requested to do so, subject to the relevant exemptions, which include a requirement to protect commercially sensitive information. We agree that public transparency for the new digital markets regime is vital. The drafting ensures that the right information will be made publicly available. I hope I have set out our position to hon. Members and that they feel able to withdraw their amendments.
Alex Davies-Jones
I have listened to the Minister carefully outline the Government’s position. I do recognise that a balance needs to be struck, yet we feel that our amendments would seek to increase transparency, openness and accountability. For that reason, we will press them to a vote.
Question put, That the amendment be made.
Alex Davies-Jones
I beg to move amendment 54, in clause 19, page 11, line 17, after “CMA,” insert—
“(ab) where the designated undertaking has been given an SMS decision notice under section 14(2), must come into force no later than three months of the SMS decision notice being given”.
This amendment introduces a timeline for the enforcement of conduct requirements set out on the face of the Bill and in CMA Guidance.
With your permission, Dame Maria, I will also speak to clause 19, in the interests of efficiency.
Alex Davies-Jones
Clause 19, which outlines the CMA’s power to impose conduct requirements on a designated firm, is very welcome indeed. It is an important clause that aims to prevent harm that may result from the market position of undertakings with strategic market status.
In practice, these conduct requirements are essentially instructions given to a designated undertaking to conduct digital activities in a manner that promotes competition. The requirements can be prescriptive or prohibitive in nature; they are essentially the dos and don’ts, except that the requirements do not apply automatically to every undertaking having SMS and instead apply on a case-by-case basis. The DMU therefore has wide discretion to impose conduct requirements on specific SMS firms, as long as they fit within a list of purposes that are listed in clause 20.
Vicky Ford (Chelmsford) (Con)
I am very fond of the hon. Member and she has a beautiful voice, but she did complain earlier about how long it had taken this Bill to get to market. I urge her to remember that we want to get through the Bill as quickly as possible, for consumers. Repeating every single thing that we can already read in the explanatory notes and in the Bill does not seem to me to be the most efficient use of all of our time.
Alex Davies-Jones
I am grateful for that intervention. The hon. Member will know I am also fond of her and her voice. I think it is important to clarify exactly what we are debating, and why we are reasoning as we are. I will happily refer to certain clauses if that would please the hon. Member, but it is important that we outline exactly why we have come to the rationale that we have on the Bill as it stands before us.
Potential examples of prescriptive conduct requirements include having effective processes for handling complaints, trading on fair and reasonable terms, or giving users options or default settings. Conversely, some examples of prohibitive conduct requirements may be preventing abuse of dominance practices, such as treating its own products more favourably, using data unfairly, tying practices, restricting interoperability, refusal to grant access and so on.
We particularly welcome subsection (5), which provides that the CMA may impose conduct requirements only for certain objectives. However, we have concerns about subsection (10), which says that a conduct requirement
“(a) comes into force at a time determined by the CMA, and
(b) ceases to have effect—
(i) in accordance with a decision of the CMA”—
as Members can read in the Bill.
For swift implementation, it is right that the Bill’s approach allows for conduct requirements to be written alongside an SMS designation investigation, but we need a statutory time limit for the initial set of conduct requirements to be implemented. As it is likely that the DMU will have considered the three conduct objectives before the SMS designation decision is made, the DMU should be required to impose the initial set of conduct requirements either at the same time as the SMS designation or within three months of its date.
A central feature of the new regime is to enable the DMU to revise its rules as time goes on, so the deadline should apply only to the initial set of conduct requirements, so as not to hinder the DMU in revising or adding to them subsequently. Amendment 54 would introduce a timeline for the enforcement of conduct requirements set out in the Bill and in CMA guidance.
Peter Dowd
Given that subscription traps cost between £28 billion and £34 billion a year, my constituents in Bootle are perfectly entitled to listen to my hon. Friend ram home this point time after time, because £28 billion out of their pockets in someone else’s pocket is not appropriate, not reasonable and not fair, given the current cost of living crisis. My hon. Friend should speak as much and as long as she wants.
Alex Davies-Jones
I am grateful for that intervention. It is important that we get the Bill right. It is a very technical Bill. It is incredibly wordy—Members will have heard me trip over my words a number of times. It is important that we are able to portray the nature and benefits of the Bill to those listening at home or elsewhere, for the future and for the CMA, so that they understand what we as legislators mean when we speak in this place. That could influence decisions later. It is important for our constituents, who will be positively—we hope—impacted by the Bill. It will enable to have them more choice to hear exactly what we as legislators in this place mean.
The amendment introduces a timeline. It is important and we have given it some serious thought. I hope that the Minister has given it serious thought, too, because it would be helpful to ensure that the CMA is forced to act swiftly, as we have all discussed. I look forward to hearing his comments. I hope that he sees how beneficial this simple amendment could be. It is not meant to trick him; it is meant to make the legislation as positive and as beneficial as it can be.
Paul Scully
Thank you, Dame Maria. I will cover the clause first. It enables the DMU to introduce conduct requirements to govern the behaviour of SMS firms. That will help manage the effects of their market power by protecting the businesses and consumers that rely on their services. The tailored rules will be used to promote fair dealing, open choices, and trust and transparency, which mean that the DMU will be able to ensure that SMS firms treat consumers and other businesses fairly, not subjecting them to unreasonable terms and conditions. It will also mean that the regulator is able to intervene to ensure that users can choose freely and easily between different products and providers. Finally, the DMU will be able to intervene to ensure that users have the information they need to understand what is on offer, and to make their own decisions about whether they want to use the SMS firm’s products.
The clause sets out that, where the DMU imposes a conduct requirement, it must send a notice to the SMS firm and publish that notice online as soon as reasonably practicable. That will ensure that the obligations and responsibilities will be made clear to the SMS firm and to those businesses and consumers who rely on them.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
My hon. Friend the shadow Minister has been accused of repetition, but she made a point about resources. The Minister is making further comments about the capacity and tasks of the regulator, so perhaps he could come back to the earlier question on resourcing, about which a lot of concern was expressed last week in the evidence sessions. Will the Minister address some of that and tell us how the new body will be resourced to fulfil all the tasks that he is discussing?
Paul Scully
That is a good point. The hon. Gentleman will be aware that that is one of the reasons why we have set the DMU up in shadow form, to start building up its capacity and expanding on its expertise. Currently, the DMU stands at about 70 people, and it is able to lean in on expertise as required. In the evidence session last week, we heard from the chief executive of the CMA that she feels that they have the expertise and the resource able to make the clear decisions needed in a complicated area of competition. The whole point about digital markets is that they are not like the analogue competition regime that we have been used to for so many years. That is complex enough, but it is well established and matured; in digital markets, things happen very quickly.
The Opposition are absolutely right when they say that we need to make decisions quickly, transparently and in a way that holds the confidence of consumers and the challenge attackers, to ensure that this is a place where people can grow and scale a company, even to the size of those companies that are likely to have entrenched market power and to have SMS in the first place.
The clause enables the DMU to vary conduct requirements as firms and markets change, ensuring that they remain appropriately tailored and proportionate. Without the clause, the DMU would not have the means to regulate the most powerful tech firms appropriately, and consumers would continue to be not adequately protected from harms in digital markets.
Neil Coyle
The Minister made reference to the analogue competition. That equivalent is trading standards and physical competition, but last week they told us that they had had a cut of 50% in their capability to tackle problems. The Minister is talking about powers to investigate, to assess, to recall, to monitor and to review, all within a fixed timetable, against companies with very significant resources, so what capacity will there be to review the powers and resources of the new body and how will it be kept up to date in terms of its skills?
Paul Scully
I have talked about the fact that the CMA will publish on a regular basis—on an annual basis—its report about what it is doing and how it is working. The Under-Secretary of State for Business and Trade, my hon. Friend the Member for Thirsk and Malton, has regular meetings with the CMA and with the Competition Appeal Tribunal as well. We will meet regularly the digital markets unit to talk through the issues of capacity and its decision making, but it is not just for us to be talking to it “behind closed doors”, within the Department. The regular reports from the CMA and the decision-making reports, which will be published as well, will absolutely highlight why the decisions have been taken and how they have been taken, and therefore we can take a judgment on what resources it needs and whether it is under-resourced.
Over the three years of my ministerial career, I seem to have been giving the CMA jobs to do. I say that having done the Bills that became the United Kingdom Internal Market Act 2020 and the Subsidy Control Act 2022 and now this. The hon. Member for Bermondsey and Old Southwark is right to say that the CMA has expanded. But it has expanded in accordance with the expertise that it has.
Jerome Mayhew
We had three days of oral evidence last week and were lucky enough to have the chief executive of the CMA come and give evidence to us. I do not have a copy of Hansard with me, so I stand to be corrected, but I believe that I am right in saying that Ms Cardell, when she gave her evidence, was directly questioned about the level of resource that the CMA had and her degree of confidence as to whether it would be sufficient to carry out the tasks anticipated in the Bill. The words that stick in my mind and that I ascribe to Ms Cardell—again, I stand to be corrected—were that the CMA is well resourced and more than capable of undertaking these activities.
Peter Dowd
Does the Minister agree with me that we have to learn lessons from history? The Committee considering the Bill that became the Criminal Finances Act 2017, on which I served, took evidence from the enforcement and regulatory authorities and they said at the time, “Oh yes, we have all the resources we need,” but that proved not to be the case. If the chief executive of the CMA is saying that, let us come back in 12 or 18 months’ time and see whether it is actually correct. Will the Minister agree to a review of it in perhaps 12 or 18 months’ time, when this Bill has bedded in?
Paul Scully
The hon. Gentleman is absolutely right that we have to keep all these things in our purview, because if we get this wrong, that just embeds the entrenched power that we are talking about. It is absolutely the case that we have to ensure that the CMA, as an important body—I am thinking of not just the digital markets unit, which we are discussing here, but the entirety of its operation—has the capacity to do its work. As I said, we will clearly continue to look at the resources, capacity and expertise of the digital markets unit.
Amendment 54 would introduce a duty on the DMU to impose conduct requirements within three months of a decision notice being given, as we have heard. I absolutely share hon. Members’ interest in ensuring that conduct requirements are imposed quickly so that businesses and consumers can be protected. Indeed, we anticipate that conduct requirements will be in place from the day a firm is designated—or if not, much sooner than the three months proposed in the amendment. That is because the DMU can develop tailored conduct requirements informed by, and alongside, the designation investigation. That is facilitated by clauses 13(2) and 24(3), which enable the DMU to carry out the public consultation on strategic market status designation alongside the public consultation on any proposed conduct requirements.
Although we expect conduct requirements to be imposed as soon as a firm is designated, the Government have not included a statutory deadline. That is because the DMU needs the flexibility to deal with the complexities of developing targeted obligations. That includes taking the time necessary to consult and consider all the views shared by interested stakeholders.
Vicky Ford
I want to be quick. I really care about this Bill, because it is incredibly important for our constituents, who are consumers, to ensure that they are offered fair choices and fair prices. The clause is important, because it means that when a company acts inappropriately, the CMA, through the digital markets unit, can tell it what to do. Can the Minister give an example of a case where it might need more than three months for that telling it what to do to be done?
Paul Scully
That is a very good point. I do not think that I can give my right hon. Friend a specific example. If particular technicalities are involved, we do not want to put an arbitrary time limit such as three months, because we want the decision to be right. The Government absolutely expect the decision to be taken either on the day of designation or very shortly afterwards, but by binding ourselves there may be examples—I am afraid I am not nimble enough to think of a specific example, but I am sure one will come down the line. The whole point of this Bill is that it is flexible, proportionate and gets things right. At the end of the day, that is what we are trying to do, rather than putting in a timescale.
Vicky Ford
For the record, when the DMU tells a company what to do, does the Minister agree that that should always be done as quickly as possible, given that there may be technical changes to get things done as well? This is not a suggestion that decisions or actions should be delayed.
Paul Scully
I totally agree. That is exactly the point. Let us make it quickly, but we do not want an arbitrary timescale so that we rush and get the decision wrong. It is more important to get the answer right. For those reasons, I hope that the hon. Member for Pontypridd will withdraw her amendment.
Alex Davies-Jones
I have listened to the robust debate we have had. I still feel that having a timeline on the face of the Bill would provide transparency, clarity and certainty. Therefore, we will press the amendment to a vote.
Question put, That the amendment be made.
Alex Davies-Jones
I beg to move amendment 53, in clause 20, page 12, line 11, at end insert—
“(ca) carrying on activities in an area of its business other than the relevant digital activity, which if they were done in relation to the relevant digital activity would be prevented under the provisions of this section.”
This amendment prevents a designated undertaking from carrying on activities that would be prevented by the provisions of section 20 from being done in a different area of its business.
Amendment 53 aims to prevent a designated undertaking from carrying on activities that would be prevented by the provisions of section 20 from being done in a different area of its business. We feel that the amendment gets to the heart of the issues at hand, and we urge the Minister to consider it carefully. It will prevent a Whac-A-Mole situation in which the regulator is always having to define new activities to catch up, and we see it as an essential part of the Bill.
Paul Scully
I am trying to work out the intention of the amendment. It seems that it would add a permitted type of conduct requirement in order to expand the ability of the DMU to intervene outside the designated digital activity; I am not sure that I understand whether my understanding of that is clear.
The regime is explicitly designed to address competition issues in activities when a firm has strategic market status—that is, when it holds substantial and entrenched market power and a position of strategic significance. In some circumstances, SMS firms may use other, non-designated activities to further entrench their market power in the designated activity. Clause 20(3)(c) allows the DMU to create conduct requirements to address that; however, it is important that the DMU does not intervene in non-designated activities beyond that.
SMS firms are likely to be active in a large range of activities, and in many of them will face healthy competition from other firms. The amendment would allow the DMU to intervene outside the designated digital activity, without any requirement to show that there is a link to the firm’s market power in any given activity. That could be harmful to competition, consumers and innovation.
We are worried about whether the regime can tackle retaliatory conduct. It is important that that ability is built in, because a retaliatory action is likely to be captured under conduct requirement categories to ensure fair dealing, such as those that prevent discriminatory treatment or unfair terms and conditions. We want the DMU to be able to take firm action against retaliatory conduct, whether or not that is within the scope of designation, but only if it can prove the link between the two. It is really important that that step happens first.
Alex Davies-Jones
I appreciate the Minister’s comments, although I disagree with him on the reasoning. We see the leveraging principle as critical to the success of the pro-competition regime. It is important to clause 20, which is a mammoth clause. Our amendment would prevent a designated undertaking from carrying on activities that would be prevented by the provisions in the clause. It is really important that the amendment is included so we will press it to a vote.
Question put, That the amendment be made.
Alex Davies-Jones
I beg to move amendment 58, Clause 20, page 12, line 22, at end insert—
“(i) discriminating against a recognised news publisher by withholding from an internet service material produced by the recognised news publisher.”
This amendment would allow a conduct requirement to be used to stop a designated undertaking withholding news from a recognised news publisher from its platform.
The Chair
With this it will be convenient to discuss new clause 2—Recognised news publisher: definition—
“(1) In section 20, ‘recognised news publisher’ means any of the following entities—
(a) the British Broadcasting Corporation,
(b) Sianel Pedwar Cymru,
(c) the holder of a licence under the Broadcasting Act 1990 or 1996 who publishes news-related material in connection with the broadcasting activities authorised under the licence, and
(d) any other entity which—
(i) meets all of the conditions in subsection (2), and
(ii) is not an excluded entity (see subsection (3)).
(2) The conditions referred to in subsection (1)(d)(i) are that the entity—
(a) has as its principal purpose the publication of news-related material, and such material—
(i) is created by different persons, and
(ii) is subject to editorial control,
(b) publishes such material in the course of a business (whether or not carried on with a view to profit),
(c) is subject to a standards code,
(d) has policies and procedures for handling and resolving complaints,
(e) has a registered office or other business address in the United Kingdom,
(f) is the person with legal responsibility for material published by it in the United Kingdom, and
(g) publishes—
(i) the entity’s name, the address mentioned in paragraph (e) and the entity’s registered number (if any), and
(ii) the name and address of any person who controls the entity (including, where such a person is an entity, the address of that person’s registered or principal office and that person’s registered number (if any)).
(3) An ‘excluded entity’ is an entity—
(a) which is a proscribed organisation under the Terrorism Act 2000 (see section 3 of that Act), or
(b) the purpose of which is to support a proscribed organisation under that Act.
(4) For the purposes of subsection (2)—
(a) news-related material is “subject to editorial control” if there is a person (whether or not the publisher of the material) who has editorial or equivalent responsibility for the material, including responsibility for how it is presented and the decision to publish it;
(b) ‘control’ has the same meaning as it has in the Broadcasting Act 1990 by virtue of section 202 of that Act.
(5) In this section—
‘news-related material’ means material consisting of—
(a) news or information about current affairs,
(b) opinion about matters relating to the news or current affairs, or
(c) gossip about celebrities, other public figures or other persons in the news;
‘publish’ means publish by any means (including by broadcasting), and references to a publisher and publication are to be construed accordingly;
‘standards code’ means—
(a) a code of standards that regulates the conduct of publishers, that is published by an independent regulator, or
(b) a code of standards that regulates the conduct of the entity in question, that is published by the entity itself.”
This new clause is linked to Amendment 58.
Alex Davies-Jones
The amendment would allow a conduct requirement to be used to stop a designated undertaking withholding news from a recognised news publisher from its platform. None of us want to see in the UK situations like those occurring elsewhere across the globe. Colleagues will be aware that Google and Meta have attempted to ward off fair negotiations in Australia and Canada by restricting or threatening to restrict access to domestic trusted news that is the antidote to online disinformation. Denying citizens access to reliable information to avoid payment serves only to emphasise the primacy that such firms place on profits, rather than citizens’ interests. The Government must absolutely not give in to similar threats in the UK.
As the EU and other jurisdictions have forged ahead with similar but ultimately less agile and effective digital competition regulation, there is a danger that the UK will become a rule taker and not a rule maker. I urge the Minister to consider carefully the principles of the amendment and new clause 2, which further outlines a favourable definition of a recognised publisher that Labour supports. I look forward to hearing the Minister’s comments, but if we are not reassured, we will press the amendment to a vote.
Paul Scully
As we have heard, amendment 58 and new clause 2 are intended to strengthen the regime’s protections for news publishers by defining “recognised news publisher” and introducing a specific power to protect them from discrimination. I understand and appreciate the sentiment behind the amendment and what the hon. Member for Pontypridd is striving to do. It is important that news publishers can benefit from the robust protections offered by the new regime. I am confident that the Bill, as drafted, will make an important contribution to the sustainability of the press. I hope the hon. Lady will understand when I expand on that, because the DMU’s tools, including all permitted types of conduct requirement, are designed to rebalance the relationship between SMS firms and those who rely on them, including firms and sectors across the economy. They are drafted in a sector-neutral way for that reason.
Alex Davies-Jones
Is the Minister reassured that the Bill will not allow the emergence of a situation like those in Australia and Canada, where online disinformation is pumped around constantly because of the lack of clarity on platforms highlighting recognised news publishers?
Peter Dowd
Does the Minister agree that this is an exact replica of what happened when ITV tried to stop Sky advertising on ITV platforms, in terms of competition? That was stopped: it was not fair and it was not reasonable. Is this not sort of similar? We cannot give the power to the platform itself to decide what it does or does not do and what people’s access to news is.
Paul Scully
No, I do not agree. To answer the question asked by the hon. Member for Pontypridd, I absolutely believe that it does, because the conduct requirements can be tailored to instruct SMS firms on how they should treat consumers and other businesses, including publishers. In the case of publishers, that could, for example, include conduct requirements on SMS firms to give more transparency to third parties over the algorithms that drive traffic, or it could oblige firms to offer third parties fair payment terms for the use of their content. Examples of that have come up time and again, both in evidence and in my conversations with publishing representatives.
Freedom of contract is a crucial principle, but withdrawal of service by an SMS firm could be considered anti-competitive if the behaviour is discriminatory or sufficient notice is not given. In such a scenario, the DMU could take appropriate action through conduct requirements or PCIs. There are plenty of general examples, and the Bill very much accounts for the examples of Australia and Canada. We are just shaping it in a different way, in as flexible—
Neil Coyle
The Minister’s assertion is not shared by the News Media Association. The Opposition amendment tries to address some of the concerns around timeframes of designation and final offer mechanisms. Will the Minister tell us why he thinks the News Media Association’s briefing is inaccurate?
Paul Scully
At the end of the day, this is an interpretation of the Bill. The amendment names a number of specific news publishers; our approach is sector-unspecific. All those will come within the regime of the Bill, but specifying just one sector would risk skewing the conduct of the regime and the way it works towards that sector. I think the question that was asked was whether those news publishers and the kind of behaviour that has been described come under the regime of the Bill, as drafted. We believe they absolutely do.
Alex Davies-Jones
I appreciate the Minister’s rationale, but leaving the interpretation of the Bill so ambiguous could mean certain platforms allowing news publishers that are not relevant news publishers to cause harm and damage to society and the public, as we have seen elsewhere in the world. It is imperative on us as legislators to get it right, and we have that opportunity in the Bill.
We have always said that we want this law to be world-leading. We wanted to be able to do things differently from the EU. This amendment gives us the flexibility to make that change and do things differently, which is why we will press it to a vote.
Question put, That the amendment be made.
Paul Scully
The DMU will be able to use conduct requirements to address and prevent practices that exploit consumers and businesses or exclude innovative competitors. Clause 20 sets out an exhaustive list of permitted types of conduct requirement that the DMU can impose in order to address and prevent harm to businesses and consumers in digital markets. It ensures that the regime can adapt to future challenges by empowering the Secretary of State to amend this list, subject to parliamentary approval.
The list reflects insights drawn from the CMA’s market studies and regulatory expertise. It captures 13 well-evidenced types of anti-competitive behaviours including self-preferencing, tying and bundling, and the unfair use of data. Conduct requirements could be used to ensure that SMS firms interact with users of all kinds on fair and reasonable terms; that consumers are not discriminated against; or that competitors do not lose out because an SMS firm has used data unfairly. The list of permitted types of requirement reflects the competition issues we see in digital markets today, but these markets are fast-moving.
It is vital that the Secretary of State is able to amend the list in future, with Parliament’s approval, to ensure that consumers are protected from whatever new challenges arise. Setting out the types of permitted requirement in the legislation, rather than specifying the requirements themselves, means that the regime will be flexible and responsive. It will make it possible to impose targeted and tailored interventions that address harms to consumers, while avoiding unnecessary burdens and unintended consequences for SMS firms.
Alex Davies-Jones
Clause 20 is a mammoth clause that sets out an exhaustive list of permitted types of conduct requirement. Labour welcomes the clarity in the clause—as, I am sure, will the CMA and firms likely to be designated. Ultimately, pro-competitive interventions will tackle the causes of market power and are a necessary step to addressing the characteristics of these markets, such as network effects and economies of scale that tip some digital markets towards a single firm. Those interventions could also include mandating that consumers have greater choice over the collection and use of their personal data. They could even look at ownership separation. However, some digital markets cannot be made competitive, and in such cases the effects of market power must be managed. To do this, the DMU needs sufficient powers. We see the clause as central to getting that balance right.
Clause 20 states that conduct requirements may prevent the SMS firm from
“carrying on activities other than the relevant digital activity in a way that is likely to increase the undertaking’s market power materially, or bolster the strategic significance of its position, in relation to the relevant digital activity”.
The leveraging principle is critical to the success of the pro-competition regime. Without it, the DMU will find itself unable to address harmful conduct and will meet arguments about where—meaning in which activity—a piece of conduct occurs, because the DMU will be unable to touch conduct that occurs outside the SMS activity even if it is closely related to the SMS activity.
A stronger leveraging principle would prevent designated firms from simply moving their service fees from one location in the ecosystem to another, such as from app store service fees to an operating system licence—the stealth tax that we heard about during our evidence sessions. It would prevent a whack-a-mole situation in which the regulator always has to define new activities to catch up.
We have already debated our amendment, with which we were seeking a stronger principle. Sadly, it was not accepted by the Government, but we will push this further as the Bill progresses.
Question put and agreed to.
Clause 20 accordingly ordered to stand part of the Bill.
Clause 21
Content of notice imposing a conduct requirement
Question proposed, That the clause stand part of the Bill.
Paul Scully
Clauses 21 to 25 set out the procedural aspects in relation to conduct requirements, because it is really important that SMS firms, and the people and businesses who rely on them, understand what obligations are being imposed and why. The DMU is required to give notice to the SMS firm and then publish the notice online as soon as is reasonably practicable. Clause 21 sets out the information that must appear in the notice.
Given the rapid pace of change across businesses and digital markets, it is important that the DMU can adapt conduct requirements to ensure that they remain targeted and proportionate, so clause 22 will establish the DMU’s power to revoke a conduct requirement, helping to ensure that conduct requirements remain targeted and proportionate as markets and firms change.
Clause 23 will allow the DMU to facilitate the smooth transition into or out of a conduct requirement. Without the clause, there is a risk of disruption or harm to businesses and consumers where a conduct requirement comes into force or ceases to have effect without a sufficient transition period.
The conduct requirements in clause 24 will impose tailored, enforceable obligations on SMS firms. It is only right that consumers and businesses, including the SMS firms themselves, have a chance to share their perspective on those obligations, so clause 24 requires the DMU to carry out a public consultation on its proposed decision before it can impose, vary or revoke a conduct requirement.
Clause 25 requires the DMU to keep conduct requirements under review, ensuring that requirements remain effective, targeted and proportionate. It also ensures that the DMU monitors where breaches may have taken place.
Alex Davies-Jones
Clause 21 sets out the information that the CMA is required to publish as part of the notice imposing or varying a conduct requirement. Labour supports the clause, which we feel is important for clarifying the details around the content of potential conduct requirements. Again, I am keen to understand exactly who will have access to such information. As ever, I would appreciate the Minister’s thoughts on that point. That aside, we see the clause as integral to the Bill, so we have not sought to amend it at this stage.
As with clause 21, we support clause 22 and its intentions in full. The only point that I feel is worth raising with the Minister is the slight ambiguity around the timeframes. It will be helpful for all involved if the regime is not only flexible, but rapid and able to evolve for changing markets. Can the Minister assure us that the clause will support this in practice?
Clause 23 is important and serves a vital function in establishing the transitional provisions related to conduct requirements. An example would be if a conduct requirement were imposed from a particular date, but some allowances were made in relation to certain aspects of that conduct requirement so that they had effect from a later date to smooth the transition for the benefit of a designated undertaking. That speaks to the nature of the regime: we all want to see it as flexible and fair, but it is therefore only right that the CMA be given appropriate statutory powers to vary its conduct requirements where required. We also welcome subsection (2), the details of which will enable and empower the CMA to investigate and enforce against historical breaches. That is vital, as we seek to establish a regime that will be sufficiently agile for breaches both past and present.
Clause 24 is also incredibly welcome. It imposes a duty on the CMA to consult publicly before imposing, varying or revoking a conduct requirement. The consultation must be brought to the attention of such persons as the CMA considers appropriate. We have already discussed who is an appropriate person, but sadly the transparency and commitment to consultation is not mirrored elsewhere in the Bill, which is frustrating. Given the broadly collegiate nature of our debate thus far, I hope that the Minister can consider some adjustments, and I look forward to hearing from him shortly. By and large, though, Labour welcomes the provisions in subsection (3), which provide that the CMA will be allowed to carry out a consultation on proposed conduct requirements before making a decision on designation. As we know, that makes it possible for the CMA to impose conduct requirements at the same time as issuing a decision on designation, or very shortly afterwards. We consider that to be a sensible approach, and we therefore support the clause.
Again, there is no need to repeat myself. Labour supports clause 25, which places a duty on the CMA to consider, on an ongoing basis, the effectiveness of any conduct requirements in place and how far the designated undertaking is complying with them. The CMA will also need to consider, on an ongoing basis, whether to impose, vary or revoke a conduct requirement, and whether it would be appropriate to take action against a breach of any conduct requirement. It would be helpful for us all to have an idea of how regularly the reviews will happen. It cannot and should not be the case that one SMS firm has its conduct requirements reviewed more regularly than any other, so I am keen to hear the Minister’s assessment of how that will work fairly and equitably in practice.
Question put and agreed to.
Clause 21 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Mike Wood.)
Digital Markets, Competition and Consumers Bill (Sixth sitting)
Tuesday 20th June 2023
(10 months, 3 weeks ago)
Public Bill CommitteesRead Full debate Digital Markets, Competition and Consumers Bill 2022-23 View all Digital Markets, Competition and Consumers Bill 2022-23 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 20 June 2023 - (20 Jun 2023)
The Chair
Clauses 22 to 25 were debated this morning. With the leave of the Committee, I will put the Questions together on clauses 22 to 25 stand part.
Clauses 22 to 25 ordered to stand part of the Bill.
Clause 26
Power to begin a conduct investigation
Question proposed, That the clause stand part of the Bill.
The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Paul Scully)
It is a pleasure to serve under your chairmanship, Mr Hollobone. Clauses 26 to 35 are about the enforcement of conduct requirements. The participative approach within the pro-competition regime means that the digital markets unit will aim to resolve issues with firms with strategic market status without the need for formal enforcement action. Where that is not possible, clause 26 will empower the DMU to investigate suspected breaches of conduct requirements by SMS firms and, where it finds a breach, consider what action can be taken. That is necessary to ensure that SMS firms comply with requirements.
Opening an investigation allows the DMU to make use of the full range of information-gathering powers set out in chapter 6. Where the DMU begins an investigation, certain information must be given via a notice to the SMS firm, and a summary of that notice must be published. Clause 27 will require that before the DMU can make a finding of the breach, it must consider any representations that an SMS firm makes in relation to the conduct investigation.
Clause 28 will allow the DMU to close a conduct investigation at any time without making a finding as to whether a breach has occurred. The DMU will need to explain why it is closing the investigation and account for its decision. That power is needed as it allows the DMU to react to changes during the investigation process. That could be, for example, needing to divert resources to an emerging high-priority competition issue elsewhere.
Clause 29 sets out the countervailing benefits exemption. The DMU’s objective is to promote competition for the benefit of consumers, and that will shape the design of its regulatory interventions, meaning that the DMU will take consumer benefits into account when designing conduct requirements in the first place. However, the inclusion of the countervailing benefits exemption provides a backstop to ensure that, if needed, consumer benefits can be explicitly considered at the enforcement stage, too.
During a conduct investigation, an SMS firm will be able to put forward evidence that its action brings about benefits for consumers that outweigh the potential harm to competition. That will reinforce that consumers are at the heart of the regime. The clause is not about pursuing textbook-perfect economic outcomes; it is about real-world outcomes for consumers.
Clause 30 will place the DMU under a duty to notify an SMS firm of the outcome of a conduct investigation within a six-month investigation period. That will ensure that investigations are executed within reasonable timeframes. That does not apply if the DMU has accepted a voluntary binding commitment from the firm relating to the conduct under investigation, or if the investigation is closed with no findings made. The duty to give a notice to an SMS firm and subsequently publish a summary online is vital to inform the firm under investigation of the outcome and keep relevant parties informed of DMU action.
Clause 31 will give power to the DMU to impose an enforcement order on an SMS firm where it has found a breach of a conduct requirement. Those orders will most often be cease-and-desist orders requiring bad behaviour to stop, but they can also require more complex behavioural changes where that is a more appropriate way to remedy a breach. When imposing or varying an enforcement order, the DMU has a power, rather than a duty, to consult those persons it considers appropriate. That will allow the DMU to consider relevant third-party and SMS representations on proposed enforcement action, while ensuring that enforcement orders requiring the SMS firm to simply stop bad behaviour are not delayed by a requirement to consult.
Clause 32 will grant a power to the DMU to introduce enforcement orders on an interim basis. The DMU needs to be able quickly to address immediate harms that may occur from suspected conduct breaches in order to prevent significant damage, prevent action that would make subsequent remedies ineffective, or protect the public interest. The clause will enable intervention before irreversible change occurs and will ensure that options to restore competition are maintained.
Clause 33 makes provision for the duration of enforcement orders and interim enforcement orders, and for the circumstances in which they cease to have effect. Clause 34 will establish the DMU’s power to revoke an enforcement order, ensuring that the enforcement orders in place remain targeted and proportionate. The DMU needs the flexibility to remove enforcement orders where they are no longer appropriate, so that SMS firms are not subject to unnecessary or inappropriate rules.
Finally, to ensure that enforcement orders are effective, targeted and proportionate, it is important that the DMU considers how they function and whether changes are necessary. Clause 35 will require that the DMU monitors the effectiveness of the enforcement orders in place. That includes assessing whether SMS firms are complying with existing enforcement orders, whether variation of an order is required and whether further enforcement action is needed.
In conclusion, clauses 26 to 35 set out robust enforcement provisions to make sure that the impacts of conduct requirements are realised.
Alex Davies-Jones (Pontypridd) (Lab)
It is an honour to serve under your chairship this afternoon, Mr Hollobone. With your permission, I will make some brief comments on the clauses, in response to the Minister.
Clause 26 is very welcome. It is an important clause that outlines the circumstances in which the CMA will be able to begin an investigation into a suspected breach of a conduct requirement, more formally referred to in the Bill as a conduct investigation. It is an important and positive addition. For too long, the CMA has not had the legislative teeth to make positive change in our digital markets. Ensuring that it has reasonable and sufficient powers such as those outlined in the clause is central.
Labour particularly welcomes the provisions and thresholds outlined in subsection (1), which make it clear that the decision to begin a conduct investigation will be grounded in empirical evidence, whether from complaints submitted by third parties or from the CMA’s own market studies. None of us wants to see overregulation or businesses stifled, but it is important that when the CMA has reasonable grounds to carry out a breach of conduct requirement, it has the tools available to act swiftly.
We note that subsections (3) and (4) outline the requirement for the CMA to give a notice to the undertaking about the investigation and set out the content required for that notice. We welcome the provisions entirely, as we do the clarification on the period in which a statutory investigation can take place. We think six months is reasonable, and we are pleased to see clarity on when the timeframe can be extended—a matter we will come to later when we address clause 102.
The current wording of subsection (6) states:
“As soon as reasonably practicable after giving a conduct investigation notice, the CMA must publish a statement summarising the contents of the conduct investigation notice.”
Could the Minister clarify exactly where, and to whom, that notice will be published? As I have previously stated in reference to other parts of the Bill, there are some grounds for making that information public, at least to those who request it. We appreciate the market sensitivities, but ultimately it is businesses that will be facing regulation over their digital practices, broadly for the first time, and they deserve access to that information. It will be a valuable tool for learning and best practice.
I will keep my comments on clause 27 brief because I think, or at least hope, that we all agree that it is an important clause that makes sure that the CMA is required to consider representations from the undertaking being investigated before making a decision on whether the undertaking has breached conduct requirements. I am keen to hear from the Minister exactly what sort of information he believes will be appropriate for the CMA to consider. A balanced approach to the regime is critical, but we do not want the CMA’s investigatory powers delayed by big firms who may choose to delay or overwhelm the process in any way. That aside, we support the clause and have not sought to amend it at this stage. Sincere apologies to Committee members for my repetition, but this is a far more collegiate Committee than others I have sat on.
We support clause 28 and its intentions. As we know, the clause provides that the CMA can choose to close a conduct investigation without making a decision about a breach, and sets out the process and timing for giving a notice to the undertaking about the closure and publishing a summary of the notice. We welcome provisions and clarity over this process. The CMA could summarise the contents of the notice provided to the relevant designated undertaking, while allowing it to redact some information for confidentiality purposes. However, we feel that there is a strong argument, once again, for making that information public to anyone who wishes to request a copy.
Labour welcomes the intentions of clause 29, which outlines the procedure that the CMA must follow where a breach of a firm’s conduct requirement results in net benefits for consumers. This is an important clause, and it is vital that we have such an exemption to ensure that the regime does not inadvertently harmfully impact consumers. However, the countervailing benefits exemption must not be drawn too broadly. If the exemption is too broad, SMS firms will be able regularly to avoid conduct requirement compliance by citing security and privacy claims, as well as spamming the CMA with numerous studies, thus diverting its resources, which, as we have discussed, are very precious. This would undermine the entire regime by severely limiting the efficacy and efficiency of the conduct requirements. I therefore wonder whether the Minister has considered including in the Bill an exhaustive or non-exhaustive list of acceptable grounds for exemption.
Broadly speaking, though, Labour welcomes the Government’s approach, which has similarities with the approach taken in the Competition Act 1998. It would be remiss of me not to remind the Minister that that important Act came into being thanks to a Labour Government. The reality is that Labour has always been committed to getting this balance right. We want to support big businesses, while also protecting consumers and encouraging innovation. These principles do not have to be mutually exclusive. That is why we particularly welcome clause 29(2), which sets out the criteria for the exemption, including that the benefits need to be
“to users or potential users of the digital activity in respect of which the conduct requirement in question applies,”
and must
“outweigh any actual or likely detrimental impact on competition resulting from a breach of the conduct requirement”.
As we know, some examples of benefits may include lower prices, higher-quality goods or services, or greater innovation in relation to goods or services.
Clause 29 also makes it clear that it must not be possible to realise the benefits without the conduct, which means that the CMA must be satisfied that there is no other reasonable or practical way for the designated undertaking to achieve the same benefits with less anti-competitive effect. That is an important clarification, which is once again a sensible approach that we feel is crucial to getting the balance of this regime right.
Although I know that colleagues will be aware of the example highlighted to us all in the Bill’s explanatory notes about a default internet browser receiving security updates possibly being an exemption, I wonder whether the Minister can give us additional examples of situations in which he would see the clause coming into effect. That aside, we support the intentions of clause 29 and see it as a positive step in terms of putting consumers and common sense first.
We see clause 30 as being fairly procedural, in that it outlines the circumstances in which the CMA must give notice about the findings of a conduct investigation. We are pleased to see that a period of six months has been established; none of us wants to see this process going on unnecessarily. We note, however, that in subsection (1), and in the Bill generally, we truly believe that more transparency is required. As it stands, the Bill is missing an opportunity to afford civil society, academics, businesses and consumers alike the opportunity to learn from the regime and ultimately to improve best practice in our digital markets more widely.
We welcome clause 31. However, we note that subsection (4) specifies information that the enforcement must contain, while subsection (5) requires that the CMA
“may consult such persons as the CMA considers appropriate before making an enforcement order”,
or varying one. Again, the wording is very subtle, but I am most interested to hear from the Minister exactly why the consultation process is a “may” rather than a “must”.
Throughout the Bill in its current form, there appears to be a lack of points for stakeholders to engage with the CMA decisions through consultation. Although the CMA being able to design rules and interventions for each firm could result in more effective remedies, it also increases the risk of regulatory capture, whereby SMS firms write their own rules and get them rubber-stamped by the regulator. That makes proper consultation essential. I would appreciate clarification on that point from the Minister.
Clause 32, as its title suggests, gives the CMA the power to make enforcement orders on an interim basis. This is an important tool to allow the CMA to act rapidly where a potential breach is concerned. It is particularly welcome that subsection (1)(b) lists the circumstances under which interim enforcement orders can be made, and that these are broadly around preventing damage to a person or people, preventing conduct that could reduce the effectiveness of the CMA, or protecting the public interest. It is important for all of us with an interest in the Bill that that is clearly outlined in the Bill, so that is very welcome indeed.
Clause 33 makes provision for enforcement orders and interim enforcement orders to come into force, and outlines the circumstances in which they cease to have effect. We see this clause as, again, a fairly procedural one. We welcome the clarity of subsection (4), which will ultimately enable the CMA to take action against historic breaches. That is imperative, given the pace at which our digital markets and regulated firms can shift. We therefore support the clause and believe that it should stand part of the Bill.
On clause 34, as with previous clauses, there is no need for me to elaborate at great length. In essence, we agree with the clause.
As we know, clause 35 outlines that the CMA must keep the enforcement orders and interim enforcement orders that it has made under review, including whether to vary or revoke them, and also the extent to which undertakings are complying with them and whether further enforcement action needs to be taken. This is an incredibly important point. The CMA must review its own homework, as we expect all regulators to do. However, I wonder what assessment the Minister has made of making those reviews public. The CMA must have a degree of accountability, particularly to Parliament. We feel that that is somewhat lacking in the Bill as it stands.
More widely, that points to the lack of opportunities for stakeholders to engage with the CMA and its decisions through consultation, as I have previously said. This is a significant problem, given the nature of the regime. On the one hand, the flexibility and agency that the DMU has to tailor its regulatory approach depending on the nature of the firm should allow it to design more effective remedies. On the other, it increases the danger of regulatory capture by SMS firms. I would appreciate the Minister clarifying that point so that we get this right.
Paul Scully
The publication of notices will be online. The reason that there will be two separate versions is that one might be redacted, for example for things like commercial sensitivity, but it is right that the SMS firm understands the full reasons. Beyond that redaction, there will be one separate online publication for people to see, including the challenger firms themselves.
The hon. Lady spoke about the length of time. The DMU will decide the length of the period during which an SMS firm can make representations, because it will vary from case to case. It is not for us to set an arbitrary timeline, because some will be comparatively simple and others will be incredibly complex and technical. That will ensure that the DMU can run investigations efficiently, without unnecessary delays due to late representations, but the DMU has to tell the SMS firm in the notice opening the investigation about the length of the period.
The implementation of any conduct requirements will be preceded by a public consultation, alongside ongoing engagement between the SMS firm and the DMU about compliance with those requirements as part of the regime’s participative approach. However, there is no statutory requirement to consult on enforcement orders, because we are giving the DMU the discretion to consult where appropriate. Requiring consultation would not be proportionate for straightforward cease-and-desist orders, for example. Such orders, which we expect to be the majority of orders made, simply require firms to stop breaching the original conduct requirement that has already been consulted on, meaning that undertaking a consultation would be unnecessary.
That is where we are coming from on that—there is no deeper reason beyond ensuring that we can keep things proportionate for all sides. Third parties with a view or with evidence will be able to communicate those to the DMU during the conduct investigation itself, or once the enforcement order statement is published.
Question put and agreed to.
Clause 26 accordingly ordered to stand part of the Bill.
Clauses 27 to 35 ordered to stand part of the Bill.
Clause 36
Commitments
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
That schedule 1 be the First schedule to the Bill.
Clause 37 stand part.
Paul Scully
I turn to the clauses on commitments related to conduct requirements. The ability of the DMU to accept commitments, which are voluntary and binding obligations, from SMS firms is important to support the participative approach to regulation that I have spoken about. That approach promotes greater efficiency and the swift resolution of investigations.
Clause 36 will allow the DMU to accept commitments from a firm during a conduct investigation. Firms will be able to offer commitments to the DMU to propose a solution to a suspected breach of conduct requirements. There will be robust safeguards in place to ensure that commitments are used appropriately. The DMU will need to publicly consult on any proposal to accept a commitment. Commitments can be varied to reflect changes in circumstances and will remain in force until either the DMU decides to release the SMS firm from the commitment or the conduct requirement to which the commitment relates comes to an end.
Clause 37 will ensure that the DMU is required to monitor the commitments that are accepted. That includes assessing the appropriateness of the commitments; whether SMS firms are complying with the commitments; and whether further enforcement actions are needed. To ensure that commitments are accepted, varied or revoked in a transparent way, schedule 1 sets out the procedures relating to commitments.
The procedures in schedule 1 also apply in relation to commitments for pro-competition interventions, but I will speak about those at a later stage. Schedule 1 ensures that the DMU publishes a notice detailing the commitment or proposed varying or revocation of the commitment and the reasons for its decision. The DMU must also consider any representations made in accordance with the notice before accepting, varying or revoking commitments. Without the ability to accept commitments, the DMU would have to use greater resources to further investigate breaches, and then develop and impose enforcement orders to fix them. The swift and effective resolution through binding commitments will be beneficial for the DMU, affected firms and ultimately consumers.
Alex Davies-Jones
Labour supports the intentions of clause 36, which ensures that the CMA can accept binding voluntary commitments from an undertaking during a conduct investigation to bring the investigation to an end. Once again, we feel that that is critical to a flexible and fair regulatory regime. It is only right that the CMA is empowered to continue an investigation into other behaviour and, when it can, investigate the same behaviour again. Therefore, we particularly welcome subsection (4).
That being said, there is no mention of consultation regarding the accepting of commitments from SMS firms, even though that will close a conduct requirement investigation and the commitments accepted will impact stakeholders. There is also no consultation when the CMA chooses to release an SMS firm from the commitments. Again, we feel that those points are worth clarifying. I would be grateful if the Minister could outline exactly why the Bill fails to place a duty on the CMA to consult appropriately on that important point.
Schedule 1 and its provisions relate to the commitments on firms, and it is very welcome. The schedule outlines the duty on the CMA to publish a notice, and consider any representations made in accordance with the notice that are not withdrawn. That is a logical and sensible approach. We also welcome the range of provisions in the schedule that provide extensive clarity on the CMA’s responsibilities in relation to its decision making. We have repeatedly called for more clarity with a number of amendments, so I hope the Minister will carefully consider our reasonable requests. Overall, schedule 1 is an important part of the Bill that further clarifies the CMA’s responsibilities, and we support its inclusion.
Without mirroring the comments that were made when we considered clause 25, Labour supports clause 37. It is vital for the regime to function now and into the future that the CMA has a duty to review those commitments. I am interested to know the Minister’s thoughts on how frequent the reviews should be, but ultimately this is the right approach if we are to ensure and encourage total compliance. I hope that the Minister will assure us that the Government are open to improving the Bill when it comes to transparency, including parliamentary oversight. With that in mind, we do not have any specific amendments to clause 37 at this stage, but that could change.
Paul Scully
To answer the hon. Lady’s point about consultation in clause 36, I will point her to schedule 1(2), which requires the DMU to consult on commitments before they are accepted or varied. Although that requirement is not in clause 36, it is in schedule 1.
Question put and agreed to.
Clause 36 accordingly ordered to stand part of the Bill.
Schedule 1 agreed to.
Clause 37 ordered to stand part of the Bill.
Clause 38
Power to adopt final offer mechanism
Paul Scully
I beg to move amendment 1, in clause 38, page 20, line 32, leave out “proposed”.
See the explanatory statement for Amendment 4.
The Chair
With this it will be convenient to discuss the following:
Government amendments 2 to 4.
Government amendment 45.
Government amendment 6.
Government amendments 8 and 9.
Government amendment 11.
Paul Scully
Government amendment 4 redefines what transactions can be dealt with under the final offer mechanism. It is accompanied by several consequential amendments to clauses 38 to 41. One of the conditions for the use of the final offer mechanism as currently drafted is that it can be used only in relation to a “proposed” transaction, where an SMS firm provides goods or services to the third party, or uses or acquires goods or services from the third party.
However, for the final offer mechanism to be most effective, it is crucial that the definition of “transaction” includes the future performance of an existing transaction, as well as new transactions that will happen in the future. That will ensure that parties who are already transacting with each other but on unfair and unreasonable payment terms are not excluded by the conditions for using the final offer mechanism. These are consequential, technical amendments that have been produced alongside feedback from the CMA.
Alex Davies-Jones
We welcome the first group of Government amendments, which we see as important clarifications to ensure that the final offer mechanism can be applied in relation to the future performance of an ongoing transaction. We support their inclusion, as those changes should stand part of the Bill.
Amendment 1 agreed to.
Amendments made: 2, in clause 38, page 21, line 1, leave out “proposed”.
See the explanatory statement for Amendment 4.
Amendment 3, in clause 38, page 21, line 7, leave out “proposed”.
See the explanatory statement for Amendment 4.
Amendment 4, in clause 38, page 21, line 13, at end insert—
“(4A) In subsection (1), ‘transaction’ means—
(a) a future transaction, or
(b) the future performance of an ongoing transaction,
whether in accordance with a contract or otherwise.”
This amendment, together with Amendments 1, 2, 3, 6, 8, 9, 11 and 45 means that the final offer mechanism could be applied in relation to the future performance of an ongoing transaction.
Amendment 45, in clause 38, page 21, leave out line 20 and insert—
“‘the transaction’ means the transaction mentioned”—(Paul Scully.)
See the explanatory statement for Amendment 4.
Question proposed, That the clause, as amended, stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clause 39 stand part.
Government amendment 7.
Government amendment 10.
Clauses 40 to 43 stand part.
Government new clause 1—Decision not to make final offer order—
New clause 3—CMA annual report on final offer mechanism—
‘(1) The CMA must, once a year, produce a report about the final offer mechanism.
(2) Each report must include information about—
(a) the number of final offer orders the CMA has made over the previous year;
(b) for each final offer order—
(i) the amount of time taken between final offer initiation notice being given and the final offer order being made.
(ii) whether bids were submitted by both the undertaking and the third party, and
(iii) the outcome of the process; and
(3) The CMA may provide the information in such a way as to withhold any details that the CMA considers to be commercially sensitive.
(4) The first report must be published and laid before both Houses of Parliament within one year of this Act being passed.’
This new clause requires the CMA to publish an annual report on the workings of the final offer mechanism. The report will be made publicly available and will be laid in both Houses of Parliament.
Paul Scully
Clauses 38 to 43 will allow the DMU to use the final offer mechanism as a backstop enforcement measure to other regulatory tools. The final offer mechanism will help the DMU to resolve breaches of conduct requirements requiring fair and reasonable payment terms when there has been sustained non-compliance by an SMS firm. The inclusion of these clauses in the Bill is essential to provide the DMU with a more effective alternative to setting prices directly, which could be complex and time-consuming in fast-moving digital markets.
The final offer mechanism is a backstop that can be used when normal enforcement processes have not brought about a timely resolution. The DMU must prevent SMS firms from imposing unfair and unreasonable terms in the first place and incentivise constructive negotiations. That will ultimately drive the best outcomes for consumers, which is why there is a high threshold set out in clause 38 for the use of the final offer mechanism.
On the occasions when the tool is used, the DMU will ask the SMS firm and relevant third party to each submit what they believe are fair payment terms—their final offers—and the DMU will then choose one. The regulator will not be able to amend or replace the offers. To ensure the timely resolution of the breach, clause 40 establishes that the upper time limit for the entire final offer process is six months, as well as providing for a power for the Secretary of State to amend that time limit in future. The clauses also establish clear requirements on the DMU to publish key notices and statements upon issuing any orders, ensuring public transparency and accountability about the tool’s use.
It is important when discussing these clauses to mention the role of the DMU in facilitating the preparation of the final offers. Under clause 39, the DMU can both gather and share crucial information between the two parties, allowing both sides to prepare a well evidenced final offer. The outcome of the final offer mechanism will be confirmed through a final offer order, which will instruct the SMS firm to give effect to the terms decided through the tool.
Government amendment 7 makes provision for how final offer payment terms are to be given effect for the purposes of the transaction. The amendment makes explicit that the final offer order will not set out specific terms that must be incorporated word for word into the terms of the transaction; rather it will set out the outcome for the transaction for the SMS firm to achieve. I therefore encourage Members to support its inclusion. The clauses also contain key provisions for ensuring that the use of this tool is proportionate, allowing the DMU to revoke a final offer order where there has been a material change in circumstances.
On that topic, I turn to Government amendment 10 and new clause 1. Taken together, they will ensure that the DMU can end the final offer mechanism without making a final offer order, at any time after giving a final offer initiation notice where there has been a material change in circumstances. Such a change in circumstances may include a privately negotiated agreement being reached between the disputing parties, or evidence of duress becoming known to the DMU. This amendment will therefore ensure the tool is not used where it is not appropriate to do so, and that the DMU has suitable flexibility to make that decision. I therefore invite the Committee to support these clauses and the relevant Government amendments.
Alex Davies-Jones
As we know, there are several provisions contained in the Bill that could form the basis of new rules regulating agreements between UK news media and digital platforms, akin to the news media bargaining code in Australia. However, the formulation of those rules will be at the discretion of the DMU, and would apply on a case-by-case basis. As we have debated, the Bill currently enables the DMU to impose conduct requirements that are for the purposes of obliging undertakings to
“trade on fair and reasonable terms”.
Those undertakings could also be obliged by the DMU to not carry on activities other than their digital activities in a way that could be anti-competitive. That could be the case where carrying out that non-digital activity is likely to increase an undertaking’s market power materially or bolster the strategic significance of its position in relation to its digital activity.
The Bill also provides an arbitration process called a final offer mechanism. Under that mechanism, the DMU will invite the SMS firms and third parties to submit a payment terms offer that they regard as fair and reasonable. The DMU is then required to choose one party’s offer only, without any ability to determine alternative offers. That process has been adopted in Australia for the purpose of arbitrating bargains between digital platforms and news media providers, although it has not yet been used. While there is no provision for a media bargaining code in the Bill, the mere existence of this mechanism will hopefully drive tech platforms to negotiate sincerely with media providers in that context to reach an agreement independently, rather than risk the CMA choosing the final offer. We entirely welcome this clause, and the additional relevant ones to follow.
In the digital media sector, Google and Meta’s overwhelming market power means that publishers are not compensated fairly for the significant value that their content creates for platforms, which is estimated at about £1 billion per year here in the UK. Google Search and Meta’s Facebook rely on news publishers to attract and engage users, as professional news content is reliable and regularly updated. It is absolutely right that the CMA will be empowered to make pro-competition interventions. While the conduct reviews will hopefully prevent the worst abuses of market power, PCIs will allow the DMU to implement remedies that address the root cause of that market power. For example, a CR could prevent an SMS firm from self-preferencing its own businesses in the digital advertising market, which has negative impacts including locking businesses into products and taking an unfairly large cut of revenues, whereas a PCI could require a functional separation to remove the incentive for self-preferencing. Labour sees that as a hugely important tool. We want to see and support an empowered DMU, so we are pleased to support the clause and believe it should stand part of the Bill.
Again, we see clause 39 as important: it sets out the process that the CMA must follow if it decides to use a final offer mechanism. In theory, the DMU should support publishers, who will now be able to negotiate fair and reasonable terms for the value that news content brings to platforms. If SMS firms refuse to comply, a final offer mechanism will be available, with each party submitting bids and the fairest offer being selected. The DMU will ensure that publishers receive a fair share of revenues for the advertising that is shown around their content. Publishers will also be able to receive user data when consumers interact with their content on platform services, in a manner compliant with data protection law. In theory, unfair commissions on app store sales will be prevented, ensuring that publishers can build sustainable digital subscription businesses.
These are all very welcome developments indeed. We particularly welcome subsection (3), under which the CMA must specify if it is considering taking any other action to address the underlying cause of the breach that led to the use of the FOM—for example, a pro-competition order instructing a designated undertaking to provide access for third parties to consumer data held by that undertaking, which could rebalance bargaining power within that digital activity. It will come as no surprise that I ask the Minister, once again, to clarify whether such statements will be published in the public domain. This important point is worth clarifying, so I look forward to hearing about the adequacy of the transparency provisions in this part of the Bill.
Government amendments 7 and 10 are linked to Government new clause 1. They clarify that parties can still settle outside formal processes once the FOM stage has begun. Given that the aim of the final offer mechanism is to incentivise parties to come to a deal without direct CMA intervention, it seems right that parties are still able to come to a deal outside this formal process. This may allow for more favourable terms to be reached, as the platforms will be under pressure in the FOM process, and it will mean that publishers can avoid the uncertainty of the CMA picking one of the two offers.
There will always be a concern that the asymmetry of resources might mean that publishers compromise too far when faced with the uncertainty of an FOM decision but, ultimately, Labour supported these provisions when they appeared in clause 40, and moving them to ensure that a deal can be reached outside the FOM at any time after a final offer intention notice has been issued seems to make good sense. We therefore support the Government amendments.
Unsurprisingly, Labour also welcomes clause 40, which establishes the process that the CMA must follow with regard to the outcome of the FOM process. We need not go into much detail on this clause, as we view it as a fairly standard and effective way of ensuring that proposed transactions are fairly processed by the CMA.
At this point, I must press home the wider importance of these final offer mechanisms because, if they are implemented correctly, they could have incredibly positive benefits. Indeed, we know that Google and Meta have attempted to ward off fair negotiations in Australia and Canada by restricting, or threatening to restrict, access to domestic trusted news, which is the antidote to online disinformation. Denying citizens access to reliable information to avoid payment serves only to emphasise the primacy that these firms place on profit, rather than citizens’ interests. The Government should not give in to similar threats here in the UK, and I hope the Minister is listening.
As the EU and other jurisdictions have forged ahead with similar, but less agile and effective, digital competition regulations, there is a danger that the UK will become a rule taker, not a rule maker. Delayed or weakened legislation will leave UK businesses at a competitive disadvantage internationally, and will deny UK consumers lower prices and more innovative products. In contrast, a strong, forward-looking DMU regulation will ensure that digital markets live up to their potential, allowing consumers to enjoy the full benefits that technology can deliver. I hope that the Minister can reassure us that the Government will not bow to pressure and that the CMA will rightly be compelled to intervene where necessary.
Labour supports the intention of clause 41, which we also see as standard practice. Colleagues will note that subsection (1) provides that a final offer order must impose obligations on the designated undertaking that the CMA considers appropriate for giving effect to the final offer payment terms it has decided, and they must be included in the proposed transaction.
Again, subsection (2) sets out exactly what information the CMA must give to the parties, and we welcome the provision. I further note that subsection (3) requires the CMA to publish a statement summarising the final offer order, and this transparency is also welcome. It is unclear who will have access to these statements, so I am keen to hear the Minister’s assessment of the value of making such documents public to anyone who wishes to seek them. This aside, we support clause 41 and believe it should stand part of the Bill.
Labour supports clause 42 and particularly welcomes subsection (3). This is an important clause as it empowers the CMA to take action on both historical and live breaches. Concerns reported to us by tech companies include requiring clarity on the terms of these final offer mechanisms. It is well known that many users sign up to digital platforms, via terms and conditions, to access a service with no monetary exchange as part of the agreement. Does the Minister see this counting as a contract that is challengeable via the final offer mechanism under the DMU regime? Although the regime appears clear, the final offer mechanism relates to pricing disputes and there are concerns that it could be drawn wider. Clarity on this point is vital and is worth establishing on the record, so I am keen for the Minister to address it.
I do not have any specific comments to make on clause 43. As we have previously said, Labour believes it is important that the CMA must be legally obliged to keep these final offer orders under constant review. This is the nature of a workable, agile regime, and we therefore support the clause standing part.
We tabled new clause 3 to require the CMA to publish an annual report on the workings of the final offer mechanism. This report should be made publicly available and should be laid in both Houses so that Parliament has its say.
We recognise that the final offer mechanism is fairly unique, and it is therefore only right that the CMA is required to update the House each year, with findings on the number of SMS firms that are subject to these investigations. The Minister mentioned that the CMA will be obliged to provide an annual report to Parliament; I want it to be clear that what we have set out in new clause 1 on the final offer mechanism would be part of that report so that Parliament could scrutinise how many were made, for example. This would add to and support the other transparency measures we have pursued, so I hope the Minister not dismiss the new clause, but will consider it carefully. We feel that that is an important matter to get on record in any annual review.
Paul Scully
I appreciate the spirit in which the hon. Lady has engaged in our debate on these clauses. I shall try to answer her questions in turn.
Publication will be online, so people will be able to see it. It will be public. The hon. Lady’s second question was: will I listen? Absolutely yes, I will. On her third question—will I not bow? I will bow to her, but not to pressure, because I think we have largely got this right. I cannot remember her last question—
Paul Scully
Oh yes. It is important that we examine the efficacy of the final offer mechanism, so it is appropriate that that will be covered in the CMA’s review of all its work, and that we will get to see and assess that work as well. I can stand here and tell the Committee that I think we have got it right now, but things change. Yes, it is flexible, and yes, it is proportionate, but we want to make sure that it stays world beating.
Question put and agreed to.
Clause 38 accordingly ordered to stand part of the Bill.
Clause 39
Final offer mechanism
Amendment made: 6, in clause 39, page 21, line 32, leave out “proposed”.—(Paul Scully.)
See the explanatory statement for Amendment 4.
Clause 39, as amended, ordered to stand part of the Bill.
Clause 40
Final offers: outcome
Amendments made: 7, in clause 40, page 22, line 25, leave out
“included as terms of”
and insert
“given effect for the purposes of”.
This amendment means that terms as to payment are to be given effect for the purposes of the transaction, or of any substantially similar transaction, rather than having to be “included” as terms of the transaction.
Amendment 8, in clause 40, page 22, line 26, leave out “proposed”.
See the explanatory statement for Amendment 4.
Amendment 9, in clause 40, page 22, line 28, leave out “proposed”.
See the explanatory statement for Amendment 4.
Amendment 10, in clause 40, page 22, line 36, leave out subsections (6) to (10).—(Paul Scully.)
See the explanatory statement for NC1.
Clause 40, as amended, ordered to stand part of the Bill.
Clause 41
Final offer orders: supplementary
Amendment made: 11, in clause 41, page 23, line 19, leave out “proposed”.—(Paul Scully.)
See the explanatory statement for Amendment 4.
Clause 41, as amended, ordered to stand part of the Bill.
Clauses 42 and 43 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Mike Wood.)
Victims and Prisoners Bill (First sitting)
Tuesday 20th June 2023
(10 months, 3 weeks ago)
Public Bill CommitteesRead Full debate Victims and Prisoners Bill 2022-23 View all Victims and Prisoners Bill 2022-23 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 20 June 2023 - (20 Jun 2023)
The Chair
We are now sitting in public and the proceedings are being broadcast. Before we begin, I have a few preliminary announcements. First, it is very warm, even after the thunderstorm, so if people want to remove their jackets or cardigans, that is fine. Hansard colleagues would be grateful if Members could email their speaking notes to hansardnotes@parliament.uk. Please switch electronic devices to silent. Date Time Witness Tuesday 20 June Until no later than 9.55 am Domestic Abuse Commissioner Tuesday 20 June Until no later than 10.40 am Rape Crisis England & Wales; Southall Black Sisters; SafeLives Tuesday 20 June Until no later than 10.55 am Children’s Commissioner for England Tuesday 20 June Until no later than 11.25 am Dame Vera Baird DBE KC; Victims’ Commissioner for London Tuesday 20 June Until no later than 2.45 pm Nottinghamshire Police and Crime Commissioner; Association of Police and Crime Commissioners; National Police Chiefs’ Council Tuesday 20 June Until no later than 3.00 pm Parole Board Tuesday 20 June Until no later than 3.30 pm Crown Prosecution Service Tuesday 20 June Until no later than 4.00 pm Local Government Association; NHS England Tuesday 20 June Until no later than 4.45 pm National Association for People Abused in Childhood; Victim Support; We Are Survivors Thursday 22 June Until no later than 12.00 noon The Right Reverend James Jones KBE; Ken Sutton Thursday 22 June Until no later than 12.15 pm Lord Wills Thursday 22 June Until no later than 12.45 pm Nick Hurd; Tim Suter Thursday 22 June Until no later than 1.00 pm Refuge Thursday 22 June Until no later than 2.30 pm Jenni Hicks Thursday 22 June Until no later than 2.45 pm Dr Stuart Murray; Grenfell Next of Kin Thursday 22 June Until no later than 3.15 pm Sophie Cartwright KC
We will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication and a motion to allow us to deliberate in private about questions before the oral evidence session. In view of the time available, I hope we can get through these matters quickly, as I am sure we will.
Ordered,
That—
1. the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 20 June) meet—
(a) at 2.00 pm on Tuesday 20 June;
(b) at 11.30 am and 2.00 pm on Thursday 22 June;
(c) at 9.25 am and 2.00 pm on Tuesday 27 June;
(d) at 11.30 am and 2.00 pm on Thursday 29 June;
(e) at 9.25 am and 2.00 pm on Tuesday 4 July;
(f) at 11.30 am and 2.00 pm on Thursday 6 July;
(g) at 9.25 am and 2.00 pm on Tuesday 11 July;
(h) at 11.30 am and 2.00 pm on Thursday 13 July.
2. the Committee shall hear oral evidence in accordance with the following Table:
3. proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 11; Clauses 16 to 21; Clauses 12 to 15; Clauses 22 to 33; Schedule; Clauses 34 to 55; new Clauses; new Schedules; remaining proceedings on the Bill.
4. the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 13 July.
The Chair
The Committee will therefore proceed to line-by-line consideration of the Bill on Tuesday 27 June at 9.25 am.
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Edward Argar.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room and will be circulated to Members by email.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Edward Argar.)
The Chair
We will now go into private session for a few moments to discuss lines of questioning.
The Chair
We are now sitting in public again and the proceedings are being broadcast. Before we hear from the witness, do any Members wish to make declarations of interests in connection with the Bill?
Elliot Colburn (Carshalton and Wallington) (Con)
I am chair of the all-party parliamentary group on restorative justice.
Rob Butler (Aylesbury) (Con)
I would like to declare, in the interests of full transparency, that prior to my election I was a non-executive director of what was then Her Majesty’s Prison and Probation Service and a member of the Sentencing Council. I was also a magistrate for 12 years and previously a member of the independent monitoring board of HMP Young Offenders’ Institution Feltham. I hope that covers the full gambit.
Jess Phillips (Birmingham, Yardley) (Lab)
In that case, I should probably declare that I have run sexual violence services, domestic abuse services, female offender services, human trafficking services and sexual exploitation services, as well as being the chair of the all-party parliamentary group on children at the centre of the family court and the vice chair of the all-party parliamentary group on domestic abuse. I think that is it.
The Chair
Thank you. I am happy to take declarations throughout proceedings if any Member thinks there is something they need to declare as we go through.
I welcome our first witness this morning, Nicole Jacobs, the Domestic Abuse Commissioner. We will now hear her oral evidence.
Before calling the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill and that we stick to the timings in the programme motion that the Committee has agreed. For this session, we have until 9.55 am. Could I ask Nicole Jacobs to introduce herself for the record, please?
Nicole Jacobs: Good morning, everyone. I am Nicole Jacobs. I am the Domestic Abuse Commissioner for England and Wales.
Jess Phillips
Q
Nicole Jacobs: Thanks for having me today. In general, I have huge hopes for this Bill. If amended and changed, which I am sure we will talk about, it could really produce momentous change for victims of domestic abuse. I am here to talk about victims of domestic abuse. You obviously have a wider scope of victims to consider, but victims of domestic abuse are highly prevalent; in my mind, that also includes and has a very strong link to so-called honour-based abuse, forced abuse, sexual violence, stalking and harassment, because, for the vast majority of people in those categories, you would find that their perpetrator is either a current or former partner.
It is hugely important to think about, in each and every part of the Bill, where we could improve and how we could go further to make it more meaningful on the ground. That is my interest. As things stand now, my topline view is that there is a lot to work with here, particularly regarding the duty to collaborate. That has huge potential to transform services on the ground, if the provisions are implemented correctly, which is what we need to spend some time talking about.
Jess Phillips
Q
Nicole Jacobs: First, I hope you will consider the mapping report that my office produced; I will tell you a little about it. When I became commissioner, that was one of the responsibilities of my role, and last year we produced a mapping report of services for England and Wales. That is a very important document, partly because we have not had one before. It brought together information from commissioners, from domestic abuse services on the ground, and, really importantly, from thousands of victims who fed back about their experiences of seeking services in the last three years—on what they wanted, what they got, and what is actually out there. We have not had that information at our disposal before. We have a sense of what is out there and we have other types of reports, but this is pretty comprehensive.
The report showed how huge the gaps are. Part 4 of the Domestic Abuse Act 2021 brought us the accommodation-based duty, which of course was a huge step forward, but we have to appreciate that 70% of victims go to community-based services, which is what you are looking at in this duty to collaborate and how it is funded. We know that the vast majority of victims—over half—were not able to find services that they wanted or needed in that category. There are higher rates when it comes to services for children, and lots of variability regionally in services for children and domestic abuse. We are looking at huge gaps in mental health counselling and therapeutic support, and in services for perpetrators to change.
The stark reality that I want to get across to you—although you will know this, because you have constituents—is that there are huge gaps. We have come a long way in our thinking and our legislation about domestic abuse, but the services are not sustainably funded. That is simply the reality. I ran services myself, before I was in this role. To give you a sense of things, the charity I ran had about 34 different funding streams, which were always cutting off, with cliff edges at various points. It was a struggle to make ends meet and to keep services continuing. That is what the services are doing. They are not sitting in core budgets. Money is coming to them—and the good news is that, in particular in the past few years, we have had great money through the Ministry of Justice and other sources—but it comes to the local area in a not very coherent way for the services to plan and think about filling the gaps.
The duty to collaborate, therefore, is potentially truly transformational, but to be so it is not as simple as saying, “You must collaborate”, which is how I read some of the Bill as it stands. Services will have to plan for collaboration and bring partners together, while sometimes the geographical mix does not fit exactly and certainly the timescales do not fit. There has to be a joint strategic needs assessment, which sounds administrative, but it is the only way to make the best of such duties. That takes some time. Under part 4 of the Domestic Abuse Act, money was set aside for the needs assessment of housing and accommodation-based planning, and we have seen that in other types of things, like our serious violence duty. A very practical way to make sure that the duty is implemented well is to have the joint strategic needs assessment.
Also, very importantly, when partners get together and look around the table, cobbling everything together and getting everything in line as perfectly as they can, inevitably they will find that they do not have funding for certain things that we would all agree that we need—services for children particularly, or for domestic abuse. They will then need some kind of mechanism to feed back to us here and to decision makers in Government to say, “We have this gap. How is it going to be filled?” There has to be some kind of responsibility back and forth. That is the only way we will move in any kind of meaningful way to fill the gaps.
Jess Phillips
Q
Nicole Jacobs: Absolutely, and there needs to be some kind of language that creates a responsibility for when the gap remains and how it is dealt with at the national level.
One other quick thing to point out from the mapping is the need for “by and for” services. What I mean by that is services that are very specific to particular groups: deaf and disabled survivors; black and minoritised survivors; LGBTQ+ survivors. What we found in our mapping is good news—that they are, by any measure, the most effective services for victims. We can see that because in our survey we could compare people who got to those services and how they felt with people who did not. That is very unusual, because usually we hear from reports and surveys of all people who made it to a service; it is great to hear about that effect, but in this mapping we could compare the two groups, so we can see how effective the services are.
We can also imagine how those services could be not effectively funded at the local level, because their geographic footprint might be a little larger, so the planning needs to be more regional or national. Another thing that has to be recognised at this stage is that there is a need for a “by and for” pot, which would help to supplement what is then implemented locally.
Jess Phillips
Q
Nicole Jacobs: Certain parts of it could. Of course, that is highly dependent on what kinds of services are out there and what they are funded to do. On the definition of an independent domestic violence adviser and an independent sexual violence adviser, that work really needs refining, as does the duty to collaborate in terms of community-based services. You are absolutely right: most victims do not report to the police. The reality is that it is probably one in six. We published a report where we scoped specifically which community-based services are oriented to criminal and family court proceedings. For the family court, it is much less—around 18%. We can send that to the Committee.
Jess Phillips
Q
Nicole Jacobs: I would, and I would go even further. You will spend a lot of time in this Committee hearing from people who will tell you about how to correct the criminal justice response as if it starts only with our statutory partners—the police, the Crown Prosecution Service and others. I beg you to realise—I have done this work myself—that the real meaningful work for a victim is when you have the community-based service, the IDVA or ISVA, in the mix and interacting with the police and those partners on a daily basis. That is where the problem solving is. You will get to a point where you will not have to worry as much about invoking the victims code because everything is taken care of.
Jess Phillips
Q
Nicole Jacobs: That is a really important point. Imagine that you are on a team at a local level—that was my reality before I came into this role. In central London, in the year before I was appointed, 4,000 victims were referred to the service. They cannot be supported by a team of IDVAs as if that is all that is needed. The most successful teams are ones that are surrounded by other types of role that recognise that not all people will interact with the police or the criminal justice system, but they will need help and very practical support. I do not know whether I am putting that in the right way.
These roles have huge caseloads, just like a lot of our frontline services. They cannot be everything to everyone. A big step forward in the process would be to carve out and be clear. I am not as concerned about what roles are called; it is about the skills and knowledge that one needs to be at the table advocating with and alongside victims in the criminal justice system and other systems—housing, health and children’s social care. What are the skills and knowledge, and what tables should they sit at? The best work that I have ever done was when I was in a working system where I knew that there was an operational group with the police, the CPS and others that was oriented to that work. You could problem-solve. You could bring issues to the table that everyone grappled with together. You cannot do that without the advocate for the victim being in the mix and being supported to do that.
There is another thing that, if it were in the statutory guidance or provisions, would allow a huge step forward. We have done a lot of funding of these roles, but not a lot of development of what that really means. What is the salary? What are the skills and knowledge? What is the practice development for this type of criminal justice advocacy or family court advocacy? That would move us substantially forward. Those are all possibilities that we can achieve in the Bill if we get the guidance, funding and language right.
Jess Phillips
Q
Nicole Jacobs: No. I had heard something along the lines of there being an interest in making sure that there were improvements to parole. I was surprised, and I understand the arguments made about the optics of it. On a practical level, I feel strongly that we really have to achieve the ambition of the Bill.
On the parole reforms, I talk to families, particularly bereaved families, and they often do not have a very good experience of the parole system, in terms of feeling informed and feeling that their concerns about release are being dealt with. One of the things that I am most curious about regarding the last-minute changes is how strong the parole provisions will be and how the family liaison care will be improved. I am very interested in what mental health assessments will be required when prisoners are released who have committed domestic abuse or murder. You are right: my thinking about this is probably less developed, because this was added on quite quickly.
Sir Oliver Heald (North East Hertfordshire) (Con)
Q
Nicole Jacobs: I think broader is really positive. If you were to limit the definition to people who are accessing criminal justice remedies, then when it comes to domestic abuse, for example, that would narrow it way too much. Of course, the Domestic Abuse Act has a definition of children as victims in their own right. I am quite comfortable with the definition and feel good about what it is signalling, which is that in the victims code we want support for all victims, regardless of whether they engage with the police, for example. Services should be there.
One of my main concerns when it comes to genuinely providing services for all is that with domestic abuse, you are still leaving out migrant survivors and people who are in this country as students or with some other visa status; they have trouble accessing domestic abuse services. That could be fixed quite simply by allowing recourse to public funds for domestic abuse services for the period when a migrant is here—often victimised by a citizen here, let’s keep in mind. Having the provision of care that any other victim has: that is the one key thing I would highlight.
Sir Oliver Heald
Q
Nicole Jacobs: When I think of the impact of the victims code, the broadening of the victim definition impacts the fact that we want services for all in terms of what they need. A victim of domestic abuse, for example, may not ever have talked to the police, but may need housing support or support for their children and all sorts of things. Having that in place is really important. When you are talking about the obligations in the code in relation to people being informed about their case and all those things, to some degree quite a lot of victims will not need that if they are not engaging. In other words, I do not think it adds a huge amount of pressure that does not already exist on the statutory services in that regard.
Sir Oliver Heald
Q
Nicole Jacobs: I would not want the Committee to believe that there are not existing ways of training. Earlier in my career, I myself was part of developing the core training for IDVAs and doing that initial training, so I am fairly familiar with that. It is an accredited training. A lot of commissioners at the local level will require that level of training when they are tendering for community-based domestic abuse services, for example. I think you will hear from some charity CEOs later who can give you some more detail. Where we are is that while that is often included in commissioning standards, we need something more specific, more uniform, so that we—and, frankly, all our statutory partners—are really clear on what skills and knowledge these roles bring. I feel that we have this ability and need to carve out very specifically for criminal justice work and family court work what the skills and knowledge are that you need in particular.
The Chair
You have three minutes left.
Nicole Jacobs: Sorry. This is my job—I could talk about it all day. I think there is real scope to better define what good looks like for that, and that will impact the victims code and compliance with it. It impacts the multi-agency working at the local level. That would be a huge step forward.
Sarah Champion (Rotherham) (Lab)
Q
Nicole Jacobs: The skills.
Sarah Champion
Q
Nicole Jacobs: No, I see that a lot more as a role at the local level.
Sarah Champion
Q
Nicole Jacobs: I would have thought the Secretary of State, but I don’t know. You will be the best people to decide those kinds of things.
Sarah Champion
Q
Nicole Jacobs: Of the services that domestic abuse victims access, 70% are community-based services. Having worked at them, I can say that you do not need to compel them to fill the gaps. They exist only to provide those services, and they desperately want to provide more. They will engage with absolutely any process that would help fill gaps for the people they are working with.
Sarah Champion
Q
Nicole Jacobs: I would expect there to be a meaningful assessment at the local level—a joint strategic needs assessment—where the potential funders come together alongside service providers and experts in their area and think very critically about what opportunities they have. That will not be totally precise, because some of it would depend on bidding, so they would have to decide together.
Sarah Champion
Q
Nicole Jacobs: The Bill could open recourse to public funds to all survivors. It could also create a firewall between the police and immigration enforcement so that people who are desperately needing protection would not fear calling or talking to services because of negative repercussions. They would just know that they would be made safe. They would have safety before status.
The Chair
I am afraid that that brings us to the end of the time allotted for the Committee to ask questions. I thank the witness, on behalf of the Committee, for giving evidence this morning.
Examination of Witnesses
Jayne Butler, Ellen Miller and Dr Hannana Siddiqui gave evidence.
The Chair
There is a slight technical problem, so we will start with the witnesses who are here, and we will continue to try to get the other witness online as soon as possible.
We are now going to hear oral evidence from Jayne Butler, chief executive officer of Rape Crisis England and Wales; Dr Hannana Siddiqui, head of policy and research, Southall Black Sisters; and, if we manage to get the technology working, Ellen Miller, interim chief executive officer of SafeLives, via Zoom. Could the witnesses quickly introduce themselves for the record?
Jayne Butler: I am Jayne Butler, chief executive of Rape Crisis England and Wales.
Dr Siddiqui: I am Dr Hannana Siddiqui, head of policy, campaigns and research at Southall Black Sisters.
The Chair
Lovely. We now have Ellen joining us as well. Ellen, could you introduce yourself, please? [Interruption.] Ah. We will carry on, and hopefully Ellen will be able to join us as time progresses. Can I ask Anna McMorrin to ask the first question, please?
Anna McMorrin (Cardiff North) (Lab)
Q
Ellen Miller: I hope you can hear me okay. I am Ellen Miller, interim CEO at SafeLives.
Anna McMorrin
Jayne, can you tell the Committee what you think the Bill will do to tackle the historic low rates of rape prosecutions? Can you set out what you have said in your report today?
Jayne Butler: We had a lot of hope that the Bill would really change things for victims, particularly given the commitments that were made two years ago in the rape review. While there has been some positive progress on some things, there has been nowhere near enough to make a difference to the figures, and to the people on the ground who experience sexual violence and go to court. We can see that in the stats. It is evident, and does not really need me to speak to it.
There are still huge issues to do with the charges, conviction rates and use of scorecards. We talked in our report about the lack of understanding of who is using the criminal justice system and how, and a range of other things to do with victims and the specific legislation. For example, currently we do not have protection for counselling notes when victims come to court, and the Bill will not solve that. We do not have the security that victims will get support throughout the process and beyond. We hear time and again from people who report through the criminal justice system, then get to the end of the process and feel discarded. Those are the ones who are coming in, which we know is a tiny proportion of those affected by these crimes.
We feel that there is no genuine legacy in the Bill for ISVA roles, which have been really prioritised by the Government and funded at a much higher level than they were previously. They are highly regarded roles, but we still do not see the impact of them on the ground, and there is nothing to change that in the Bill. We see lots of hints at rights in the Bill that will not necessarily result in a genuine change for victims on the ground, because they will not have a way to pursue them—for example, through having independent legal advice that would help victims to challenge decisions that are made on their behalf, and to deal with it when the interests of the criminal justice agencies do not necessarily align with their own. That needs to be there, too. There is a whole raft of things; I could be here all day.
Anna McMorrin
Q
Jayne Butler: We know that rights are effective only if they go with equivalent responsibilities and accountabilities for not being upheld. To really make the rights in the Bill meaningful, and to actually change things for anyone who is pursuing a sexual violence issue within the criminal justice system, we would need an independent legal advice model that supports victims in understanding what is happening to them and how to make challenges. The Bill provides rights to people, and the idea that you can make a challenge—but no funding, no support and no way of actually making those challenges.
We are in a system where the criminal justice agencies are failing victims. The Bill gives victims more rights, but what does it do to support those already failing agencies to change anything? Right now, the responsibility for doing that falls time and again to the voluntary sector—to services that are underfunded and that constantly need to do more, challenge more and pick up issues and failures that come from individual cases and from systemic issues. Without any funding or decent proposal to give victims advice, the Bill leaves victims with nothing, and the voluntary sector with not enough funding and massive demand to pick up.
Anna McMorrin
Q
Jayne Butler: Sure. We would like to see a national hub provided for legal advice. We are not looking for that legal advice to give victims party status in legal proceedings; that is not what we are asking for. It is much more about ensuring that every time a victim has a problem to overcome, they can get some legal advice about how to challenge it. That might be a right to review; it might be a disclosure request for counselling notes or something else that is being asked for that they do not feel is relevant and that they feel is invasive and further traumatising them within the system.
We want it to be an independent service that will operate outside the current criminal justice agencies to ensure that victims feel that they have somebody who will act in their interests. A pilot has already been successful in Northumbria, and there is a strong evidence base that such models exist in other jurisdictions, including Australia, California and Ireland. We have put in a really detailed written submission to the Committee about this.
Anna McMorrin
Q
Jayne Butler: Not as it stands, no. Our concern is that it will not really deliver any improvements to victim services, partly because there is no funding attached to it. How do you ask people to collaborate around a massive demand without actually putting money in to provide those services? Often, we find in commissioning processes in this sector—and probably in others too—that as commissioners gain responsibilities, they pass some of the risk on to a provider, so we will start to see services being commissioned to deliver x within three working days for very small money. We have seen this across the board in other sectors before, and that is the real concern around this—that the duty to collaborate is not strong enough to give victims’ services, usually provided by the voluntary sector, a decent enough voice in talking about what is needed, demonstrating the demand and getting those service actually available for victims.
Anna McMorrin
Q
Jayne Butler: Potentially, yes. It is not necessarily my area.
Jess Phillips
Q
Jayne Butler: If it is one, I will be surprised. It is probably not—
Jess Phillips
Q
Jayne Butler: Not that I am aware of.
Jess Phillips
Q
Hannana, I will come on to you. My first question is: do you think that migrant victims of domestic abuse are currently included in the Bill?
Dr Siddiqui: Definitely not. The whole Bill is lacking, properly and in any meaningful way, any inclusion of protected characteristics. Black and minority women, for example, are not included, and migrant victims are definitely not included. The migrant victims should be central to the victims code, the definition of the victim and throughout the Bill. It is the only way that we can ensure all victims are provided for by the Bill.
Jess Phillips
Q
Dr Siddiqui: No. I think that most migrant victims do not approach the police or the criminal justice system to report domestic abuse and other forms of violence, primarily because they can be treated as an immigration offender and become criminalised, or they can be arrested, detained and deported. The fear of deportation is often the reason that prevents migrant victims coming forward. That is why a firewall, which is a total separation of the data sharing between the police and immigration enforcement, is absolutely necessary in order for them to come forward.
Jess Phillips
Q
Dr Siddiqui: Yes, there has to be a firewall and other legal reforms—for example, around no recourse to public funds. That needs to be lifted, so that victims can go to statutory agencies such as the police for help and support without the fear that they will be destitute as well as deported.
Jess Phillips
Q
Dr Siddiqui: There are hardly any. I mean, I would say that there should not be a statutory definition of IDVA and ISVA because it excludes most advocacy services that we have in community-based organisations, including “by and for” services. Southall Black Sisters, which is a pioneering organisation in advocacy services, does not fit the current MOJ model, which is very criminal-justice focused and largely looks at high-risk cases. We provide holistic services for victims of domestic abuse and a lot of that is advocacy work that sits outside the current definitions. You know, IDVAs and ISVAs also need development. They need guidance and improvement in pay and conditions. But I do not think that that needs to be done through a statutory definition. They definitely need more funding and you definitely need to give more funding for the “by and for” services with a wider definition of what an advocate is.
Jess Phillips
Ellen, can you hear me? I do not know whether I should make this declaration, but Ellen went to the same school as me. Ellen? Okay, I cede the floor if Ellen cannot hear me.
Elliot Colburn
Q
Dr Siddiqui: There is a duty to collaborate, but there is actually a lot of collaboration at a local level with funding agencies at the moment, but unfortunately they do not support migrant victims or victims from black or minority communities sufficiently to provide adequate services. You cannot have a duty to collaborate without having a duty to fund community services. More specifically, you need to fund specialist “by and for” services that are at the frontline in the community, providing services to enable migrant and other minority women to access mainstream services, including the criminal justice system.
There is also a need to change the law. The Bill on its own will not do it. You need to be able to remove the no recourse to public funds requirement for victims of domestic abuse so that they are able to come forward to and present themselves at the police, social services and elsewhere for help and support. At the moment, they cannot do that because they are frightened of being destitute or being treated as immigration offenders and deported. If you are going to look at protected characteristics, you have to look at migrants, at their specific experiences and at how they cannot use the criminal justice systems and local services. There is a need not only to improve funding for services, but to change the law.
Elliot Colburn
In the interest of time, I will cede the floor to my colleague.
Sarah Champion
Q
Jayne Butler: The announcement made in the Bill does not specifically mention counselling material. In our opinion, it does not bring about any new protections, but just effectively reinforces what already exists in law around the Data Protection Act.
Sarah Champion
Q
Jayne Butler: What we would like to see is a model that changes the legal threshold for access to survivors’ counselling records. This is not a blanket ban. What we are asking for is a test of substantive probative value. Again, we have seen this be successful in other jurisdictions. It would mean that CJS agencies have to make applications for access to a judge. There would be judicial scrutiny at two stages: a first one at the stage of access to the police, and a second one if it gets to the stage of being disclosed to the defence. It really protects that without, we believe, compromising any right to a fair trial or any rights that a defendant might hold in that circumstance. We have put a detailed written submission in to the Committee about this.
Sarah Champion
Q
Dr Siddiqui: There should not be a statutory definition, because under the current meaning of ISVAs and IDVAs, they tend to be criminal justice-focused and only deal with high-risk cases. They do not deal with the wider forms of advocacy services we provide, which tend to be on the whole more holistic and do not just focus on the criminal justice system; they look at the family court, the health and welfare system and provide services over a long period of time to women. It also does intersectional advocacy, which is about looking at a whole range of different issues, but it also looks at equalities.
Not all of them fit into the current definitions, and I think that if you define it, it will narrow what the definition is of an ISVA or IDVA. That means that the local commissioning bodies may not fund those services. The current services, of which a lot are run as “by and for” services that do not fit the current definitions, will not get funding. Historically, they are underfunded anyway, so they could disappear as a result.
Sarah Champion
Q
Dr Siddiqui: Yes, I think that a range of services—holistic services—are what the IDVAs should be dealing with. That is not just for high-risk cases. I would include medium and standard-risk cases, because risk changes rapidly. The models that exist for the community that are provided by the “by and for” sector include a whole range of things, including support services, outreach services, helpline advice and advocates. They do not fit the current models. The current model has always been restricted, and we have said so. Defining it in law means we could lose the funding we currently have for the range of services we offer.
Sarah Champion
Q
Dr Siddiqui: We would like a ringfenced fund that provides sustainable, multi-year funding to the “by and for” sector from central Government. There should be a duty to fund those services. I think the DA Commissioner estimates that there is about £300 million you need to give for the by and for sector. Imkaan, which is a voluntary umbrella organisation, estimates that £97 million is needed just for the “by and for” sector in black and minority communities. There needs to be sufficient funding that is long-term and provides holistic services that victims need in the community.
Sarah Champion
Q
Dr Siddiqui: No, most of the women we help do not actually know about the victims code. There needs to be far greater awareness, and it needs to be more inclusive in terms of language. It needs to be very explicit about protected characteristics and around migrant victims in order for it to reach and include everyone.
Rob Butler
Q
Dr Siddiqui: I wish I had the time to do that. I do not have an estimate, but I know that others have done those calculations. The Domestic Abuse Commissioner has done a calculation, which is about £300 million. Women’s Aid, Rape Crisis and Imkaan are all organisations that have done an analysis of what is needed.
Rob Butler
Q
Jayne Butler: I do not. There is a piece of academic work going on at the moment to estimate this. We all know that it is less than what these crimes cost society. What it costs to deal with victims and the long-term impact of these crimes in society is a lot less than victim support services. We would ask for more things. We have not talked about prevention. We want to see these crimes stop and that will cost money.
Rob Butler
Do you think we are talking tens of millions, hundreds of millions, or even more?
Jayne Butler: Hundreds of millions.
Rob Butler
Q
Jayne Butler: We have definitely seen incremental funding increases and recognise that those have been made. I do not think it is yet enough. We still have this really patchy provision of services. There are long-term issues around organisations that have been funded in the past and therefore exist versus where there are gaps. A lot more is needed to fill some of those gaps. Our waiting list in Rape Crisis is some 14,000 a year and increases constantly. We have seen an increase in demand of about 38% in the last year. We are seeing huge demand for those services, but that funding never quite touches it.
We also need to acknowledge that some of the delays in the last few years in the criminal justice system have really exacerbated things and mean that sometimes that new funding is not about helping new people. It is about the cost that they sit in the system for so much longer. I would like to know more about to what extent it is really making a difference to help more people.
Rob Butler
Q
Jayne Butler: I don’t think that people do always understand. It depends on what access to support they have had along the journey and who they are, but there is definitely more work that could be done on that and also in terms of how their individual cases are communicated. We hear time and again from people who have found out at a day’s notice that their court case has been postponed for months, if not years. So it is not only about knowing what is going to happen, but about being told when there is a variance and when that is changing for them individually.
Rob Butler
Dr Siddiqui?
Dr Siddiqui: I think you need an advocate to help you navigate the system. The information provided by the criminal justice system or by the courts generally is usually very little and victims do not really know what to expect. The fact that we are there as advocates and as a specialist service means we are able to give them the confidence to move forward. That is critical throughout the pre-trial, during trial and after trial. Nobody really cares about the aftermath except us. We are the ones who have to give them the ongoing support after the trial, so it is essential that the two work together.
Janet Daby (Lewisham East) (Lab)
Q
Dr Siddiqui: As I have said before, the victims code needs to be very clear about protected characteristics, particularly for migrant victims who lack the trust and confidence in the system to use it and to come forward. You need a wider definition of what a victim is. It needs to include witnesses. Also, a lot of our cases are transnational. When you are talking about what a victim is, you have to include families, friends and victims who have been dealing with international cases, which at the moment are not really being addressed. A lot of forced marriage cases and honour killings, for example, may take place overseas, but the families do not get any support in this country from the police and other agencies when they try to bring justice, even though the perpetrators may live in this country.
There is another thing that we need to include in the victims code when trying to define what a victim is. We know that a lot of women are falsely accused of perpetrating domestic abuse by their abuser, or defend themselves against abuse and may be treated as offenders as opposed to victims. It is really important that victims who defend themselves or who are falsely accused are seen as victims by the system. Groups such as the Centre for Women’s Justice are even asking for a statutory defence when women are driven to kill a violent partner out of self-defence. There is a need to look at our defences, and how we should treat those people as victims, not perpetrators.
Jayne Butler: To double what Dr Siddiqui just said, in terms of prevention work, we clearly do not want people to keep becoming victims. A whole host of work has been done on that. I refer back to the recent report of the independent inquiry into child sexual abuse on the ongoing scale of such abuse. We also see huge numbers of adult rapes, with vast numbers of people affected, so it is obvious that we ought to be doing some prevention work. We had the Enough campaign through the Home Office, but we do not have a wholescale approach. Possibly some kind of public health approach is needed, because this is such a big issue, which continues to affect so many people.
In terms of gaps and counselling, the ISVA role gets a lot of focus. That is really important because support for victims of sexual violence who are going through the court process is invaluable, but people also need access to therapy. Often those services are not funded. Most of our waiting lists are for counselling as opposed to ISVA support, because the funding has been put into the ISVA side of things, without the need. Charlie Webster wrote an open letter recently, which I think was mentioned on Second Reading, about her and Katie’s experiences. They just did not get that kind of support.
Janet Daby
Q
Jayne Butler: Our waiting list for therapy is about 12,000 people across services across England and Wales.
Janet Daby
Thank you. Ms Elliott, I should have declared that I am the chair of the all-party parliamentary group on children in police custody, and I sit on the Justice Committee.
Siobhan Baillie (Stroud) (Con)
Q
Dr Siddiqui: I do not know how the firewall could be abused. It is important that, if there were a firewall, it would give victims the trust and confidence to come forward and seek help, and would ensure that the perpetrator was held accountable. At the moment, a lot of the victims—because they have insecure status—are told by the perpetrator that they have no rights in this country. Usually, that means that if they go to the police and are arrested for being an offender, or are reported to the Home Office, what the perpetrator has said is reinforced by the system. Basically, the perpetrator is able to weaponise victims’ status to control and trap them. David Carrick is a high-profile example: he trapped a woman with an insecure status. He told her that if she went to the police, no one would help her. That is true for many cases we deal with.
Some of the evidence for how many people are being caught out by that is from The Guardian, which did some FOI research with the police. It found that in a period of two years, about 2,500 people facing serious crimes including domestic and sexual abuse, as well as trafficking, were being reported to the Home Office. A lot of women were in that: in one quarter, about 130 women who were victims of domestic abuse were served with an enforcement order. We are talking about a hostile environment for migrants, and we must remove all barriers to victims of abuse being able to access their rights to protection, safeguarding and justice by giving them the whole toolkit that they need to access those rights.
The firewall—where there is complete separation from sharing of data between the police and statutory agencies, and immigration enforcement—is one way of increasing trust and confidence among migrant victims. I do not see a problem. If they are referred to agencies like ourselves, usually we will help them to report the abuse, but we do it by being their support and being able to advise them, and dealing with any issues that might arise with the police when they report it.
After getting legal advice on their immigration status, migrant victims are able to think more clearly along the lines of, “Yes, I should report it, because I want safeguarding and some justice. I want to hold this perpetrator to account.” At the moment, perpetrators have impunity, because they know that the women will not get any help from the police, even if they turn to them.
Siobhan Baillie
Q
Dr Siddiqui: If the migrant victims have done a crime, the police do their normal duties to investigate crime. It depends what that crime is. If they are seen as immigration offenders first and foremost, rather than victims first and foremost, they will not get any of the help and support they need. They do not even have a chance to get legal advice on their immigration status before they are reported. They do not have a chance to go to a “by and for” organisation to get any support or advocacy, so it is essential that they have the chance to do that before there are any kinds of communication with the Home Office. Usually, that communication should be done through their legal representatives, rather than by the police.
A lot of police officers say to us that they do not agree with the fact that there is no firewall. A lot do not even realise that there could be negative consequences if they report migrants. There is some international work, and even some in the UK, on having good guidance or a firewall. For example, there has been work in Amsterdam and in Quebec showing that a firewall works. The potential for abuse is minimised. In Northumbria and Surrey, the police are all looking at ways for how to improve responses to migrant victims without reporting them to the Home Office as their first response.
Sarah Champion
Q
Dr Siddiqui: If they have committed a crime, of course they need to be investigated like anyone else.
Sarah Champion
Q
Dr Siddiqui: Yes; there is no automatic sharing of data.
Sarah Champion
Q
Dr Siddiqui: No, I think there is a postcode lottery. “By and for” services, in particular, are very thin on the ground. Even in areas where there is a high black and minority population, “by and for” services are not necessarily commissioned locally. That is why I am saying that the duty to collaborate is not enough. You have got to have a duty to fund and you have got to have ringfenced funding, particularly for “by and for” services and specialist services, for that to work. At the moment, the system does not work and I do not think that this will necessarily improve it enough.
The Minister of State, Ministry of Justice (Edward Argar)
Q
Dr Siddiqui: A joint SNA is important if you are going to have collaboration at a local level and it will help to highlight which gaps could be filled by which agency, but at the moment some of that work is being done locally and some of the gaps are still not being filled. For those with no recourse to public funds, there are hardly any services on the ground. For those from black and minority communities, or “by and for” services, there is hardly any funding in the local area—so even where a gap may have been identified, there is not the funding to fill it.
Jayne Butler: There has been a little bit of work done on this, in terms of the recommissioning of the rape support fund and thinking about how to share that geographically. The result, when you have the same pot overall, is that you end up reducing services in some areas. If we start to look at where the gaps are, but we do not put any more funding in, and we are just revisiting what is already there, the result will be that some services that are funded now, which have high demands, will be reduced. There is nobody sitting there who is seeing people within a week, or sometimes even a month or six months.
Edward Argar
Q
Dr Siddiqui: Our demand has really rocketed, particularly after the covid pandemic, and it has not really gone down. It has doubled in size. We deal with 20,000 cases and inquiries every year. Before, we had half that.
We must remember that the mapping report by the DA Commissioner has shown that only 6% of Government funding was being made available to the “by and for” sector. Even though the demand has gone up, the funding has not gone up. In fact, a lot of “by and for” services are in crisis and are having to close down or reduce their services.
The cost of living crisis is adding to the problem. Services are not able to pay their staff enough. They have to find more resources for service users. We are having to find money to supplement the rent and subsistence of victims with no recourse to public funds. Although we have money from the support for migrant victims pilot project at the moment, that is temporary and it does not give us enough money. It does not give a universal credit rate. It does not give us enough money to pay rent for a refuge. It does not give enough to cover living expenses. We are having to find that extra money in the cost of living crisis situation. That is really not sustainable.
The Chair
Order. I am afraid that brings us to the end of the time allotted for this panel. I thank our witnesses, Dr Hannana Siddiqui and Jayne Butler, for answering questions in the room. I also place on record our thanks to Ellen Miller, who was on Zoom, intermittently without sound, and gave up her time this morning to try to give evidence.
Examination of Witness
Dame Rachel de Souza gave evidence.
The Chair
Could I ask you to introduce yourself for the Committee, Rachel?
Dame Rachel de Souza: I am Rachel de Souza, Children’s Commissioner for England. I am very grateful to be here.
Anna McMorrin
Q
Dame Rachel de Souza: Absolutely. I have been a big supporter of the Bill. I have to say that the ministerial team’s civil servants have worked incredibly well with us throughout the Bill’s passage. One of the things we have been pressing them on is making sure that children’s voices and experiences as victims are at the centre of the Bill. That is obviously why I am here today. I am happy to see the duty to collaborate there, but I would like a bit more accountability around it, which goes the last person’s comments. I am really pleased that they are there, but if we are going to put children as victims in the Bill, we have to make sure that we recognise that they experience crime and being victims differently. What we need to put around them to make sure they are supported, and can process things and get justice, is different. I would almost like a duty of accountability as much as a duty to collaborate.
Anna McMorrin
Q
Dame Rachel de Souza: I had intended to reserve my comments to children as victims, because that is what I am here to talk about. I do not want to let perfection be the enemy of good. I want a victims Bill that has children at the centre and understands children’s unique experiences. From what I saw yesterday, there is a lot of work to do. There is a lot of work to do in terms of defining children as victims, looking at the support they need and making sure that the victims code of practice is in the right place for children. That is what I want to focus on.
Anna McMorrin
Q
Dame Rachel de Souza: Yes, absolutely. I was going to bring that up with the definition of children as victims. When I go around the country and talk to children, wherever they are—whether that is being held in police cells or children who are involved in drugs or whatever—I realise just how complex the situations are. You realise that these children are as much victim as perpetrator. Children tell me all the time that their experiences with the police make them feel like they are not victims but criminals. That is what we need to sort out.
Anna McMorrin
Q
Dame Rachel de Souza: I have seen some very diverse and excellent services. I would first point out The Lighthouse, which I am sure you are all familiar with and which is a superb example of services coalescing around children’s needs and understanding where children are. Some of the sexual assault referral centres for peer-on-peer sexual abuse are also fantastic, but we do not have a national network so that every child gets the same experience. Every child should get the best support, and it is just not there.
Anna McMorrin
Q
Dame Rachel de Souza: I have made an initial examination of what has been proposed around Jade’s law. We have to protect children. Obviously we need to ensure that there are not unintended consequences and we need to look in detail, but I would say, on the face of it, that the protection of children must have primacy, so I support it.
Anna McMorrin
Q
Dame Rachel de Souza: That is a deeply complex question, but I would be deeply concerned. Children in those situations are often the victims of abuse themselves, and we must protect them. I would not say that I can read the mind of any particular father, but we find time and again that everyone in the household has had that experience.
The Chair
We have less than eight minutes left and five Members are indicating that they wish to come in, so please keep questions brief.
Rob Butler
Q
Dame Rachel de Souza: I was pleased to see the victims code published yesterday. There is more work to do on it, particularly in relation to having a clear definition of children and ensuring that it is child friendly all the way through. We have been working with the team to try to do that, and there is a lot more work to do.
Rob Butler
Q
Dame Rachel de Souza: I think there is, but it is wider than that. We also need to look at children with special educational needs and ensure that we take into account and make use of the expertise around working properly for those children.
Rob Butler
Q
Dame Rachel de Souza: Yes. When you talk to children who are victims you very quickly discover that they do not necessarily understand or report their experience in the same way as adults. Often, there is often quite a lot of delay in their coming forward, and the kind of support they need is far more complex, which is why I am so keen on an approach like that of the Lighthouse, where the services really see the child as an individual and coalesce around them. Children talk to me a lot about having to tell their story lots of times. They experience the courts completely differently. I have pages and pages of testimony of young people who have had dreadful experiences in the courts, because the courts just do not understand that they are children.
Rob Butler
Some of us tried.
Dame Rachel de Souza: Yes, but kids say, “I gave them my texts, I gave them my statements, but look—they’re not taking it forward.” We need the advice around the child to recognise what it is to be a child; they do not necessarily have that step-back view.
We need to do more. I was pleased to see the mention of advocacy; we could develop that a lot more, rather than just say, “This public service needs to deal with it, or that one.” It is about the individual child advocate and the services coming together around the child. It does not necessarily have to be introduced at vast new expense. I think there is a question about how we can regroup services to work in a way that works.
Rob Butler
Okay. I am going to interrupt you, if you do not mind, because I know that so many colleagues want to pick up. But thank you very much.
Janet Daby
Q
Dame Rachel de Souza: First off, and it is the point I made before, it is about recognising in the definition of victims children who have been criminally exploited; that comes up time and again. If I had more time, I could give you pages of quotes from children who, because of their experiences—whether it was being strip-searched or something else—have spent years feeling that they were in the wrong when they were actually the victims. That definition would be protective in itself, to start.
However, we also need to recognise that children get very worried if they have not come forward to the police to say they have been victims. We need to make sure that they are recognised in the victims code as well. I think that would help and I have some definitional changes and some word changes that I can write to the Committee about, which I think could help there. Often, it is about just two or three words, but it could make that work.
Elliot Colburn
Q
Dame Rachel de Souza: We heard a lot from the people before me about how services really are not set up for children, and we have started to talk about how they can be set up to deliver for children. Ultimately, of course, Government and Government Departments have a responsibility, but I think it is about ensuring accountability at local level as well. It is always going to have to be multi-agency, because there are different strands of support for children, but we need to find a way, and with children it is probably in relation to the victims code. There is some value in focusing on youth justice holding that, but we need to try to go for the holy grail, which is to make multi-agency support work. I do not want to sound like a broken record, but I think that looking at how the Lighthouse has done it in Camden, where it has drawn together the different strands of health, social care, policing and youth justice, and actually made that work, can give us a blueprint for how to go forward.
Sarah Champion
Q
Dame Rachel de Souza: Yes. I was so delighted during the passage of the Bill that Daisy’s law was taken seriously; we worked with Daisy. I think that is a really important step forward, and I feel similarly about children of paedophiles, because it will be the same argument.
Siobhan Baillie
Q
Dame Rachel de Souza: We have good intentions, but what will be important is that that is in the VCOP and that we operationalise it properly, because I absolutely agree with you that when these situations arise, the earliest possible intervention to deal with parental conflict is what needs to happen.
I think we have—
The Chair
Order. I am afraid that brings us to the end of the time allotted for the Committee to ask questions. On behalf of the Committee, I thank Rachel de Souza for her evidence this morning.
Examination of Witnesses
Dame Vera Baird and Claire Waxman gave evidence.
The Chair
Q
Dame Vera Baird: I am Dame Vera Baird KC.
Claire Waxman: I am Claire Waxman, independent Victims’ Commissioner for London.
Anna McMorrin
Q
Dame Vera Baird: No, it does not. First and most important for me, it does not deal with people who suffer from serious antisocial behaviour. Despite the fact that the behaviour is often criminal, it is not dealt with as criminal by the police, but is instead called antisocial behaviour. I am particularly worried about people who are persecuted at home. It is not about every bit of antisocial behaviour—if someone chucks a can into my garden, I do not expect to have victims code rights—but this Government legislated well to introduce something called the community trigger about seven years ago. It says that when it escalates to a particular level, you have a series of remedies to get all the agencies together to put it right. If it gets to that level, then it is seriously persecuting, and there are people who are suffering that.
I had cases when I was an MP years ago but they still came to me when I was the Victims’ Commissioner. A woman is in her home; lads sit outside drinking beer and chuck the can into her garden. If she complains, they chuck something at her window. They stamp on her plants. They kick the ball against the gable end all the time. They shout abuse. They have just picked a place to mess around, but often the person affected is already vulnerable. That is very worrying, but it is not treated as criminality; it is treated as antisocial behaviour. But if we look at it, stamping on the plants in her garden is criminal damage; chucking something at her, if it might hurt her, is an assault; much of this behaviour is likely to cause a breach of the peace, but it is never dealt with like that. Since the key to the Bill appears to be that you are a victim of criminal behaviour, the question is: who makes that decision?
If I go to Victim Support and say, “Please help me. This is happening at home,” does the fact that it is obvious that part of it is an assault make me a victim or not? I think that is a key question to answer in the Bill. Who decides what is criminal behaviour? Often, it is wrapped up exactly as I have described but dealt with quite differently by the police. If someone pinches a spade from my garden, I am entitled to my victims code rights, but if someone behaves like that to an older person, they have nothing. That is a very serious omission. It is very widespread and it is very scary for people.
Anna McMorrin
Q
Dame Vera Baird: Yes, it is imperative. Of course it is. To be fair, the Government did consult us. It took about two years to get the victims code together. In fact, I am not sure if Mr Argar was not the Victims Minister when it started the first time around. It took a very long time. We wrote back four or five times, although I have to say we brought no change. There must be meaningful consultation, but the Victims’ Commissioner has to be in there. Indeed, in all the provisions about drafting codes and making changes, where it says you should consult the Attorney General, you have to consult the Victims’ Commissioner as well. This is about victims.
Anna McMorrin
Q
Dame Vera Baird: I feel that they should be elevated. The third duty of the Victims’ Commissioner is to keep the code under review. They cannot do that unless they can bespeak data. That is not in the Bill. What happens to the data is that it is collected by police and crime commissioners, promoted locally—that is fine—and if it has failed locally, it is promoted to the Secretary of State. It needs to go to the Victims’ Commissioner as well; otherwise the Victims’ Commissioner cannot perform that bit of their statutory role unless the Secretary of State chooses to give them the data. That is obviously the wrong way around, because the commissioner will want to have a say in how it is collected, what the nature of it is, and what to do with it. I think that definitely needs elevating.
Anna McMorrin
Q
Dame Vera Baird: You are talking about the duty to collaborate?
Anna McMorrin
Yes, the duty to collaborate in the Bill.
Dame Vera Baird: I think the main deficit in that duty is that it needs to be a joint needs assessment, rather than a duty to collaborate in some way after each individual organisation has decided what its needs are. There is a role for a victims’ champion in every police and crime commissioner area. We have a fabulous example of a Victims’ Commissioner who is a victims’ champion here, but we do not need a full-time person in a little place like Durham, or a relatively minor place like Northumbria. You need somebody charged with the task, however, so locally they can pursue the interests of the victim.
Anna McMorrin
Q
Dame Vera Baird: It will do nothing to bring change—if that is really your question. I am happy that there will be a duty to promote it to the public and to victims. Actually, it is a very odd, one-sided duty to promote it to everybody except the agencies that have to deliver it. There is no duty to promote it within the agencies themselves, and they do not know much about it.
There is a statistic—from 2020, I think—that 70% of people who have been through the criminal justice system as victims have never heard of the victims code. We used Office for National Statistics data in 2021 and showed that 80% of victims who had gone through the entire criminal justice system had never heard of the victims code. The first code was in 2006, so it has been completely ignored for 18 years. The agencies that are obliged to deliver it have no duty in the Bill to promote it themselves. They have no budget to train their staff, because, as I understand the Bill, there is absolutely no funding of any kind behind it—I think it is called financially neutral. Any training, development or promotion has all got to be done out of somebody’s back pocket.
Anna McMorrin
Q
Claire Waxman: Sadly, no, not in its current form. I spearheaded the campaign nearly 12 years ago for a victims’ law; the ambition was to give victims legally enforceable rights to justice and support. We have had the code in place since 2006. Compliance with the code has always been low, and even though the Government have reformed the code four or five times now, that has not driven better compliance. This Bill is the legislative opportunity to improve that. I remind everyone that even delivering the code is a minimum level of service to victims. Even if agencies are complying and delivering it, it is still a minimum level.
The Bill is a legislative opportunity to transform the way that victims in this country are treated once they report and come into the criminal justice system. It is an opportunity to help them easily access support services to help them through recovery and their justice journey. Unfortunately, the Bill in its current form, when it is translated into practice, will not have any meaningful impact for victims who are going through the criminal justice system or trying to access support services.
Anna McMorrin
Q
Claire Waxman: I think it has a huge impact on the Bill. As I said, the original ambition was to give victims legally enforceable rights. Part 1, which is where it should be addressing that, is very thin, weak and insufficient. A lot more focus has now been put on to part 3. A huge amount of funding has been allocated to Parole Board measures—more than the entire Parole Board budget, I think—and what has been put forward in the measures is not what victims or families have called for.
I work directly with bereaved families in London and the agencies that support them, and not one bereaved family has actually called for these measures. The Government have said that it is about public safety, but if it really is about public safety then where is the reform on probation, which is underfunded and understaffed? That is a public safety issue that needs tackling, but that is not in the Bill.
Part 3, I am sorry to say, is a vanity project. I think it is a power grab by our previous Justice Secretary. We have a Parole Board in place who are the right people to make the decision on release. I am with families who have been eight years in the process; it comes around for them every four or five months. They can barely recover. They are in this process and it is relentless. Putting these measures in gives them a false sense of hope. We are telling them that there is a chance that the Justice Secretary can veto the Parole Board decision and that the prisoners will not be released.
What will actually happen in reality is that, yes, the Justice Secretary might veto, but that prisoner will then have legal aid to appeal the decision. They will appeal every decision, pulling the bereaved families into even more distress and trauma. When I asked the officials in the Ministry of Justice what allocation had been given to provide extra support to the families during this process, no support had been given—only to the prisoners to appeal. I have to say very strongly that part 3 is nothing short of shameful.
Anna McMorrin
Thank you. That is pretty strong.
Claire Waxman: Yes, because this is a victims Bill and we are here for victims.
Anna McMorrin
Q
Claire Waxman: Absolutely. Sadly, I work with too many victims of domestic abuse, rape and stalking who have tried to leave abusive relationships. Many will not have the courage to report to the police, so they just want to flee and leave the abusive relationship. If children are involved, unfortunately those victims are then pulled into family court proceedings, which are retraumatising and place them and their children at further risk because there is no support provision in the family court to identify who the real victims are and what support is in place to protect them.
If they do report to the police, the two jurisdictions do not work together. You can be a victim in the criminal court but be accused of parental alienation in family court, and your victimisation has been dismissed. I see far too many victims who are victims of crime, may not have had the confidence to come forward to the police, and are being treated very poorly in family court. Unfortunately, this Bill will not address anything for those victims.
Anna McMorrin
Q
Claire Waxman: I have published two London rape reviews and heard from many, many rape victims in London. One of the biggest issues that comes up for them is the request for their personal records, especially their counselling records. Many victims will decide to withdraw from the process and feel pushed out because they have to make a decision as to whether they are going to pursue justice or hand over their counselling records, which are about their thoughts and feelings and trying to recover from the crime.
I know the Government have brought forward some measures now, but those measures are already in place. The police and CPS should be requesting these personal records only if absolutely necessary. We need to have judicial oversight, and that is where the Bill needs to go further. We need to ensure that therapy notes are only requested and that the judge makes a decision around that. Yesterday the Government announced that the CPS would meet rape victims before going to court, to raise confidence, but that is not going to work if we are requesting therapy notes from rape victims. That alone—just requesting those notes—is a deterrent and will push many rape victims out of the justice system, and then we will be allowing serious offenders to act with impunity.
Anna McMorrin
Vera, may I invite you to comment on that issue?
Dame Vera Baird: I think back to being a barrister more than a decade ago, when there was no pursuit whatever of this kind of material. It simply was not done. Very occasionally, if it came up in evidence that there was some issue about someone’s medical records, for instance, they would be sought, because it was directly relevant. There would be an occasional case, but none of this was ever looked for.
What the issue is about is what Operation Soteria, the new way of policing rape, talks about—there not being investigation departments for rape in police stations, but there being credibility investigation departments for complainants. Before the tendency to want to question the credibility by looking at the most intimate details about the complainant emerged, the conviction rate was actually better, very considerably better, than it is now. It dropped catastrophically in about 2016, and that was about the time when this started to emerge. So if we can do fair trials without that material, we do not need to get it.
In order to deal with this now, there can be no complete ban, clearly. After a decade or more in which the police and the CPS have treated it as axiomatic that you take these documents from a complainant, we must make someone else take that decision. It has to go to the court, so that a provisional hearing can decide whether the material should be accessed by the Crown and whether it should go to the defence. And of course the complainant needs to be represented fully at that hearing.
What is badly missing from this Bill—well, a whole range of things are. I completely concur with Claire that it is not going to make any difference to the ordinary victim, because there is no means of enforcing their code rights. But for victims of rape, the announcement that Alex Chalk made recently will make not a jot of difference as long as it is the same police and CPS that are using the test and it is the test that has been there throughout.
Independent legal advice is missing. You need to just put that counselling stuff into the court, and that is that: you need a good reason for accessing it, and the court will decide. As for the need for representation in that court, there is a need for representation at an earlier stage so that, if possible, we can avoid the cumbersome court. If you have, as we piloted in Northumbria a couple of years ago, independent legal advice when the material is requested by the police in the first place, you can often negotiate it away by just asking forceful questions about what is necessary about it. Independent legal advice could serve that purpose, but then would offer representation if there was a serious demand for the material.
This has been happening in New South Wales, with an identical jurisdiction to ours, since 1998 and is in every other state in Australia, save for Queensland, which is taking it on. Claire has been to Canada, and I believe it is very effectively run in Canada, too. In the end, of course, it deters people from pursuing this kind of material, because they take a second look at whether they need it. And that might put us back where we ought to be.
In short—never a ban; always judicial oversight. We do need to get rid of this massive deterrent. I think that according to some figures that possibly you, Anna, or someone else in the Labour party produced, 70% of those who accuse people of rape now withdraw. A huge factor—a huge factor—is when they realise that their most intimate secrets are going to be disclosed to a CPS and police force that, for quite understandable reasons, they do not see as their allies. And then, perhaps, the material goes on to—even worse—the defendant, who caused them their trauma in the first place.
Anna McMorrin
Q
Claire Waxman: I very much support Jade’s law. I worked with a family many years ago whose daughter was murdered, and they tried to adopt the grandchild. The prisoner—the murderer—had the right from prison to stop that adoption, and to cross-examine the bereaved family as well. He got legal aid. They did not get anything. At that point there is a presumption of no contact—of course he did not get contact—but they were still pulled into the most inhumane proceedings after their daughter had been killed. We need to stop that and to ensure that those convicted of murder do not have parental rights to access those children for the duration of the prison sentence. That needs to be reviewed very carefully to ensure that the family are well protected from engaging with the prisoner.
Edward Argar
Q
I will ask a couple of questions if I may. One might be specifically for you, Vera, and I think the other will be broader. Adding to what you have already said, are there any other aspects of the role of Victims’ Commissioner, in the context of the legislation, that you would wish to see elevated? I know we used to talk about, for example, your report being put before Parliament and similar. There is a lot more here than that, but what other aspects would you wish to see elevated in terms of the role?
Dame Vera Baird: It is nice to see that the Victims’ Commissioner must lay their report before Parliament; we have done that for the past two years. We had to crusade our way in, but it seemed important to me that victims’ rights were elevated to a parliamentary responsibility, and that the report did not just go to the Secretary of State. That is already being done, and it is good that it is in the legislation.
The most critical thing is to get data in the way I have already explained, but a big gap—make no mistake, you do need to put this right—is that there is no means to enforce any of the rights under the victims code: not one. It is not even expressed in terms of rights.
Let me give one quick example; I am a nerd on this, even though I have tried to forget in the last couple of months. Right 8.5 allows you as a victim to have a separate entrance and a separate place to wait from the defendant at court. That could not be more important. If my child had been run down by some driver, the last person I would want to meet when I walked through the door of the Crown court would be him—still less with his posse round him, which often does happen.
That is a very good right, and the right continues, but most courts do not have separate entrances and waiting areas. If you let the court know you are worried, it will do its best, but this is supposed to be a right. Many, many times—I am sure Claire will confirm this from an up-to-date perspective—people do come face to face with the defendant as they walk into court, and it is quite terrifying. You have to put the victims code in terms of rights in the first place, but you also have to be able to enforce it. If in default that ultimately must come to the Victims’ Commissioner, so be it.
I have a completely different plan for how we should enforce the code, but there is a statutory rule stopping the Victims’ Commissioner from being involved in individual cases. We still have 70 or 80 cases a month individually sent to us, so there would be a lot if that were done centrally. My notion is that we should have a local victims’ commissioner in the PCC’s office. That need not be a draconian imposition on a PCC; it could be someone who was there for two days. Truly, in Durham, where there are about 1,000 police officers, you do not need a Claire. You need a much smaller status of person.
That person could be the recipient of the complaint, but their working practice ought to be that they have a duty to promote, which needs to be put into the legislation, with respect to victim support services and the use of the code, which is not there properly either. Obviously, you have to have a duty to promote the code internally, so the CPS, the police and the court know they have to deliver it. Then, the victims’ services commissioned by the PCC could argue that a certain person needed an interpreter, or ask whether they had been guaranteed a separate entrance to court. If that was not happening, you could go to the PCC’s office with a working practice of trying to put the problem right in the case. I would not want to meet the person and be able to complain afterwards that I had met him by accident. I would never want to see him.
If you have that local resolution, ultimately for complaints but in the first place to try and intervene through local tentacles—PCCs are quite powerful people now—then you could stop a lot of this damaging material. If you do not, the recipient of the complaint in the first place could be that Victims’ Commissioner champion, who would then take on dealing with that on a local basis.
In the end, I think there have to be penalties. I think police officers should be docked pay; I think the CPS should have something done to them. The first code was in 2006. Now it is 2023 and 80% of people have never heard of it, even though they have gone right through. It is not just that there is nothing to impel it; there is a culture of disregard built on there. You need to change that. If you started there, then somebody has got to take a complaint that is not reconcilable locally up higher and that could go to the Victims’ Commissioner, if that were an appropriate route.
Edward Argar
Q
One of the things you have both talked about is the need for people to be able to understand their rights, access them and know what they are, particularly in the context of the legal advice point for victims and complainants. I would be interested to hear both your perspectives. I know, Vera, that you ran a pilot programme on this up in Northumbria when you were PCC, which was done through you as the PCC. Were that to happen, what would be the right model for it? Would it be PCCs doing that, a national service or a regional service? To both of you: how do you think that might look were such a provision to be made, whether on a pilot basis and then extended or otherwise?
Dame Vera Baird: Two sentences. We could only do it the way we did it by recruiting solicitors from solicitors’ firms because we could not offer people contracts beyond the time of the pilot. So that is how we did it. However, the best way, in my view, is to have a lawyer in a place where independent sexual violence advisers—ISVAs—are also working so that the lawyer is steeped in the ethics and culture of what is going on and has that to draw on for cases coming through. Claire, you probably have more to say.
Claire Waxman: Looking at how this role has worked in London gives us a really good example and evidence of what should be changing. Some of the key issues that we see with victims is that, while the Bill is putting a duty on partners to promote the code to victims, we are still leaving the onus on victims to try and claim their rights. Victims who are just recovering or trying to get over a crime and go through the criminal justice system are not going to be in any state to claim those rights. We need someone to help them navigate that system.
On Vera’s points, first, there is no enforceability; the code is not even really defined as legally enforceable in the Bill and that is an issue. Secondly, there is no enforcement mechanism either. Most victims want to see some redress on their cases. They do not want to go through a lengthy complaints process. What is missing is having that separate entity or agency that works alongside the police and the CPS, so that the moment the victim reports to the police, there is someone supporting all the agencies to ensure that those rights and entitlements are being delivered to victims at the right time. We take the onus off victims to try and battle their way through the criminal justice system and claim those rights.
We also pick up problems if rights are not being delivered, as to how we tackle it there and then in order to keep the case moving all the way through the justice system. That is missing and those are really important mechanisms if we want victims to access their rights and we want to see better justice and recovery outcomes for victims. It is critical that we look at the Bill and how we can use this legislative opportunity to really transform the way victims are treated through the criminal justice system.
The Chair
Order. We have 15 seconds left, so that brings us to the end of this morning’s allotted time for asking questions. I thank the witnesses on behalf of the Committee for their evidence.
Victims and Prisoners Bill (Second sitting)
Tuesday 20th June 2023
(10 months, 3 weeks ago)
Public Bill CommitteesRead Full debate Victims and Prisoners Bill 2022-23 View all Victims and Prisoners Bill 2022-23 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 20 June 2023 - (20 Jun 2023)
The Chair
We are now sitting in public again, and proceedings are being broadcast. Before we start, I am happy for people to take off jackets, cardigans or whatever; it is very hot today, particularly in this room.
We will now hear oral evidence from Caroline Henry, Emma Barnett and Sophie Linden. I ask the witnesses to introduce themselves for the record.
Caroline Henry: Good afternoon. I am the police and crime commissioner for Nottinghamshire, and because of that I would just like to take a moment to mention the terrible events in Nottingham last week. I repeat again to the families and friends of those affected: you are in our thoughts.
This Bill proposes to introduce a requirement to collaborate. Partners are already working together to support victims in Nottingham, and in many other parts of the country.
Sophie Linden: Good afternoon. I am deputy Mayor for policing and crime in London, but I am joint lead on victims for the Association of Police and Crime Commissioners.
DCC Barnett: Good afternoon. I am the deputy chief constable of Staffordshire police, but I am the National Police Chiefs’ Council lead for victims and witnesses under the criminal justice co-ordination committee.
The Chair
Thank you. I ask people to speak up, because the acoustics in this room are dreadful.
Jess Phillips (Birmingham, Yardley) (Lab)
Q
Caroline Henry: We, as PCCs, absolutely welcome the duty requiring agencies to share data and to collaborate. PCCs take a big role in that. As police and crime commissioner for Nottinghamshire, I started a local criminal justice board, and I see those boards as an excellent forum where agencies can meet and collaborate.
Sophie Linden: You might get on to some of the points that I wanted to raise. We obviously welcome the Bill, but how it will work in practice will depend on what else happens in terms of strengthening the Bill, what the data collection is, what duties there are on other criminal justice agencies to provide the data to police and crime commissioners, and what the mechanisms are for when that data is not provided or for non-compliance with the code. If those mechanisms are not strengthened, there will be no step change in practice and in how victims are supported.
Jess Phillips
Q
Sophie Linden: I do think that, but the Bill could also look at other things. For example, police forces have a duty to provide data to police and crime commissioners, but the other criminal justice agencies do not have that duty. You could look at something like that—each of the different agencies having that duty. Then there has to be the guidance that sits underneath it for the criminal justice agencies to provide that data. The Crown Prosecution Service, for example, will provide data nationally. It is very difficult to get it regionally. The courts do not provide data, so there has to be clear guidance and practice—not just in the Bill—on data being collated in a consistent way and in a way that is useful to the police and crime commissioners. It has to be at force level.
Jess Phillips
Q
Sophie Linden: There is quite a reliance on relationships and the convening power of police and crime commissioners. There needs to be more strength and robustness put into the Bill in terms of enforcement and data collection.
Caroline Henry: You are spot on. What happens if we do not get the data? What do we do? It does not say what happens if we do not get it. That should be stronger.
Jess Phillips
Q
Caroline Henry: We can raise it with the Minister.
Jess Phillips
I am sure the Minister will be thrilled.
Sophie Linden: I am sure he is always pleased to hear from us.
Caroline Henry: There is a duty to collaborate, but there are no penalties if people do not.
Jess Phillips
Q
Caroline Henry: Funding has been talked about, potentially to give us an analyst. I am really keen that there is flexibility on a local level around what we might need, because it depends on your relationships. Analysts are great, and it is very hard to get hold of good analysts; that is a real challenge. But we might also need somebody to support the local criminal justice board as a manager to make sure that everybody collaborates and works together. There should be some flexibility in the funding we can have to help us make sure that we can pull everything together.
Sophie Linden: On the compliance issue, I think there needs to be something in the Bill, or that can flow through the Bill, that is akin to the way the Information Commissioner’s Office can work. If you have escalated it and nothing is happening, the Information Commissioner’s Office can ask for an action plan and impose fines. There has to be something like an end point by which if you have not got compliance and you are not getting the data, there is an escalation and enforcement route.
Jess Phillips
Q
Sophie Linden: I think it should be included in the code. The duty to collaborate is really important, but we have to make sure that what is in this Bill aligns with, and does not duplicate or cause complexities with, the Domestic Abuse Act 2021. There is obviously a duty to collaborate on domestic abuse accommodation, and there is the serious violence duty. From my point of view, speaking as deputy Mayor of London, I would want to see that duty to collaborate made wider for all victims. You should not start with the offence; you should start with the needs of the victim. At the moment, there are three categories, but I think it should be wider for all victims.
Caroline Henry: The definition of victims has been on my mind recently. It is a very tight definition in the Bill. The question is, how much wider do you need to make it? I would like to think about the included areas and get back to you in writing. ASB is one of the things that, as a police and crime commissioner, comes across my desk most. The victims mentioned in here, however, are on a different scale. It is so important that we get this right.
There is the word “victim” as well. I commission a lot of victim care. With what has happened in Nottingham, the word “victim” has put some people off getting help, because they are witnesses or have been traumatised by what they have seen—they are not immediate victims, but they have still been impacted by the terrible events of last week. The word “victim” is quite tricky to define.
Jess Phillips
Q
DCC Barnett: It is a long time.
Jess Phillips
Part 3 of the Bill seeks to increase the number of board members with law enforcement backgrounds, to give a different perspective of offenders. Will that help to strengthen public confidence in the Parole Board?
DCC Barnett: The first thing I would say is that the dealings of the Parole Board are not specifically in my portfolio, although I have a view. It is a very positive thing to include a breadth of perspective in the Parole Board setting and to give confidence on experience of risk management, risk assessment, decision making and so on, which can add value for the Parole Board.
Let me turn to a couple of other points you made at the outset. First, policing welcomes the victims Bill and its intentions. I guess we are in a unique position, because we are very used to the accountability mechanism that is proposed through local PCCs, recognising the independent nature of chief constables and the local accountability that exists through the elected bodies. If the Bill is to be a success, that will be around how that accountability spreads beyond policing across all the agencies, so that the victim’s experience can be understood from the point of reporting to the police right the way through to resolution and even beyond, into the parole setting. We welcome the understanding of where accountability may be strengthened through what is proposed to include the other criminal justice agencies that we work alongside.
We know that in the delivery of some of the rights, for example, our success in delivery is dependent on other agencies supplying us with the information we need to be able to pass on to victims. That is about how we work together and the local arrangements that are put in place. That is the strength of relationships. We welcome the opportunity of good visibility of data to understand compliance.
Jess Phillips
Q
DCC Barnett: I think this is a broader issue around how we collaborate as agencies with all victims. So much of that is based on how information flows, for example, so that we can keep victims updated about the experience of their case, their investigation, their court case and so on. We must have that good understanding of how we can work together to have the information to service the needs of victims.
We have been working closely with the Ministry of Justice on the suitability of metrics and—this is really important, because it is not only about the metrics of compliance with the code—on the victim’s experience: the qualitative information in the victim’s voice, the victim survey and the work of the Home Office to generate a victim satisfaction survey. Again, that is very much focused on policing, but I think it will start to give some good insights into the whole victim experience.
We are confident in a number of compliance measures going forward. We need to understand fully how we go about collating that information, and then passing it on in a transparent way to PCCs and criminal justice boards.
Siobhan Baillie (Stroud) (Con)
Q
Caroline Henry: I agree that not enough victims know that the code exists. That is why we need the Bill; we need to let people know that the code exists.
Siobhan Baillie
Q
Caroline Henry: We need to increase transparency around whether the victims code is being complied with. We all need to be talking about victims more, and keeping victims at the heart of this all the time.
Sophie Linden: As with any Bill, it will come down to practice and how it is delivered. The underpinnings of the legislation, and getting compliance and enforcement right, will help with that. I monitor it from my position in the Mayor’s Office for Policing and Crime; we monitor policing compliance with the code. It is very low, but we have done some work with the Metropolitan police around trying to raise the awareness of officers, and making it much easier for police officers to let victims know what is in the code. For example, we have helped the Met to produce a victims care leaflet. Something as simple as that, which has information about the code in, has started to make a difference with victim satisfaction and with compliance.
There is, however, a long way to go. You need all the agencies to have that legislative framework, so that there is compliance, there is an escalation and then there is enforcement. Those two things together, and proper monitoring, which is going to be down to the police and crime commissioners, should help improve awareness of the victims code among victims, and, importantly, among professionals. It is the professionals who are there to support the victim, and it is their duty and responsibility to ensure that the victims know about that.
DCC Barnett: I would not say anything different. It is key for all police forces. When we launched the revised code back in April 2021, chief constables had a responsibility for how that was delivered across their forces. We have training materials through the College of Policing and all forces will be monitoring their own compliance with the code, as well as the qualitative side through victim satisfaction.
Awareness of the code cannot just be around the agencies turning up to deal with the victim. That is a key part, but it is almost too late at that point. There should be a heightened awareness of the code anyway, so that if people are then unfortunate enough to be a victim there is an understanding of what the code is. It is also about being really clear on what aspects of the code are relevant to a victim at any given time. Obviously, that will change as they go through their experience of the criminal justice system.
Siobhan Baillie
Q
DCC Barnett: I think it is a really positive step forward. One of the real challenges with the delivery of victim rights is when we get to post charge. At that point, you start to bring in a number of different agencies. It goes back to the earlier point around how information flows and communications are delivered; if you are not careful, it can become a very confusing time for victims. I think it is our responsibility as agencies to streamline that process as much as possible and make the communications as effective as possible.
A victim should not have to worry about who, at a particular time, they are entitled to see or who should be supporting them. The notion of the CPS having those visits is really positive. I think they are a good engagement to have, but I think they need to be carefully operationalised around the other contacts and support that might be available to a victim, so that it does not become too confusing or an overload.
Caroline Henry: It is really important that wherever we can we have an independent sexual violence adviser to support and help with CPS contacts—to hold people’s hand as they go through the system.
Sophie Linden: Obviously I really welcome that, but I think it is just part of what needs to happen. At the moment, as I am sure you are all well aware, the victim has interaction with the police, the CPS and the courts. What you really need to look at is how that becomes a seamless service with one point of contact. In London—I am speaking on behalf of London now—we are exploring the victim care hub, which would bring all that together so that there is one point of contact and the victim is able to get updates and understand what is happening right across the piece.
Of course, the individual agencies have their specific roles to play, but the Bill could help that to happen. For it to happen, there has to be the relevant data sharing and there has to be the ability to track the victim through the system—not through policing, then the CPS and then the courts. At the moment you are tracking the crime, you are tracking the case and then you are tracking into court, and those things do not meet. You therefore have different points of contact for the victim, and you need to be able to either—at a minimum—interrogate the different databases or look at how you bring all that together. I think the Bill could make it easier for the agencies to share that data.
DCC Barnett: I would really support that. We look at this—again, I think the Bill does this—as a process of separate agencies, each with its own touch points to a victim’s experience of the criminal justice process, as opposed to looking at it from a victim’s perspective. Where do they get the information that they need? Where do they get the support that they need, whether that is reporting the crime with no further action or whether it goes right the way through to waiting for their court dates, what it means to give evidence in court, the outcome, parole consideration and so on?
Caroline Henry: I would just add that the victims who choose not to go down the criminal justice route or to report to the police still need support from all the agencies.
Maria Eagle (Garston and Halewood) (Lab)
Q
Caroline Henry: I would absolutely like some of it in part 1, but we do need to remember that if you stop people reoffending, you are actually stopping us getting more victims as well. Parole and preventing and managing reoffending are really important.
Sophie Linden: I would always go for additional. But in terms of the duty to collaborate, at the moment it is a duty to collaborate literally on a strategy—there is no additional funding for the services and the gaps that might flow from that in the way that there was for the Domestic Abuse Act 2021 and the duty to collaborate around safe accommodation. There was significant additional money provided for that, which was welcomed.
Also, in terms of code compliance and the analysts that are being talked about by the Ministry of Justice—we are having discussions with them—at the moment my understanding is that it is a one-size-fits-all of two analysts per force area. Now, forces are vastly different in size and—just speaking on behalf of London, West Midlands, Greater Manchester or any other force with more complex arrangements—there are different numbers of organisations that they are going to have to make sure are complying. So this is just not going to be right—you cannot have one size fits all.
Then we have to really look at whether this funding really adds up to what is needed. For example, in London we recently did a needs assessment on sexual violence services. That cost us £110,000. If you add that up for other forces, this is not going to meet what is needed in terms of additional burdens.
DCC Barnett: I would support that in terms of looking again at part 1. With the duty to provide the data, we have a nervousness around the cost implications for forces. A lot of the measures are based on dip samples and having a really close assessment of what has been undertaken. There is no provision at the moment for additional resource to do that or to assist in taking forward the insight that that information gives us. This is an opportunity to work with PCCs to understand the roles that are accommodated and how the data is used.
The other point that I would make is about the demand for our witness care units and witness care officers, who have a lot of responsibility under the code to deliver the information to victims on what is happening with their case post charge and post first hearing. They are under a lot of pressure, given the time it takes for cases to come to court and the additional complexities and vulnerabilities of victims. Anything that helps us with managing those pressures and giving additional training and support, in terms of resourcing, would always be welcome.
Maria Eagle
Q
Sophie Linden: I think they could, but it will be dependent on proper support for victims. It is a difficult thing. There has to be a proper assessment of what victims’ needs are for them to be able to participate. There needs to be proper support for victims to do that, and then there will have to be funding to provide those support services.
DCC Barnett: I would agree. I think it is a very well-intended notion, but there are some risks around the impact on victims as well as around raising expectations.
Maria Eagle
Q
Sophie Linden: I think it could improve, but it is not strong enough. My overarching view is that it needs strengthening, but we welcome the Bill. It needs significant strengthening in the way that I have talked about, in terms of compliance, enforcement, proper data sharing, duty to provide the data and then the ability to access other agencies’ databases, at a minimum. It would be better if we could track a victim through the system, rather than tracking them through policing, then the CPS, then the courts. I hope that there will be significant amendments to strengthen the Bill.
Caroline Henry: It is great that work has been done together already. I would like to thank the Ministry of Justice and yourselves for letting the Association of Police and Crime Commissioners be involved with putting the Bill together. I do think that it will definitely improve things for victims, because it puts things on a statutory footing. That is what we need.
DCC Barnett: If I speak on behalf of the policing role, I think it does put it on a statutory footing, and it is a real opportunity to continue the work we have been doing over recent years to strengthen our overall performance within forces around the service that we deliver to victims. The question mark for me relates to making sure we take the opportunity within the Bill, whether that is through a strengthening arrangement around compliance or the accountability piece, so that we can understand how the victim traverses the criminal justice system and their experience of it. It must not just be—as I think it is at the moment—front-loaded around the code and the policing activities. It has to be seen as a whole. That is an opportunity in the Bill, and if we take that, overall service should improve.
Rob Butler (Aylesbury) (Con)
Q
Caroline Henry: Personally, I feel that I have a directly elected mandate to be the champion for victims in Nottinghamshire and to make sure that they get the justice and support they need. That is what my office does, so I am happy that my office will continue to support victims. I do not think we need a separate victims’ champion; I think it could be confusing locally if that happened.
Rob Butler
Q
Sophie Linden: I know you had Claire Waxman in front of you this morning, and you are well aware of her role as an independent Victims’ Commissioner. It was an incredibly important development, when the Mayor was elected, that we appointed an independent Victims’ Commissioner. There is a very clear distinction between my role in holding the police to account and her role in bringing in the voice of the victim and advocating for victims. There has been no issue with the confusion of roles in London on that.
I am speaking for myself, not on behalf of the Association of Police and Crime Commissioners, because there is a difference of opinion, to be frank, but I think every force should have a victims’ advocate who is there purely as a victims’ advocate. The police and crime commissioner should use that voice coming into the commissioner’s office in order to be able to improve the services we commission.
Rob Butler
Q
Sophie Linden: My experience is that the Metropolitan police take my voice seriously and take Claire Waxman’s voice seriously. I think it makes it more powerful that there is a very clear voice coming in that is absolutely grounded in the experience of victims that she brings with her office and the work she does—for example, the rape review and her own analysis of victims code compliance in London—and then I am there as deputy Mayor and as police and crime commissioner to hold the police to account, having taken her advice.
Rob Butler
DCC Barnett, do you have a view on that?
DCC Barnett: I guess it is about being really clear about the lines of accountability. It is very clear that PCCs hold chief constables to account. That said, someone who brings the voice of the victim is absolutely going to help to shape service delivery. The two roles do not need to be the same. We can be very clear on a distinction around absolute accountability, but there is a wealth of information and experience that a victims’ commissioner can bring to a force area and all the criminal justice agencies.
Rob Butler
Q
DCC Barnett: I guess it may well be covered in other legislation. It is about recognising that there are a number of requirements on policing in order to further an investigation for consideration by the Crown Prosecution Service. I know that a lot of work is done around minimising those requirements, because we would all like to see speedier access to justice. We also recognise that there are good reasons why those requirements are in place. Whether those can be addressed through the Bill, I do not know; I would have to give that a little more thought.
Rob Butler
Ms Henry?
Caroline Henry: I know that the police officers and staff would much rather not be redacting all that information, but be getting on with their job. It would be a great vehicle if it could be included in the Bill. Going back to the independent victims’ champion, one of the ways I listen to victims is through the local criminal justice board; we have a victims sub-group, which feeds into the board. I also go out to speak to people all the time.
Rob Butler
Q
Caroline Henry: Our police work really hard. That wouldn’t be the first thing you’d want to do, would it?
Sophie Linden: An important issue is whether you are enforcing against the institution or the individual. In the Bill, you should be looking at the institution.
DCC Barnett: I absolutely do not support that suggestion. It is not about individuals; this is about the organisation’s ability to deliver. I will say that we have a robust complaints process, so if someone wishes to make a complaint about the police aspect, the code delivery or the service that people have had, they can make a complaint. That will then be assessed—it might be service recovery or quick resolution, or there might be a performance issue with an individual or a conduct issue if it is very extreme—and that works very well in policing. I would not advocate anything like what you suggest.
Janet Daby (Lewisham East) (Lab)
Q
Caroline Henry: I would like to give some written evidence on that, if that is okay, because I have a lot to say.
Janet Daby
Fair enough.
Sophie Linden: On the face of it, that sounds extremely interesting. I would be in favour of looking at how the Bill focuses on children. We know that trust and confidence—coming forward to the police—can be a real issue for young people and children. I would be interested in looking at the Bill to see what it means for children, where that compliance fits in—with the youth offending teams, which is partly there—and how the duty is enforced and monitored.
DCC Barnett: Again, the code defines victims, and that includes children and young people. Whether that is something specifically around how you might define a child when you first deal with them, I do not know. I would have to give that a little more consideration. I will put it in some written evidence. I am not totally sure that I understand exactly where Rachel de Souza is coming from, but perhaps I can understand that a bit more first.
Maggie Throup (Erewash) (Con)
Q
Caroline Henry: The definition of victim here would not include indirect victims who were not a direct witness of, or directly impacted by, the crimes that happened in Nottinghamshire last week, but they so need support too. As a commissioner, I have commissioned Notts Victim Care to be there to pick up the calls from people who are grieving and are traumatised, even though they were not directly impacted. It is having such an impact and such a ripple across our city, and not just our city: people have gone home from university and are all over the country. They might not think of themselves as victims, but what happened last week has made them so.
Maggie Throup
Q
Caroline Henry: It would be nice if there could be something in this Bill, but I am keen for it to get through. There are so many things I want to add on.
Maggie Throup
Q
Sophie Linden: Indeed. There are two things here. The role of an independent public advocate is an important one and we would support it. We should probably get back to you with more detail in terms of looking at the Bill and what we might or might not want for that independent public advocate. It is important because of what Caroline says about when those tragic events happen with a lot of witnesses, and that can be a problem.
In London, the way we have commissioned the London Victim and Witness Service has enabled us to stand up that response for events, but that does not mean—I will put it the other way: we do support an independent public advocate because I think there is a role for them.
DCC Barnett: Again, the Bill describes that role of an independent advocate, which I think is supported. In times of major incidents, as part of the overall response you will get support from family liaison officers, for example, but they also work closely with victim support services to identify those who would benefit from support. As for whether there needs to be more within the Bill itself, I think we would have to give that further consideration.
Sir Oliver Heald (North East Hertfordshire) (Con)
Q
One of the things we have heard from earlier witnesses is that a larger group of people should be covered by the term “victims”. For example, it could cover people involved in anti-social behaviour cases, and somebody suggested that people who are migrants and worried about their status should be dealt with in the Bill in a special way. Of course, the duty to collaborate and the services covered by that duty are quite specific, and there are a limited number of advisers who have been trained in independent domestic violence and sexual violence work. We have heard that there is quite a need to develop those roles—to have some core skills that are understood and so on. Is there a danger that we expand the definition of victim to the point where the services that are available just cannot cope?
Caroline Henry: The independent domestic violence adviser and the independent sexual violence adviser work is very niche and absolutely essential. I would welcome more funding for more. I know we have quadrupled funding for it, but we still have a waiting list, especially because of the court delays.
Sophie Linden: I support the expansion to include victims of anti-social behaviour, because I think it should be the victim, not the offence, that is given the support. The danger is not funding it enough. In order to mitigate that risk, there should be funding; it should not be that you are ringfencing only a certain type or a certain offence. That is where I would come from, because we should be led by the victim’s needs, by their vulnerability and by revictimisation. So I support antisocial behaviour being part of the definition of victims.
From my point of view as deputy Mayor of London, one of the things we are pushing quite strongly and have been lobbying for is that, for migrant victims, we are keen to see in the Bill the ability to keep a firewall for victims who have insecure immigration status. We know that it is putting people off and victims are suffering.
The Chair
Order. I am afraid that brings us to the end of the time allotted for questions. I thank the witnesses on the Committee’s behalf for their evidence.
Examination of Witness
Martin Jones gave evidence.
The Chair
Q
Martin Jones: I am Martin Jones, chief executive of the Parole Board. I have been undertaking that role since 2015.
Ellie Reeves (Lewisham West and Penge) (Lab)
Q
Martin Jones: I certainly think there would have been a benefit. I always think there is benefit in pre-legislative scrutiny. I have taken legislation through in the past as an official and there would certainly be benefit in Parliament understanding what the impact would be.
On consultation with the Parole Board, it would be fair to say that it was very limited ahead of the provisions being introduced to Parliament. The root-and-branch review was published in the spring of last year, setting out what the proposals would be. Ahead of the Bill’s publication, the details of what it contained were shared with us, but I would not say that we were asked for our views on what was contained in the legislation.
Ellie Reeves
Q
Martin Jones: The current release test is set by Parliament. It is a very clear, simple test as to whether the prisoner’s continued detention remains necessary for the protection of the public. That means that public protection is always paramount in our decision making. Of course, when we make those decisions, we have to have regard to all the different factors involved in a prisoner’s case: the progress they have made in custody, the nature of their index offences, whether they have been well behaved in custody, whether they might have taken drugs in custody, and whether they might have done positive work, such as education and training. We take account of all those factors when we reach a Parole Board decision.
I would say that what is on the face of the Bill, in reality, gives effect to what the Parole Board already says in its guidance that we should take into account. We think that the legislation should make no significant changes to our practice.
Ellie Reeves
Q
Martin Jones: The slight danger is that the Parole Board practitioners start to view the matters that are on the face of the Bill as more important than other factors. The Bill is clear that it is not an exhaustive list, and the Parole Board can, of course, take account of whatever factors it believes to be relevant in the individual case, but the fact that Parliament puts a certain set of factors on the face of the Bill means that you will always have to have regard to that.
Allegations is a particularly important area when you are assessing the risk of a prisoner. It most commonly comes to the Parole Board when, for example, you are talking about an allegation of domestic violence. It often comes up, and particularly with somebody being recalled to custody. It may not be a proven allegation, but what the Parole Board may see is a pattern of behaviour with a person being arrested on a number of different occasions, alleging perhaps an assault against a partner. Those charges may not end up being brought to court and may not be proven, but when we are deciding whether someone is to be released, we want to ensure that we understand the pattern of behaviour. It was certainly something that was important to us as part of the DSD case—that is the Worboys case—in relation to how we take account and what weight we add in making those decisions. So previous allegations is a really important point for us.
Ellie Reeves
Q
Martin Jones: It is important to be clear that the Parole Board has always taken the view that it is important that you are able to challenge a Parole Board decision if either the victim, the Secretary of State or a prisoner thinks we have got our decision wrong. Ultimately, our decisions are judicial decisions made independent of Government and based on evidence and the law.
In 2019, the Government introduced a reconsideration mechanism that enables parties to come to the Parole Board and say, “We think you’ve got it wrong.” It is very closely based on the grounds for judicial review, and that provides a way for us to then review that case, normally via a judicial member of the Parole Board looking at all the evidence that the panel took account of and deciding, via a decision that is now published and available for the public to see, whether that decision was rational and fair. We have no problem with people challenging that.
The problem with a block on the decision and the veto amounts to two issues, one of which is: will it subsequently stand up to legal scrutiny? Parliament and the courts have been very clear that the final decision on whether somebody is safe to be released or not has to rest with a court. Until this Bill came along, that court has always been the Parole Board, subject only to judicial review. If you have the Justice Secretary intervening and blocking that release, it will have to go up, according to the Bill, to the upper tribunal to decide whether that decision should stand, and they will apply very similar principles of judicial review to look at the rationality of our decision.
In almost all cases, in my experience, when the Parole Board makes a decision, the reason we release somebody is because the professionals—the offender manager, the prison officers, the probation officer and the psychologists —say that the person is safe to be released. It is really important that we do not make decisions out of the air: they are based on the evidence presented to the panel. In my experience it would be highly unusual for us to go against that. But, of course, we are a court and we have to look at the evidence independently.
It is very difficult to see how, if the decision gets blocked and it goes up to the tribunal, and you look at all the evidence and the evidence is pointing towards release, and it gets blocked, that will withstand a subsequent challenge. The Parole Board has suggested that an alternative way would be to have a substantive appeal—which could indeed be wider than judicial review, if that was what Parliament decided—and that would provide an effective mechanism to stop and have a review of Parole Board decisions if you genuinely think we have got it wrong. That would add additional balance into the system.
My concern would be building up unrealistic hopes in the eyes of victims. I meet loads of victims: they are getting terribly upset and you can understand it. If you have been the victim of a serious crime—20 or 30 years ago you have lost a member of your family—and that person is up for parole, that is always going to be a difficult experience. But I am not sure that simply delaying release by two to three months is good for victims if a significant number of the decisions do not subsequently stand up to scrutiny by the courts.
Ellie Reeves
Q
Martin Jones: You are absolutely right: generally speaking, particularly in what we describe as the tier 1 cases—cases of murder, rape, terrorism, or causing or allowing the death of a child—the average size of the dossier of information provided to the Parole Board will be somewhere between 500 and 1,000 pages. Our members will in most cases ordinarily consist of a judge—a retired judge, sometimes a retired High Court judge; an independent member, who might be a retired police officer, a retired probation officer or prison officer; and maybe a psychologist or a psychiatrist if somebody has a mental health condition. They will consider that in detail and spend anywhere between half a day to a day hearing evidence from all the people at the hearing to determine whether that person is safe to be released or not.
If the Secretary of State then usurps that, how will he get sight of the evidence that the panel has carefully weighed in the balance to make the final decision? Decision letters are normally 15 to 20 pages long, explaining the legal basis of why we think that person is safe to be released or not. You certainly need an equivalent process if that is going to withstand a challenge subsequently in the tribunal.
Ellie Reeves
Q
Martin Jones: That would be an additional challenge. At the moment, I guess the closest approximation you have is the mental health review tribunal, which makes decisions about the release of people from hospital or prison. If you have mental health conditions, that goes up to the tribunal. But this would be new work for the tribunal.
It certainly seems to me that the tribunal would need training in relation to risk assessment. The lifeblood of the Parole Board is understanding the progress that somebody has made and ensuring the processes work. Clearly, if you are going to have, under one part almost, a reconsideration of the case as a whole, that will be quite a complex decision if you are potentially dealing with a significant volume of cases being challenged.
Maria Eagle
Q
Martin Jones: In my seven years of experience running the Parole Board, I cannot think of a single case where we would say that we cannot make that decision. We would say that is our job—take the evidence presented to us, do a risk assessment and decide whether that person is safe to be released—on some incredibly difficult, complex and sometimes controversial cases. I cannot imagine a circumstance in which a Parole Board would not deal with that.
The only circumstance I could possibly imagine is where we did not believe we had the full information to enable us to make the decision—perhaps on a terrorist case where there is sensitive information. But over the last three years, particularly following London Bridge, we have worked very closely with the Department and other agencies to ensure that the Parole Board always sees the most sensitive information in those cases, to make the right decision. That includes ways of seeing very sensitive information without disclosing the full information to the prisoner. That is really important to ensure that the public are kept safe.
Maria Eagle
Q
Martin Jones: First of all, it is important to be clear that we already have police officers on the Parole Board. They are an incredibly important part of our decision making, alongside all the other experience—the judges, the psychologists, the psychiatrists and others. We have had a look at the release rates by different types, and in reality our members are trained and we bring in people who are driven by the evidence, not by their vocation.
I think there is a problem in saying that a particular person must be on the panel for a particular group of cases. Certainly, it adds an additional layer of operational complexity to us to ensure that we have enough police officers. If you look at the numbers in the explanatory memorandum, it is about 2,000 cases a year; we would need quite a lot of police officers on the Parole Board to ensure that those cases are appropriately panelled.
Ultimately, it goes back to the fact that the Parole Board is a court in law. In reality, it is best for the court to decide who are the appropriate people on cases, depending on the complexity. Sometimes, we might have a case in which somebody was convicted as a child and has severe learning difficulties. It might be more important to have someone with that experience on a panel, rather than a police officer.
Maria Eagle
Q
Martin Jones: My concern would be about the nature of the decisions we are asked to make. Parliament has decided that we should decide upon the release of people convicted of the most serious offences. Ordinarily, the classic would be someone serving a life sentence for murder or other very serious offences of rape, terrorism and other things. None of those decisions are easy; none are decisions that will not have caused potential public anxiety and huge damage to the victim.
If you look at the numbers, we make around 16,000 decisions a year about whether people are safe to be released. We release about one in four, so 4,000 people each year. We probably get a controversy and lots of media attention in around five of those decisions, so it is a tiny number of cases. I have been working in public service for 30 years, and I understand why you get that attention on particular decisions if they are high profile, but I think there is a danger in trying to take aim at the chair of the Parole Board, who has had nothing at all to do with the decision in that case. Indeed, under the Bill they would not even decide who should sit on that case, but they could be told that they should be removed.
I would say that, of course, it must be right that if someone is not up to the job, there should be a way of removing them from that job. I think we would all expect that, living in public life. There is already a protocol in place that would allow a Secretary of State to follow a process in a fair way to remove the chair of the Parole Board if they believe they are not fulfilling their functions. My concern is that if it is used simply because the Parole Board has made a controversial decision, that potentially impacts on the independence of the Parole Board.
The Chair
That brings to a close the questions for this session. Thank you for coming this afternoon and answering questions.
Examination of Witness
Jan Lamping gave evidence.
The Chair
Jan, could you introduce yourself for the record, please?
Jan Lamping: Good afternoon. I am Jan Lamping, the chief Crown prosecutor for CPS Service Yorkshire and Humberside and the chief Crown prosecutor with the thematic lead for victims.
Anna McMorrin (Cardiff North) (Lab)
Q
Jan Lamping: The CPS is very positive about the Bill and we support its aims of improving the service to victims. The aims align with our victim transformation programme. We think it is positive that, for the first time, principles of the code are included in legislation.
As far as whether any category of victim is missing, there has been discussion about victims of antisocial behaviour. It would be a matter for Parliament as to whether they were included, but from a CPS point of view, we only consider cases that are referred to us by the police, so if there were a case with a victim of antisocial behaviour, we would apply their code rights in the usual way.
Anna McMorrin
Q
Jan Lamping: Our staff are really committed to complying with the rights. As an organisation, that is really important to us, so our practices and policies are written with that in mind.
Obviously, there can be problems and it is important that victims are able to complain, should they feel their rights have not been met. We have a robust complaints procedure that has several stages. At the first and second stages, the complaint would be dealt with within the local CPS area—at the second stage, by a very senior manager. With a service complaint—non-compliance with code rights would be a service complaint—there is a right for victims to complain to the independent assessor of complaints. The independent assessor has the power to make recommendations about our practices and procedures; to recommend that we give an apology, if we haven’t already; and to make a payment. There is the parliamentary and health service ombudsman as well. That is not the only oversight; there is oversight by our inspectorate as well, and we are superintended by the Attorney General
Anna McMorrin
Q
Jan Lamping: They are two very different things. The “Speaking to Witnesses at Court” guidance says that when witnesses attend court, we would speak to them at that point. When they arrive on the day to give evidence, we introduce ourselves as prosecutors or paralegals, and explain what is going to happen on the day.
The new duty is different, in that it would apply to every rape and serious sexual offence victim after a not guilty plea. It would be a more detailed meeting, so we would make the offer following the not guilty plea. We hope that people would take us up on it. It is an opportunity for us to try to give witnesses confidence in the process, because we know that there is likely to be quite a long time before the trial, to reassure them and to make sure that support is in place, because speaking to witnesses at the court stage would be too late. It is just one part of the service that we are working to provide under the victim transformation programme.
Anna McMorrin
Q
Jan Lamping: The fact that the Bill places a spotlight on all agencies complying with the code will make a difference. Obviously, that is only one aspect, though; we need to work well together, including locally. In my area, we work really closely with our police and crime commissioners and other justice partners. That is not to say that we always agree with one another, but we are working together through our local criminal justice boards to address barriers to providing a better service. I think that collaboration is what is really required.
Anna McMorrin
Q
Jan Lamping: The Bill in itself will not make a big change to the length of time that takes. Other work that is ongoing will hopefully do that, such as Operation Soteria.
Anna McMorrin
Q
Jan Lamping: Well, the Bill is really about compliance with victim code rights, and there are other pressures that lead to, for example, delays in the court process.
Anna McMorrin
Q
Jan Lamping: Obviously, only a part of that—a significant part, I accept—is our responsibility. The meeting with the victim following a not guilty plea is important given that cases are ongoing for longer. As I mentioned, this will be one part of our enhanced service to the victims in greatest need under our transformation programme. It will offer a more tailored, more bespoke service to those people. We completely accept that as cases go on much longer, people will need more support.
Anna McMorrin
Q
Jan Lamping: From a CPS point of view, our part would be to make sure that the right special measures are in place. Obviously, we do not provide the support services; that is not our role. However, we make sure that people are signposted to local support, that the right special measures are in place, and that we have kept people updated. Victims told us that they wanted to be kept updated, even if nothing was happening.
Anna McMorrin
Q
Jan Lamping: As the aims of our victim transformation programme align with the aims in the Bill—
Anna McMorrin
Q
Jan Lamping: I think the Bill, as I said before, puts a spotlight on things. Our work is aligned with that, and the two things go together, along with collaboration across the system.
Anna McMorrin
Q
Jan Lamping: Going back to our transformation programme, we have recognised the need to improve our communication with victims. I appreciate that you are talking not just about the CPS, but communication across a whole system. The principles in the Bill are aligned with what we are trying to do, and we fully accept that we need to improve our service to victims. That is why we commissioned independent research, and that is why we are now on our transformation programme.
Anna McMorrin
I was actually referring specifically to the CPS, because that was raised in the report. Thank you.
Rob Butler
Q
Jan Lamping: We want to ensure that we are responding to what victims need from us. That is why we think it is really important to have some flexibility about who from the CPS meets. There will undoubtedly be times when the right person to meet with the victim is the prosecutor in the case—for example, when a legal concept is to be explained or when we know that a victim has a particular question about a legal aspect. On other occasions, perhaps the victim may have questions about the practicalities on the day, and in those circumstances, it might be more appropriate for the victim to meet with one of our trained paralegals who are at court on a day-to-day basis and are more involved with speaking to victims. I think it is more about what would be of genuine benefit to the to the victim on a case-by-case basis.
Rob Butler
Q
Jan Lamping: No, we are absolutely committed to delivering this. The people who are presenting these cases in court would not be the people meeting with the victims, so—
Rob Butler
Q
Jan Lamping: That person will meet the victim under the “Speaking to Witnesses at Court” guidance, but the person making the decisions in the case is the reviewing prosecutor. I think it is really about what the victim needs from the meeting.
Rob Butler
Q
Jan Lamping: From the information that we have had so far, from the testing that we have been doing under Operation Soteria, victims and support services are telling us locally that the victims find it really useful to meet with the prosecutor.
Rob Butler
Q
Jan Lamping: Prosecutors in the magistrates court will deal with lists and have received them the day before, for example.
Rob Butler
And sometimes it is much shorter notice than that.
Jan Lamping: That is not my own experience. I accept what you say about that from yours.
Rob Butler
Q
Jan Lamping: We are committed to doing that. That is why the victim transformation programme that is aligned with the Bill will help us to work towards that.
Rob Butler
Q
Jan Lamping: In terms of resources, obviously the Ministry of Justice accepts that we will need to have the right resources in place—for example, for the meetings. As far as skills are concerned, we will need to train our people in, for example, how to speak to vulnerable victims, and we will need to use the expertise of those around us—not necessarily within our own organisation —to help us with that.
Janet Daby
Q
Jan Lamping: It is important that where victims feel that they need to have legal representation, they are able to obtain it. We would certainly engage on any proposals in that respect. We understand that issues relating to disclosure of personal information in particular cause anxiety for victims, and while we apply the law as it stands, we would engage on any proposals regarding independent legal advice.
Jess Phillips
Q
Jan Lamping: I was explaining about my personal experience in the areas I had worked.
Jess Phillips
Yes, that was my understanding.
Jan Lamping: We have offered the meetings, and they have tended to take place with an ISVA there as well.
Jess Phillips
Q
Jan Lamping: I accept that not everybody knows what questions to ask. That is why I said we would engage on any such proposals.
Siobhan Baillie
Q
Jan Lamping: As I said, we apply the law as it is now, and our guidance that is in place now should provide adequate safeguards, in that we should request such material only if it is relevant and necessary, and only in pursuance of a reasonable line of inquiry. That should provide safeguards. As for it being a judicial decision, there is a danger that that would introduce further delays. It is important that we follow our guidance and the police follow their guidance, so that victims are protected from unreasonable intrusion into their private lives.
Siobhan Baillie
Q
Jan Lamping: It is difficult to know from a CPS point of view, because we deal with the cases that are referred to us by the police. We do not know what has been a deterrent before that in terms of what the police have asked for, so I do not think that that is something I can comment on. It could be a deterrent, yes.
Janet Daby
Q
Jan Lamping: It is obviously a new concept, and we are interested in what the detail will be. We can certainly see the benefit from the point of view of the people affected by these terrible incidents. There are some things that we would like to work through. Prosecutors would have responsibilities for speaking to, for example, bereaved families in any event, and there are some concerns about whether there might be duplication.
I know there is mention that it could be a community representative who is the independent advocate. That may be fine, but it may be that a community representative does not represent everybody in that community. There are things to be worked through, but we understand why that is being suggested and are certainly happy to work on the detail.
Sir Oliver Heald
Q
Jan Lamping: In what sense?
Sir Oliver Heald
Obviously, you have a duty to the court. The judge is in charge of the procedure and the law. Does that create any limitations for the role of an independent advocate working for a witness?
Jan Lamping: In terms of the independent advocate, for the prosecutor?
Sir Oliver Heald
Well, the prosecutor clearly would want to be in charge of the prosecution, because that is your duty. Is there a limit to what the role of the independent advocate can be, and if so, what would it be?
Jan Lamping: I think there is. From what I have read about it, the independent advocate is more about the link between the people affected by a major incident and the agencies either investigating or prosecuting; it is more that kind of role, as opposed to in court.
Sir Oliver Heald
Q
Jan Lamping: No, not at all.
Sir Oliver Heald
Q
Jan Lamping: When the police refer a case to us, they provide information to us about the conversations they have had with victims about what kind of support would help them to give their best evidence. There are numerous special measures available that we then consider, from live links to giving evidence remotely, giving evidence in private in certain circumstances and pre-recorded evidence.
Sir Oliver Heald
Q
Jan Lamping: It happens at different points. There are initial conversations between the investigating officer and the victim and then conversations between ourselves and the police once we get the information from them, but certainly one point would be at that meeting. It may well be that we have already had the information and special measures are in place, so the meeting might be more of a check of whether those are still the appropriate measures and whether any changes need to be made.
The Chair
There are no more questions, so I thank the witness, Jan Lamping, for coming and giving evidence this afternoon. We will end that session and move on to the next session a few minutes early. I warn people that we are expecting a vote fairly soon, so we will have to interrupt proceedings when that happens.
Examination of Witnesses
Councillor Jeanie Bell, Kate Davies and Catherine Hinwood gave evidence.
The Chair
Can I welcome the witnesses and ask you to introduce yourselves for the record, please?
Kate Davies: Good afternoon, everyone. I am Kate Davies, a national director in NHS England. My formal title is the director of health and justice, armed forces and sexual assault services commissioning, and I have recently taken on a senior responsible owner role for the programme of work that NHS England is doing on domestic abuse and sexual violence.
Catherine Hinwood: Hi everyone, it is lovely to be here. I am Catherine Hinwood, NHS England’s lead on domestic abuse and sexual violence.
Cllr Bell: I am Councillor Jeanie Bell from St Helens Borough Council and I am here representing the Local Government Association.
Jess Phillips
Q
Kate Davies: Thank you very much, Jess. We welcome the Bill and we welcome the duty to collaborate. From the perspective of sitting giving evidence or suggesting amendments, the Bill probably is not as up to date as we in NHS England would like it to be with the new legislation of the integrated care boards, the integrated care partnerships and the different elements of commissioning. There are some additions that would help to strengthen that reality of work that is now happening with 42 integrated care boards. I think that a lot of that was in good faith, and in consultation with the Health and Care Bill becoming an Act in July 2022, but there is certainly more that could be produced to give a clear element of prioritisation and advice to 42 integrated care boards, which ultimately are the population-based commissioning for NHS services.
NHS England has mitigated that collaboration element by putting together a single national programme of work on domestic abuse and sexual violence, which I am pleased to say Catherine Hinwood is the senior lead for, because we take very seriously the fact that we want to support, influence and also use legislation and current Act work to prioritise the needs of the 1.5 million people who are seen by the NHS every day, whether in primary care, hospital trusts, mental health or within some of the services that I directly commission.
I think the answer to the question is, “Yes, that is great,” but the Bill is probably in the past in the way that has been written and put. If we are looking into the future and what we now know, we could look at strengthening that for NHS collaboration with local authorities and also at how the ICPs in particular work across their populations with the voluntary sector, lived experience, the criminal justice sector and police and crime commissioners.
Catherine Hinwood: If I could just add to that, I started leading this programme at the back end of last year. I visited a lot of ICBs and a lot of commissioners and I have spoken to the third sector. There is fantastic collaboration going on in some areas, so I welcome strengthening the collaboration through a duty, but there are a couple of things that I think we need to be mindful of.
The first is the serious violence duty and the duty in relation to prevention, ensuring that whatever we do in terms of thinking about the local structures and local infrastructure that exist—also in relation to the implementation of the Domestic Abuse Act and domestic abuse partnership boards—all comes together to be a really person-centred, locally focused duty that supports and enhances the structures that are already there at the moment, rather than comes in and brings in something new. From my perspective, there is great work that is already being done. Ensuring that collaboration is at the heart of the way in which key local partners work is brilliant, but I want to make sure that whatever we are doing aligns well with what is happening in local structures.
The next thing I would want to say is that I really welcomed the focus in the women’s health strategy on looking at violence against women and girls—in which, of course, we include men and boys as well—as a public health issue. One of the things that I would really like to see through the Bill, and across Government more widely, is thinking about violence against women and girls, domestic abuse and sexual violence through a public health lens, as well as the really important criminal justice lens. I would like to see the Bill thinking a little bit more about, and interacting a bit more with, that public health approach that we are taking to serious violence.
Jess Phillips
Q
Historically, health services have not been a commissioner in this particular space. When Rape Crisis England and Wales gave its evidence earlier, the witness said that she could not think of a mental health trust in the country that commissioned a specialist trauma service for victims of rape and sexual violence, and that has certainly been my experience as well—not that I could not think of one, but that it is very patchy. Kate, I noticed that you said it would be better if they had better advice. Do you think that the duty is strong enough to make the ICBs actually fund any of this work?
Kate Davies: I think one of the reasons why I am also sitting here is that I do commission £50 million-worth of sexual assault referral centres—47 across the country—and NHS England has increased that from what was actually £6 million when it first came in as part of the Act of 2012-13, and also developed all the paediatric services as well as adult services. Most recently, the long-term plan in 2019 increased a baseline of £4 million of mental health trauma-informed services around sexual violence, and in fact, I announced another £2 million for that only last week.
I think the reality with this area of work is that, when you are working within the NHS in a busy hospital trust or a GP’s surgery, of course we give some brilliant support every day of the week to men, women, girls and boys who are victims of rape and sexual assault, and also other elements of violence. However, this could be an opportunity to look at how the resource, generically within the NHS as well as maybe a more targeted element, can support people’s knowledge, people’s understanding and sometimes people’s fear—how that can be an earlier intervention, as well as a targeted intervention. That is why I am sitting here, and that is why we are sitting here for the NHS. I think that answer is yes.
Jess Phillips
Q
Kate Davies: I will have to say yes; I think it will. We would like to see that consistency. One of the works that the national programme does, as well as obviously across ICBs with Steve Russell—who is actually the board sponsor for this work as the chief delivery officer for NHS England; it is a great approach, through both Steve Russell and Amanda Pritchard as chief exec—is to really evidence that importance to our ICBs, for not only patients but staff. We have 1.3 million staff, and certainly from a recent campaign we had a lot of feedback on the improvements we can make and also the good practice.
We have some great work going on. We have just done some audit work around ISVAs in some of our acute trusts and actually found out that we are doing more that is commissioned through the health budgets and through ICBs than we ever realised before. We have to build on that good practice, to be honest with you, but this is a very busy time in the NHS. It is really important that we can maybe use some additional resource that can target how this can be understood and also be focused as part of a planned programme of work.
Jess Phillips
Q
Cllr Bell: I do not know if this will be controversial or not, because I am not sure what everybody else has been saying. Although I tried to tune in as much as I could on my train journeys down, the wi-fi has not been great. I would say that no, actually, I do not think that the duty alone is enough to make the collaboration work. Collaboration is formed on good relationships, good professional relationships and information sharing, and that is developed through strong partnership working practices. You cannot have that unless it is funded properly.
My concerns from what I see in the proposed Bill are that the funding assigned to it is for almost like a convener role to pull things together, whether that is at PCC level, who will help run the meetings and provide the support. Actually, we have local authorities and the NHS with significant capacity issues. I would go as far as to say that PCCs have capacity issues and cannot do everything either, so we cannot get away from that resource and capacity issue. It is an increasingly complex landscape.
We have to be really careful, when we talk about capacity in this context, that we are not duplicating as well. We have talked about the Domestic Abuse Act and the serious violence duty, but we also have collaboration happening through the combating drugs partnership. You have all these additional collaboration duties coming in—which we all want to comply with, because ultimately we all want a better service for victims—but there is no additional funding for victims in all this either, which is a concern.
I suppose the last thing I would say is when we look at the duty to collaborate, that will not solve the problem around the footprint that this will operate on. In terms of PCCs, ICBs, local authorities and violence reduction units—of which you have only 20—you are talking about lots of different organisations, some of which will be operating on different footprints, so how will you ensure that when you talk about the duty to collaborate, you have that flexibility built in to ensure that at a local level you can work in a way that meets the needs of your residents? You will all know from your own constituencies how complex that can be within that footprint, so there has to be a degree of flexibility as well.
Jess Phillips
Q
Cllr Bell: The pressure will increase. I was the previous cabinet member for community safety, which included housing, domestic abuse services, homelessness, asylum and refugees, as well as community safety and our band A properties, which are for most urgent need. Domestic abuse is in that band A category. A person could still be waiting for a minimum of a year.
Ultimately, our refuges fill up very quickly. They remain at capacity and that can be seen right across the country. That is not specific to my authority either, so you will see it right across the landscape. There are not enough houses being built to provide accommodation that is safe for people. I know that that is not necessarily what we are here to talk about today, but you do have to address that. That is why I have a concern about the duty to collaborate. Obviously, I want it to work. I want us all to work together, but I just do not think that the duty alone is enough.
Elliot Colburn (Carshalton and Wallington) (Con)
Q
Catherine Hinwood: I am going to talk to you about the implementation of the serious violence duty and the way in which that worked, and some of the lessons that I think we should learn from that. Under the serious violence duty, police and crime commissioners were given the responsibility of overseeing the implementation of the duty and overseeing all of the funding for labour costs, which were given to responsible authorities for the set-up of the duty, as well as allocating the money for commissioning costs, which, again, were given once a new duty was put on responsible authorities.
What we saw with the way in which PCCs have taken that responsibility is that it has had a very justice-focused lens in the way that they decided to distribute labour costs. We know from the Home Office’s implementation work that a significant amount of money that ought to have been spread evenly across responsible authorities has not gone to ICBs. A significant number of ICBs did not receive their implementation costs.
What we have learned from the serious violence duty is that if you want to have some kind of equality of arms across responsible authorities to be able to ensure that they are all implementing the duty— I think that it is a great point about wanting to see ICBs much more in this space; they are talking about the fact that they want to be more in this space. If you put a PCC, for example, as the lead body—the convener—in relation to this, then the implementation of it needs to be done in a way that you are ensuring that funding is distributed equally and that responsibilities are clearly set out. I am not sure that I would put a lead authority or a lead body in place for the duty. There must be a way of ensuring equality between each of them.
Elliot Colburn
Q
Catherine Hinwood: The way that I have read the legislation and the way that I understand the guidance is being considered is that there will be local flexibility as to what kind of body will be the convening body. For example, one area might say that they will use an integrated care partnership, one might use a violence reduction unit, and another might use a criminal justice board. If you build that flexibility in, I do not know how you can then give one body the oversight for the implementation. It might be that a national body needs to oversee it, I really do not know. But this is the kind of stuff that we need to work through, and work through in the guidance.
The Chair
Order. I will suspend the Committee for Divisions in the Chamber. I will suspend for 15 minutes for the first Division and 10 minutes for the second and any subsequent ones. We are expecting at least two votes, so we will suspend for at least 25 minutes.
The Chair
We shall carry on with the session, and I would like to bring in Siobhan Baillie to ask a question.
Siobhan Baillie
Q
Kate Davies: It is obviously our responsibility within NHS England, when there is a particular area like commissioning some victim services—as I do—to work with Bills as they are coming in. I worked across that with Catherine in a previous role; I declare that as an interest. We are aware of it from working with our colleagues in the Department of Health and Social Care as well. We now realise, because of the Health and Care Act of 2022—there are obviously lots of issues coming in as a Bill turns into an Act—what that means. We know much more than we did then, and I think it is fundamental now to look at how, with ICBs and ICPs, we can make better use of the local authority and NHS population-based commissioning. There is also a requirement with the voluntary sector. One of the objectives with ICBs is about health inequalities.
All those elements are now legislation. All those elements give us a real focus, a real lens, on, in particular, survivors and victims within a population, whether they come through a GP’s door or through a local authority door for something to do with housing. It is a question of that needs assessment at local level to say that we have a duty and the responsibility to work with that population number and also support that, whether that is through collaboration or governance. It goes back to Elliot’s earlier point about ensuring that we come round the table to ensure that that happens. I think the current wording in the Bill is helpful, but does not go far enough to ensure that there is that responsibility, accountability and governance in order to collaborate and provide as part of that needs assessment.
Siobhan Baillie
Q
Kate Davies: There have been discussions with the Department of Health and Social Care recently on that, so I think that is an important element to go back to you on.
Catherine Hinwood: I think we are going to submit written evidence on this, so we are really happy to do that.
Rob Butler
Q
In the context of, frankly, ICBs that are struggling to fulfil their core duties, I wonder how they will really do what is needed for victims through this proposed legislation, because I do not think that they are going to see it as their No. 1 priority. I wonder how you can leverage to ensure that this important legislation and the concepts behind it are delivered on by ICBs.
Catherine Hinwood: ICBs now have a duty to set out in their joint forward plans how they are going to support victims of abuse, and it is specifically set out that they must talk about victims of domestic abuse and sexual abuse. We are starting to work with ICBs to help them. We issued guidance on what they might want to do to be able to fulfil that duty and how they might approach it, but we are starting to work with them in the coming months to assist them in how they are approaching that. I agree that they would be at different levels of maturity, but it is certainly something that we within NHS England have had to focus on in assisting them with and will over the next year, as they grapple with a number of different responsibilities. You are absolutely right: this focus that they have on victims of abuse is a new one. It is a different one and it did not come with any funding—it did not come with any ringfenced funding—so we are helping them to think about how they might be able to mature in this space.
Kate Davies: One of the things at the moment is the maturity of the NHS, with the recovery from covid and everything else. I remember being in a forum during covid and looking at the issues of serious violence, victims and survivors. There are victims and survivors walking through the door of every GP, hospital trust and, perhaps, accident and emergency department. We have too much evidence or representation of people coming in years after they have actually been a victim— this may be related to childhood sexual abuse or to domestic abuse.
It is fundamental that someone in an NHS service has the opportunity to feel safe enough and supported enough to be part of their needs and requirements. They might come in for something else—for example, we have just done some work on cervical screening. I have to say that we are talking about superb interventions through lived experience. How do we get every woman who has cervical screening as part of their requirement also to have the opportunity to say, whether they know this or not, what needs they have or what support they need? This is about, “How can we support you? Have you ever been a victim of rape, sexual assault or domestic abuse?” It is those opportunities that we should be supporting.
I have been with the NHS quite a long time, so I am not saying this because I am sitting in front of the Committee, but there are massive amounts of evidence that people want to do more in this space, because that is part of so many people’s experiences, either personally or professionally; this could be as a clinician, with someone in front of them as a patient. This is a great opportunity to talk about the duty to collaborate, but it is also a great opportunity, as you say, when you have maturity of ICBs at this early stage, to make it a priority.
Lastly, as people are aware, I sat in front of a number of Committees to do with armed forces, as I am the senior commissioner for armed forces. I had exactly the same conversation about that maturity. Four or five years later, we had the armed forces covenant and a really important requirement around armed forces’ mental health and trauma, whereby we have commissioning and supporting a dedicated pathway. That is really why we have been commissioning more mental health enhanced services for sexual abuse recently, through the long term plan. It is a really good opportunity to build on this and build on that good practice, as well as to say where it is not working—we have to be honest about that, too.
Rob Butler
Q
Cllr Bell: Yes, it can. Let me just to come back to add a little more detail. At a local level, we are talking about ICBs and we are quite heavily focused on them. They will be feeding into your health and wellbeing boards on your local authorities. Your community safety partnership should be feeding into your health and wellbeing boards, and there should be a joint commissioning approach to local services running through that process as well. When we talk about not duplicating, we need to look at them; we need to look at what is already in existence and how we can deliver that duty to collaborate without creating additional layers of bureaucracy that may not actually do anything other than exacerbate the pressure on capacity. If we do not have to reinvent the wheel, let us not do so—let us look at what is there already.
Local representation in the ICBs is a funny picture at the moment, because different places are operating in different ways. Let me talk from my experience. Our clinical commissioning group was integrated into our local authority a number of years ago, so we had an integrated health and social care model already. Our director of adult health and social care was also our director at the CCG, and is now the head of our ICB. It works quite well and quite seamlessly. Our cabinet member sits within that structure as well.
Rob Butler
Q
Cllr Bell: I do not want to overstretch. From my experience, it works well in our authority. I am certainly not a health specialist. Those are the people you should speak to, given their knowledge. In my experience, at our level, it has worked extremely well.
The Chair
If there are no other questions, I thank the witnesses for coming along this afternoon and giving evidence, and I apologise for the intervention of democracy. We will now move on to the next panel.
Examination of Witnesses
Gabrielle Shaw, Rachel Almeida and Duncan Craig gave evidence.
The Chair
I welcome the three witnesses. Thank you for coming along. Would you all introduce yourselves briefly for the record, please?
Duncan Craig: Hi, my name is Duncan Craig. I am the founder and chief executive of We Are Survivors, an organisation supporting boys and men, like me, who are affected by sexual abuse, rape and sexual exploitation. Thank you for inviting me.
Rachel Almeida: I am Rachel Almeida, the assistant director for knowledge and insight at Victim Support.
Gabrielle Shaw: Hi, my name is Gabrielle Shaw. I am the chief executive of the National Association for People Abused in Childhood. NAPAC is a national organisation that supports adult survivors of any kind of childhood abuse, trauma or neglect.
The Chair
I repeat what I said earlier: people should speak loudly, because the acoustics in this room are dreadful.
Anna McMorrin
Q
Gabrielle Shaw: This is my “Mastermind” subject—thank you. First and foremost, it is good that we have the Bill. It is imperfect, as you will have heard today, but the fact that it is here and will potentially recognise victim status in statute is great, and there are some really good bits in it. My big thing is around the definition of a victim, because it is not currently explicit that you are a victim if your case has not been reported to the police. Clause 1(4)(b), which defines criminal conduct, states that, although you may be a victim,
“it is immaterial that no person has been charged with or convicted of an offence”.
By omission that implies that you have to have reported the criminal conduct to the criminal justice system. We are automatically cutting out the huge majority of victims.
In its 2020 crime survey for England and Wales, the Office for National Statistics showed that there are more than 8.5 million adult survivors of some kind of childhood abuse or trauma. Colleagues know that only a tiny fraction of survivors will ever report or even disclose their abuse. If the Bill could be made more explicit to include that you do not have to have reported the criminal conduct, it just needs to have happened, what a win that would be. How important it would be to victims and survivors on the ground to think, “What happened to me mattered and I am entitled to support.” As you can probably tell, I am a big fan of making the definition more explicit to cover that.
Rachel Almeida: This Bill is really welcome and has a lot of potential to improve the experiences of victims. We previously heard from the Minister that the Government’s intention is for victims who have not reported to be within scope, but given that there is a question around that, we would suggest that it could be made more explicit so that those who have not reported feel that the rights are for them. We welcome the additions to the definition in the draft Bill, and we would support widening the definition to include victims of non-criminal antisocial behaviour. Similar to what Vera Baird said earlier, we believe that a lot of victims are hugely impacted by persistent ASB. We agree that there needs to be a threshold for it to be persistent ASB, but we believe that their not having any rights means they are unable to access the support that they really need. We welcome the Bill and think it needs to be strengthened.
Duncan Craig: I am really pleased with the Bill. I remember speaking to Minister Argar, and I believe that this is a once-in-a-lifetime opportunity to create something. I absolutely echo what my colleagues have said. As a child abuse survivor, a victim of sexual exploitation and a victim of rape, I have not reported to the police any of what happened to me, despite the fact that I have spent the last eight years training police officers, using my story in various different working groups and sitting on various different boards. Although I hear what Gabrielle is saying and I think there is a really powerful statement in there about strengthening the Bill, what is really important for us victims is to be seen. We can talk about the semantics of it, but it is not about that; it is about being seen and knowing that all of you see people like me.
Anna McMorrin
Q
Duncan Craig: Are you talking about mandatory reporting?
Anna McMorrin
Yes—and a definition.
Duncan Craig: I get a bit nervous around this particular subject, because no matter where I have worked—whether it is the past 15 years within my organisation, or working over in Australia or the States—no one has ever been able to fully explain what it means for adult survivors. I absolutely think that what we need is 100% clarity to make sure that if any individual—professional or volunteer—knows that a child is being harmed, we will use all our powers to stop that happening now. I am not too sure how we carry on with that, to be honest.
Anna McMorrin
Q
Gabrielle Shaw: I am not—
Anna McMorrin
Q
Rachel Almeida: The code is a really important document, which the Bill puts on a statutory footing. We really believe that if the code was put into practice, it would hugely improve the experiences of victims. There are a huge number of valuable rights in there that, if delivered, would provide victims with clear information, confidence in the system that they will hear what will happen to their case and support at court. We know that that does not happen in practice and we want a step change—a systemic change. We know that code compliance is really poor and what we need from the Bill is for that to change. We are concerned that, as the Bill stands, the change that is needed will not happen. A few things need to be done to strengthen the Bill.
The Bill refers to regulations being introduced to collect prescribed information. It needs to be more explicit that that applies to every single right. We want compliance with every single right to be monitored. From evidence we have seen, that will not necessarily happen, so it needs to be really clear that the regulations cover every single right.
We also believe that it should be made clear what level of compliance is acceptable. We know that compliance is quite low and, at the moment, the Bill hangs on the thread of transparency. It mentions collecting data—at the moment, the data will not necessarily be across all rights—giving the PCC oversight, although not powers to drive or compel agencies to comply or improve their compliance; that can be done only with the police, but it should be done across other agencies to drive compliance. That is lacking.
The Bill talks about information and reviewing the data, which is then shared with the Secretary of State. We do not believe that that level of oversight is enough. There is no enforcement mechanism or clarity that, if agencies do not comply across the board—we know that there are systemic issues with compliance—there will be any consequence; that anything will happen. We would like the Secretary of State at a national level to set out, as part of the regulations, a minimum threshold that criminal justice agencies are expected to meet. If they do not reach the required levels of compliance, there should perhaps be a warning period when they are given the opportunity to address the lack of compliance. However, if that compliance does not improve, we would like steps to be taken. For example, an inspection of the agency could be triggered to understand why they are failing to comply. There should also be clear recommendations that they need to remedy, and accountability around that.
That is not the only way it could happen, but we feel that it is a way that could work. Without that, at the moment, it is data being collected and published, but there are not really any teeth, which we would like to see.
Anna McMorrin
Q
Rachel Almeida: Yes.
Anna McMorrin
Q
Gabrielle Shaw: Yes. That is a really good point. I love what you just said about the tangible difference it makes to victims and survivors. It comes back to accountability. Building on Rachel’s points, accountability has to be built in from the start to make the Bill really effective. I was watching the previous session, when the Committee asked many interesting questions about collaboration and the duty to collaborate—ICBs, PCCs. That is great, but how do we measure the effectiveness of that collaboration? Will it just be a meeting once a year with collaborators? It has got to be stronger than that. I like what you are saying about strengthening the Bill. That is really important.
There is currently a duty on PCCs to oversee compliance with the victims’ code of practice—I read it quite a few times to make sure that I knew what I was talking about— but there is no similar duty to oversee compliance with the delivery of victim support services. That goes back to the making a difference on the ground that you mentioned. Compliance is patchy. There is really good stuff, but more consistency across the piece would make that tangible difference.
Anna McMorrin
Q
Rachel Almeida: Definitely. It should be at least on a par with the Domestic Abuse Commissioner’s powers, particularly the powers that criminal justice agencies are compelled to co-operate with. That is really important. Those powers are not currently proposed in the Bill for the Victims’ Commissioner.
Anna McMorrin
Q
Rachel Almeida: It is enabling the Victims’ Commissioner to be that champion for victims and have that independent voice and ability to investigate where there is a lack of compliance, where areas are not improving and where they are seeing issues raised with them. They will have ways to address that and drive forward change.
Duncan Craig: Could I make a comment on the victims code and the question you asked my colleagues? It is really interesting that when we started off talking about victims’ rights, we called it victims’ rights, and then all of a sudden we started calling it the victims code. I think there is something really important about that. All of the 2,500 men who come through our service every year and all of the thousands of women who go through Jayne’s service—Rape Crisis England and Wales—need rights, not a code. In the victims code as it is—again, I do not think it is semantics—section 32(1)(b) says that it relates to “any aspect of the criminal justice system”, but, as I go through the Bill, I see that nobody is holding my organisation to account, and actually somebody should be.
Once we have moved the police out of the way, even though so many people do not report to the police, as well as health and SARCs—in Greater Manchester, only 10% of people who access SARC are males and 83% of those are prepubescent children, so that is exactly where they should be—there is something about ensuring that the rights of the victim are held not just by statutory agencies but by the voluntary sector, who provide the majority of the services that people want and access. So there is something about making sure that the voluntary sector is in here somewhere. We know—I have a really bad personal experience of going to a voluntary sector organisation; it made things worse.
Anna McMorrin
Q
Duncan Craig: Absolutely, and not just locally either, but nationally. There is something about commissioner oversight that should be better anyway—I think we should be spending smarter—but there is definitely something about real consequences for not adhering to victims’ rights.
Anna McMorrin
Q
Duncan Craig: Part 3 was a huge surprise. I had been part of the working group—the task and finish group—for the victims Bill for quite a long time, and I was part of the end-to-end rape review. I think I even asked a question of where that had come from, because it just had not been talked about.
My organisation has services across all 15 north-west prisons commissioned by NHS England, and I just cannot see how this is going to help. It is so easy to draw a line between victims and perpetrators, but the absolute reality is that for so many people there is a really blurred line, particularly in prison. It is quite easy to write certain people off, and it makes me sad that we are doing that, because quite a lot of the women in prison and the men in prison have suffered various things in their lives as well. What we really need to do is help, and it feels like part 3 is more of a hindrance.
Gabrielle Shaw: To add to that, it did come as a surprise—it came out of left field—but at least it is here, and we will work with what we have. Duncan makes an important point about the blurred lines between victims and perpetrators, and the crossing back and forth of it. It could have been, and perhaps could still be, a good opportunity, so let us work with what we have and turn it into an opportunity. In the earlier session, Catherine or Kate said that we need to look at this as a public health issue. If we are going to look at this in the round for victims, let us look at abuse suffered in childhood, what that means for life chances, and what that means if they go on to offend. There is a real opportunity here, and if we can turn it around, I will support that.
Rachel Almeida: I agree that it was a surprise. We expected a victims Bill, and we would welcome it returning to being a victims Bill.
Anna McMorrin
We have been waiting eight years for it.
Rachel Almeida: I feel like the level of scrutiny given to the first part has not been allowed for the other two parts. We obviously suggest that that should happen.
Janet Daby
Q
Duncan Craig: When we talk about paedophilia and child sexual abuse, about 87% of paedophilic offenders are victims, but only about 3% of victims ever go on to offend, so vampire syndrome—the idea that if you have been bitten by a vampire, you will go on to become a vampire—does not exist. All the research shows that that does not stack up.
In my service—I am only talking about 15 north-west prisons, but some have category offenders—I am not necessarily interested in dealing with the offenders and their crime; I am interested in the root cause. My organisation sadly lost one of our survivors the other day. One of the things that I will carry with me about him is that I met him in prison—I was his therapist in prison—and we dealt with a lot of his experiences. I fought for the service to go into that prison because nobody was interested in dealing with his victimhood; they were interested only in dealing with his perpetration of the crimes he committed. That is right, but there is something here that nobody is talking about or dealing with. He was in a small group of people I approached as a survivor, as a therapist, as the chief exec of an organisation. I had a challenge from a couple of our service users, who said, “What are you doing, Duncan, about reducing offending?” and I could not tell them. What we are really good at in victim services—Jess, you know this from all your time in domestic abuse—is cleaning up, but when are we going to stop cleaning up and start preventing?
With part 3 of this Bill, we could do some incredible work in prisons and with prisoners around prevention so that, when people come back out of prison and into the community, there is a better sense of self and better support. What happened was only because I have an amazing commissioner in NHS England North who just took a punt, quite frankly—I am sure there is a proper word for that in commissioning, but it was a punt—and actually, 897 prisoners are now on our waiting list, they are being seen and are dealing with the things they needed to deal with.
Finally, when I started talking to Michael and said, “I think we need to do something; I think we need to do something about that 87%. What do we do about those men?”—they nearly are all men—“How do we make sure that they are not going back out and offending against women, children and other males? Maybe we need to deal with their root cause.” He said to me, “Everything in my body says no. Why should we deal with them?” And then I think, “Maybe if somebody had dealt with the guy who abused you, Dunc—maybe you would not have been abused.” It hits right there in the middle, and I think that this is a phenomenal opportunity for us to not just do stuff around victims but to prevent us from even having victims in the first place. That was a very long answer; apologies.
Janet Daby
Thank you, Duncan. Sorry about your loss, as well.
Duncan Craig: Thank you.
Gabrielle Shaw: Great question. It is a hard act to follow.
To answer your question, there is an opportunity to name it in the very least. That would be such a great start here—to acknowledge the facts that Duncan just set out, and the proportions, and say it is a public health issue and really go hard on the public health and prevention aspect. Otherwise, we all know what is going to happen. If the comms message gets twisted, it will be “Oh gosh, everybody who has been abused as a child is going to go on to become a perpetrator.” We need to be really careful about how we message that. It could be about keeping the generalities—acknowledging the fact that a lot of abuse does come on to being part of a perpetrator—but talking about why we need to deal with it with money, resources, therapy and with all those things we know about, because that prevents and it makes people safer in the future.
At NAPAC, on our telephone support line, we hear from tens of thousands of survivors with many different stories and backgrounds. Survivors are not a homogenous group—there are so many individual stories out there—but I can say that there are key themes that come through. Probably the No. 1 key theme that we hear from survivors is “I wish it had not happened to me and I do not want it to happen to anybody else.” I do not purport to speak on behalf of survivors, but I can relay that theme to you as a Committee and help to tie that to your question. Put it in there; make it count.
Janet Daby
Rachel, did you want to say anything or are you okay?
Rachel Almeida: I am okay.
Siobhan Baillie
Q
Duncan Craig: I did, pre-pandemic. I used to go to the local training school. For a specially trained officer—an old-fashioned Nightingale officer—the 999 call comes in, and they go and lock down the scene, with the scene even being the individual themselves. They used to get five days’ training in forensics and so on, and they would have a whole day with me on working with male victims, because everything else that was talked about was around female victims. Then, on the very last day they would do role play with an actor and get scored. Effectively, it was a bit like an exam.
Now, I go to a university. I have done two classes now. I am really angry about this: in the first class, as I was telling my story—a story that I have told for seven or eight years—an individual put their hand up. There is a picture of me in the room where it happened. They put their hand up and said, “Yes, but do you not think that you should push them all off a cliff?” [Interruption.] I had exactly the same reaction as you; I was absolutely astonished. In seven or eight years, I have never had to kick anybody out of a classroom and I have never been surprised by it. It could just be a one-off, so I spoke to the tutors and said, “Just watch that.” Two weeks later, I went back to the same university, where a new cohort of police officers were being trained, and we kind of got the same thing. I do not know what has happened, other than we have moved from police training school to university, but I am terrified. I am terrified about what we are getting and what I am seeing on the ground now. There used to be a moment in time when I had done some training with every single police officer in my force, and I was really confident. I have zero confidence at the moment, and it is frightening.
Gabrielle Shaw: I come at this from two perspectives. What we hear through the NAPAC support line, from thousands of survivors, is that some of them have disclosed to the police. Of course, people who contact NAPAC are a self-selecting cohort, but over the past five years the number of positive experiences relayed by survivors to NAPAC has risen. I think that is no coincidence, because I know at a national level—I will come to this in a second—there has been a huge drive by national policing to improve response to childhood sexual abuse. The hydrant programme has done a lot of work on this, as well as College of Policing and the NPCC. There has been a huge national drive.
As Duncan described, the issue is how that national drive, the national guidance and all those really good intentions translate down to force level. I can hear the chief constables now saying there is a squeeze on the training budgets and so on, but we need to maintain that pressure and the good intentions that have set at a national policing level, to ensure that trickles down properly. What Duncan described is not a rare or isolated experience at all. There is good practice as well, but there needs to be more consistency to get that real drive across all levels.
Duncan Craig: I am not overly concerned about the current detectives at the moment, because we have a great relationship with them, but they are about to leave because they have done their service. It is exactly like the prevention bit—the bit that I am extremely concerned about is the new people.
Jess Phillips
Q
Duncan Craig: I am a bit conflicted, if I am honest, about whether the Bill should contain the guidance around IDVA—
Jess Phillips
I am not conflicted; I don’t think it should.
Duncan Craig: To be honest, Jess, I am probably leaning more towards your thinking. My organisation had the first male ISVA service nine or 10 years ago, and I know it is really patchy across the country in terms of what the judiciary and different judges will allow ISVA to do and not do, so my happiness about it being contained in legislation is that it is really clear what they are.
My unhappiness is about how restrictive it could be. What about people who have not been trained as ISVAs? What do we call them? Are we creating a hierarchy that does not need to be there? I definitely think we need some level of guidance, not necessarily for the ISVAs and for our services, but for the judiciary. What we do not want to see is an ISVA going into the witness box in an ITV drama and then everybody thinking that that is what ISVAs can do. We want clear guidance. I am worried about it being restrictive.
Jess Phillips
Q
Duncan Craig: Absolutely.
Jess Phillips
Me too, 100%.
Duncan Craig: I think they should be able to do whatever the witness wants them to do.
Jess Phillips
Yes, me too. But Victim Support runs the service that is allowed to sit in the witness box.
Rachel Almeida: Not all of them. Again, it varies hugely. In some areas, there are services where there are two courts, and one they are allowed in and one they are not allowed in. What good looks like is if the guidance could make it really clear that the roles need to be really independent. There is a role there to help establish the independence of the role and that these services should be independent from statutory organisations. The second thing is for the guidance to lead to improved and more consistent access, so that ISVAs can do their role fully and the support the victim-survivor through the court system. That is exactly what is needed. If the victim’s family wants them to sit next to them, they should be allowed to—they should be allowed in the court building—and that role should be recognised.
Jess Phillips
Q
Rachel Almeida: Further, I would say, in relation to section 28—whenever they are cross-examined, which may not necessarily be in the court building but could be in pre-trial cross-examination—that they should also be included in that room. Also, in the introduction of a CPS meeting, the ISVA should be there, invited and included as part of that process.
Duncan Craig: In Greater Manchester, we have been trying, with the deputy Mayor, to do an opt-out of ISVA. As soon as someone is identified, they have an ISVA, partly because, particularly when we are talking about something that happened last night, we seem to ask the individual 25,000 questions when all they want to do is go home, have a shower, go to bed and have nobody talk to them—let alone decide whether they want an ISVA, an IDVA or whatever.
What we learned in some of our discussions with our clients was, if we gave them one, they just accepted—in some way, shape or form—and it meant that we could properly see somebody right through to the end. If we asked, “Would you like an ISVA?” they always say, “No, I’m fine.” Then it is not until three days before going into court that someone has a breakdown and we have to try to fly somebody in. It is about working a little bit with some agencies. I am very proud of our north-west CPS, because its first question is, “Who is their ISVA?” The police need to do a little bit of that and health really needs to do a lot of that.
Jess Phillips
Q
Duncan Craig: That is the next bit. I did not say that we—
Jess Phillips
You could not possibly guarantee that every single rape victim would have one.
Duncan Craig: Completely. It would be nice to.
Jess Phillips
I mean, I would.
Rachel Almeida: I just want to come back to the guidance. Something that we are really keen not to happen is exactly what Duncan said: for it to lead to a hierarchy. A range of roles work in these services, and they are really valuable roles. There is a range of needs and victims, and the guidance needs to make sure that it does not end up excluding certain services or roles from being recognised as important in providing the support that is needed to victims. A concern we have is that all funding is channelled into ISVA roles only and then you lose the expertise and the recognition of the wider roles.
The Chair
If there are no further questions, I thank the witnesses for attending this afternoon and giving evidence. I apologise for the slight delay.
Ordered, That further consideration be now adjourned. —(Fay Jones.)
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Smokefree 2030 Target
(10 months, 3 weeks ago)
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Bob Blackman (Harrow East) (Con)
I beg to move,
That this House has considered the Smokefree 2030 target.
It is a pleasure to serve under your chairmanship once again, Mr Evans, and thank you for stepping in to ensure that the debate can take place. We will be considering the 17 April statement to the House on achieving a smokefree England by 2030, cutting smoking and stopping kids vaping.
The debate is co-sponsored by me, in my capacity as chairman of the all-party parliamentary group on smoking and health, and by my friend, the hon. Member for City of Durham (Mary Kelly Foy), who is a vice-chair of the group. The APPG wants to ensure that Parliament has the chance to debate the announcement made by the Under-Secretary of State for Health and Social Care, my hon. Friend the Member for Harborough (Neil O’Brien), and to consider whether those measures are sufficient to end smoking by 2030 and level up the health and wellbeing of some of the most deprived communities in the country.
At the outset, I commend my hon. Friend the Under-Secretary for announcing the first tobacco control measures since the Government set out their Smokefree 2030 ambition way back in 2019. Since 2021, the APPG has been calling for greater funding to help smokers to swap and to stop, and to provide incentives to help pregnant smokers to quit. We are extremely pleased to see that those measures have been taken forward.
However, while the measures recently introduced by the Government to achieve a Smokefree 2030 are welcome, they are insufficiently ambitious, as they provide only a quarter of the funding called for by the Government’s own independent review last year. Meanwhile, big tobacco continues to make extreme profits selling highly addictive, lethal products that kill if they are used correctly.
The idea of a levy on the industry is popular and feasible, and is supported by voters of all political persuasions, as well as the majority of tobacco retailers. The manufacturers clearly have the money and high profits, so they should be made to pay to end the epidemic. This is more than just a health crisis because delivering a Smokefree 2030 is integral to delivering economic growth, which is a mantra for the Government and for Opposition parties.
Analysis conducted by Landman Economics on behalf of ASH—Action on Smoking and Health—found that, in addition to causing around 75,000 premature deaths a year in the UK, in 2022 smoking cost the economy a staggering £173 billion, including lost productivity and premature death.
Let me break those figures down. The cost to the public finances was £21 billion, which is nearly double the tobacco tax revenues of £11 billion. The cost to the NHS was £2.2 billion, and to social care £1.3 billion. Those figures are substantial, but they pale into insignificance beside the £5 billion of social security payments and the £11.8 billion of lost income tax and national insurance—people who are sick from smoking are unable to work. That is public money, and it will continue literally to go up in smoke for years to come unless we take urgent and bold action.
I welcome the measures announced by the Minister in April, but I recognise that they still fall well short of the recommendations in Dr Javed Khan’s independent review. Of the four “must do” measures recommended by Dr Khan, only one—promoting vaping for adult smokers—has been fully adopted by the Government. The recommendation to improve prevention in the NHS has been partially implemented via the new NHS long-term plan with respect to tobacco treatment services, but those have been constrained by a lack of funding.
Dr Khan’s top two recommendations, which are increased investment in tobacco control and increasing the age of sale, have not been adopted, which has left tobacco control efforts desperately underfunded and put the Smokefree 2030 ambition in critical jeopardy. While I commend the Government’s ambition and commitment to make smoking obsolete by 2030, to date that ambition has not been matched by funding. Dr Khan’s independent review made it clear that a Smokefree 2030 cannot be delivered on the cheap. Speaking recently on improved public sector productivity, the Chancellor stated that
“we count the number of hospital treatments but not the value of preventative care, even though that saves lives and reduces cost.”
I could not agree more.
Public health interventions, such as smoking cessation, cost three to four times less than NHS treatment for each additional year of good health achieved in the population, yet this is where the largest budget cuts have fallen to date, with the public health grant falling by a quarter in real terms since 2015 and funding for tobacco control falling by almost half. Local authorities have done their best to continue delivering vital tobacco control activity despite these funding cuts, but there is much more that we can do. If the Government are serious about the Smokefree 2030 ambition, they cannot keep asking local government to do more with less. More funding must be made available to deliver it.
Last year, Dr Javed Khan called on the Government to urgently invest an additional £125 million per year in a comprehensive Smokefree 2030 programme. One of his options for raising that money was a “polluter pays” levy on tobacco manufacturers, based on the principle that those responsible for the problem should be required to fix it. The principle has been accepted on numerous occasions: the landfill levy; the tax on sugar in soft drinks; requiring developers to pay for the costs of remediating building safety defects; and, most recently, a statutory gambling levy. The “polluter pays” model would enable the Government to limit the ability of manufacturers to profit from smokers while protecting Government excise tax revenues. That will prevent big tobacco gaming the system as it currently does with corporation tax.
Despite paying little corporation tax, the big four tobacco companies make around 50% net operating profits in the UK—far higher than the average of 10% for UK manufacturers overall. Imperial Brands is the most profitable, with 40% market share in the UK and over 70% net operating profits in 2021. Why should an industry whose products diminish the health of users be allowed to make such excessive profits? A levy could raise £700 million a year while capping the profits on sales to ensure that the costs are not passed on to smokers. Some £700 million from tobacco manufacturers would more than cover the £125-million additional funding that Dr Khan estimated was needed for tobacco control, with money left over for other prevention and public health measures.
[Mr Virendra Sharma in the Chair]
Amendments to the Health and Care Act 2022 calling for a consultation on such a levy were tabled by the hon. Member for City of Durham, who is co-sponsor of this debate, and were accepted in the House of Lords last year. Health Ministers were sympathetic, but the Treasury opposed the measure, so it was voted down by the Government, despite overwhelming public support for a levy. Some 75% of the British public think that tobacco manufacturers should be made to pay. My first question to the Minister is: can he tell me, if the Government will not commit to a levy on tobacco manufacturers, how, when and where will they find the additional funding needed to deliver the Smokefree 2030 ambition? Since 2020, public health Ministers have committed to publishing a new tobacco control plan, initially by July 2021 and then by the end of 2022—we are still waiting. The previous tobacco control plan expired last year, leaving us without a strategy or any targets for reducing smoking rates among the most disadvantaged groups.
In the absence of national leadership, local authorities are stepping up to the plate. For example, the London Tobacco Alliance, which I am proud to support, launched last year. It is leading the charge to make the capital smoke-free by 2030. I am sure the Minister will join me in commending the alliance and other regional partnerships across the country that are committed to tackling smoking in their communities. In place of a tobacco control plan, the Minister has said that tackling smoking will be “central” to the major conditions strategy. However, the recent call for evidence for that strategy was not reassuring, and certainly did not place smoking front and centre. My second question is: if the Minister will not commit to a new tobacco control plan—I wish he would—can he at least reaffirm that smoking will be central to the major conditions strategy and that further tobacco control measures will be included in the major conditions strategy when it is finally published? I assure the Minister that he has the full support of the APPG in his efforts to tackle youth vaping, and recent announcements by both the Minister and the Prime Minister are warmly welcomed.
My views on youth vaping were summed up expertly by the chief medical officer:
“If you smoke, vaping is much safer; if you don’t smoke, don’t vape; marketing vapes to children is utterly unacceptable.”
The APPG is deeply concerned about recent figures published by ASH showing that there has been a significant rise in youth experimentation with nicotine e-cigarettes, driven by cheap, colourful disposable vapes and child-friendly marketing.
Dr Neil Hudson (Penrith and The Border) (Con)
I congratulate my hon. Friend and the hon. Member for City of Durham (Mary Kelly Foy) on securing this debate. Although I acknowledge that vaping has a role in helping adults to quit tobacco smoking, youth vaping has unintended consequences, as my hon. Friend is starting to elaborate. We have seen a surge in such vaping, and there are huge health and environmental concerns. As he said, the products are targeted at young people, with colourful packaging and flavouring. The Government have taken some strong steps. Does my hon. Friend agree that we need to go faster to stop this unintended public-health ticking time bomb?
Bob Blackman
I thank my hon. Friend for that intervention. It reminds me that 11 years ago I led a debate in this place on introducing standardised packaging for tobacco products. At the time, both the Government and the Opposition said they had no plans to support such a measure. Of course, we now have standardised packaging of tobacco products. I hope we can get standardised packaging of vaping products as well.
The Government recently issued a call for evidence on the best approaches for tackling youth vaping. I look forward to seeing the response. First and foremost, the Government should make disposable vapes, which are the worst things for the economy, much less affordable, by adding a £5 excise tax. That would also make the distribution of those products subject to much more stringent controls, making it easier to prevent illicit and underage sales. It would in particular ban the issuing of free samples to young people.
Will the Minister tell us when the Government’s response to the call for evidence on youth vaping will be published, and whether it will include specific enhanced regulation to address loopholes in the law? I welcome the Minister’s commitment to adapting the tobacco trace and trace system, to strengthen enforcement and to target the illicit market. I particularly welcome the Minister’s commitment to exploring how to share information with local partners about who is registered on the track and trace system, which is critical.
Gareth Johnson (Dartford) (Con)
Does my hon. Friend agree that there is a critical role for trading standards in enforcing measures against illegal vapes, counterfeit tobacco and underage sales? We could greatly secure the environment for the consumer by trading standards enforcing the laws.
Bob Blackman
My hon. Friend must have read the next part of my speech. At present, trading standards officers have one arm tied behind their back in the fight against illicit tobacco, due to a lack of options for identifying and cracking down on retailers who repeatedly flout tobacco regulation. We know that retailers who sell illicit tobacco products are much more likely to sell tobacco to children, undermining tobacco-control regulations. They also seek to hook children on the addictive product that kills more than half of long-term users, by giving or selling them vapes in the first place.
Retailers are required to have an economic operator ID before they can trade in tobacco, under the current tobacco tracking and tracing regulations. Through adaptation of that system, local enforcement will easily be able to identify retailers who are breaking the law, and hold them accountable. That is the approach that I recommend in my ten-minute rule Bill, which would introduce a retail licensing system, similar to the one that exists for alcohol. Retail licensing for tobacco was recommended in Dr Khan’s independent review.
The Minister will be pleased to know that that approach has the support of the public and retailers. Survey evidence from ASH, published last autumn, found that more than eight in 10 small tobacco retailers support the introduction of a tobacco licence, backed by mandatory age verification. Will the Minister commit to publishing further detail on his plans to strengthen the track and trace system, before Second Reading of my ten-minute rule Bill on retail licensing in November?
It is undeniable that big tobacco and those representing its interests never cease in their attempts to undermine public policy, not just on tobacco but on vaping. Only last weekend, The Observer revealed that lobbyists connected to big tobacco were funding Facebook campaigns opposing new vaping regulations. Regulations, I think we can all agree, are desperately needed to protect children. It was exceptionally well timed, therefore, that yesterday the Department of Health and Social Care published guidance for all parts of Government on our legal obligations to protect public policy from the commercial and vested interests of the industry—guidance that I very warmly welcome. The Department of Health and Social Care, as custodian of the World Health Organisation framework convention on tobacco control, has been staunch in its support for that treaty and has upheld our legal obligation to strictly limit any engagement with the industry solely to that required for effective regulation of the industry. Will the Minister put it on the record that Government—the Executive, legislature and judiciary—are required to limit interactions not just with tobacco manufacturers but with any organisations or individuals with affiliations to the tobacco industry, including lobbyists or industry trade bodies, such as the UK Vaping Industry Association, which lists big tobacco among its members?
Mr Sharma, it is good to see you in the Chair; thank you for stepping in. When the Government initially announced their Smokefree 2030 ambition, it was described as “extremely challenging”. Four years on, not only has the challenge increased but the need for action has become more urgent. Cancer Research UK estimates that we will miss achieving the ambition by nine years; it will be even longer for the most disadvantaged in society. I am sure that the Minister agrees that that is not acceptable, so I wish to remind him of comments that he made in his previous role as a Minister for levelling up. He said that
“ultimately on public health and on prevention, we need to think extremely radically and really floor it, because otherwise the NHS will just be under humongous pressure for the rest of our lifetimes because of an ageing population.”
The proposals brought forward to date have been radical, but are not yet sufficient. There is nothing on key measures recommended by the APPG and by Dr Khan in last year’s review, which included reinstating funding that was cut for behaviour change campaigns, raising the age of sale, retail licensing, and tougher regulations for tobacco as well as vaping. I hope that when the Minister replies to this debate, he can assure the Chamber that the major conditions strategy will be published this year and will contain further measures—and funding—sufficiently radical to achieve our ambition for a smoke-free future, not just in England but throughout the United Kingdom. I look forward to hearing the contributions of other colleagues on this important matter, and thank you, Mr Sharma, for allowing this important debate to take place today.
Several hon. Members rose—
Mr Virendra Sharma (in the Chair)
Order. I have two announcements to make before I call the next speaker. This debate will still finish at 11 am. I intend to start calling Opposition Front Benchers at 10.30 am. Rather than setting a time limit now, I make this request of all Members: try to be brief, so that everybody can contribute. I hope that, in that way, we can deal with the situation. I call Mary Kelly Foy.
Mary Kelly Foy (City of Durham) (Lab)
It is a pleasure to serve under your chairmanship, Mr Sharma, and to follow my co-sponsor of this debate, the hon. Member for Harrow East (Bob Blackman). He is also the chairman of the all-party parliamentary group on smoking and health, of which I am a vice-chair. I declare that interest.
As we have heard, the measures announced by the Minister in April were a step in the right direction. However, they fell very short of the comprehensive strategy outlined by the APPG and the Khan review, and it has taken far too long—almost four years—for the Government to get going on this. In the meantime, tobacco continues to kill an estimated one person every five minutes in Britain. The deaths are disproportionately concentrated in regions such as the north-east—regions that have some of the highest rates of poverty and, in turn, the highest rates of smoking in England. In the north-east, nearly 13,000 people died prematurely from smoking between 2017 and 2019. This has an economic cost for our communities of over £100 million in healthcare costs and £64 million in social care costs. All the while, tobacco companies make record profits, leaving the taxpayer and families to pick up the pieces.
We are fortunate in the north-east to have a highly effective regional tobacco control programme—Fresh—funded by all the local authorities in the region and the local integrated care board, and it has proven successful over the years. Just yesterday, it launched a new behavioural change campaign called “Smoking Survivors”, which features two women from the north-east who have quit smoking and survived cancer. However, national funding for behavioural change campaigns such as that fell by around 90% between 2008 and 2018. Although regional activity is vital, we need strong leadership from the Government if we are to see every region be smoke free by 2030.
Like the hon. Member for Harrow East, I welcome the Minister’s recent announcement on tackling youth vaping, but why did it take so long for the Government to act? When the Health and Care Act 2022 was going through Parliament in 2021, I tabled amendments that would have given the Government powers to prohibit child-friendly branding on e-cigarette packaging and to ban the free distribution of vapes to under-18s, which, as we know, has strong cross-party support. To my amazement, not only did the Government fail to adopt my amendments, but they voted them down.
As the Minister will remember, one of Dr Khan’s must-do recommendations was raising the age of sale for tobacco beyond 18, so I was disappointed not to see that included in the April announcement. The all-party group has already urged the Government to launch a public consultation on raising the age of sale, and I urge them to do that too.
I will end with a few questions for the Minister, which probably echo what the hon. Member for Harrow East asked. Will the Minister commit to consulting on a “polluter pays” levy to raise funding for a comprehensive tobacco control strategy?
Will the Government consider measures to address the affordability, accessibility, appeal and advertising of vapes, which were recommended by ASH in its response to the Government’s call for evidence on youth vaping? Once again, I highlight the fact that big tobacco companies rigorously lobby against vaping regulations, so I would like the Minister to take note of that.
Will the Minister confirm that a consultation on raising the age of sale will be considered? Finally, will he reassure the House that a comprehensive strategy to address smoking and vaping will be delivered—if not through the tobacco control plan, as promised by his predecessors, then in the forthcoming major conditions strategy?
Mr Virendra Sharma (in the Chair)
I urge Members to stick to about five minutes.
Damien Moore (Southport) (Con)
It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate the hon. Member for City of Durham (Mary Kelly Foy) and my hon. Friend the Member for Harrow East (Bob Blackman) on securing this important debate. The Department of Health and Social Care’s announcement in response to the Khan smoking review of last year was a positive step to ensure the UK remains a world leader on harm reduction and has a strong chance of reaching the Government’s ambitious Smokefree 2030 target. That said, I worry there is a serious risk that the target will be missed, with an estimated 13.3% of adults in the UK still smoking. The Department’s announcement that a reduction in smoking would also reduce the number of hospital admissions is clearly correct. It would help the Government’s priority of reducing NHS waiting lists.
The Government are taking a harm reduction approach to tackling smoking. As the Minister said, the person who quits today is the person who is not in a hospital bed tomorrow. I therefore welcome the Government’s highly pragmatic approach to vapes, but only by embracing all smoking alternatives—not just vaping, but gum, patches and NHS stop smoking services—can the UK give itself the best chance of hitting its Smokefree 2030 target, with the health benefits that would result from that.
There are 3.3 million vapers in the UK, but vaping does not meet the needs of all smokers looking to stop. Furthermore, because it does not closely mimic smoking, 35% of current vapers use vapes and cigarettes alongside one another, as confirmed by Action on Smoking and Health. Other products, such as “heat not burn”, heat tobacco rather than burning it, and therefore produce substantially fewer harmful and potentially harmful chemicals than cigarettes. They also mimic cigarettes much more closely than vapes, which means that smokers who switch to them are less likely to continue smoking. Importantly, studies have shown that they are less attractive than vapes to younger people who have never smoked.
That said, there are rightly concerns about youth uptake of vaping. Vapes are designed for adult smokers who are trying to quit, not for teenagers to use as a gateway to other nicotine products. There is clearly a balance to be struck between ensuring that vapes do not end up in the hands of young people and not hindering the access of adult smokers to these reduced-risk alternatives.
Tt international forums, the UK should stand up for this positive harm-reduction approach to tackling smoking. Now that it has left the EU, it can speak as a world leader on harm reduction, alongside nations such as Sweden and Japan, to demonstrate the powerful role that support for less harmful alternatives to cigarettes can play in reducing smoking prevalence.
In 2018, when I sat on the Science and Technology Committee, we called for independent research to be commissioned on the relative risks of “heat not burn” tobacco products. The research would fill the gap in knowledge and understanding of the impact of these products and the relative harms compared to other products, such as e-cigarettes, and would ensure that evidence-based policymaking was not solely reliant on the industry for scientific evidence. I stood—and indeed continue to stand—firmly by that call from the Select Committee for proper scientific research to be done. It is only when we have all the facts that we can make the most effective decisions to help us stop smoking by 2030, with all the health benefits that that entails and all the lives it will save.
Mrs Paulette Hamilton (Birmingham, Erdington) (Lab)
I thank the hon. Member for Harrow East (Bob Blackman) and my hon. Friend the Member for City of Durham (Mary Kelly Foy) for securing this important debate. For seven years, I was the cabinet member on Birmingham City Council overseeing public health. Because of that, I have seen the long-term health impacts of smoking on communities across both Birmingham and the UK.
It is shocking that one of the biggest causes of death in the UK—causing around 150 cases of cancer per day—is entirely preventable. Around 6.6 million adults currently smoke in the UK. In Birmingham and Solihull, more than 10,000 people are admitted to hospital per year as a result of smoking. As a district nurse, I saw the effects that smoking can have on people both with and without existing health conditions and how difficult it can be to quit. I met patients with COPD—chronic obstructive pulmonary disease—who were using oxygen to help them to breath and who would still ask to be wheeled outside to smoke because they were so addicted to smoking.
We have a very strong pro-smoking lobby in the UK. Action on Smoking and Health reported that the tobacco industry works to undermine public health measures and is increasing its marketing plans, including to market to young people and to oppose regulation. In the face of that, young people in my constituency do not stand a chance. That is why we truly need strategies to prevent our young people from starting smoking in the first place.
I recognise that encouraging the use of e-cigarettes is a vital part of the Government’s strategy. However, it is important that we do not forget about the risk associated with them. Not enough research has been done on vaping for us to know the long-term effects, especially during pregnancy, and the impact on the lives of children who vape, which are just starting to show through. Last year, 40 children in England were admitted to hospital due to vaping-related disorders, with 15 children under 10 admitted due to the effects of vaping. We are relying on best estimates to understand the impacts of vaping. It is vital that the Government commit to proper research and enforcement, including clamping down on the sale of e-cigarettes containing harmful levels of nicotine.
The ambition is for England to be smoke free by 2030. It is a welcome target, and the Government themselves have recognised that it will need bold action. The Khan review, which was published a year ago, found that, without further action, England will miss the smoke-free target by at least seven years, and the poorest areas, such as my communities in Erdington, Kingstanding and Castle Vale, will not meet it until 2044. We are still to see the Government’s new tobacco control plan more than a year later.
It is ridiculous that, since the Smokefree 2030 target was published—only three years ago—the Secretary of State has changed four times. If we are serious about stopping smoking and improving outcomes for all, we need an NHS fit for the future, with the capacity to deliver long-term, ambitious targets for public health. We need a serious Government, committed to backing our health service. Only Labour can deliver on those promises.
Jim Shannon (Strangford) (DUP)
I thank the hon. Members for Harrow East (Bob Blackman) and for City of Durham (Mary Kelly Foy) for securing this important debate. I am always pleased to come along and make a contribution.
Although Northern Ireland does not yet have a smoke-free target, I strongly support the Smokefree 2030 ambition. I welcomed the Minister’s announcement in April, which set out a number of bold and innovative measures. Putting in place the measures needed to make England smoke free by 2030 will enhance efforts to tackle smoking across the whole United Kingdom. Although Northern Ireland and the other devolved nations hold responsibility for their own health policies, the Government in Westminster maintain responsibility for UK-wide policies, which will impact progress in the devolved nations. I know that the Minister is always keen to respond in a positive way; perhaps he could confirm that discussions have taken place and tell us their outcome.
I particularly welcome the commitment to hold a consultation on pack inserts. All of us have probably called for that—I know I have—and I am pleased to see that it has been adopted by the Government. Cigarette pack inserts providing health information have been required in Canada since 2000, and there is substantial evidence that they are effective. Research carried out in the UK supports their use here too. I hope that the Minister will confirm when the consultation will open—that is my first question.
As the Minister knows, healthcare services are under severe pressure across the United Kingdom. Tackling smoking, which is a leading preventable cause of death and disease, killing 2,300 people in Northern Ireland each year, is vital if we are to ease that pressure. In Northern Ireland, cases of lung cancer among men are projected to increase by 74% by 2035. That is massive, but the figures are even more massive for women, for whom cases are projected to increase by 91%. Smoking is responsible for over seven in 10 cases of lung cancer. Therefore, real, targeted action needs to be taken. I am keen to get the Minister’s thoughts on that.
In 2016-17, the estimated hospital costs for treating smoking-related diseases in Northern Ireland were £172 million. If we do not take urgent action now to reduce smoking rates, our healthcare service will continue to face huge pressure. Analysis by Cancer Research UK shows that current rates of decline in Northern Ireland will not achieve the smoke-free ambition of smoking rates of 5% or less until the late 2040s, which is a decade after England. That means that our deprived populations will not be smoke-free until 2050. We need to step up efforts to achieve a smoke-free future at both the devolved level and the UK level.
I was interested to see the Minister’s announcement on how the Government intend to crack down on illicit tobacco and vaping products. We can give some credit to the Government, and to the Minister in particular, for the action they have put forward. The sale of illicit tobacco undermines efforts to reduce smoking rates. It is concentrated among poorer smokers and disadvantaged communities, contributing to higher rates of smoking. Retailers who sell illicit tobacco are much more likely to be happy to sell to children, so the illicit market also poses a particular risk to children’s health. Addressing the issue requires tackling not just the supply but the demand for illicit tobacco in communities where smoking is endemic.
The UK has made great strides in reducing the trade of illicit tobacco in the last two decades, with a comprehensive anti-smuggling strategy, which has more than halved the market share of illicit cigarettes, from 22% in 2000-01 to 9% in 2021. The Government need to be thanked and congratulated for that. It is a very positive and clear strategy, and it is working, but we need perhaps to sharpen it up a wee bit. There is still more to be done.
The announcement that His Majesty’s Revenue and Customs and Border Force will publish an updated strategy to tackle illicit tobacco is welcome. Northern Ireland, with its land border with the EU, is particularly geographically vulnerable to illicit trade run by criminal gangs, and we have a proliferation of paramilitary groups on both sides using the illicit tobacco sector to create moneys for their criminal uses. Border Force and HMRC have a key role to play in tackling smuggled tobacco, especially in our most disadvantaged communities, where smoking rates are highest. It is not the Minister’s responsibility, but perhaps he could give us some idea about how that co-operation between the Police Service of Northern Ireland, Garda Síochána and the mainland police here is working.
I also welcome the Minister’s commitment to adapting the tobacco track and trace system to strengthen enforcement and target the illicit market. In particular, the Minister’s commitment to explore how to share with local partners information about who is registered on the track and trace system is critical. Will he confirm whether sharing information with local partners from the track and trace system overseen by HMRC will be part of the new strategy? It is important that it is. The Minister is nodding, so I expect that the answer is yes, which would be good news. Will he also tell us whether the new illicit tobacco strategy will be launched before the summer recess? As MPs, we always like timescales—I know I do, so perhaps he could respond positively to that question.
Liz Twist (Blaydon) (Lab)
It is a pleasure to serve under you as Chair, Mr Sharma. I commend the hon. Member for Harrow East (Bob Blackman) and my hon. Friend the Member for City of Durham (Mary Kelly Foy) for securing today’s debate.
Smoking is not a lifestyle choice; it is a lethal addiction that the vast majority of smokers enter into before they reach adulthood. It is also an addiction that is increasingly concentrated among the most disadvantaged in society. The Office for National Statistics recently reported that over a third of smokers are now among the poorest 20% of the population. Lest we forget, that concentration of disadvantage is fuelled by the tobacco industry, the ability of which to maximise its profits by selling lethal and addictive products must be strictly regulated if we are to achieve our Smokefree 2030 ambition and protect the nation’s health.
My constituency, like that of my hon. Friend the Member for City of Durham, is in the north-east, which is the most disadvantaged region in the country, as well as having the lowest regional life expectancy and among the highest smoking rates. It gives me absolutely no pleasure to say that. In 2021, 22,000 adults in Gateshead smoked, which cost the NHS £7 million and local authority social care £5.4 million, as well as costing £66 million in lost productivity. Those costs are due entirely to smoking and are entirely preventable.
Tobacco addiction has been levelling down communities across the country for decades and will go on doing so until the Government start to take action to deliver on their Smokefree 2030 ambition for all in society. On average, smokers spend around £2,500 per year on smoking. That is money they can ill afford. The total spend in Gateshead is £55 million—an eye-watering amount that goes up in smoke, with no benefit to the local community. Ending smoking will significantly increase disposable income in poorer communities such as mine, help grow the local economy, and improve the health and wellbeing of our communities.
Members have spoken about the need for investment in stop smoking services, which is indeed vital. The hon. Member for Harrow East spoke passionately at a debate in March about the Smokefree 2030 ambition and the role of support for smokers in achieving that goal. I wholeheartedly agree with him: smokers need to be motivated and supported to quit. But, as we have heard, the public health budget that funds local authority stop smoking services has been cut by 45% in real terms since 2015. That funding desperately needs to be reinstated if smokers are to get the support they need and deserve. The Government have so far failed to make the necessary funding available from the public purse. That is why I support a levy on tobacco manufacturers to pay for measures such as the stop smoking services needed to deliver the Smokefree 2030 ambition. Will the Minister fulfil the prevention Green Paper commitment to consider a “polluter pays” approach to funding tobacco control? That funding is sorely needed if we are to achieve our ambition of a Smokefree 2030.
Another area I want to look at is mental health. More investment is desperately needed to tackle smoking among those with mental health conditions as smoking is the leading cause of significantly reduced life expectancy among people with a mental health condition. Depending on the condition, life expectancy can be reduced by between seven to 25 years and as many as one in three smokers has a diagnosable mental health condition. Smoking is an indirect cause of poor mental health across the whole population through its impacts on physical health, income and employment. It is also a direct cause because it increases the risk of some mental health conditions, such as depression and schizophrenia. Those factors form a cycle whereby smokers are at greater risk of poor mental health and those with poor mental health are at greater risk of becoming heavily addicted to smoking and struggling to stop, further damaging their mental health. Investment is desperately needed to break that cycle. I could say much more on the issue. It is vital that we look at the provisions in the NHS long-term plan. They, on their own, will not reach the much larger group of smokers who need assistance to quit.
The improving access to psychological therapies programme has around 1,690,000 referrals a year and supports people with conditions such as depression and anxiety. The smoking status of clients of IAPT services is not routinely monitored. However, given the high rates of smoking among people with common mental health conditions, it is likely that around one in four clients smokes, which is equivalent to 504,000 smokers a year taking part in the IAPT programme. Pilot projects have shown that IAPT therapists are willing and able to deliver support to quit and that clients value the offer, so extending IAPT to include smoking cessation treatment would be highly cost-effective as it piggybacks on an existing service. But that still requires investment.
Finally, I want to share concerns that others have raised about the increase in youth vaping. Smokers with mental health conditions have been found particularly to benefit from access to e-cigarettes given their high levels of addiction and their barriers to quitting. It is essential that we ensure that adult smokers continue to have that help as a safer alternative to smoking and a means of quitting, but we must drive down the increasing rates of vaping in our children.
Gareth Johnson
The hon. Lady is making an interesting speech. There is no doubt that vaping saves lives when smokers convert to vaping. Although we must do everything we can to stop children from accessing vapes and dissuade non-smokers from taking up vaping, does she agree that the last thing we want is to do anything at all that prevents or dissuades smokers from switching to vaping or other alternatives such as heat-not-burn products?
Liz Twist
Of course, it is right that we do everything we can to help adults stop smoking, but we also want to prevent young people from accessing vaping. We do not know the long-term impact, and it is important that we do not get non-smokers taking up smoking because of some attractive bubblegum or strawberry-flavoured vape. There are also environmental issues with disposable vapes, which are often used. Yes, I agree with the hon. Gentleman, but we must tackle the other side of the issue as well.
Fresh, the tobacco control programme in the north-east, and Action on Smoking and Health have submitted strong, evidence-based proposals for further regulation of vaping to the consultation, which has just closed. The Government must act now, without delay, to implement their proposals. My final question to the Minister is this: will he commit to publishing concrete proposals for regulation to tackle youth vaping before the summer recess?
Hywel Williams (Arfon) (PC)
I congratulate the hon. Member for Harrow East (Bob Blackman) on securing the debate. I must confess to some trepidation about taking part, because it is on an England-only topic: health is devolved, as the hon. Member for Strangford (Jim Shannon) pointed out. However, smoking is of specific and acute importance to young people, and many young people from Arfon work, live, love and play in England, so it has relevance.
I am a former smoker. I smoked until my 30s, when a friend pointed out the folly of rolling dried leaves up in paper and setting fire to them in my mouth—that eventually persuaded me. More relevantly, as long ago as 2005 I was a supporter of the Smoking in Public Places (Wales) Bill, a private Member’s Bill promoted by Julie Morgan, the then Labour MP for Cardiff North, that would have devolved power to the Welsh Assembly to ban smoking in public places. Unfortunately, the then UK Labour Government did not provide time for that Bill, and by the time an England and Wales Bill had become law, more people employed in bars, hotels and restaurants in Wales had contracted fatal smoking-related diseases. I am not being too dramatic about this: the lack of devolution in that instance actually cost lives.
In Wales, as in England, smoking is the largest single cause of preventable and premature death. Poverty is an issue. Wales is a poor country: when we were in the European Union, parts of Wales qualified for regional aid on the same basis as the most poverty-stricken parts of the former Soviet bloc in eastern Europe. That is how bad it was and, tragically, that is how bad it remains.
Smoking is responsible for half the difference in life expectancy between rich and poor. Smoking hits us hard in Wales: our smoking rates are some of the highest among vulnerable populations. The Welsh Government’s tobacco control plan, published in July 2022, sets a target for Wales to become smoke free by 2030. Meanwhile, England’s tobacco control plan has expired, and the promised updates have been delayed time and again.
As I said, this is an England-only matter because health is devolved. Health policy has diverged between Wales and England, not least in that the wellbeing approach adopted in Wales is markedly different from the illness policy introduced elsewhere. Reducing smoking is an urgent element of that wellbeing approach. However, many of the key policy interventions in Wales that require legislation are reserved and must be voted through in this Parliament. The Welsh Government do not have the power to put warnings on individual cigarettes, put inserts in tobacco packs or strengthen the regulation of e-cigarettes—by the way, if they did, I suspect that those warnings would be in both our languages, but that is a matter for another day. The Welsh Government have even been told that they do not have the power to raise the age of sale for tobacco to 21.
Those were all key measures that were recommended in the Khan review and are supported by the people of Wales, but they cannot be taken forward because of a lack of devolution and powers. By being so slow, the UK Government are undermining the ability of the Welsh Government to achieve their Smokefree 2030 ambition. That ambition is supported by seven out of 10 people in Wales, a figure that rises to eight out of 10 among those who voted for my party, Plaid Cymru, at the last election.
The “polluter pays” levy is vital for Wales, as it is for England. I was pleased to put my name, on behalf of Plaid, to the amendments to the Health and Care Bill that the hon. Member for City of Durham (Mary Kelly Foy) tabled on Report, and particularly to the amendment that called for a consultation on a levy on tobacco manufacturers to pay for measures needed to deliver a smoke-free future. If the Government had adopted that amendment, we would now be much closer to achieving the target. A UK-wide levy would have raised as much as £700 million per year, which would have been sufficient to fund the programme both in England and Wales.
There are many other regulations that would benefit Wales but that need action from Westminster. Because of the time available, let me just say that those measures include: warnings on cigarettes; a ban on all tobacco flavours; prohibition of free distribution of vapes to children; a ban on sweet names, bright colours and cartoon characters on vapes, which are all so appealing to children; and a requirement that tobacco packs have inserts. These are all measures that the Government have refused to adopt in the past and are still slow to adopt today. Announcements on pack inserts and free vape distribution are urgent, so that both Parliaments have clarity. Will the Minister confirm the dates for the launch of the consultation on the pack insert regulations that was announced in April, and at the very least to reassure us that it will take place before the summer recess?
Mr Virendra Sharma (in the Chair)
I hope that the Front Benchers and the Minister will spare about a minute or two for Bob Blackman to wind up at the end of the debate.
Martyn Day (Linlithgow and East Falkirk) (SNP)
It is a pleasure to serve under your chairmanship today, Mr Sharma, and I thank the hon. Members for Harrow East (Bob Blackman) and for City of Durham (Mary Kelly Foy) for securing today’s debate. This is absolutely vital issue that needs to get far more attention than it has had.
It is good to hear the broad cross-party consensus in the debate. Of course, as has already been mentioned by a number of speakers, health is a devolved matter. However, smoking is a significant public health issue in Scotland and a leading cause of preventable ill health, premature death and disability.
In 2013, the Scottish Government set a target that children born that year would reach adulthood in a smoke-free Scotland; our target for that is 2034, a few years after the English target date. A recent YouGov poll for ASH found that that 2034 target is supported by three quarters of adults in Scotland, with even more support coming from the supporters of my party—it was supported by eight out of 10 of them at the last election. It is perhaps worth remembering that the ban on smoking in public places came into force in Scotland in the spring of 2006, with the rest of the UK following soon afterwards.
As a footnote, the ban in Scotland came in on my birthday, which, as a non-smoker, I thought was a wonderful thing. I thoroughly enjoyed nights out a lot more afterwards. However, a much more profound effect was felt by my friends who smoked. Almost all of them have either stopped smoking completely or very significantly reduced their consumption.
Research shows that the number of heart attacks in Scotland fell by 74% between 1990 and 2014. Reduction in the number of people smoking and the increased uptake of cholesterol testing and statin drugs were cited as major contributory factors for that fall. That is very positive and it backs up the evidence I have seen with my own eyes among my friends and family connections. Since 2013, smoking prevalence has fallen significantly, from 22% to 14% now, but much remains to be done.
Smoking remains the leading cause of death in Scotland. Indeed, in 2021 the Scottish health survey set out that smoking was the cause of about one in five deaths and it is estimated that it also causes around 100,000 hospital admissions a year. The Scottish Government estimate that smoking costs NHS Scotland at least £300 million and the true figure could be upwards of £500 million, with additional costs, such as lost productivity, environmental and fire costs, calculated by Landman Economics at another £500 million. That is money literally going up in smoke for public services, as well as for smokers, at a time when the cost of living crisis is hitting hard everywhere.
We should not forget that the average smoker in Scotland—I do not know what the equivalent figures are for England, Wales or Northern Ireland—consumes around 12 cigarettes a day, which means they spend £1,875 a year on smoking. It remains pretty big business. Of course, smoking prevalence is highest in the areas that are most deprived, which further compounds health inequalities and poverty issues.
As Scotland’s five-year tobacco control plan is set to be renewed later this year, I hope for an ambitious set of policies that can help us to achieve our goal of a smoke-free 2034. A range of policies that aim to make smoking less visible, such as prohibiting smoking in public playgrounds, are being considered. However, there is only so much that can be done by Holyrood.
The Government’s Green Paper on prevention commits to considering options for raising revenue to fund evidence-based tobacco control, including a “polluter pays” approach, using mechanisms set out in the Health Act 2006. That would be a public health fund rather than a tax, modelled on the pharmaceutical pricing scheme that is organised and collected by the Department of Health and Social Care on behalf of England and the devolved nations.
Three quarters of adults in Great Britain support making the tobacco industry pay a levy or licence fee to Government for measures to help smokers quit and to prevent young people from taking up smoking. Tobacco must be the only product that kills when it is used as intended. I had a smile moment when the hon. Member for Arfon (Hywel Williams) mentioned why he stopped. I always think of the Bob Newhart comedy sketch, for those of a certain generation, about introducing tobacco to the western world. If it had been found nowadays, no one would use it. That makes me wonder why we continue.
The tobacco industry continues to make vast profits: on average, 50% of operating profits, compared with only 10% on average for UK manufacturing. Big tobacco can—and should be made to—pay. A “polluter pays” levy would be not a tax but a public health fund, raising a fixed sum to pay for recurring costs of tobacco control. Capping profits at 10% would prevent tobacco manufacturers from passing on the cost to smokers and ensure that tobacco taxes were not undermined.
The current pharmaceutical scheme, set out in the Health Act 2006, is administered by the DHSC, with the devolved Administrations opting in. A tobacco control fund could easily be operated on the same basis. Funding for evidence-based tobacco control policies, such as public education campaigns, smoking cessation services and enforcement, has declined since 2010. The levy could restore funding for those vital activities, and provide additional resource for the further activity needed to reach a smoke-free generation throughout the UK’s nations. Will the Minister listen to the public and commit to consulting on a “polluter pays” levy to provide the funding needed to deliver Smokefree 2030 through the rest of the UK, and to assist Scotland with its 2034 target?
No debate on smoking could be complete without consideration of vaping, which has come up several times today. For many, vapes are a helpful route out of smoking and towards less harm. They are potentially a useful aid for many adult smokers, which has been proven by evidence from Cancer Research UK. However, as we have heard today, understandable concerns about youth vaping are growing, particularly about the cheap, disposable vapes most widely used by children. There have been many calls throughout Scotland to ban disposable vapes, and that movement is gaining traction, with 21 of the 32 councils in Scotland now backing a national ban on those products. It is true that single-use e-cigarettes are often discarded irresponsibly and, because of their composition, do not break down in the environment. Even if users attempt to recycle them, as is theoretically possible, they will find that the infrastructure required to do so does not exist in many places.
I am particularly troubled by the rise in youth vaping, about which several hon. Members have already expressed concern. Those products should never have been intended for children or for non-smokers, yet recent surveys have found an increase in experimental use among 11- to 17-year-olds. The cynic in me thinks that big tobacco may have designed those products to have child appeal, and ensure a future generation of consumers. Disposable vapes are brightly coloured, available in flavours attractive to children, and are in a price range that is accessible to those with limited funds. They should probably be banned but, at the very least, an excise tax on disposables should be introduced. That would put the price up and make them far less affordable to children, thereby driving down the use of these environmentally damaging products.
In conclusion, while the rate of smoking continues to fall in Scotland, it remains too high to be confident about meeting our targets of reducing it by 2034. We must all come together to eliminate smoking and stop the spread of nicotine addiction. I thank all hon. Members for their contributions and continued dedication to trying to eliminate the UK’s leading cause of preventable death. I urge Ministers to commit to implementing a “polluter pays” levy to help fund much-needed tobacco control action not just in England but throughout the devolved nations.
Andrew Gwynne (Denton and Reddish) (Lab)
It is a pleasure to see you in the Chair, Mr Sharma. At 9.30 am, it would have been a pleasure to see anybody in the Chair. I place on the record my thanks to you and Mr Evans for stepping into the vacancy. I congratulate the hon. Member for Harrow East (Bob Blackman) and my hon. Friend the Member for City of Durham (Mary Kelly Foy) on securing this important debate and on their tireless work on this issue. When we create a smoke-free England—the consensus here today is for a smoke-free Britain—it will be in no small part thanks to their tremendous efforts and campaigning.
I also pay tribute to my hon. Friends the Members for Birmingham, Erdington (Mrs Hamilton) and for Blaydon (Liz Twist), and the hon. Members for Southport (Damien Moore), for Strangford (Jim Shannon) and for Arfon (Hywel Williams), as well as the hon. Member for Linlithgow and East Falkirk (Martyn Day), who leads for the Scottish National party on health issues. There is consensus across the Chamber on where we need to go.
In 2019, the Government committed themselves to a Smokefree 2030. As Members across the House will be aware, that means a smoking prevalence of around 5% of the population. The commitment was welcomed across the House, and for good reason: despite significant progress in driving down smoking rates over the past 40 years, smoking, as we have heard today, is still the biggest cause of cancer and death in the United Kingdom. Smoking causes around 150 cancer cases every day, and smoking tobacco kills one person every five minutes.
Those deaths are made all the more tragic by the fact that they are avoidable. By creating a smoke-free England, we would empower people to live happier, longer and healthier lives, and substantially reduce pressure on our NHS, as Cancer Research UK estimates that up to 75,000 GP appointments could be freed up each year if we put an end to smoking. That would all come alongside substantial economic benefits, as smoking costs the public finances an estimated £20.6 billion. The argument for a smoke-free future is overwhelming. We just need to get there.
In a recent response to a written question I tabled, the Minister stated that his Department is “confident” that it is
“on course to achieve…Smokefree 2030,”
but Cancer Research UK estimates that the Government are, as we heard from the hon. Member for Harrow East, on track to miss their Smokefree 2030 target by around nine years. Smoking cessation services have faced cuts of 45% since 2015-16, and in some of the most deprived areas of England, smoking rates are increasing, not decreasing.
That increase is incredibly concerning, and it risks exacerbating health inequalities that are already widening, in some cases at an alarming rate. Therefore, I would be grateful if the Minister explained why his Department is so confident that the 2030 target will be met, and where the Government’s modelling is, as well as why it differs from that of Cancer Research UK.
The announcements the Minister made in April were undoubtedly welcome, but they do not seem to me to be ambitious enough or wide-ranging enough to get us back on track. If that is the case, and if we are to miss the 2030 target, the Department of Health and Social Care needs to fess up and say how it plans to keep its pledge. The truth is that the foot has been taken off the pedal with regard to Smokefree 2030. The Government wasted precious time, and unless they act swiftly the target will be beyond reach. I do not want that. I want the Minister to succeed in achieving the target, and I do not think anybody in the Chamber wants us to miss it.
We need action, so I will press the Minister on a few key points. First, will he confirm whether the Government plan to announce any further measures to tackle smoking prevalence, or whether the April announcement is intended to replace the tobacco control plan and the health disparities White Paper?
Secondly, the April announcement referred to an updated strategy to tackle illicit sales and imports of tobacco due to be released at some point this year. There is a backlog of reports to be published sometime this year. We would like this one to be at the front of the queue, not the back. Will the Minister update Members on where the work has got to and when we can expect publication of the strategy?
Thirdly, the Minister will no doubt be aware that Cancer Research UK and ASH have made several recommendations to the Government, most notably on an increase in the age of sale and a “polluter pays” tobacco levy. I would be interested to hear what recent assessment he has made of those proposals and whether they will inform his Department’s work moving forward.
Finally, cross-Government guidance on protecting public policy from the vested interests of the tobacco industry was published yesterday. That is a step in the right direction, but will the Minister set out how the guidance will be disseminated to all branches of Government, given that it is cross-departmental?
The last Labour Government had a proud history of taking bold action to drive down smoking prevalence. We implemented the indoor smoking ban and took action to tackle cigarette advertising, and we are still feeling the benefits of those policies to this day. We want to continue that legacy and, indeed, the measures that were brought in more recently. That is why creating a smoke-free England within a smoke-free United Kingdom will be an absolute priority for the next Labour Government.
Our recent health mission launch set out the first steps of our road map to a smoke-free Britain. They include making all hospital trusts integrate opt-out smoking cessation interventions into routine care and expecting every trust to have a named lead on smoking cessation, so that every single clinical consultation counts towards health improvement. We would legislate to require all tobacco companies to dispel the myth that smoking reduces stress and anxiety. We would also ban vapes from being advertised to children and instead work with councils and the NHS to ensure that vapes are being used to stop smoking—full stop.
That is just the start of our road map to a smoke-free United Kingdom. The next Labour Government wholeheartedly believe in a smoke-free future, and we will not shy away from taking the bold steps that are needed to protect and improve public health. Until then, we are ready to work constructively and across party lines to build a smoke-free England within a smoke-free United Kingdom. I look forward to hearing how the Government plan to get us back on track.
The Parliamentary Under-Secretary of State for Health and Social Care (Neil O’Brien)
It is a pleasure to serve under your chairmanship, Mr Sharma. I thank my hon. Friend the Member for Harrow East (Bob Blackman) and the hon. Member for City of Durham (Mary Kelly Foy) for securing this hugely important debate, and I thank other hon. Members for some excellent speeches. I was haunted by the image, conjured up by the hon. Member for Birmingham, Erdington (Mrs Hamilton), of people with COPD being wheeled outside to have one more gasp—I think we have all seen things like that. It has also been a pleasure to have contributions from all four parts of the UK. I shall try to respond to as many of the questions as possible.
In 2019, the Government produced a Green Paper on preventive health, in which we introduced our ambition for England to become smoke free by 2030. The ambition aims to shift the focus from treating ill health to preventing it in the first place. That means three things: first, discouraging children and adults from starting; secondly, helping smokers to quit; and thirdly, moving smokers to less harmful alternatives, such as vapes.
That is exactly what we have been doing over the last decade, and we have made significant progress. In recent years, the Government have introduced a range of legislation. We have introduced a UK-wide system of track and trace for cigarettes and hand-rolling tobacco to deter illicit sales, and from May 2024 that will cover all tobacco products, including shisha and cigars. We have continued to invest in stop smoking services, to help smokers get the right support for them. We continue to support the NHS, and last year alone provided £35 million to the NHS long-term plan commitments on smoking. Of course, we have also doubled duty on cigarettes and introduced a minimum excise tax on the cheapest cigarettes. Between them, those measures have helped to ensure that adult smoking prevalence in England is at its lowest level on record, 13%, and that youth smoking rates are the lowest on record—in 2021, 3.3% of 15-year-olds were regular smokers.
If we are to achieve our 5% ambition by 2030, however, we must move faster and be bolder. That is why on 11 April I introduced a package of new measures to help make more progress. To help smokers quit and move towards less harmful alternatives, we announced funding for a new national “swap to stop” scheme, which is the first of its kind in the world at a national level, to encourage 1 million smokers to swap cigarettes for vapes. We have begun to set up pathfinders, where local authorities can apply for starter kits, and the first shipments of vapes should begin going out later this summer. Local authorities across the country have expressed an interest, and we are also working with social landlords, homelessness charities, jobcentres, food banks and all the other groups that can help smokers to quit.
Despite its effectiveness as a tool to quit smoking, we must be aware of the risks that vaping poses to children and non-smokers, as various Members have pointed out. Over the past couple of years, we have seen an alarming rise in children vaping, and that is why we are taking action. We recently held a call for evidence to look at all the opportunities to reduce the number of children using vape products. It closed on 6 June and we are analysing the responses. We will publish our response within 12 weeks.
To stop children buying vapes, we need to get businesses to comply with our regulations and abide by the standards we have set. Of course, there are retailers out there selling vapes to children. That is why we recently created a new enforcement unit, which has three priorities: to tackle products imported and traded illicitly, to remove illegal products from the market that do not comply with our regulations, and to stop under-age sales to children. The unit will help remove illegal products from shelves, stop them coming through our borders and stop the sale of vapes to children.
Dr Hudson
I thank the Minister for articulating some of the risks around disposable vapes. I want to raise the risks they pose to animals. Just the other day, I was out walking my young dog Poppy and she came out of the undergrowth with a bright pink, melon-flavoured disposable vape in her mouth. I was able to get it out of her mouth, but, as a vet, I shudder to think what would have happened if she had chewed, crunched or swallowed it. Does my hon. Friend agree that we need more public awareness of the risks of vapes to health, the environment and even animals?
Neil O’Brien
That is a fascinating point, and my hon. Friend is absolutely right that we need to be aware of the environmental and wider impacts of disposable vapes as we consider our next steps.
At the end of May, the Prime Minister announced several further measures to address youth vaping, including closing the loophole that allowed industry to give out free samples, increasing education and supporting dedicated school police liaison officers to keep illegal vapes out of schools. The measures support our wider approach to tackling youth vaping—not only preventing supply, but reducing demand. We also need to take action against businesses that break the rules and protect businesses that abide by them.
As well as non-compliant vapes, the illicit trade in tobacco undermines our work to protect public health. To answer the question from the hon. Member for Arfon (Hywel Williams), His Majesty’s Revenue and Customs will produce a new strategy to tackle illicit tobacco later this year. The strategy will outline joint efforts to catch and punish those involved in the illegal market and will build on the work we are already doing—my hon. Friend the Member for Harrow East alluded to it—to use the registration system as a way to improve enforcement.
Another big priority is to help pregnant women quit smoking. The rate of smoking in pregnancy remains stubbornly high; increasing the number of women who have a smoke-free pregnancy is crucial. To help expectant mothers, we have set up a financial incentive scheme, married with behavioural support. We aim to ensure that every pregnant mother who smokes across England gets help to quit. That work is based on a successful scheme in Greater Manchester, which has seen one of the biggest drops in smoking in pregnancy anywhere in the country.
To help more smokers quit, we need to be more innovative in how we connect with them, with the right type of support and messaging at the right time. To address the question asked by the hon. Member for Blaydon (Liz Twist), we are going further on mental health and are ensuring that everyone who is in mental health treatment is signposted to stop smoking services, because there is a link between the two.
Another potential opportunity that hon. Members have raised is our plan to provide pack inserts in smoked tobacco packets, with positive messages and information to help more smokers quit. We intend to launch a UK-wide consultation shortly and are engaging with devolved Administrations on the matter. To answer the question raised by the hon. Member for Strangford (Jim Shannon), we are absolutely having those conversations.
We are committed to doing all we can to prevent people from starting smoking, to give smokers the support they need to quit, and to tackle the damage from the illicit market. I talked about some of the measures that I recently announced, but we will have more to say in the major conditions strategy in the not-too-distant future. I thank my hon. Friend the Member for Harrow East and the hon. Member for City of Durham for securing this hugely important debate, and I look forward to making further progress towards our ambition for a smoke-free England and a smoke-free UK by 2030.
Bob Blackman
I thank the Minister for his reply to the debate; the co-sponsor of the debate, the hon. Member for City of Durham (Mary Kelly Foy), for her contribution; the Labour Front-Bench spokesman, the hon. Member for Denton and Reddish (Andrew Gwynne), for his support from across the Chamber; and our SNP colleague, the hon. Member for Linlithgow and East Falkirk (Martyn Day), for his contribution. That we have had contributions from Northern Ireland, Wales, Scotland and England demonstrates the strong cross-party and cross-country support for making the United Kingdom smoke free. It is reassuring to hear people support the campaign with such enthusiasm.
I urge the Minister to consider carefully the questions and points that were put during the debate as we look forward to the action that is required to prevent people from starting to smoke and to encourage those who do smoke to quit. At the end of the day, this is about preventing avoidable deaths, and without that action, we will, unfortunately, see far too many people become ill and die prematurely.
While I have the floor, I will remind colleagues that on 19 July the all-party group will be hosting a reception to mark the fourth anniversary of the Government’s Smokefree 2030 ambition. We hope to hear from both the Minister and the Opposition spokesman, and I invite other colleagues to contribute to the session. I hope that we will be able to celebrate some new announcements from the Government, and that we will move forward to a smoke-free England in 2030 jointly and severally.
Finally, I thank you, Mr Sharma, and Mr Evans earlier, for stepping into the Chair. When we were all sitting here before the start, we were wondering whether the debate would take place at all, and had you not stepped in, it would have been very difficult to continue. I commend the motion to the House.
Question put and agreed to.
Resolved,
That this House has considered the Smokefree 2030 target.
Volunteer Groups in Rural Settings
(10 months, 3 weeks ago)
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Mr Virendra Sharma (in the Chair)
I will call Anthony Mangnall to move the motion and then call the Minister to respond. There will be no opportunity for the Member in charge to make a winding-up speech, as is the convention in 30-minute debates.
Anthony Mangnall (Totnes) (Con)
I beg to move,
That this House has considered the role of volunteer groups in rural settings.
This is not so much a debate, but a statement of appreciation and a tipping of the hat to David Cameron’s efforts around the big society. Those of us fortunate enough to live in a rural community are acutely aware that much of what takes place around us is done by the hard work of volunteers. From Dartmouth’s food and music festivals and royal regatta to the Kingsbridge show, Brixham’s pirate festival, Salcombe’s Crabfest and Totnes’ Christmas market, all are organised, operated and supported by legions of volunteers. Those successful events help to raise money, drive tourism and provide tailored experiences in keeping with the spirit and character of every location in which they take place.
For the purpose of this debate, I will specifically focus on the volunteering groups providing local services throughout the year to people across south Devon and, indeed, the whole country, often doing so under the radar, without thanks and making a huge difference. They are helping to decentralise the centralised bureaucratic model and provide services that operate effectively at a local level with long-term impacts. They are encouraging a new generation of volunteering and philanthropy and social engagement. They are helping to empower communities to take charge of their own future rather than waiting for the lumbering, clanking machines of state to catch up. Above all, they are providing local solutions to national problems.
For instance, south Devon is home to LandWorks, an extraordinary charity based in Dartington that seeks to provide a supported route back into employment and the community for those in prison or those at risk of going to prison. At its core, LandWorks provides a solution to reducing recidivism, which costs the UK £18 billion a year. It celebrates its 10th anniversary this year, and thanks to the extraordinary work of Chris Parsons, Ted Tuppen and countless volunteers, it has grown into an organisation that is effectively changing the landscape when it comes to preventing reoffending.
The charity’s work in helping to equip trainees with skills and support to engage with society is helping to drive down reoffending rates. Compared with the national average, the figures are stark. In the UK, the reoffending rates for imprisonment and community sentences are 36.7% and 28.8% respectively. For prisoners released from sentences of less than 12 months, the reoffending rate is 53.9%. At LandWorks, the reoffending rate has never exceeded 6% during 10 years of operation.
This local solution may well offer a strong guide for how we can bring down reoffending nationally. Exploring the LandWorks model on a national scale could help to reskill and equip individuals with the skills necessary to lead successful, productive lives. The Minister is welcome to visit LandWorks, and I might encourage him to bring the Minister for prisons, parole and probation. LandWorks is a strong reminder of how some of the best and most effective solutions to national problems come not from Westminster or Whitehall, but from a small band of volunteers who set out to make a difference within their local community. Government would do well to look closely at the model.
It has been my pleasure and honour over the past three and a half years to visit and meet many extraordinary volunteering groups across south Devon, so forgive me for this rather lengthy list: Prickles in a Pickle, a hedgehog sanctuary; Till the Coast is Clear, an organisation dedicated to keeping our coastline plastic and rubbish free; Dart Sailability; Dartmouth in Bloom and Kingsbridge in Bloom; SASHA, a domestic violence prevention charity; Cued Speech; and all the local care groups, such as Totnes Caring, Dartmouth Caring, Kingsbridge Age Concern, Kingsbridge and Saltstone Caring, South Brent Caring and Brixham Does Care. From meeting all those groups, I have created working groups to enhance their activity, such as my social care group, where best practices and resources can be shared, common problems and difficulties can be discussed and solved, and I can be given my marching orders.
Jim Shannon (Strangford) (DUP)
I commend the hon. Gentleman on bringing this forward; what an important subject it is. I would add to that list young farmers’ clubs, and I would do so for a purpose. Does he agree that isolation is prevalent among farmers, with data indicating that in Northern Ireland, for example, a third—33%—of all farmers express concerns about loneliness and isolation? There are organisations in my area—I know he has them in his area as well—such as young farmers’ clubs. They are a vital tool in the battle for good mental health for our farmers. The isolation of rural communities and the impact that loneliness and desolation sometimes have on people is hard to quantify, but it is real.
Anthony Mangnall
I thank the hon. Gentleman for continuing his record of intervening in nearly every one of my Westminster Hall debates. He does so with absolute accuracy and a commitment to raise important issues such as that. The National Farmers Union and the Country Land and Business Association are fantastic organisations, but we need to look at how we can help within communities, such as in agriculture and fisheries in my community. During the pandemic, I saw fisheries groups, farming groups and young farmers band together to help in the community. It is right to use such a debate to discuss and contemplate how we can support those groups in turn, how we can reassess the structures that keep them going and ensure that we can tackle loneliness and, indeed, suicide, which is all too prevalent in the agricultural sector.
Tim Farron (Westmorland and Lonsdale) (LD)
I wondered whether it might be helpful to intervene after another intervention, but the hon. Gentleman is being very generous. I congratulate him on all that he has said; he is making really important points and delivering them well. B4RN—Broadband for the Rural North—is a wonderful community interest company that has connected thousands of homes in rural Cumbria and north Lancashire to the internet, ensuring that there is connectivity. It is basically run by volunteers on the ground. The volunteer groups in Warcop, Sandford, Coupland Beck, Bleatarn and Ormside have done brilliant work alongside B4RN to bring hyper-fast broadband to their communities, but at the eleventh hour, the Government pulled the rug from under them by saying that their communities are no longer a priority area. Does the hon. Gentleman agree that the Government should rethink and back these volunteers and their communities?
Anthony Mangnall
I am always concerned about any platform that might help the hon. Gentleman to get his message out to his constituents. In this instance, however, he is absolutely right. When living in a rural constituency, as I do in south Devon, internet connectivity is absolutely essential. We have upgraded our internet in south Devon through volunteer groups working together with state and private enterprise—something I will touch on later—and we absolutely need to look at how we can find the balance between private, public and charitable to ensure that people are getting the services they need, especially in the new working environment post pandemic. I thank him for his intervention.
Volunteer groups are the fabric of our society in rural settings, and we must do all we can to sustain, encourage and learn from them. In 2020, I visited Hope Cove lifeboat station, and I was made aware of the UK’s 54 independent lifeboat stations. These non-Royal National Lifeboat Institution stations operate at a local level, staffed by volunteers and funded by local donations. They do not benefit from being part of a wider system, at least until now. From seeing the vital work of Hope Cove’s independent lifeboat station and speaking with volunteers, I was energised into action. I am pleased to inform the Minister—and you, Mr Sharma—that since that meeting with Hope Cove lifeboat station, my colleague Rachel Roberts in south Devon and I have worked extremely hard to create the National Independent Lifeboat Association, known as NILA. I am grateful to some Members here who helped me in that process.
NILA seeks not to take away the independence of independent lifeboat stations, but to promote and highlight their work while ensuring that the machinery of state is taking notice of its work and using these vital stations to keep people safe on our waterways. Since its establishment, a board has been appointed, with myself as president—that is, until I am usurped by someone important. The Charity Commission has registered it as a national charity, and just last month, United Kingdom Search and Rescue admitted it to its ranks. Once again, this is an example of where local organisations and volunteer-led services can provide a national service without huge costs and bureaucratic rigmarole to deliver an important and necessary service.
Beyond LandWorks and NILA, I will mention one group in detail, I believe for the first time in the House of Commons: the Rapid Relief Team. I am grateful that some of them are in the Gallery today. The RRT was born out of the work of the Plymouth Brethren, and I confidently suggest that it has helped people in nearly every constituency across the country. I had my own dealings with the RRT a few weeks ago, when a constituent was in dire need of medical equipment. I did not know where to turn; I asked integrated care boards and local healthcare groups, but I found myself being continually rebuffed—that is, until I spoke to the RRT. Within a day of contacting it about my constituent’s concerns, my constituent was greeted and given the medical equipment he needed. He is now living a life where he can even get out and about, and I am particularly grateful to the RRT for its efforts in that case.
Across the UK, the RRT has 3,302 approved volunteers, and its most recent impact report shows how it has effectively set about helping in the community. It has supported more than 366 events, served 95,027 meals and gifted 22,571 volunteer hours. In south Devon and across the country, the RRT has helped to deliver incident and training exercise support to emergency services, and relief at home and abroad. It is a flexible organisation that can meet the need from unexpected events.
The work of the RRT takes it across Europe, America, Australia and New Zealand, as well as the UK. It has effectively harnessed the power of teamwork by working with the private sector to encourage philanthropy and volunteering. It is even more remarkable to consider that its work has focused on emergency and disaster relief, homelessness, poverty and hardship, youth, and health and disability, and that it has been able to effectively move the dial in those areas without a single penny of Government funding.
We owe those organisations, and all the ones that I have not mentioned, a huge debt of thanks and gratitude for their work. The three examples I have given remind us how to solve local problems from a grassroots perspective, as well as how to empower communities and encourage greater private sector involvement. They also remind us that the state does not have all the answers, nor does it always need to be involved. However, although fantastic organisations such as the RRT, LandWorks and NILA all depend on volunteers, the statistics since the pandemic have shown a concerning decline in the number of people willing to volunteer. We need to consider how we can encourage a return to volunteering. Failure to do so will irreparably impact the fabric of rural and, indeed, urban communities, and only cost the Government more in the future.
Several funds have been made available through national and local government. For instance, the £5 million platinum jubilee village hall fund was announced, and the bidding in for the funding process ended in January this year. May I ask the Minister how much of that money has been allocated to date, and whether any extension is being considered? The UK search and rescue volunteer training fund helps organisations such as NILA and the RRT to train their volunteers to go out and be as effective as possible. It would be interesting to have the statistics on how many people are being trained every year, and to know how the bidding process can be streamlined to ensure that it is as effective as possible.
The Minister’s Department has also announced the volunteering futures fund; I believe that £7 million has been made available to volunteering funds across the country. May I ask the Minister how much of that money has been allocated, whether the funding will be continued over the next few years, and whether we can provide certainty to local organisations, where necessary, that it will be available in the next five and 10 years? Of course, other methods can be used, such as local authority funding, section 106 funding and allowances within councils to be able to talk about these issues.
Time, job constraints and now costs are putting off volunteers. We need to think about how we can encourage more people to take up the worthy work of volunteering, not necessarily through regulation, but through encouragement and co-operation with fantastic organisations such as those represented by the people who are attending the debate. We need to think carefully about how we support volunteer groups across this country. I suggest that by encouraging private sector involvement, as well as Government adoption of local solutions, we can empower local communities and deliver across the country. Finding the balance between state, private and charitable sectors is the answer to addressing many of the challenges we face.
If Members will forgive me for recommending a book, this is well presented in “The Third Pillar: How the State and Markets are leaving Communities Behind” by Raghuram Rajan, the former Indian central bank leader. The case is made about ensuring that the balance is found between each of the three core structures in our society and ensuring that we can get the resources to where they need to go. We need to reset the balance and make the case for better co-operation between the three pillars so that we can meaningfully ensure that our volunteer groups can effectively deliver on their objectives, and support our rural communities.
There is, as ever, more work to be done in this field, but I conclude by saying that I owe a debt of gratitude to the extraordinary volunteers who have done so much in my constituency and across south Devon, and to all the volunteer groups who have done so much across all of our respective constituencies and, indeed, the country. Whether they worked during the pandemic, work abroad or work in the United Kingdom, they do so because they have pride in the work that they do and because they feel a need to take a part and a hand in society. As politicians, as Government and as officials watching this debate, we must do all we can to encourage that work and action. I look forward to hearing the Minister’s response.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stuart Andrew)
It is a pleasure to serve under your chairmanship, Mr Sharma. I thank my hon. Friend the Member for Totnes (Anthony Mangnall) for securing this important debate on volunteering in rural settings. I mean that most sincerely. Having spent most of my life working in the charitable sector, I know that we could not have provided anything like the services that we did in the hospice movement without a band of volunteers not just providing excellent support to the hospice staff but raising significant amounts of money.
Volunteering is vital for society and provides enormous benefits both to the volunteer and to the community that they serve. It connects communities, builds people’s skills and networks, boosts their wellbeing and improves their physical health. My hon. Friend rightly pointed out the issues around loneliness. That is an important part of my portfolio, and I see a strong link between tackling loneliness and the opportunities created through volunteering.
The Government are committed to supporting volunteering. I am delighted to have the opportunity to discuss such an important issue today and to highlight some of the many ways in which we are supporting volunteers across the country. However, first I would like to thank all the volunteers who contribute their time and energy to support others and make a real difference in their communities. They are ordinary people doing extraordinary things to help others. Our latest figures show that around 25 million people in England volunteered at least once in the previous 12 months.
I was delighted to take part in the celebration of Volunteers’ Week at the start of the month. I had the pleasure of presenting a Points of Light award to Joana Baptista, a youth activist who set up her social enterprise, “She Dot”, to encourage girls to pursue traditionally male careers. I also met the amazing and brilliant team and young people at the Active Communities Network in Elephant and Castle, which combines arts, sports and volunteering to create transformative opportunities for young people.
The British public’s enthusiasm for volunteering was self-evident during the Big Help Out on 8 May, which formed part of the celebration of the coronation of His Majesty King Charles III. The campaign organisers estimate that more than 6.5 million people took part by volunteering in their communities. I am proud that we were able to support that campaign. Many organisations with a large rural presence took part and provided volunteering opportunities on the day, including the Campaign to Protect Rural England and the National Federation of Young Farmers’ Clubs.
Volunteers support society and their communities in a wide range of ways each and every day: they support the health and wellbeing of the nation by giving their time to health charities and the NHS, and we will always be grateful to the hundreds of thousands of people who stepped forward during the pandemic; they are the lifeblood of community sports and large events such as the Commonwealth Games; and they are also the people who see changes that are needed in their communities and go about making those changes. That is why we shine a light on those people through the Prime Minister’s daily Points of Light award.
I am grateful to my hon. Friend for highlighting the vital role that volunteering plays, particularly in rural areas. People in rural areas such as those in his constituency can face particular challenges associated with geographical isolation, such as the sparsity of public transport and access to public services. He rightly gave some excellent examples of the work that people do to tackle some of those issues. For example, the South Western Ambulance Service covers one of the most rural areas in the UK, and every day volunteers from across the south-west support their local communities. That ranges from supporting someone before an ambulance arrives, as my hon. Friend mentioned, to saving someone’s life. Of course, the Royal National Lifeboat Institution and the independent lifeboat organisations that he mentioned—and I congratulate him on his election as president of the national association—are critical, as I know from my time growing up in Anglesey. They all rely on volunteers, who do some outstanding work and put their own lives at risk to save others.
I was encouraged that the most recent community life survey showed that, despite the challenges faced in rural areas, volunteering rates in rural areas are actually higher than in urban areas. That demonstrates the commitment and willingness of people to support their neighbours and local communities. We are committed to growing the number of volunteers and improving the volunteer experience across the country, including in rural areas. That includes supporting the next generation of volunteers and enabling them to create a lifelong habit of volunteering. An example of this is the #iwill fund, which is a joint initiative between the Government and the National Lottery Community Fund that has funded a number of projects that support young people volunteering in rural areas. For example, in Derbyshire, the #iwill fund has partnered with the Pears Foundation and other local partners to create a new young people’s forest that is situated on the site of two former coalmines. The funding enables young people to design and create the new 400-acre woodland, and over 250,000 new trees have been planted.
There are, however, barriers to overcome to ensure that everyone who wants to volunteer can volunteer. There has been a dip in volunteering following the pandemic, which is why we are providing funding and working with partners to ensure that there are clear entry points for volunteering, more flexible volunteering roles that fit with people’s work and life demands, and help for people to identify available volunteering opportunities. One key initiative is Vision for Volunteering, which is a voluntary sector-led initiative that aims to develop volunteering in England over the next 10 years. One of the vision’s themes is to increase equity and inclusion by ensuring that volunteering is accessible and welcoming to everyone, everywhere.
In March, we announced the Know Your Neighbourhood Fund, which is a funding package of up to £30 million, including £10 million from the National Lottery Community Fund, that will widen participation in volunteering and tackle loneliness in 27 disadvantaged areas in England. It is designed to generate learning about how people in those communities can be supported to volunteer and boost their social connections. Those communities include areas that are predominantly rural, including areas in Devon.
In his opening speech, my hon. Friend the Member for Totnes referred to the Rapid Relief Team, which provides essential support in the event of emergency. It is a fantastic organisation that delivers practical support including, as he mentioned, food parcels for people in need, hot meals for emergency responders dealing with crises and a multitude of other types of support, including support for refugees from Afghanistan who are settling here in the UK. We are incredibly grateful to the Rapid Relief Team and all their volunteers for the tremendous work that they do. As my hon. Friend mentioned, it was established by the Plymouth Brethren Christian Church, and I take this opportunity to thank faith-based charities for their wonderful volunteering. When a major factory in my constituency caught fire, it was exactly those teams that were there to support the people putting their lives at risk as they tried to control the fire.
The voluntary sector has a vital role to play in the event of emergencies, such as flooding and heatwaves. Those organisations have unique local insights into the needs of their communities and, as my hon. Friend rightly said, they can sometimes adapt much quicker. Given the sector’s unique capabilities, it is encouraging to see local resilience forums work collaboratively with it to support their local response to such events. The Government are strengthening the links between emergency responders and the voluntary sector through the Voluntary and Community Sector Emergencies Partnership. That partnership is co-chaired by the British Red Cross and the National Council for Voluntary Organisations, and it brings together organisations, ranging from large household names to micro local community organisations, that can assist in the event of emergencies. I am delighted that we are continuing our work with it, including by funding it to increase the effectiveness of the sector’s emergency preparedness, planning and response.
My hon. Friend mentioned LandWorks. I spent a short six weeks in the summer of last year as the Prisons Minister, so I know how important that work is. He is right that it supports people in prison or at risk of going to prison. I congratulate it on its vital work in supporting those who might otherwise take a different path; it is a great example of an organisation funded by the National Lottery Community Fund.
My hon. Friend asked about the platinum jubilee village halls fund. As he is aware, the Department for Environment, Food and Rural Affairs announced that £3-million fund last year, and it is designed to support the modernisation and improvement of village halls. I understand that it has been extremely popular. The last funding round closed in March. I am happy to write to DEFRA and update my hon. Friend when I have more information.
My hon. Friend also mentioned the volunteering futures fund. As he rightly said, more than £7 million was made available to improve the accessibility of volunteering. That funding is now fully allocated, and we are currently evaluating that scheme to see what worked and identify where we can make improvements. I see community wealth funds, which make use of dormant assets, as an opportunity to build up skills in areas where there is not the infrastructure that is needed to bring about more volunteering and community work. I look forward to updating Members as we develop that policy.
This debate has demonstrated that we share the ambition of supporting volunteers to make a real difference in their communities, including in rural areas, such as my hon. Friend’s constituency. I am proud of the Government’s record in developing volunteering in England, whether by supporting our strategic initiatives such as the vision for volunteering, or directly funding projects through the funds I mentioned. I thank my hon. Friend again for listing a whole raft of organisations in his constituency—he listed them so fast that I could not write them down. I thank him for proposing this valuable discussion to highlight the unique challenges faced in rural areas and, crucially, the role that volunteers play in addressing societal change in those wonderful settings. I thank every single one of them for their contribution to our society.
Question put and agreed to.
Co-operatives and Alternative Businesses: Local Authority Support
(10 months, 3 weeks ago)
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Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I beg to move,
That this House has considered the role of local authorities in supporting co-operatives and alternative businesses.
It is a pleasure to serve under your chairmanship, Mr Dowd. I am proud to declare my interest as a Labour and Co-op MP since 2005, and as a member of a co-operative society. I shall discuss the importance of co-operatives and alternative businesses. It is great to see the Minister here because I want to talk in particular about how councils have a role in promoting co-ops in their areas.
It is worth giving the basic background. Co-operatives are mutual societies, often locally based, that invest their profits with their members and services. That means that they are very much part of the local community, with their activity and finances in that local area. They put economic power directly in the hands of local people, ensuring that the benefits of economic growth are felt by those who create it.
As I said, I want to highlight the role of councils. There are now 41 councils up and down the country that are members of the co-operative councils’ innovation network. Those councils believe that traditional models of top-down governance and economic growth are not always fit for purpose. By being part of that network, they choose to reclaim the traditions of community action, community engagement and civic empowerment that can transform communities.
There were 7,200 co-operatives in the UK in 2021. Those include 2,500 social clubs in the trade union sector; 721 in retail; and 720 in housing, which is an area of particular interest to me. There are 14 million people in the UK who are members of co-ops. This is a significant sector that reaches into many areas of our lives. Co-ops directly employ 250,000 people. In 2015, co-ops produced 2% of the UK’s GDP. That is impressive enough but, compared with New Zealand where co-ops produce 20%, France and the Netherlands, where they produce 18% in each, and Finland where they produce 14% of GDP, there is still a lot of opportunity, to put it positively, for co-ops in the UK. There is also a lot of wasted opportunity, when considering what they could do to deliver for communities and the wider economy.
In 2021, UK co-operatives had an annual turnover of £39.7 billion, and they have grown every year since 2017. They are significant and important in economic terms. Some people might ask why promote co-ops rather than other businesses. Co-ops are more ambitious than other businesses, according to research by the Co-op party and its allies. As many as 61% of co-ops expressed ambitions to grow, compared with 53% of small businesses generally in the UK. That might be because some are smaller, so it is easier for them to have that ambition. Obviously, businesses are going through a difficult time at the moment. Nevertheless, that is a sign of people’s personal investment in co-operatives.
Co-operatives are more resilient. Co-op start-ups are almost twice as likely to survive the first five years of trading, compared with start-ups generally. Co-ops were more resilient in the pandemic, with the number growing by just over 1% between 2020 and 2021. It is interesting that co-ops have a smaller gender pay gap than other businesses: 9% compared with 12%, based on the median hourly wage in Great Britain, and covering Northern Ireland as well. That may be because co-ops have a flatter pay scale and less of a hierarchy, but that is nevertheless a significant fact when looking at that important issue.
I want to highlight what local government is doing to promote co-ops. I will start my canter around the country with Greater Manchester and its Co-operative Commission, which was established by the Greater Manchester Combined Authority and launched by Mayor Andy Burnham, to make recommendations aimed at enabling the co-operative and mutual sector to make the best possible contribution to Greater Manchester. Of course, that is very fitting considering where the Rochdale pioneers came from. Mayor Burnham is going back to the roots of his region.
The commission focused on recommendations in three sectors: housing, the digital economy and transport. They were all chosen because of their fit with the Greater Manchester strategy. The commission promoted co-ops to reduce inequality, improve education and employment. Its stated aim is
“To help co-ops to expand into other areas of the economy to make Greater Manchester the most co-operative region in the UK.”
I may have a bone to pick with Mayor Burnham, because I hope that east London might beat him to that title. Nevertheless, the Mayor accepted those recommendations by the commission, so that work is now under way to ensure that co-ops play an important role in the north-west.
Ownership hubs have been set up in several combined authorities across the UK. They began initially in South Yorkshire under the former Mayor, my hon. Friend the Member for Barnsley Central (Dan Jarvis). The ownership hub model has also been launched in Greater London. The aim of that is to promote both co-operative and employee-owned business growth. In South Yorkshire, the collaborative partnership works with the combined local authorities in the region and the South Yorkshire Growth Hub, where businesses can get support to set up or indeed convert their organisation to worker or employee ownership.
The South Yorkshire Growth Hub has experienced and knowledgeable advisers, who can offer support on setting up new businesses, upskilling workers and gaining access to finance. In London and Greater London, the London Growth Hub, under Mayor Sadiq Khan, will be tasked with increasing the growth of co-ops across different London boroughs, replicating—we hope—the successes of the South Yorkshire Growth Hub. It is significant that the hubs provide knowledge and expertise, because sometimes one of the barriers to setting up a co-op is that, seen from the outside, there are some seemingly complex legal models that have to be established, but they are not so complex if a business has a helping hand to guide it through.
Moving to the west midlands, Birmingham City Council has taken a community economic development planning approach, which engages residents, community groups, local businesses and voluntary sector organisations as part of its economic development projects. For example, a community building has been built on a disused playing field next to Edgbaston reservoir, and the land is now used for growing food. Again, that project is very much rooted in the local community.
In January, Liverpool City Council adopted a community-led housing policy, which aims to unlock vacant land and properties for community groups to convert into new homes. The policy was devised in collaboration with local community groups. These groups are already forming land trusts and co-ops, and they will work alongside council officers and community-led housing advisers to build new houses.
In my own constituency, I know the vital importance of housing, the problem of shortage, the overcrowding situation and how little empowerment there is for many residents, whether they are private renters or council tenants. Co-ops are a really great way to give people control and power over their own homes.
I have mentioned east London. As the MP for Hackney South and Shoreditch, of course I will focus on what my own borough is doing, under the excellent leadership of Mayor Philip Glanville, a Labour and Co-op mayor who was directly elected by the residents of Hackney.
In setting its budget for the current financial year of 2023-24, Hackney set aside £70,000 to support the creation of co-ops, in order to deliver services where there is market failure and no business case for in-sourcing. Hackney has a good track record of in-sourcing many services, including our street sweeping and cleansing, but where there is not the right case—perhaps because the service is too small—Mayor Glanville wants to consider alternatives. At the moment, these include social care, affordable childcare and community energy. Where Hackney cannot in-source services and there are existing co-ops, it wants to look to local businesses, social enterprises and co-ops first, working across departments to ensure that contracts are designed to make it possible for co-ops to tender.
I should perhaps flag to the Minister one of the challenges. Sometimes in local government it is difficult for co-ops to meet the required threshold, because of some of the restrictions set at different times, in different eras and by different Governments, including different central Governments, which perhaps do not understand the benefit of a local community co-op.
Jim Shannon (Strangford) (DUP)
First, I commend the hon. Lady for securing this debate. I have apologised to her already and I apologise now to you, Mr Dowd, as I am afraid I cannot stay for the whole debate, because I have another meeting to attend at 3 pm.
I also commend the hon. Lady for her leadership of the Public Accounts Committee. We are all very glad that she is there, because we believe that she gives the leadership and direction that that Committee needs. Does she agree that in these times of financial crisis, a mutually beneficial co-operative has never been more important? I know that from my own constituency. A local social supermarket in Newtownards, in my constituency of Strangford, operates almost like a co-operative—it is not an actual co-operative, but almost operates like one—in order to provide food at a lower price. This is something that our local council also needs to sow into, in order to facilitate and encourage people. If a lower price can be obtained by that shop in my constituency, the saving can be passed on to those who need it most. Clearly, that is what we need to do. It is for that reason that this debate is so important and I once more congratulate the hon. Lady on securing it.
Dame Meg Hillier
I thank the hon. Gentleman for his kind comments and for that valid point. One of the many advantages of local co-ops is that they and the benefits are owned by the local population, and the profit is redistributed to the very people who helped to generate it. Although I have talked about small-scale co-ops, of course they can be larger; there are many such co-operative businesses up and down the country. I am focusing on how councils can facilitate co-operatives in their own areas, so by definition I am talking about the local.
Mayor Philip Glanville has established, among the elected councillors, a member champion for inclusive business, social enterprise and co-operatives. The role is held by Councillor Sam Pallis, who does an excellent job in promoting these issues. There have been some success stories in Hackney. Hackney Co-operative Developments, which has been established for a long time, is being supported by the council through the provision of properties at sub-market rent, capital investment in those properties—that can be hard for small co-ops—and targeted funding for business support and outreach projects so that that fantastic project can spread its expertise to other organisations in Hackney and help to build the co-op sector. Hackney Co-operative Developments understands the technical and legal aspects of setting up a co-op better than anyone, as do similar organisations in other areas up and down the country, so it is right that the council supports it in that way. That relates to the ask that I will have for the Minister in a moment.
Hackney has also set up a community energy fund. A few years ago, it established Hackney Light and Power, which is the energy services arm of the council, and that local company launched a £300,000 community energy fund last year, which aims to support innovative community-led energy projects that benefit Hackney. That amazing programme ensures that Hackney generates its own energy for local use. That reduces energy costs for many consumers; long may it succeed. We must see locally generated energy for local use as a way to tackle the challenge of climate change.
The first round of funding from that £300,000 community energy fund provided funding for solar panels on the Hackney Empire, our fantastic local theatre. I say “local”—it is nationally renowned, but we are proud to call it our local theatre in Hackney. I should declare, as an interest, that I am a friend of the Hackney Empire—that will hardly surprise Members—and a regular visitor to its fantastic pantomime. The fund also provided solar panels for the Mildmay club in north Hackney, in the constituency of my right hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott), and Parkwood Primary School. Those panels provide enough electricity for one third of those properties’ energy use, equivalent to 35 homes. If the first round of funding can deliver that, it has real potential. The Minister is very welcome to visit if that would be helpful.
We need a real understanding in Government about what co-ops can deliver. Many years ago, when Labour was last in government—it does seem like a long time ago—I was looking to mutualise the then Forensic Science Service, and I asked for guidance from the Government. I was a Minister in the Home Office, which was, perhaps understandably, not an expert on co-operatives and mutual ownership, so it commissioned advice elsewhere in Whitehall. To my horror, what landed on my desk was a document about John Lewis. I feel no horror about John Lewis, I have to say, but its model of employee ownership was not what we were looking at. It was almost as if there was no real understanding of what mutualism was. Unfortunately, I was unable to get that mutual off the ground for various reasons—many co-ops face a challenge with capital funding—but that drove home to me the fact that we need a central hub in Government that can point people to advice about co-operatives, and I have been banging that drum ever since, in all these years in opposition.
The Treasury, the Department for Levelling Up, Housing and Communities, the Department for Business and Trade, and other Departments such as the Department for Environment, Food and Rural Affairs, would benefit from that understanding. We need a hub that is open to Departments so that when advice on alternative models is needed, co-ops are considered. The Minister making the decision must have full knowledge of the possibilities and possible challenges, and co-ops must be considered as part of the solution.
Chris Stephens (Glasgow South West) (SNP)
The hon. Lady is making a very important point about what central Government can do. Does she agree that that applies to measures to address food poverty? Co-operatives right across these isles are playing a vital role in ensuring people have affordable food during the cost-of-living crisis.
Dame Meg Hillier
Absolutely. As I have said, co-operatives invest back into their own communities, especially the small local co-ops—not every business does that. It is really important that we recognise what the benefits are. Like other hon. Members, I have community shops in my constituency as well as food banks, in which people can buy food and get double the value of what they paid. The fantastic community shop on the Kingsmead estate is staffed by local young people who volunteer their time. There is dignity there for the people who come into the shop; they pay for their shopping but get much more than they paid for. They can get fresh fruit and vegetables as well as other products. Community shops are an important and valuable resource.
As well as a central unit, it is important that the Government ensures that procurement opportunities are open and available to alternative businesses, so that we do not just set up a central procurement model that allows the big beasts—the big strategic suppliers of Government—to bid, without taking into account options for smaller businesses, including co-operatives, to bid. That may be beyond the Minister’s personal gift today, but I am sure she can take it back to relevant Ministers. It is important that we consider what co-operatives can bring to the table.
There is a requirement to have social value in a number of contracts now, but we cannot have co-ops as an added-on extra to a big contract from one of the big strategic suppliers, there to salve Government or community conscience. In that respect, if they are involved they need to be involved properly but, better still, they can actually bid. Greenwich Leisure Ltd was a co-operative social enterprise, but it is now running leisure centres across London and elsewhere as Better Ltd. That is a mutual that is delivering for local people, and it is now big enough potentially to bid for bigger contracts. From small co-ops these larger opportunities grow.
There may be work that needs to be done to provide additional support to those businesses, such as open roundtables, discussions or opportunities for drop-ins for those businesses to come and talk to Government about what they need to do to meet Government procurement requirements. I have highlighted some of the regional and local government support that goes on. If we look at regions—this is very much in the Minister’s bag—if co-operative development is a central strand of economic development outcomes for combined local authorities, then there will be more than what has been happening in Greater Manchester and elsewhere. It is something that could be used to drive up economic growth in the country. The mutual route is an entry-level way for a lot of people to get into business opportunities.
A regional co-operative development agency, to model, co-ordinate and support the co-op sector, would be an excellent initiative. It would not be massively resource intensive; in fact, if the Minister took one of the big, regional local authorities—for example, Greater Manchester —and boosted it, that could be the hub. It does not need to be in Whitehall; I am all for having those provisions outside of London. Although I am a London MP, I think it is important that we support those sectors across different parts of the country. I really want to see a central Government unit set up to support co-ops.
I hope the Minister will take those points on board. I know that she cannot answer them all. Co-operatives cover every sector of the economy and every part of Whitehall’s responsibilities. I know that she is a champion within Whitehall for local government, so I hope that she will pass on these thoughts and comments to her fellow Ministers.
Christina Rees (Neath) (Ind)
It is always a pleasure to serve with you in the Chair, Mr Dowd. I congratulate the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) on securing this important debate. I have been a co-operator for many years, because I believe that the only way to improve the quality of life of people living in the UK, Wales and my constituency of Neath is by working together.
I would like to pay tribute to some of my fellow co-operators who have encouraged and supported me in my co-operative endeavours over the years. Alun Michael, former MP and now police and crime commissioner in south Wales, introduced me to the co-operative ethos many years ago. Three of the four police and crime commissioners in Wales are Labour and Co-operative, which is a wonderful achievement. I thank all the current and past members of the Wales co-operative council, on which I have had the honour to serve for many years. A special mention goes to K. C. Gordon, secretary of the Wales co-operative council for nearly 20 years, my campaign manager when I stood for Arfon in the Senedd election in 2011, and a formidable mountain rescuer on Snowdon. Chair of the Wales co-operative council and former MEP Jackie Jones is an ambassador for co-operative ideals throughout Europe. The legend that is David Smith has campaigned for many years for the father of the co-operative movement, Robert Owen, a Welshman who was born in Newtown in Powys in 1771, to be part of the school curriculum in Wales. That will mean that children can learn that Robert Owen, who made his future and his fortune in the cotton trade, was unique among employers of that era because he believed in putting his workers in a good working environment with access to education for them and their children.
Karen Wilkie, former regional secretary of the Wales Co-operative party, gave 20 years’ service to promoting and growing the co-operative sector all over Wales. The former MP and now Senedd member Huw Irranca-Davies has worked with me to have Marcora law adopted in the UK and Welsh Parliaments. I firmly believe that support for co-operatives and alternative businesses would be greatly enhanced if the UK Government created a Marcora law.
Those who missed my 20-minute speech in my Westminster Hall debate on Marcora law in September 2021 will be relieved that I am going to give the edited version today. I believe that a Marcora law is the answer to small businesses closing or where there is a lack of succession planning. Marcora law was created by the Industry Minister Giovanni Marcora in the Italian Government more than 30 years ago. Marcora law gives workers the right and, more importantly, the financial support to buy out all or parts of an at-risk business and establish it as a worker-owned co-operative. Italian workers are given the opportunity to rescue profitable parts of a business or an entire profitable business, and are each given a lump sum in advance of three years’ social security payments and redundancy payments, which they pool together to use for the buy-out.
Marcora law is run by the Cooperazione Finanza Impresa—I will call it the CFI—which was set up in 1986 by the Italian Government, who hold a 98.6% share of the capital investment and oversee the CFI board. The CFI assesses, supports and provides the finances for the buy-out, and it has invested over €300 million in 560 companies, saving more than 25,000 jobs and retaining the skills and experience of the Italian workforce.
The return to CFI is more than six times the capital it has invested in worker buy-outs, and the workers also benefit from co-operative values, safeguarding employment and guaranteeing fair workplace conditions. In my Westminster Hall debate, which seems like years ago now—it was September 2021—I asked the Minister whether the UK Government had
“conducted an assessment of…the existing co-operative sector”.
I asked whether his UK Government would
“increase the size of the co-operative sector”.—[Official Report, 8 September 2021; Vol. 700, c. 113-114WH.]
Had he considered the benefits of worker buy-outs for at-risk businesses? Would his UK Government provide financial support to workers looking to buy out their at-risk business? Unfortunately, the Minister was not too impressed, so I will ask the Minister today whether she will meet me to discuss the benefits of Marcora law.
I followed up my debate by introducing ten-minute rule Bill on a Marcora law, the Co-operatives (Employee Company Ownership) Bill. To my absolute astonishment, the CFI got in touch, having watched my Westminster Hall debate and my ten-minute rule Bill debate. I had the absolute honour of speaking at the CFI conference in Rome in November 2021. Unfortunately it happened virtually, so I have still never been to Italy, but it is on my to-do list.
In the Welsh Parliament, Huw Irranca-Davies introduced a legislative proposal for an employee ownership Bill to give workers support to buy out their workplace if it is at risk of failure. Huw’s motion, which received cross-party support, proposed
“that the Senedd:
1. Notes a proposal for an employee ownership Bill on promoting worker buy-outs and employee ownership;
2. Notes that the purpose of this Bill would be to:
a) legislate for a Welsh Marcora law to provide the legal framework, financial support and advice for worker buy-outs;
b) put in place a statutory duty to double the size of the co-operative economy by 2026 and to actively promote employee-ownership and worker buy-outs;
c) provide financial support and advice for workers to buy out all or part of a business facing closure or down-sizing and to establish a workers co-operative;
d) ensure that all companies in Wales in receipt of public funding or part of the social partnership and ethical procurement chains agree to the principles of worker buy-outs and employee ownership.”
Huw’s Bill is still awaiting legislative time, but although it would pave the way for a Marcora-type law in Wales, only this place has the financial power to truly provide what will be needed to make worker buy-outs a success. Welfare and benefits are not devolved. Even with a Welsh Marcora law, the Welsh Government would struggle to provide the funding needed. That is why we need the UK Government to commit to such a law for the UK.
Co-operatives and alternative businesses represent a departure from the traditional business model, emphasising principles of shared ownership, democratic decision making and the pursuit of sustainable development. By prioritising social and environmental wellbeing alongside economic growth, these enterprises encapsulate the values that we hold dear: equality, co-operation and resilience. These forward-thinking initiatives are reshaping our economic landscape, fostering inclusivity and empowering communities across Wales.
Many local authorities in Wales, including my own in Neath Port Talbot, have recognised the potential of co-operatives and alternative businesses to drive positive change in their communities. They understand that these ventures not only provide valuable products and services, but generate meaningful employment opportunities and promote community engagement. By lending their support, local authorities are fostering an environment conducive to collaboration, innovation and empowerment.
A key way in which local authorities assist co-operatives and alternative businesses is through the provision of financial resources. They offer grants, loans and other forms of financial assistance to help those enterprises get off the ground, expand their operations or invest in sustainable practices. By leveraging access to funding, local authorities are reducing the barriers to entry and are levelling the playing field for aspiring entrepreneurs who wish to pursue a co-operative or alternative business model. In Neath Port Talbot, support is provided through a range of schemes targeted at the third sector, including the community regeneration fund, the Building Safe and Resilient Communities programme and community benefit funds linked to renewable energy products.
Moreover, local authorities play a pivotal role in facilitating networking and knowledge sharing among co-operatives and alternative businesses. They organise events, workshops and conferences at which entrepreneurs can connect with like-minded individuals, share best practice and learn from successful case studies. By fostering a sense of community and collaboration, local authorities are empowering these businesses to thrive and grow.
There are also examples of capacity-building initiatives to ensure the long-term viability of co-operatives and alternative businesses. They provide training programmes, mentorship opportunities and business-development support to enhance the skills and knowledge of entrepreneurs. By equipping them with the tools that they need to navigate the challenges of running a co-operative enterprise, local authorities are creating a sustainable ecosystem that fosters success.
I will finish by mentioning Cwmpas, a development agency working with local authorities, organisations and businesses for positive change in Wales, which has recently expanded to cover the UK—so look out! Cwmpas is a co-operative that was established in 1982 as the Wales Co-operative Centre. It focuses on building a fairer, greener economy and a more equal society in which people and the planet come first.
How we do things is just as important as what we do. Cwmpas works collaboratively, for mutual benefit, by providing support and encouragement, addressing inequality, valuing diversity and democracy, striving to be open and honest, investing in achieving positive outcomes and inspiring and empowering people, communities, and businesses to take control and reach their potential.
My good friend, Derek Walker, led Cwmpas for many years, and I was proud and honoured to speak at many of its events. Recently, Derek was made the Future Generations Commissioner for Wales, and I am sure he will do just as good a job there.
Cwmpas research found that small and medium-sized enterprises make up 90% of public sector and 62% of private sector companies in Wales, and that 20% face closure or succession in the next five years. A Marcora law has a place in improving the chances of succession, rescuing jobs and securing the future of many at-risk businesses across Wales and the UK. A Marcora law would allow organisations such as Cwmpas and local authorities to provide the financial support and expertise to deliver this.
Importantly, the support provided by local authorities and organisations such as Cwmpas is not limited to the start-up phase of co-operatives and alternative businesses. They recognise the need for ongoing support and aim to create an enabling environment for those enterprises to flourish. Local authorities work hand in hand with those businesses to identify opportunities, address challenges, and advocate for policies that promote their growth. By nurturing a long-term partnership, local authorities ensure the resilience and sustainability of co-operatives and alternative businesses.
Support for co-operatives and alternative businesses in Wales is an essential pillar of economic development and community empowerment. By championing those enterprises, local authorities are not only fostering inclusive growth and job creation but promoting the co-operative values that define us as a society—co-operative values that have stood the test of time. As we move forward, let us continue to embrace and support the co-operative spirit and its values, for it holds the key to a more equitable and prosperous Wales.
I invite the Minister to visit Neath and to see those wonderful co-operatives and alternative businesses in operation in every community of the Neath Port Talbot local authority.
Beth Winter (Cynon Valley) (Lab)
It is a pleasure to follow my hon. Friend the Member for Neath (Christina Rees). I also congratulate the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) on securing this important debate during Co-operatives Fortnight.
The economic system under which we live is creating extreme levels of inequality, poverty, suffering and hardship, and the private profit motive is benefiting a tiny few at the expense of the majority of people in the United Kingdom. After a decade of Conservative austerity, public service cuts and the current cost of living crisis, we urgently need fundamental societal change to deal collectively with the social and economic crises that we face.
I genuinely and firmly believe that co-operatives—which are “people centred” to realise
“common economic, social, and cultural needs and aspirations”—
have a critical role in shaping the alternative economic system that this country urgently requires.
As my hon. Friend the Member for Neath already outlined, Wales has a strong culture of co-operation, and many of the first co-operative societies were established in Wales. Indeed, the socialist Robert Owen is credited with inspiring and founding the co-operative movement in the UK. In my constituency of Cynon Valley, the first co-operative society in Wales—the Cwmbach co-operative—was established in 1859. It was founded to collectively alleviate the extreme poverty experienced by the community as a result of the miners’ strike back in 1857. Since that time, co-ops have had a growing presence in Wales with a wide variety of functions and, thanks to organisations such as Cwmpas, they now contribute £3 billion to the Welsh economy. That is no small change; that is a massive, significant contribution.
We are fortunate in Wales that the Welsh Government actively support the co-operative sector and are building an economy that prioritises wellbeing and resilience. Legislation like the Well-being of Future Generations (Wales) Act 2015 and the recently passed Social Partnership and Public Procurement (Wales) Act 2023 are models of facilitating that co-operative approach, as is the Welsh Government’s recently announced £1.7 million funding a year for the next two years to help businesses transition to employee ownership and help develop new social enterprises. Community energy projects will benefit from the Welsh Government’s publicly owned Ynni Cymru energy provider, which the shadow Climate Minister, my right hon. Friend the Member for Doncaster North (Edward Miliband), continues to champion in this House through GB Energy.
In addition to the Welsh Government, there is a significant role for councils. As Professor Neil McInroy of the Centre for Local Economic Strategies has said, we need
“a new conception of the local state”
that conceives
“the local state as a facilitating institution that empowers, coordinates and upscales social innovation from community organisation and social enterprises.”
I have been fortunate enough to do quite a lot of work with Neil and many of the trade unions in the UK to develop the building of a community wealth-building approach in the co-operative movement, which I will come to shortly.
Since I was elected to this House, given the horrendous impact of austerity, the cost of living crisis and the pandemic on people in my Cynon Valley constituency, I have prioritised working with the local council, other organisations and, crucially, local people to develop a co-operative and community wealth-building approach. I am truly determined that not only can we and should we create wealth in our communities, but we have to retain that wealth in our communities, unlike during the mining industrial revolution where we produced all the wealth in the south Wales valleys and other valleys and communities throughout the UK, but the wealth was extracted out of our communities. That cannot happen again.
My local authority, Rhondda Cynon Taf County Borough Council, and its community development team, with people like Simon Gale, have significant experience of working with and supporting co-ops and community-based enterprises. One example of how it recently worked was with the Coalfields Regeneration Trust opening a facility called Hwb Cana in Penywaun, where I used to work as a community development officer many years ago. It will function as a skills and training centre for local residents and will house Smart Money Cymru Community Bank, which will enable local people to access loans and other financial services and is similar to the credit union movement that has spread throughout the UK.
There is much more that can be done and, with that in mind, one of the first things I did when I was elected was to commission independent research by the Bevan Foundation think-tank in south Wales to assess how it is possible to transform the economy of Cynon Valley, taking a grassroots, bottom-up approach. The report produced around 17 recommendations, ranging from having a joint procurement strategy using local supply chains and bottom-up town centre regeneration to delivering a real living wage and a Cynon Valley-wide co-operative. To achieve each recommendation, we have set up a number of working groups to turn them into real action and change.
The purpose of the co-operative, which will be in the form of a development trust, is
“to stimulate community-based enterprises, with a strong focus on the green economy.”
Without a doubt, we are living in a climate crisis and notwithstanding the significant challenges and risks, we have many opportunities, particularly in Wales with our topography and green environment, to really develop grassroots, co-operative and community-owned initiatives to tackle that crisis.
We have secured funding from the Welsh Government to undertake a feasibility study into the Cynon-wide co-operative and we are currently considering that report’s findings. It is a really exciting time in the valley and there are lots of opportunities there. Indeed, there was overwhelming agreement that a development trust would play a critical role to assist the economic and social revival of Cynon Valley and its long-term sustainability, which is key to any developments.
I will finish by mentioning Tyrone O’Sullivan. He is a hero of mine, and I had the privilege of attending his funeral yesterday. He was a miners’ leader and a real giant of the trade union and Labour movement, but he also put co-operation into practice. His leadership and vision led to the miners’ buy-out of Tower colliery back in 1995, when miners used their redundancy money to purchase the mine. It was a huge success and made in excess of £11 million in profit in the first three years alone, so it was a brilliant example of worker ownership and the potential of co-operatives.
Going back to where I started, co-operatives must be part of a much wider transformative change and must be placed in the wider context. Tyrone really did have a clear vision of the need for that societal change to give young people a future and to build and develop our communities. He showed that change can happen and that people can take control of the wealth in their communities and make sure that that wealth stays there. That vision remained part of Tyrone. I was privileged to have met him in recent weeks, when we had a long discussion about politics, socialism and the need for societal change. He spoke about the power that lies in our working-class valley communities to effect the change required to achieve—for me and for Tyrone—a socialist society.
The south Wales valleys have been at the forefront of change in the past and we can, and will, be at the forefront of change again. Co-operatives, with the co-operation of councils, have a fundamental role to play, turning that vision—and in his memory, Tyrone’s vision—into reality. Diolch yn fawr.
Peter Dowd (in the Chair)
Just to alert people, there are likely to be a number of votes. If that is the case, we will adjourn for 35 minutes.
Chris Stephens (Glasgow South West) (SNP)
It is a pleasure to see you in the Chair, Mr Dowd. I commend the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) for leading this debate with an excellent speech. I commend the speeches of my good friends, the hon. Members for Neath (Christina Rees) and for Cynon Valley (Beth Winter).
I completely agree with the hon. Member for Cynon Valley: the ongoing cost of living crisis has clearly demonstrated the inherent dangers of communities being reliant on companies motivated by profit for essentials like food and housing. It is vital that co-operatives and social enterprise organisations, which prioritise supporting communities, receive adequate funding, not just from local authorities and devolved Administrations, but central Government, too.
I listened intently to the colleagues who provided a bit of history on co-operatives, which have existed for centuries. The co-operative movement predates the British Labour party. In Govan in Glasgow South West, in 1777, the Govan Victualling Society became Scotland’s second co-operative—it was pipped to first place by the village of Fenwick. The book on co-operatives describes Govan in 1777 as a pretty village on the banks of the Clyde just outside Glasgow. Of course, some of the people of Govan still deprecate the decision of 1912 to bring Govan into the city of Glasgow for local authority purposes. I am not here to describe that part of Govan’s history, but to demonstrate that we can learn lessons from the past. The memory of that society founded in 1777 lives on today in my constituency.
I am privileged to be the chair of Good Food Scotland. That organisation, along with a number of others, assisted the great organisation Govan Home and Education Link Project—Govan HELP—which transitioned during the covid pandemic away from emergency food parcels to become a co-operative pantry. The work of Good Food Scotland is thriving, with the help of both the Scottish Government and Glasgow City Council. We now have six, and rising, larders run by Good Food Scotland, with a membership so far of 1,500, which is also rising.
How vital is that service? The saving for a weekly shop using one of these Good Food larders is on average £20 a week, but we had an example just this week from the Linthouse Larder. A couple who go to a regular supermarket calculated their weekly shop at £80; using the larder, their weekly shopping is now £30. We not only need to promote the great work of co-operatives, we also need to look at supermarkets’ excess profits, and we should be debating whether companies that are making excess profits should perhaps be contributing a bit more in the taxation system.
The work we are doing on eliminating food poverty backs the principles of my private Member’s Bill, the Food Poverty Strategy Bill, in which I ask the Government to produce a food poverty strategy to eliminate the need for food banks by the year 2030. If Joe Biden’s America can look at producing a food poverty strategy to eliminate food banks in America by 2030, we can learn lessons in this nation state and do that as well.
Co-operatives are business organisations that are owned and controlled by members to meet their shared needs. Members can be customers, employees, residents or suppliers, and they have a say in how the co-operative is run. In 2020, just 1% of UK businesses were co-ops, but more co-ops are opening in response to the ongoing cost of living crisis, and a vital job they are doing, too. In January 2022, Cooperation Town had six co-ops in its network, and that has now more than tripled to 21.
Co-operatives provide a vital service to those struggling through the crisis. The soaring food prices in supermarkets are a clear example of why we need organisations that prioritise fairness and support local communities. This cost of greed crisis is a stark reminder of the danger of companies that sell essential supplies prioritising profit margins above all else.
Christina Rees
The hon. Gentleman really is a friend of the workers. What I find so inspiring about this debate—I am sure he will agree—is that Wales, Scotland and England have come together to show the value of co-operation and the amazing impact that co-operatives have across the UK.
Chris Stephens
The hon. Lady, too, is a friend of the workers. In fact, I once said that to her when she was in your very spot, Mr Dowd, in a debate on workers’ rights. She is correct that the co-operative movement, which is doing a vital job, needs to grow in this country.
I would argue that credit unions are based on the co-operative model, and they too are playing a vital role in helping people with their finances. They help people to save and take out affordable loans. The credit union movement, which is doing great work, should be congratulated. The less I say about some of the bigger banks, the better, because I would probably veer into using unparliamentary language, and I am sure you would not allow me to do such a thing, Mr Dowd.
According to the House of Commons Library, in 2021-22 4.7 million people, or 7% of the UK population, were in food poverty, including 12% of children. In 2022-23, the Trussell Trust supplied the highest recorded number of three-day emergency food parcels. It is hardly surprising that the number of co-operatives in the UK is growing to meet the challenge of soaring levels of food poverty.
FareShare, the largest distributor of charitable and surplus food in Britain, supplies about 9,500 groups, including food banks, co-ops, community cafés and school clubs, but it currently has a waiting list of 1,500 organisations. That shows the challenge of dealing with the cost-of-living crisis. Its head of marketing noted:
“We believe this is just the tip of the iceberg for the number of charities and community groups needing more support… We do not have enough food to meet this soaring demand, so we’re asking the government to provide us with £25m to help us unlock an additional 42,500 tonnes of surplus food, the equivalent of 100m meals, to the people worst hit by the cost of living crisis.”
That shows the very real challenge facing citizens across these islands. The idea that the growing demand for affordable food is an indictment of the lack of action in providing adequate support through the cost of living crisis is echoed by other stakeholders.
Co-ops have the potential to offer a real, sustainable solution to the ongoing housing crisis. It is not just in the context of essentials like food that we are seeing companies take advantage of the ongoing crisis to disguise hiking their prices; increasingly, landlords are also taking advantage of the cost of living crisis to charge exorbitant prices for accommodation. Although the Scottish Government have taken decisive action to support people through the housing crisis by introducing a rent freeze and a moratorium on evictions, I am afraid that the UK Government have taken no action to protect people from the crisis. As with food prices, soaring housing costs do not impact everyone equally.
Chloe Field, the National Union of Students’ vice-president for higher education, has said that the “unprecedented” housing shortage is
“jeopardising students’ university experience and forcing them to make difficult decisions.”
She also noted:
“Without urgent action to increase the amount of affordable housing, it is inevitable that both dropouts and student homelessness will increase.”
Those on low incomes are paying a hefty price for the lack of action to tackle our housing crisis. One charity has warned that student housing is reaching a “crisis point” not seen since the 1970s. As a result, housing co-operatives are becoming increasingly popular, particularly among students, who have set up student co-operative homes. The Student Co-op Homes organisation notes that
“We know from elsewhere in the world this model works and is replicable at scale...There are now four such co-ops in the UK (housing over 130 students) in Birmingham, Edinburgh, Sheffield and Brighton, plus active groups looking to secure property in Belfast, Bristol, Glasgow, Manchester, and Nottingham. Further enquiries are coming in every month.”
Such co-op homes are a solution for people who have been priced out of buying a home in their local communities.
I hope that when the Minister responds to the debate, we will hear about what the Government are doing to help these housing co-operatives ensure that there is affordable housing, about how we are very much having to deal with food poverty, whether or not the Government will support my private Member’s Bill, what action the Government are taking to address food poverty, and about the support that they will give food co-operatives.
Alex Norris (Nottingham North) (Lab/Co-op)
It is a pleasure to serve under your chairship, Mr Dowd. I refer colleagues to my entry in the Register of Members’ Financial Interests, as I am a Labour and Co-op Member of Parliament and because my wife is the assistant general secretary of the Co-operative party.
I commend my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier) for securing this debate and for her leadership of it. She started by saying that there is a great need and enthusiasm in this country to move to more local models and away from top-down planning to local delivery. That was really on the money, as was her point about the huge input that the co-op sector already makes to our economy. She also referred to the frankly unrealised potential of the sector, which I will talk about shortly. However, as the theme of the debate is the role of local authorities, I thought it was wonderful that she pulled out examples from across Greater Manchester, South Yorkshire, Birmingham and her borough of Hackney where local, regional and sub-regional leaders are taking ownership and putting co-ops at the heart of their local economy and their local economic development.
I believe, and this came through in what my hon. Friend said, that we are at a co-op moment. We are showing that leadership is local and developing, but that needs to be matched—perhaps this is a theme of today’s debate—with a national commitment.
My hon. Friend was ably supported by my hon. Friend the Member for Neath (Christina Rees), who, in my head, is synonymous with her 100-plus appearances for Wales in squash, as well as with the co-operative movement in Wales. She listed a number of people who have been the backbone of that movement, but she ought to have her place in that pantheon. I knew that she would not disappoint us and would talk about the Marcora law, which is particularly germane to today’s debate.
Whether a Member is from the north-east, like the Minister, from the east midlands, like me, or from south Wales, like my hon. Friend the Member for Neath and my hon. Friend the Member for Cynon Valley (Beth Winter), a common theme is that, in recent decades, we have felt the huge loss of businesses, industries or enterprises that are at the heart of our community, and we know the absolute hole that that creates. My hon. Friend the Member for Neath, building on the Italian example, suggested a way that we can perhaps fill that hole and stop that happening. I am interested to hear the Minister’s reflections on that. Whether she is addressing the current Government or a future one, my hon. Friend will continue to press that case hard. In giving the example of Cwmpas, she made a case—this was picked up by my hon. Friend the Member for Cynon Valley—about the impact of support and input at a national level to help different models of enterprise to develop, and that that can be highly effective.
My hon. Friend the Member for Cynon Valley picked up on that theme by talking about the work of the Welsh Government and Cwmpas. However, what I also took from what she said is that the co-operative economy and co-ops’ place in the economy are as a deliverer of really important social programmes. She mentioned net zero and energy, as well as the cost of living and tackling poverty. I believe that co-ops are at the root of tackling those challenges, which is why I am a Co-operative Member, and that local authorities should act as a facilitator. I associate myself with everything that she said about Tyrone O’Sullivan. I know that a lot of pain has been felt by Welsh colleagues at his passing. For all the reasons she mentioned, his place is very much in a co-op debate, and I am glad we have had the chance to recognise that.
I will make a couple of points of my own. Efforts to support the growth of co-ops and alternative businesses are vital, because we know the difference that those business forms can make. Co-operatives, for example, put economic power in the hands of local people, and ensure that the benefits of economic growth are felt by those who help to create it. I will be interested to hear the Minister’s reflections on that, because I think that is what we are talking about with levelling up. I know that, perhaps politically, the Minister is not co-operative, but I suspect that she is by instinct. I am interested to hear her views.
Co-ops are grounded in shared values that put communities, members and workers together in the driving seat of a fairer, more ethical way of doing business, where issues such as paying a fair share of tax and protecting our natural environment are at the core of how things are done. Co-operatives are good not just for those who depend on them, but for business. They are shown to be more resilient. Co-ops are twice as likely to survive the first five years of trading than other start-ups. As my hon. Friend the Member for Hackney South and Shoreditch said, they are more ambitious, with 61% expressing a desire to grow, as opposed to 53% of businesses more generally. Where workers and members of the co-operative have a true stake and say in the success of business and, crucially, have a share in the rewards, they are more productive.
So co-ops are resilient, ambitious and productive—qualities that we so badly need in our economy, especially in these uncertain times, and also to smooth out and avoid uncertain times in future. As colleagues have said, this is already working, with 7,000 co-operatives across the country turning over around £40 billion a year. We believe that the sector can grow and that its benefits can be felt more widely by more people.
This is about a change of focus from economic growth built around low-paid insecure work that does not ride out economic uncertainty well and is concentrated in certain regions of the country. Instead, we are talking about an “everyone in” approach, providing grassroots growth, created everywhere, by everyone, for everyone, but that will not happen by chance. Colleagues have used good examples of where it has worked well. At the root of that, there has been a degree of national, regional, sub-regional or local leadership, and it requires that proactivity. I hope we will hear some of that in the Minister’s response.
For our part, we as the Opposition have an important ambition, shared with the Co-operative party, to double the size of the co-operative sector, to help build that sustainable growth. Colleagues will also have seen that our local power plan was announced by the Leader of the Opposition on Monday. Co-operation lies at the heart of that plan, which will put money and power—literally and figuratively—into people’s hands. We believe that when more people have a say and a stake, and greater ownership of the issues and decisions that matter to them, the balance of economic power shifts back in favour of people and communities—and my goodness, do we need some of that!
We have heard that local authorities and local government are taking a lead across the country. We have also heard from colleagues that local elections saw a record number of Labour and Co-op councillors elected. There are more than 1,500 such representatives across 80% of local authorities, so the case is being made at a local level more and more. However, we need to see that matched at a national level. When the Minister makes her contribution, I will be interested to hear what work her Department is undertaking, not just to support co-ops and alternative businesses in the here and now, but going forward, in terms of its ambition and belief for the sector. On levelling up, if there is anything the Minister could deliver in her role, it would be to help those sub-regional bodies—perhaps combined authorities and mayors—to deliver ownership hubs. There is clearly enthusiasm to do that.
What more help does the Minister envisage giving local authorities to ensure that they can play their role? There has been a pattern over the past decade or more of not prioritising alternative models. It has been the same old models delivering the same old outcomes. As a result, we have pent-up potential—we really need to realise that—and that plays out in Government focus and in a policy and regulatory framework that often inhibits the development of alternative models.
I hope that the Minister has heard, in contributions from colleagues and me, about the ambition and the potential, and the difference that it would make to the UK economy to unleash co-ops. We see the local leadership of this, and we now need to see some national leadership to match it.
The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Dehenna Davison)
It is a pleasure to serve under your chairmanship for what I think is the first time, Mr Dowd—what a very sound time it is. First, I congratulate the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) on securing this incredibly important debate. We in Government share her desire to expand our understanding of what more can be done to support growth in different sectors and to learn from successful examples of best practice, as mentioned by hon. Members today. When I walked in, I admit that I was not expecting to go all the way back to 1777, which the hon. Member for Glasgow South West (Chris Stephens) mentioned, but it is always important to take on that historical perspective.
In looking at best practice today, I am grateful to the hon. Member for Hackney South and Shoreditch for her canter through the country’s co-ops and the excellent work that they do to support their local communities. I am also grateful to the hon. Member for Cynon Valley (Beth Winter) for outlining the work that she is doing across the valley to develop a local co-operative; I am interested to hear how that work progresses in the months and years to come. I am also grateful to the hon. Member for Neath (Christina Rees) for highlighting some key Welsh co-operative champions, such as Robert Owen, and for her overview of the Italian experiences of the Marcora law. I would be delighted to meet her to discuss that, perhaps in Neath; I thank her for the kind invitation to visit her in her constituency.
We recognise that co-operatives and alternative businesses can and do play a vital role in boosting growth and opportunity, at both a local level, as the hon. Member for Strangford (Jim Shannon) highlighted, and a national level. For instance, Co-operative UK’s 2021 report estimates that the UK’s co-ops have a combined turnover of almost £40 billion and employ around 250,000 people. It is also important to note the role that they have in supporting their local communities, as the hon. Member for Glasgow South West highlighted with regard to food poverty—an issue that he is incredibly passionate about and on which he is a vociferous campaigner. As for his private Member’s Bill, I do not want to give a commitment today, given that it does not sit within my brief, but I will certainly ask the relevant Minister to follow up on that point and have a discussion with him.
The role played by co-ops locally and nationally is why I am really pleased that the Department for Culture, Media and Sport recently launched the social enterprise boost fund, which will see £4.1 million of Government funding invested across six local authority areas to support the creation of new social enterprises and boost early-stage organisations. The fund will run until March 2025, and we expect local delivery partners to involve local authorities over the course of the programme.
In my Department, our £150 million community ownership fund allows community groups to bid for up to £1 million of match funding to help them to buy or take over local community assets at risk of being lost and to run them as community-owned businesses, supporting that sense of co-operative entrepreneurship. That important fund helps to safeguard the small but much-loved local assets that, frankly, we cannot put a price on, such as pubs, sports clubs, theatres and post office buildings. So far, £23.9 million has been awarded to 98 projects across the UK. I have had the pleasure of visiting a number of such projects and seeing the vital roles that they play locally. One of my highlights from my early visits was a visit to the Old Forge pub in Inverie, otherwise known as the mainland’s remotest pub. Certainly for the people in that community, it is more than a pub; it is very much a central pillar of their community, right at its heart.
In addition to those funds, the Government have supported a private Member’s Bill: the Co-operatives, Mutuals and Friendly Societies Bill. The Bill would grant His Majesty’s Treasury the power to introduce regulations to give mutuals further flexibility in determining for themselves the best strategies for their business regarding their surplus capital. The Bill completed its Third Reading in the House of Lords on 16 June and is entering its final stages. Hon. Members may recall that on the same day, the Economic Secretary to the Treasury announced that the Government will launch reviews of the Co-operative and Community Benefit Societies Act 2014 and the Friendly Societies Act 1992, conducted by the Law Commission. Those comprehensive reviews aim to identify essential updates to legislation, thereby developing a more modern legal structure in which mutuals can be supported to take advantage of opportunities to grow.
We should also recognise the work of the local growth hubs across England, as outlined by the hon. Member for Hackney South and Shoreditch. I must say, as a Yorkshire-born lass, that I was delighted to hear that Sheffield is taking lessons to London, not the other way round. That is always very refreshing for me to hear in my levelling-up role. There are currently 37 local growth hubs, which are backed by Government funding, with each delivered by a local enterprise partnership or an upper-tier local authority. They provide local businesses of any size, any sector or any ownership status with advice and access to support for any stage of their business journey through a free and impartial single point of contact.
Growth hubs bring together the best of national and local business support from across the public and private sectors. They work with key partners and funding bodies, including local authorities, to shape provision around local needs, meaning that businesses can find the right support for them at the right time. I am pleased to tell hon. Members that funding for growth hubs of up to £12 million in 2023-24 is confirmed.
It is important that co-operatives and alternative businesses are seen as valued members of their community by local authorities. That is why, as part of the antisocial behaviour action plan, the Government announced a high street accelerator pilot programme. Accelerators will incentivise and empower local people to work together to develop ambitious plans to tackle vacancy and reinvent their high streets so that they are fit for the future. I really hope to see co-operatives and alternative businesses in pilot areas joining the accelerator to ensure that we continue to learn how to better support their growth in our town centres and high streets.
I thank the hon. Member for Hackney South and Shoreditch and all Members for their contributions to this important debate. While I am unable to make promises today, as I hope hon. Members will appreciate, some key issues that I will take back to my Department, and more widely to Government, include assessing the barriers for co-operatives in accessing local and national government contracts; whether there is an opportunity to create a central hub for co-operative advice in Government; and whether there is an opportunity for a regional co-operative development agency. I will take those away and follow up with the hon. Lady. In the meantime, if there are more examples of ways in which local authorities can support co-operatives and alternative businesses, I will be very happy to receive them.
Dame Meg Hillier
I thank all hon. Members who have contributed. The House has heard the passion that we all have for co-ops and how they can invest wealth back into the communities that generate that wealth, as well as the vital role of local authorities in championing that in their areas. We need to see co-ops go from strength to strength. It is appropriate that we have had this debate in Co-op Fortnight, so I thank Mr Speaker for granting it, and I thank all hon. Members, you in the Chair, Mr Dowd, and officials for the support.
Question put and agreed to.
Resolved,
That this House has considered the role of local authorities in supporting co-operatives and alternative businesses.
Podiatry Workforce and Patient Care
(10 months, 3 weeks ago)
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Peter Dowd (in the Chair)
I will call John McDonnell to move the motion, and I will then call the Minister to respond. As is the convention for 30-minute debates, there will not be an opportunity for the Member in charge to wind up.
John McDonnell (Hayes and Harlington) (Lab)
I beg to move,
That this House has considered the podiatry workforce and patient care.
The background to this debate is a meeting I had with a number of local podiatrists representing the Royal College of Podiatry, so let me thank them for the briefing that the royal college has sent me. I want to talk about the development of a workforce strategy for podiatry.
To explain for those who may take an interest in the debate, podiatrists are highly skilled healthcare professionals. They are trained to assess, diagnose, prevent, treat and rehabilitate complications of the foot and lower limbs. They manage foot, ankle and lower-limb musculoskeletal pain, and skin conditions of the legs and feet. They treat infection, and assess and manage lower-limb neurological and circulatory disorders. They are unique in working across conditions and across the life course, rather than on a disease of a specific area.
A podiatrist’s training and expertise extends across population groups to those who have multiple chronic, long-term conditions, which place a high burden on NHS resources. The conditions largely relate to diabetes, arthritis, obesity and cardiovascular disease. In addition to delivering wider public health messages in order to minimise isolation, promote physical activity and support weight-loss strategies and healthy lifestyle choices, podiatrists keep people mobile, in work and active throughout their life. They contribute to the wellbeing of our economy and workforce.
Podiatry is intrinsic to multiple care pathways too, and podiatrists liaise between community, residential, domiciliary, secondary care and primary care settings. They specialise in being flexible and responsive, ensuring focused patient care, irrespective of the clinical setting. Podiatrists are at the forefront of delivering innovation in integrated care. They deliver high-quality and timely care, as well as embracing safe and effective technologies that lead to improved patient outcomes.
The role of podiatrists in managing diabetic foot complications is key. They play a vital role in the prevention and management of diabetic foot complications, which, at the last estimate, cost the NHS in England £1 billion a year. In the three-year period from 2017-18 to 2019-20, there were over 190 minor and major amputations per week in England. Of the people affected, 79% will be confined to one room within a year, with 80% tragically dying within five years. That is a shocking outcome for patients, and it is even worse than the outcomes for the majority of cancers we seek to deal with.
The impact of lower-limb amputations on patients’ quality of life and chances of survival are shocking, so we must do everything we can to prevent diabetic foot complications. We have to act in a timely and targeted manner to ensure that people have the best possible chance of living long and fulfilled lives.
It is estimated that by 2025, 1.2 million people with diabetes in the UK will require regular podiatry appointments if they are to remain ulcer, infection and amputation free.
Jim Shannon (Strangford) (DUP)
I declare an interest as a diabetic, so I understand exactly what the right hon. Gentleman is saying. I am aware of the silent but vital work carried out by podiatrists throughout the United Kingdom. In my constituency of Strangford, a nursing home where funded podiatry appointments were cut was still visited by a podiatrist. He was able to attend, but he treated people without taking any money. Does the right hon. Gentleman not agree that access to podiatry for the elderly in care homes should be fully funded and that they should not have to rely on family or kind-hearted podiatrists to get their health needs taken care of?
John McDonnell
What I have discovered on my journey of finding out about podiatry, which I knew very little about before I met podiatrists in my constituency, is that of course people need professional care, and that care needs to be properly funded. There are volunteers, but we should not have to rely solely on volunteers; we need professionals leading the way. Podiatrists are skilled and trained in the prevention and management of diabetes-related foot complications. That is why many of us believe that they must be at the heart of the NHS plan to eliminate unnecessary amputations and the consequent avoidable deaths.
As I said, the broader cost of diabetic foot ulcers to the NHS is more than £1 billion per year—the equivalent of just under 1% of the entire NHS budget. Effective and early intervention for diabetic foot complications prior to ulceration could save thousands of lives and millions of pounds each year.
The situation in my area in Hillingdon exemplifies what is happening elsewhere in the country, which the hon. Member for Strangford (Jim Shannon) has mentioned. Hillingdon’s community podiatry service is part of the Central and North West London NHS Foundation Trust. It is suffering from severe workforce issues, which is having a detrimental effect on the people delivering the service and those suffering from foot ulceration, infection and amputation.
The service is currently failing to meet its timescales for seeing patients at high risk of developing a foot ulcer. What should be a team of 13 clinical podiatrists is now just 3.5 full-time equivalents and three support workers. The immediate concern is the pressure that puts on the staff who remain and the impact it has on the patients who need a minimum of weekly wound re-dressings to enable healing and prevent infection and life-changing amputation. The opportunities to prevent life-changing and life-threatening complications are minimised by the shortage of staff.
We also have concerns that support workers are being asked to triage and treat people beyond their scope of practice due to the staff shortage. That is not a criticism of them, but it is the reality. We should be filling the service with professionals who are fully trained to deal with the range of complications that they might come across. The workforce challenge facing podiatry is the real issue.
There is a need for focused recruitment. As I said, it is estimated that by 2025, 1.2 million people with diabetes in the UK will require regular podiatry appointments if they are to remain ulcer and amputation free. In the absence of that, there will be a greater risk of premature disability and death. There are currently just under 10,000 podiatrists registered with the Health and Care Professions Council. That is just one per 5,500 residents in England, and that number is due to decline as a result of demographics.
Following the removal of NHS bursaries for student podiatrists in 2016, the number of undergraduates studying podiatry has declined by 38%. Prior to that, the student bursary was set at £9,000 a year and it covered the cost of tuition for a year. In 2020, in a welcome move, the Government reintroduced student bursaries, but at £5,000. That has caused a slight improvement in recruitment to the profession, but it falls far short of ensuring the future of the podiatry workforce that will be required to deal with the oncoming wave of severe diabetic complications coming out of the pandemic.
Another issue is that the average age of podiatry students on graduation is 32. The majority of students are pursuing a second degree, and the need for a second student loan is having a damaging impact on universities’ ability to recruit undergraduates to train as podiatrists. By leaving it up to the market, we face the prospect of not training the workforce required to meet the needs of an ageing population.
The other issue raised with me is the limited career progression in NHS settings. Of the podiatrists currently qualified in England, approximately 40% work in the national health service. It is projected that many of those podiatrists not heading for retirement are likely to move to work in the private sector in the next five years. The reasons cited for that include lack of career development opportunities; repetitive workloads, with limited skill mix; and high demand and low capacity to meet it, leading to what people consider are unsafe staffing levels and to staff burnout.
Expansion of the podiatric workforce across primary, community and secondary services may address some but not all of those issues. Support for workforce growth is critical, but support for those already qualified to progress to advanced clinical practice and consultancy is also critical to workforce retention and ensuring adequate capability in senior clinical, leadership, education and research roles.
We need policy to ensure closer working across providers and the delivery of a foot health strategy. There is significant opportunity to expand the foot health workforce to include non-registered roles, supported by qualified, expert podiatrists. There is also opportunity to consider alternative workforce models that are inclusive of podiatrists working in private practice or the wider foot health workforce in the third and voluntary sectors, for example. A clear workforce strategy is desperately needed now. It needs to explicitly underpin how the foot health workforce is optimally configured, funded, implemented and trained and what the core outcomes of foot health services must be to meet the needs of our future population.
Currently, there is no workforce strategy, no clear statement of aim, and no standardised set of core outcome measures informed by public health or policy. Clear foot health policy is urgently needed to maximise all the benefits that podiatry can offer across an integrated care system, before the profession becomes—as we predict it will—unsustainable, with staffing levels even more unsafe and avoidable patient harms, amputations and deaths relating to lower-limb disease rising dramatically.
I therefore have three key asks. First, I ask the Government to reinstate the £9,000 bursary for student podiatrists. If podiatrists are to be able to support the millions of people who will require their expertise, the Government must reinstate the full podiatry student bursary of £9,000 a year. That is essential if the workforce is to be secured and expanded for future generations. In the absence of long-term funding confidence, allied health professions such as podiatry are unable to commit substantial and consistent investment towards maximising recruitment and retention, both of which will be crucial in securing the future viability of this vital profession.
My second ask is for national collection of podiatry vacancy rates and inclusion of podiatry in workforce planning. Publishing a national workforce plan that considers future need for allied health professionals such as podiatrists must be a priority for the Government. That plan must take into account current trends in recruitment and retention and, for future needs-based public health, comorbidities and their impact on disease prevalence. A national workforce plan will also act as a crucial evidence base for the allocation of long-term workforce funding.
My third ask is for the guidance on integrated care system membership to be strengthened to include allied health professionals. The absence of national guidance or recommendations regarding which organisations and individuals should be included in integrated care partnerships has resulted in a patchwork of involvement for allied health professionals, including podiatrists, in integrated care decision making. Without their meaningful engagement in those discussions, there is a danger that the invaluable contribution podiatrists can make to the delivery of care might simply be overlooked. Strengthened national guidance on the make-up of integrated care partnerships, to include representation of allied health professionals such as podiatrists, should be developed and implemented at the earliest opportunity.
I conclude by thanking the professionals who work in my constituency, as well as those who work nationally. I recognise the pressures they are under and the valiant way that they cope with them.
Peter Dowd (in the Chair)
I remind the Minister that the debate must conclude by 4.41 pm.
The Minister for Health and Secondary Care (Will Quince)
It is a pleasure to serve under your chairmanship, Mr Dowd.
Let me say first how grateful I am to the right hon. Member for Hayes and Harlington (John McDonnell) for raising this important issue. He said that he did not know a huge amount about podiatry. I must say that I did not either, because I am not the Minister with responsibility for primary care, but I do have responsibility for the workforce. One of the powerful aspects of debates of this nature is that they force not only Ministers but the Department to focus on a particular issue and give Members from across the House—including the Minister —a crash course in it. As a result of my research ahead of the debate, I know far more about podiatry than I did yesterday. I thank the right hon. Gentleman for that.
I know having undertaken that research—and, indeed, from my constituency inbox—that podiatrists are a hugely important part of the workforce. They are an invaluable part of our NHS, as the right hon. Gentleman eloquently set out. I join him in saying how hugely grateful I am for their vital work supporting patients day in, day out across our NHS. The Government know that personal care that is responsive to people’s needs is essential and the service that podiatrists provide to local communities is important in helping people maintain their mobility, independence and wellbeing.
As the right hon. Gentleman rightly pointed out, early identification of foot problems helps to prevent or delay the onset or exacerbation of long-term conditions, thereby reducing the risk of wounds, infection and, ultimately, amputation. He also pointed out that foot problems have a significant financial impact on the NHS through out-patient cost, increased bed occupancy and prolonged stays in hospital. Working mainly at the heart of primary care, podiatrists are well placed to ensure patients receive a quality foot screening service, as well as the appropriate onward referrals for foot and lower-limb interventions.
The right hon. Gentleman correctly pointed to our ageing population. That is not exclusive to us; it is a global problem, certainly in the western world. I say “problem” but, actually, it is a great thing that people live longer. However, it is a challenge for health systems, because people are living longer with long-term conditions and complex needs that we need to ensure we can support and manage as a society. As the right hon. Gentleman pointed out, the need will continue to grow.
The right hon. Gentleman raised a number of issues but, with his permission, I will focus mainly on the workforce rather than on podiatry more generally. I recognise that the workforce remain under sustained pressure, having worked tirelessly throughout the pandemic to provide high-quality care for those who need it. I recognise that podiatrists’ role in supporting our NHS is as important as ever. It is vital that we support the workforce both now and in the future.
Jim Shannon
The right hon. Member for Hayes and Harlington (John McDonnell) referred to volunteers. I have them in my constituency, and if it were not for the volunteer podiatrists who give their time every day of the week, free of charge, I believe the NHS would be suffering even more. That is why we need to push for the recruitment that he referred to.
Will Quince
I thank the hon. Member for his intervention, and I pay tribute to all those who volunteer. This is not the only area in our national health service where volunteers play an important role, but it is important that they are add-on and add value—supporting professionals as opposed to replacing professionals. That is why, at the heart of this debate, we must ensure that we have the podiatry workforce that we need across all four nations—although this debate is specifically focused, understandably, on England.
As the right hon. Member for Hayes and Harlington pointed out, demand for the NHS continues to grow. That is why we have already done a significant amount to invest in the education and training of our future workforce. NHS England—until recently, this was done by Health Education England—has worked extensively to enhance and modernise the podiatry profession. One central factor, which the right hon. Gentleman alluded to, is the development of the foot health standards for the education and training of the foot health support workforce.
However, I am certainly conscious that we have more to do. As part of that process, we developed the podiatry apprenticeship, which is a degree apprenticeship, and supported the implementation of that route into the profession. The numbers are still small, but they are growing, which is great to see. We are keen to promote that route into the profession, not least because it comes with significantly reduced costs for those taking part in the training.
With the promotion of more podiatry apprenticeships, we are offering a more diverse number of training options for students. Furthermore, the learning support fund, which the right hon. Member for Hayes and Harlington pointed to, provides all eligible nursing, midwifery and allied health professional degree students—including podiatrists—with a non-repayable training grant of a minimum of £5,000 per academic year. I say “minimum” because there is an additional hardship element to that of up to £3,000 per year, and additional support is available for childcare, dual-accommodation costs and, where appropriate, travel. The right hon. Gentleman specifically asked for an increase; there are no plans for that at present, but I will of course take that away and have a look at it.
John McDonnell
I am here if the Minister needs any assistance in—I was going to say beating—negotiating the Treasury into submission.
I think I mentioned a figure of one podiatrist to every 5,500 people, but I think that I have got that wrong; I think it is actually one to every 55,000 people. That is a huge demand that is placed on podiatrists.
On the Minister’s point regarding the bursary, the British Society of Rheumatology pointed out in one of its briefings that an estimated £15 million a year would be saved on the costs of rheumatoid arthritis if sufficient support was given, particularly through podiatrists. In our argument or discussion with the Treasury, this is therefore an investment that will save money, and we know that directly from the evidence that has been provided.
Will Quince
I thank the right hon. Gentleman for his intervention. We are constantly looking at those spend-to-save arguments in areas in the health service where it makes sense to invest. Following this debate, I will gladly look at the podiatry courses and see how over-subscribed or under-subscribed they are, because that may—or may not—help to make the case.
I just spoke about training. Training is important because, of course, we need to see new podiatrists coming in to practise. However, as the right hon. Gentleman mentioned, retention is as important as recruitment. As important as increasing numbers of podiatry trainees is, it is also important to retain the highly qualified, highly skilled, experienced people we already have practising podiatry in the NHS.
I am determined—I know that the Secretary of State is too, because we have had this conversation many a time—to ensure that staff in our NHS feel supported and that the NHS works to ensure that staff feel valued, both by individual organisations and across the system. We are working closely with NHS England—and indeed, through NHS England, with individual trusts—to ensure that that is happening. We regularly meet staff to get a better understanding of how they could better feel valued and supported in their workplace.
The actions of the NHS people plan and the NHS people promise are helping us to build the kind of culture that will go a long way towards helping to support and hold on to dedicated and hard-working colleagues. That very much includes a stronger focus on health and wellbeing and, importantly, on strengthening leadership. People often say that they do not leave trusts or organisations but their managers, so we must make sure that management culture is right. We also know from speaking to staff that it is vital to increase opportunities for flexible working.
One of the right hon. Gentleman’s other asks was on the long-term workforce plan. He is absolutely right. To help us ensure that we have the right numbers of staff with the right skills to transform services and deliver high-quality services that are fit for the future, we have commissioned NHS England to develop a long-term workforce plan for the NHS for the next five, 10 and 15 years.
That high-level workforce plan will look at the mix and number of staff required across the country and will set out a number of actions and reforms that are needed to reduce those supply gaps and, importantly, improve retention. We have committed to publishing that plan shortly—and it will be shortly; I know it is soon. I am very keen to ensure that it is published, because I know how much work NHS England has put into it. In addition, the Chancellor committed that it will be independently verified. We have to make sure that we get it right.
The plan will also include projections for the number of professionals that will be needed, which goes directly to the right hon. Gentleman’s point—it will include podiatrists—and will take full account of improvements in retention and productivity that we plan and hope to see. I thank the right hon. Gentleman for securing this important debate. Through long-term planning, we are ensuring that the NHS has the robust and resilient podiatry workforce that it needs for the future.
The third and final question the right hon. Gentleman posed was on integrated care system guidance relating to allied health professionals. As tempting as it is to make policy on the hoof, that does not sit within my portfolio. I will commit to raise that with the Under-Secretary of State for Health and Social Care, my hon. Friend the Member for Harborough (Neil O'Brien), who is the Minister with responsibility for primary care. I will ask him to write to or meet the right hon. Gentleman.
We are working to ensure that we have the right people with the right skills in the right places and are working to ensure that they are well supported and looked after, so that they in turn can look after those who need our great NHS services and can keep delivering the great standard of care that people need now, but also in the future.
Question put and agreed to.
Heritage Sites: Sustainability
(10 months, 3 weeks ago)
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Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I beg to move,
That this House has considered the sustainability of heritage sites across the UK.
It is a pleasure to serve under your chairmanship, Mr Dowd. I am grateful to have been granted this time to shed light on the important contributions that independent heritage sites make to the UK.
The current climate emergency demands that we act fast to mitigate the fatal consequences for our natural world, and one way we should do that is by making man-made environments energy-efficient. There are also concerns about the fragility of heritage sites and doubts about their long-term existence.
I put on the record my thanks to Historic Houses, which has taken the time to educate me and my staff about this issue, and to come and watch this debate. I particularly want to name-check my assistant, Olivia Sharma, for her work on this issue. I also want to thank the custodians and caretakers of listed buildings—especially those in my constituency—who work tirelessly to preserve our heritage. In 2022 alone, Historic Houses’ members welcomed over 20 million visits, generating over £1.3 billion in expenditure for the UK economy. They supported over 32,000 jobs across the UK, over 4,000 of which were in Scotland. I believe the figures speak for themselves.
In my constituency, in the far north, I have seen at first hand how heritage sites, such as Dunrobin castle in Sutherland, ignite pride in the locals and provide fascination for tourists. That was evident in 2019, when the attraction welcomed—can you believe this?—100,000 visitors to a remote part of the UK. Attracting tourists from within and outside the UK to visit rural communities is imperative for the survival of those communities, as independent businesses are boosted considerably by visitors each year. The popularity of heritage sites as tourist attractions speaks to their unique ability to put rural communities in the highlands on the global map.
Jim Shannon (Strangford) (DUP)
I commend the hon. Gentleman for bringing this issue forward. Heritage sites help not only his constituency but mine. An example is the abbey at Greyabbey, which dates back to 1193 AD. It is worthy of protection not simply to preserve the history and the beautiful building, but so that it can act as a tourist attraction for cruises and coach tours, including the Disney Cruise Line tours. Does the hon. Gentleman agree that we must recognise the beauty of wonderful buildings, that funding needs to be put in place to ensure that moneys are ringfenced for historic sites, and that each and every pound must ensure that tourist money comes in, that tourists visit and that we all benefit, including the shops and the economy?
Jamie Stone
The hon. Gentleman makes his point eloquently. As he knows, my wife hails from the Province of Northern Ireland, and I know Greyabbey. He makes his point very well indeed.
Historic buildings are pieces of our history in the far north, and keeping them standing protects our heritage in the highlands, Scotland and the rest of the UK. In 2022, Historic Houses properties hosted over 26,000 events, such as festivals, theatrical performances and recitals. Listed buildings and their custodians make history, art and culture more accessible to people in communities right across the UK. It would be wrong to underestimate the value of listed buildings as sources of education as well as entertainment.
However, as I said at the outset, the climate emergency poses a challenge to the survival of estates and calls into question their long-term existence. Despite being sustainable partners who view decarbonisation as crucial to the preservation of heritage for future generations, custodians of listed buildings face practical barriers, which I am afraid to say include current planning permission and listed building consent, both of which inhibit the pursuit of net zero targets. For example, energy performance certificates use a metric of cost, as opposed to carbon. That often encourages the installation of new fossil-fuel boilers, rather than green alternatives such as solar panels, in listed buildings.
Furthermore, listed building consent adds delay, expertise and, indeed, hassle to the process of installing any energy-efficiency measures in listed buildings—even those with minimal impact on their historic fabric. I would suggest that the regulations are flawed and that they lead to the slow and difficult uptake of energy-efficiency measures. These houses were built to last, but the Government must allow them to adapt and change as necessary. Planning frameworks need to provide support for the implementation of sensitive energy-efficiency measures in a way that reflects the climate emergency.
Greater investment in renewable energy in off-grid rural communities is imperative, particularly in my constituency and other rural constituencies, because it would lower renewable fuel costs and increase self-sufficiency. That way, green energy projects in the heritage sector could be integrated into their surrounding communities. Reviewed planning frameworks must ensure that buildings are repaired and adapted in energy-efficient ways, not demolished. In short, heritage protections must be maintained and prioritised in future reviews of planning policies. We must put sustainability at the forefront of our thinking.
I am fully aware that housing is devolved to the Scottish Government, but perhaps—with the best will in the world—the two Governments could work together to ensure best practice. After all, having a chain of historic attractions all around the UK can only benefit the four nations of the United Kingdom. The United Kingdom has the oldest building stock in Europe. It would be shameful and reckless to let it succumb to insolvency when we have the tools to ensure its survival.
The point I want to make is simply this: the climate crisis is growing ever more urgent and we need to start taking tourism and heritage more seriously. We can do that by recognising this historic environment as part of the solution to achieving net zero. I suggest that tourism has for too long been treated as second rate—an afterthought to bigger, more important issues. We are talking about people’s livelihoods, the preservation of our national identity and, indeed, the very existence of our planet as somewhere we can live and work for many years to come—these are no small feats.
That is why I join the voices that have been calling on the Government to support heritage sites that are committed to net zero targets by publishing a review of the planning and regulatory reforms that face listed buildings. The survival of our country’s heritage requires a supportive regulatory framework, and we need it as soon as is humanly possible. I look forward to hearing the contributions of other Members present, and I thank them for attending the debate.
Peter Dowd (in the Chair)
I remind Members that they should bob if they wish to be called in the debate.
Matt Rodda (Reading East) (Lab)
It is a pleasure to serve under your chairmanship, Mr Dowd. I thank the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for his excellent opening speech and his commitment to the important matter of heritage and its connection with sustainability and the wider environment.
I would like to address my remarks to the question of the future of Reading gaol, which is a grade II listed building. It is famous for being the place where Oscar Wilde was incarcerated, and it was designed by the famous Victorian architect George Gilbert Scott, who was responsible for a number of well-known Victorian buildings in London, including the Albert memorial and St Pancras station. Sadly, the gaol has been mothballed since 2013 and faces an uncertain future. Locally, we would like to see this historic building reused as an arts and heritage hub and preserved for the community, possibly with some support from outside benefactors. We have had interest from Banksy and, indeed, members of the arts community.
When the Minister responds, I hope he will indicate that he has passed on my concerns to the Ministry of Justice, which owns the site. Sadly, the Ministry mothballed the gaol in 2013. It spent a large amount on maintaining the building’s integrity, but it has not sold it, and has not wished to sell it, to a community-led bid, despite an offer of interest from Reading Borough Council. The council and I are waiting to hear from the Ministry what the future of the gaol might be. We would very much like the Government to reconsider the community interest in the future of the gaol and to look at an arts and heritage hub as a possible future use for the building, so I hope the Minister will be able to address that. I thank you, Mr Dowd, for allowing me to briefly speak about this matter.
Jonathan Gullis (Stoke-on-Trent North) (Con)
It is a pleasure to serve under your chairmanship, Mr Dowd. I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing this important debate, because heritage sites and tourism mean so much to people in places like Stoke-on-Trent, Kidsgrove and Talke. I will start with a success story that shows what can be done to sustain important icons in our communities. The shadow Minister, the hon. Member for Manchester, Withington (Jeff Smith), visited Middleport pottery. I was delighted that he was able to see it; it is just a shame that he did not visit with a much sounder group of individuals like me, but I understand he was there in a party political capacity. Anyway, I am glad that he was able to see that fantastic work.
All thanks to His Majesty King Charles III: his charities came in and turned Middleport pottery around. It is a great icon of our history and heritage that was on the verge of crumbling and falling down. Today, it is a continuously working factory—the only factory in the world where pottery is still handmade and hand-printed. Every piece of Burleigh is unique to its owner.
Middleport pottery is opening up and giving tourists the opportunity to see a working factory in action, and to be involved in arts and crafts. It has developed the Harper Street project, which has an excellent veterans support network; it creates artwork for local veterans to sell. That gives them skills and ambition for the future, and helps them to tackle their physical and mental health ailments. There are fantastic organisations, such as Middleport Matters Community Trust, led by Vicki Gwynne, who does tremendous work. It ensures that young people and mothers get the support that they need all year round, through holiday activities and food programmes. It is linked to the Hubb Foundation, and gives important community support.
Channel 4 has used Middleport pottery for “The Great Pottery Throwdown”. Canal scenes in “Peaky Blinders” were filmed there. The site has been used diversely to bring in a sustainable income. The factory produces an awful lot of heat, so that is shared around the complex to drive down energy costs. Also, many volunteers kindly give up their time to support that success.
The greatest honour I have had as a Member of Parliament was seeing those at the heart of this Government—the Cabinet—have a regional away day in the Middleport pottery building. Hosting a Cabinet meeting, and knowing that those decision makers were in the community, was iconic for the people of Stoke-on-Trent. These local charities and organisations would maybe never otherwise be able to access Ministers at first hand; having them on their doorstep sent a real signal of intent and seriousness. I congratulate Boris Johnson, the former Member for Uxbridge and South Ruislip, on doing that. It was a big decision, and it meant a lot to the people of Stoke-on-Trent. I am delighted that Middleport pottery also recently received £249,962 from the National Lottery Heritage Fund.
Middleport pottery is a success story, but there are many challenges. Stoke-on-Trent is littered with beautiful buildings and historic heritage. The mother town of Burslem has many of those buildings. The Queen’s Theatre, the Victorian Burslem indoor market and the Wedgwood Institute are three iconic buildings. The city council recently found that it would cost between £30 million and £40 million to bring them back to life. Through feasibility studies, the council has been looking at what could be done with those spaces.
The indoor market—a fantastic building—had the Office for Place visit it; being the cheapest of the three, I think it is a real goer. It could be not only a great venue for meetings and conferences, but a performing arts space. Street food stalls could be set up there. An iconic building could be brought back into use. It was recently listed, which is important, because it gave us access to funds that were unavailable before. Stoke-on-Trent City Council took the risk of bringing the building back under the public purse. The council wants to see it future-proofed and used, so that Burslem can continue to thrive.
I welcome the Minister to come and see at first hand that iconic sight, and to stop off at the mighty Port Vale football club. There is another football team in the south of the city, but we do not need to worry about them quite as much. Port Vale are a great football team, and the Minister would be more than welcome there. Port Vale’s promotion from league 2 to league 1 has helped bring an awful lot of extra footfall into the mother town of Burslem. That supports pubs and independent restaurants, such as Agie and Katie, an award-winning west midlands food provider, as well as The Bull’s Head in Burslem, near the fantastic Titanic Brewery; it is a great epicentre.
There is one building that is iconic to the history of not just the city but the country: the Leopard pub. Sadly, arsonists attacked this important building and caused tremendous damage. It is where Josiah Wedgwood and James Brindley met to discuss and plan the Trent and Mersey canal, which fuelled so much of the industrial revolution across the city. Now, potentially just the frontage can be kept. The new owners are talking about turning the building into housing. I hope that can be done, but Government support is required to move those plans forward.
Price and Kensington teapot works is another important site. I am grateful to the Government for supporting my ten-minute rule Bill and including it in the Levelling-up and Regeneration Bill. It means that the current capped fine of £1,000 for someone found guilty under section 215 of the Town and Country Planning Act 1990 will be unlimited for the first offence, and will go up from £100 to £500 a day for a second offence. That will help us hold to account rogue and absent landlords, such as Charles Lewis and Co, which owns that great heritage site and was today fined up to £72,000 for its misuse. I hope that people such as Simon Davies of Kidsgrove, a local businessman, will come forward with plans to take over the site and deliver a new arts and cultural centre. It will be a corridor into Stoke-on-Trent north, off the A500. That would be really powerful, and would support the tourism industry. It would go into Middleport pottery, using the canal network.
Finally, there is a great sleeping giant that I have been proud to bang on about time and again: Chatterley Whitfield colliery, which is the largest complete deep coal mine site in Europe. It was the first colliery in the country to dig up 1 million tonnes of coal, and it did so not just once but twice. I congratulate Nigel Bowers, who in the recent honours list was recognised for his public service, and for standing up for such fantastic local charitable organisations. Stoke-on-Trent City Council, Historic England, the Chatterley Whitfield Friends and I have come up with a plan to make the colliery a really exciting centre for geothermal exploration; it can be used as a trial. The Coal Authority has revealed that there is pre-existing infrastructure that could help develop a mine energy project with a heat pump that can bring heat from the ground to the surface and power homes. The Coal Authority estimates that the site could generate about 1 MW of energy—enough to power 500 homes. I hope the Minister will take that back, feed it into Government and make the most of the opportunity to bring to that important site the investment that we need if we are to turn around that sleeping giant, which I want to see flourish.
Peter Dowd (in the Chair)
Just a bit of housekeeping: I expect to call the Opposition spokespeople at 5.16 pm, and I will give the mover of the motion a couple of minutes to wind up, so hon. Members have no more than five minutes each. Try to keep it under five minutes, please.
Dame Nia Griffith (Llanelli) (Lab)
It is a real pleasure to take part in this debate. I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing a debate on the sustainability of heritage sites across the UK.
I should like to discuss the Llanelli railway goods shed in my constituency. When the local planning authority conservation officer deals with the application for solar panels, the matter will of course come under Welsh Government guidance, which has much in common with the guidelines elsewhere; the same issues are raised. It is a huge challenge to finance the renovation of a large, grade II listed building. The building has featured in TV programmes by Michael Portillo and Huw Edwards. The dedication of volunteers, and the desire of local residents to see it restored to its former glory, is immense.
If a building is commercially viable, it will be snapped up, and there will be plenty of options—it can be done up for flats or whatever—but so many of these buildings are not in that category. The costs of renovation far outweigh any easy profit for commercial investors, so the buildings remain there until local volunteers get together, start raising money, including through grant funding, and make a business plan that stacks up. It is very important that they can show that the building is sustainable. In our case, we have gone for a mixture of commercial and business start-ups, plus community and educational use. We are already bringing in schools and showing the children material about Llanelli’s industrial heritage. For us, putting on solar panels is extremely important, because we want to tackle climate change. Every level of Government—the UK Government, the Welsh Government and the local county council, which is the local planning authority—has professed its commitment to getting to net zero. We have a huge south-facing roof, which is not visible from the front of the building—from the road, where people go in. The building backs on to the railway; somebody has to be right over the other side of the railway to see that part of the roof.
We were concerned not only to tackle climate change, but to make the building more viable and save on running costs, all the more so given that energy costs have soared recently. However, our local planning authority conservation officer has been adamant that the guidance will not permit solar panels. It was strange; they would not contemplate the modern solar panels that we liked, which look so much like slates that it is hardly possible to tell the difference. We were told that we had to have the ones that stand proud. I can understand the theory, which is that restoration to the original would be required; that might be the reasoning. Anyway, neither option is apparently acceptable, and we have been flatly refused permission to put solar panels on the roof.
This is a listed building that we want to be preserved and to look as it has looked. It is an industrial building, and we want to move with the times. We want to use technologies that are up to date, as the hon. Member for Caithness, Sutherland and Easter Ross mentioned, just as the builders used the technologies of their day. We want to conserve the building and preserve the planet. We want to contribute to tackling climate change, and make the building more viable.
Even well known buildings with high footfall do not necessarily find it easy to make ends meet, because running costs can be so high. With a building in a less well-off part of the country, which probably will not attract such high footfall and is wanted principally for community use, it matters even more that we should have the opportunity to put on solar panels, out of sight, and in a way that helps the sustainability of the building, and ensures its preservation for the future.
Mr Jonathan Lord (Woking) (Con)
Brookwood cemetery in my constituency is a beautiful grade I listed historic park and garden. It has a fascinating history, which I would recommend to everyone. In brief, London ran out of space in its churchyards and cemeteries in the Victorian age, in the late 1840s. Given the potential for cholera outbreaks and so on, Brookwood cemetery in the heart of Surrey was designated to take all of London’s deceased, and a special train line was set up. Its other name was the London necropolis.
Today, 170 years later, it is still a beautiful place. Originally, the London Necropolis Company bought more than 2,000 acres. The site is still very large, at 220 acres. It holds the remains of more than 265,000 deceased, from the great and the good through to paupers. Recently, about 15,000 sets of remains from the route of the HS2 line have been reinterred at the cemetery. It is still used as an active cemetery, and still has that historic job of taking in remains when the need arises.
Brookwood has had a slightly chequered history in more recent times. It has always been in private ownership. Some of the private owners looked after the cemetery well; others not so much. Woking Borough Council stepped in a few years ago to buy the cemetery, and has done an amazing job of restoring it. The buildings, walls and memorials were in great need of love, attention and restoration. There are also some wonderful flora and fauna, but the area had become overrun with rhododendrons and all sorts of other things. Some of the trees are 170 years old; they are an absolutely magnificent sight, all set out in serried lines, particularly next to the old railway line. As Members can hear, this is a very special place, but it needs further restoration. It is the largest cemetery in the United Kingdom and one of the largest, if not the largest, in Europe. As I say, it has an amazing amount of history.
Going forward, Woking Borough Council will not be able to spend the sort of money on the cemetery that it has done in recent times. As I say, the council has done a great restoration job, but we are talking about a site of national importance. The Minister will forgive me if I engage with the Government and with his Department on this magnificent place, along with other heritage bodies and lottery organisations, because it really deserves the public’s support. As I have said, I recommend that everyone becomes acquainted with this most amazing place, but national support will be needed for this very special and important national monument.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
It is a pleasure, Mr Dowd, to serve under you today. I congratulate my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing this debate, and on the way in which he put the case for what he charmingly termed “the far north”, or the start of the south, as we in the northern isles call it.
I flatter myself that we know a thing or two about heritage sustainability in the northern isles; we have been doing it for 5,000 years, after all. Since 1969, Orkney has been home to a UNESCO world heritage site—the heart of neolithic Orkney, incorporating Skara Brae, the stones of Stenness, Maeshowe and the Ring of Brodgar. However, that is just the start of it, because there is so much more archaeology peppered around the northern isles, and of course we have in Kirkwall St Magnus Cathedral, which is a relatively late addition to our portfolio, being a mere 12th-century construction. Most recently, we have had a very important addition in the Scapa Flow Museum in Hoy, which does a tremendous job in retaining historic artefacts that take us back to the first and second world wars—a time when Orkney and Scapa Flow were at the heart of the nation’s defence.
Of course, for some time now, Shetland has been designated a UNESCO global geopark. Earlier this year, the Government gave their support to the Zenith of Iron Age Shetland, which is also acquiring UNESCO status as a world heritage site. There are also Mousa, Old Scatness and Jarlshof. Jarlshof is a 4,000-year-old settlement. Can the Minister give us any update on support for the Zenith of Iron Age Shetland? Obviously, it was never going to be a fast process; we know that. However, if he can give us an indication of what his Department is doing to sustain that process, it would be most appreciated.
In many ways, heritage defines what we are about in Orkney and Shetland. It is one of the things that marks us out as being very different from the rest of the country, and we are enormously proud of it. It now brings in a huge amount of business, and a huge number of people from right across the world for tourism. That is both an opportunity and, if we are not careful, something of a threat. It has developed in Orkney and Shetland a tremendous visitor economy, all made up of small and medium-sized enterprises; in particular, there is now an army of well qualified and well trained tourism guides who are able to offer a great visitor experience to people coming to the northern isles.
In recent years, however, we have seen an enormous growth in cruise ship traffic. That has been enormously valuable, especially financially, to the community, but there are challenges given the sheer number of people who come to visit sites such as Skara Brae, Maeshowe and the Ring of Brodgar. I commend everybody who has been involved in the management of that influx of tourists, because they have balanced the needs of maintaining the integrity of our world heritage site while making sure it is open and accessible to those who visit our islands.
The other threat to all built heritage, of whatever age, is climate change. We see that manifesting itself in so many different ways. Skara Brae on Orkney has been listed as a site that, because of its sheer location, is particularly vulnerable to the threat of climate change. It would be an absolute tragedy for our country if we were to lose such a site. I would like to see our Government in Scotland and the UK Government in Westminster come up with a more strategic and co-ordinated approach to ensure that these very important sites are maintained for future generations.
Tim Farron (Westmorland and Lonsdale) (LD)
It is a pleasure to serve under your guidance this afternoon, Mr Dowd. I pay tribute to my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael), who I am delighted to follow, and my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone), who secured this debate and made a wonderful opening speech. I commend the other speeches made in this debate.
UNESCO granted world heritage site status to the 1,000 square mile English Lake District in 2017. The document that UNESCO released on that proud announcement gave as much credit to the farmers and land managers as to the glaciers that first shaped its environment. World heritage site status was hard won by the Lake District National Park Authority and the many communities within it. The status is richly deserved and precious, but it is not without being at some risk.
I will identify a handful of the risks to the world heritage site status that we enjoy in the Lake district, starting with the environmental risks. The great risk we face at the moment relates to the transition from the old farm payments scheme we had under the European Union, the common agriculture policy, to the new environmental land management scheme being designed by this Government. In theory and principle, I am fully in favour of the scheme; in practice, the Government are botching the transition and risking our landscape.
Why is that the case? This year, all my farmers will lose at least a third of their basic payments. Last time I checked, not very long ago, a grand total of 27 of the 1,000 farmers in my constituency alone—there are many more in the broader Lake district—had signed up to the new sustainable farming incentive. What will the farmers outside the new environmental schemes do? I suggest they will either go broke or go backwards. Many will go out of farming altogether, which means our landscape will rapidly change, damaging both the environment and our tourism economy, or they will go backwards. I have talked to many farmers who are desperate to work out how on earth they will make ends meet. What are they going to do? They are already increasing their livestock numbers, over-intensifying their farming and undoing the good environmental work they have done over the past few decades.
Meanwhile, badly put-together schemes are effectively giving landlords vast sums of money. What are they being compensated for? For evicting their tenants and creating valleys that are completely lost to farming and wildlife protection, which many of us have termed a Lakeland clearance. The landscape will look very different in a few years’ time if the Government continue on this trajectory. We have a tourism economy worth £3.5 billion a year in places like Bo’ness, Windermere, Ambleside, Grasmere, Grizedale, Langdale, Coniston, Hawkshead, Staveley, Glenridding, Patterdale and all the lakes and fells that people come to visit.
The tourism economy from which we hugely benefit will be damaged if we do not have the protection for which I am calling. We have 20 million visitors to our community, underpinning 60,000 jobs. It is important that we recognise how precious it is to the life of our community that we protect our world heritage site status. The national parks were originally founded on the Sandford principle, the idea that, all other things being the same, priority must be given to the conservation of the national parks.
We need to conserve our landscape, as I have already set out, but we also need to conserve our communities. The massive unrestricted growth of second home ownership in many of our communities means that I can name many villages where almost 90% of the housing stock is not lived in all year round. So you lose your school, you lose your bus service, you lose your pub. You lose everything there is that held the community together. We also see a growth in the ownership of the landscape falling into private hands. I trudged my way around Windermere lake a few weeks ago, when I ran the Windermere marathon. Apart from the fact that it was very uncomfortable and quite hot, it struck me how much of the frontage of the lake is privately owned. At the moment we are campaigning to stop YMCA Lakeside North Camp being sold off to a private owner who would permit no direct public access to the lake. I want the Lake district to be available to everybody, not just those of us who live there—I am so lucky to do so—but the country as a whole.
Our environment, our tourism economy and the communities that make up our national park—these things are hugely important. World heritage site status was tragically and sadly lost by Liverpool just two years ago, a reminder that all of us can lose this precious status. I ask the Government to take the action needed to protect world heritage site status for our wonderful communities in the Lake district.
Patrick Grady (Glasgow North) (SNP)
It is a pleasure to serve under your chairmanship, Mr Dowd.
I warmly congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing the debate. I share with him a heritage in the highlands. I grew up in Inverness and I recognise much of what he describes. Everyone has spoken today with passion about the heritage sites in their area, whether they are world heritage sites, scheduled monuments, listed buildings or community assets of local value, and whether they are in the far north, Reading, Stoke, Llanelli, Woking, Orkney or the Lake district. I am sure I will be able to mention a couple in Glasgow. All such assets have a value in their own right as tangible and sometimes intangible connections to our past, our culture and the role they played in shaping our society.
In Glasgow North, we have a portion of the world heritage site of the Antonine wall, which was part of the frontier of the Roman empire. Much can be learned from the wall and associated sites about the Roman presence on these islands. Apparently, the first Romans who came here were chased away from the white cliffs of Dover, and people threw rocks and stones at them. These days the Government might call them illegal migrants and try to deport them to Rwanda. Nevertheless, the legacy is there to see in all the assets we are talking about. That important economic and social value remains in the here and now. These places bring people together and attract interested visitors who spend money on site and in the local economy. That in turn provides further benefit for the local community.
In Glasgow North we have the Maryhill Burgh Halls and in the east of the city Provan Hall. They are fantastic examples not just because my younger sister has worked on their heritage and regeneration, but because the projects to save and restore those facilities have themselves supported the local economy. They will be developed into functioning buildings that provide a place for people to make new memories, as well as to share their memories of them in times past.
The development and redevelopment of such sites is rarely, at least in the first instance, a purely commercial endeavour. Many heritage sites rely on charitable giving or funding from grant-making organisations, not least the National Lottery Heritage Fund, and from statutory bodies. The Charles Rennie Mackintosh Society, which marks its 50th anniversary this year, has received support from Historic Environment Scotland and has maintained and developed Mackintosh church at Queen’s Cross in Glasgow North as an attraction in its own right and as a venue for performances, weddings and other events. Currently, it is hosting Luke Jerram’s famous Gaia installation, last seen in Glasgow at COP26, where of course we were all encouraged, as the hon. Member for Caithness, Sutherland and Easter Ross rightly said at the start, to think about how we tackle climate change and work towards reaching net zero targets.
In Glasgow’s west end, the Arlington Baths Club, of which I am a member, benefited from lottery heritage funding in the past. This recognised its value not only to the club’s members, but to the wider public. The facility is used by schools and is open throughout the year to those who wish to learn more about the building’s architecture and history. It is also a good example of how sites can adapt to a changing climate while becoming more sustainable at the same time. It recently produced a very ambitious plan to reach net zero. It will reduce carbon emissions, which is good for all of us, but also save money through energy efficiency and local generation. Supporting such projects should not just be seen as some sort of nice to have or luxury extra by Governments. Investing in heritage sites pays dividends for both the economy and wider society, and failure to invest results in either long-term maintenance costs or costs associated with the loss or even the destruction of assets.
The hon. Gentleman touched on a range of devolved areas. The Scottish Government invest what they can from the resources available to them. That includes the £278 million for the culture and heritage sector in the current year’s budget. We would, of course, welcome further investment at a UK level, because that would result in Barnett consequentials. I hope the Government will keep up with EU regulations in this area despite their insistence on a hard Brexit. There has been consensus on the value that these heritage sites bring to our culture, economy and society, but preserving them for future generations will not happen by magic. I hope the Government are prepared to step up to meet the challenges ahead.
Jeff Smith (Manchester, Withington) (Lab)
It is a pleasure to see you in the Chair, Mr Dowd. I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing the debate and on his opening remarks, most of which I agree with. We have heard contributions from a lot of right hon. and hon. Members across the Chamber, demonstrating the pride and passion that people feel in their local heritage sites. I greatly enjoyed my trip to Middleport Pottery. It is an excellent project and I also saw in Burslem the potential for wider regeneration of a heritage area.
Heritage sites tell the story of our country. They educate visitors from home and abroad, boost our visitor economy, and provide jobs and opportunities across the nation. Historic Houses has 1,450 sites, more than 900 of which are open to the public. They received 21 million visits last year, supported 32,000 jobs and generated over £1 billion for the UK economy. It is not just about money; living close to historic buildings and places associated with heritage is associated with higher levels of self-reported health, happiness and life satisfaction. Some 93% of people agree that local heritage improves their quality of life, and civil pride decreases when that heritage is in poor condition. For all those reasons, we need to preserve our heritage sites for the future so they can continue to enhance our local communities.
Like all sectors, there is a need to reduce carbon emissions as we transition to net zero. By their nature, heritage buildings are often old and inefficient. According to Historic England, improving the energy efficiency of historic properties could reduce emissions from the UK’s buildings by 5% a year and generate £35 billion for the economy, while making those buildings warmer and cheaper to run. Grosvenor’s recent research shows that retrofitting just half of pre-1919 homes in the next decade could lead to a saving of around £3.4 billion worth of CO2 reductions by 2050. Keeping historic buildings in use—adapting instead of demolishing them—is one of the most impactful things that can be done to lower carbon emissions and reduce waste.
These sites are vulnerable to risks beyond the climate crisis. During the pandemic, without a steady income stream from visitors and events, they immediately fell into difficulty, with repairs and maintenance projects cancelled. The backlog of repairs and maintenance projects will now cost around £2 billion. I would like to flag that work on historic buildings is currently subject to 20% VAT, but no VAT at all is charged on work on new buildings. Does the Minister agree that that creates a perverse incentive to pursue the most carbon intensive option, which is to demolish and rebuild rather than to repair?
Then there is the cost of living, inflation and energy costs for both operators and visitors. In January, a survey found that nine in 10 heritage sites feared for their future because of energy costs. I welcome the fact that historic sites were included in list of energy intensive industries eligible for sustained support from the energy bill relief scheme, but costs remain a problem.
As my hon. Friend the Member for Llanelli (Dame Nia Griffith) said, our under-resourced and often painfully slow planning system does not help either. Trying to upgrade listed buildings or buildings in conservation areas with things such as solar panels, window efficiency works and heat pumps is difficult. Some 87% of respondents to a Historic Houses survey believed that the planning system was a block to their efforts to decarbonise the buildings in their care.
In their energy security strategy, the Government said they would review
“planning barriers that households can face when installing energy efficiency measures…including in conservation areas and listed buildings.”
That review has been under way for some time but, halfway through 2023, it still has not been published. Recent responses from the Department for Levelling Up, Housing and Communities give no clear indication of a timeline for publication, which is frustrating those in the sector. Delaying the energy efficiency review is holding up the review of the national planning policy framework, which is in turn holding up Historic England’s new climate guidance. I urge the Government to publish that review as soon as possible. Will the Minister provide us with a timeline, or at least engage with the Department for Levelling Up, Housing and Communities and put some pressure on it to provide us with a timeline?
The hollowing out of local government and the loss of expertise under this Government and the coalition Government make these issues particularly difficult, but I presume that the work and thinking has already been done on the specific challenge of barriers to sustainability in the planning system. It is time that the Government brought those proposals forward and gave the heritage sector the information and support it needs to get on with safeguarding our heritage sites for the future.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stuart Andrew)
It is a pleasure to serve under your chairmanship, Mr Dowd. I offer my congratulations and thanks to the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for securing this important debate and for all the contributions from hon. and right hon. Members today. My noble Friend Lord Parkinson, the Minister for heritage, is keen on hearing the contributions from the debate today. I am delighted to respond to the debate, and will certainly feed back many of the points that have been made.
I want to give thanks to the custodians who look after our heritage in this country. Members rightly raised the importance of their contribution to our economy, with the role of heritage sites as tourist attractions. I recognise the high importance of tourism to this country as an industry. I also put on record my thanks to the volunteers and charities who do so much and give up so much of their time in this area. Members have listed a whole raft of heritage sites in their constituencies. I could commit my noble Friend to visit them all, but I will not. I am sure, however, that he would be keen to hear more about them.
It is important to recognise that in 2019 the sector provided 206,000 jobs directly. We can all agree that the nation’s rich heritage touches us all and is a vital part of life in this country. It has a crucial part to play, not only in our cultural lives, but in the wider economic and social fabric of society. That is true now more than ever, as we rebuild following the pandemic. Ensuring that we protect and future-proof our historic sites is a matter of utmost importance and something we must continue to do. Their value is clear. The protection and preservation of our historic sites, by making them more sustainable, plays an important role in generating economic growth as well as pride in our local village, town or city.
The Government-funded high street heritage action zones programme shows the positive return from heritage-focused investment, with over 171,000 square metres of public realm improved in 65 high streets. By ensuring that historic sites remain at the heart of our communities, we create great places to live, work and visit, making an area more attractive to visitors and locals alike. Heritage can also bring joy to people’s lives. It improves quality of life and brings a sense of wellbeing, helping to meet major challenges of ill health and social care and our wider environmental and climate goals. It is therefore imperative to ensure that the sector remains sustainable and able to deliver these positive effects.
A number of Members have mentioned financial sustainability. It goes without saying that the heritage sector, like many others, is still feeling the impact of the period of upheaval and disruption. The pandemic, and more recently cost of living pressures, have contributed to a challenging time for many organisations, which are still rebuilding their financial sustainability and finding ways to make ends meet. Our precious heritage sites continue to need routine but vital conservation work, as the hon. Member for Manchester, Withington (Jeff Smith) mentioned, and financial sustainability is needed not just in the wake of the pandemic and the cost of living pressures but so that they can adapt to a changing digital world and meet the challenges of a net zero carbon agenda. We need to look to the future and at financial resilience. There is much that needs to be done.
The Government have been working very closely with the sector on those immediate pressures, including the unprecedented investment we gave the sector as part of the £1.5 billion culture recovery fund. I thank the sector for its engagement and the delivery of that fund. It certainly helped to deal with some essential capital restoration, as well as protecting the jobs of skilled specialists, and to make sure that historic buildings survived, workforces were retained, and most reopened to the public rather than being lost. The sector has been financially strained by the cost of living. I am delighted that we have been able to give more support through the energy bills support scheme, which was mentioned, to mitigate those costs.
Climate change was rightly raised by a number of Members. Heritage has a unique role to play in wider environmental sustainability. Our natural and historic environments are inextricably interlinked and by protecting one we can benefit the other. We need to maximise the potential of heritage to drive wider environmental goals around biodiversity, protecting habitat and sustainably managing our rural environment.
For example, in the constituency of the hon. Member for Caithness, Sutherland and Easter Ross, the National Lottery Heritage Fund, an arm’s length body of the Department for Culture, Media and Sport, supported the “Flows to the Future” project, which restored more than seven square miles of blanket bog habitat. Restoring and supporting peat bogs has multiple benefits for our environment by providing habitat for rare species and carbon capture, while also protecting unique archaeology and heritage that might otherwise not be preserved.
Jamie Stone
The Minister makes a very interesting point. People come from all over the UK and the world to see the blanket bog, and to look at the little animals and flowers that live there. They also come in the shoulder months—spring and the colder times. They are not fussed about the temperature; they want to see what it is like. That, in turn, boosts the local economy.
Stuart Andrew
The hon. Gentleman is absolutely right. That is a benefit that these places bring to our communities, and that is why preserving our heritage is so important.
On energy efficiency, the Government are fully committed to encouraging homeowners to incorporate energy-efficiency measures in their properties to reduce consumption and sustain our historic building stock. As part of that, we recognise the need to ensure that more historic buildings have the right energy-efficiency measures to support those objectives. In the strategy published last year, we committed to reviewing the practical planning barriers that households face when installing such measures, including glazing, or in conservation areas and listed buildings. We will be publishing the results of the review in due course and I will certainly speak to colleagues to find out when that might be.
The Government recently consulted on introducing a new national planning policy framework to support such energy-efficiency adaptations to existing buildings and historic homes. The consultation responses are currently being analysed and an announcement on the way forward will be made in due course.
I want to touch on a few specific points that were raised. The hon. Member for Reading East (Matt Rodda) mentioned Reading jail. I commit to speak to colleagues in the Ministry of Justice on those issues. I am always happy to visit Stoke, and look forward to combining that with a visit to the football.
The hon. Member for Llanelli (Dame Nia Griffith) mentioned the issue of confusing guidance. We recognise that, which is why the review will be looking at refining it to make it easier for homeowners. Historic England has already refreshed some guidance providing advice to homeowners, but I certainly take her point.
My hon. Friend the Member for Woking (Mr Lord) spoke about the cemetery. Again, I will raise this matter with my noble Friend the heritage Minister. As a Department, we are happy to engage with him and other stakeholders.
I will have to write to the right hon. Member for Orkney and Shetland (Mr Carmichael) with an update on the issue he raises. I have a very good friend, Tracey Thompson, who lives up there. I keep being asked to go and visit her, so I look forward to going along.
I will certainly speak to colleagues in the Department for Environment, Food and Rural Affairs about the points that the hon. Member for Westmorland and Lonsdale (Tim Farron) raised. In my time as Housing Minister, I heard the issue about second homes, and he will know that the Government are working on that as we speak.
Conscious of time, I shall conclude by thanking all Members for bringing this debate forward and to life and talking about the great assets that we have in this country and the issues we are facing in making them sustainable, because that is important for us as a Government. It is an issue that is recognised, and I thank all Members for their contributions.
Jamie Stone
I will be very brief. I welcome the Minister’s tone, and we all look forward to seeing what emerges from a new planning framework for listed building consent and seeing what comes out the other end. I will make a simple point: if we get this right, there is a great prize, because the more people who come to these attractions that are supported in a sustainable way, the more that boosts the local economy and, in turn, His Majesty’s Government’s tax take increases. It becomes a beneficial spiral. It is a great goal if we can achieve it; I am sure we can if we work together. Finally, I thank all right hon. and hon. Members for their thoughtful contributions. I am personally grateful to each and every one of these splendid people. Sometimes I think that these Westminster Hall debates are like the very best kind of tutorial at a higher education institution. It leads to good thought and constructive work together.
Question put and agreed to.
Resolved,
That this House has considered the sustainability of heritage sites across the UK.
Written Statements
(10 months, 3 weeks ago)
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UK-India Free Trade Agreement Negotiations
(10 months, 3 weeks ago)
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The Minister of State, Department for Business and Trade (Nigel Huddleston)
The10th round of UK-India Free Trade Agreement (FTA) negotiations began on 5 June and concluded on 9 June. As with previous rounds, this was conducted in a hybrid fashion—UK officials travelled to New Delhi for negotiations and others attended virtually.
Technical discussions were held across 10 policy areas over 50 separate sessions. They included detailed draft treaty text discussions in these chapters.
The UK-India trade relationship was worth £36 billion in 2022. A balanced deal which respects the domestic sensitives of both sides will strengthen the economic links between the UK and India, boosting the UK economy and bringing benefits to UK businesses, families and consumers. In this negotiation, as with all our FTA negotiations, the NHS and the services it provides are not on the table.
Both sides continue to work towards a modern and comprehensive agreement. We will only sign a deal that is fair, balanced, and ultimately in the best interests of the UK.
The 11th round of negotiations is due to take place in the coming months.
The Government will continue to keep Parliament updated as these negotiations progress.
[HCWS865]
Military Accommodation: Safety Inspections
(10 months, 3 weeks ago)
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The Minister for Defence Procurement (James Cartlidge)
The Ministry of Defence is responsible for some 47,800 military homes in the United Kingdom. Since 1 April 2022, the management and maintenance of the vast majority of that accommodation has been delivered by three contractors: Amey in the central and northern regions; VIVO in the south-east and south-west; and Pinnacle who run our national service centre.
There are 27 different statutory and mandatory housing safety inspections that apply to each property, which contractors are required to complete at different time intervals. These inspections are each undertaken by the contractor on a regime planner, with the schedule dates at least 12 weeks in advance of the expiry date of any certification.
By law, all occupied rented homes are required to undertake landlord gas safety inspections (LGSI) every 12 months. As part of the standard protocol, all personnel who move into Defence accommodation should have an LGSI, alongside an electrical installation condition report (EICR), completed within 28 days.
Since April 2022, more than 12,000 families have moved into military houses and been provided with valid statutory and mandatory certificates at the point they move in. However, it has become clear that progress to update gas certificates and electrical inspections for a number of existing residents which had already elapsed was not quick enough. Consequently, as of 20 June, there are 795 homes currently occupied by service families without valid gas certificates.
A number of factors have led to this situation. It appears that in many cases operatives were unable to gain access to properties due to miscommunication. On other occasions, contractors missed agreed appointments. Then there were supply chain resource problems, including sourcing suitably qualified gas and electrical tradespersons and a backlog of work inherited from the previous contract. Furthermore, legislation has reduced the currency of existing electrical safety certificates from 10 years to five, increasing this battery of checks.
The expiry of a certificate does not immediately render a house unsafe, but, clearly, the longer a home is left with expired certificates, the greater the risk that it could become so. During checks to date, no issues have been identified that would represent a serious safety concern for the families involved. That said, the safety of our personnel is paramount and it is unacceptable for any family to be living in a home without the necessary checks.
I was made aware of this issue in early May and immediately acted to address the problem, speaking with the FDIS contractors personally, making it clear to our industry partners that we expect this backlog to be cleared, less any exceptional cases, by the end of June at the latest and preferably sooner.
Although not a statutory requirement, the Ministry of Defence also requires its accommodation contractors to maintain current certificates on unoccupied homes—minimising the safety risk to neighbours or those required to visit for maintenance purposes. It is anticipated that all these unoccupied military homes will have up to date gas safety certificates by mid-July.
Finally, all electrical safety certificates should be up to date by the end of August.
One immediate lesson that has emerged is the need for improved communications. Until now contractors had relied on email to notify residents of upcoming checks. It appears that, for numerous reasons, these were not always seen in enough time to ensure that someone was available at the property.
That has now changed with contractors contacting families through letters, by telephone and through house calls. Instead of the usual individual house appointments, gas engineers have been attending military housing estates on nominated days and, supported by the military chain of command where necessary, have moved between homes to carry out the required inspections.
Service personnel have been notified in advance of these changes and are working closely with the military chain of command and our industry partners to ensure staff balance the need for availability with operational demands. If a service person living in SFA has not received a letter notifying them of this process, they can be assured their home is not in scope.
This is not the first time issues have been raised about military accommodation. Problems will always arise to some degree when you are dealing with an estate of this size and scale and with residents whose job by its very nature is demanding and time constraining. Nonetheless, we must do better. Since Amey and VIVO have not met the acceptable level of performance in this case, the relevant performance credit for fixed and variable profit for the service period has been withheld.
There are signs of improvement, but we are closely monitoring the performance of our contractors over the coming weeks to see the deadlines are met and I receive regular updates on progress.
We are also putting in place a lessons learned process for the medium and long-term. Specifically, what can we learn from the failures here that we can apply to future contracts to avoid similar mistakes.
The safety of our personnel remains our top priority. We rely on them to keep us safe and they rely on us to provide them with safe homes.
[HCWS867]
Volume Price Promotion Restrictions
(10 months, 3 weeks ago)
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The Parliamentary Under-Secretary of State for Health and Social Care (Neil O’Brien)
The Government are announcing their intent to delay the implementation of restrictions on volume price promotions, such as “buy one get one free” or “3 for 2” offers, on less healthy products by 24 months. These restrictions will now come into force on 1 October 2025.
Given the current challenges caused by higher food prices, the Government do not want to take actions that may restrict consumer choice.
Therefore, we are delaying the restrictions until October 2025 in light of the unprecedented global economic situation.
The intention of the promotion restrictions is to shift the balance of promotions towards healthier options, encouraging people to make healthier choices. We will continue to work closely with food businesses to reformulate products to be healthier. We have already seen success in some categories of the sugar reduction programme including a 14.9% reduction in average sugar levels in retailer and manufacturer branded breakfast cereals and a 13.5% reduction in yogurts and fromage frais.
The delay to volume price promotions does not impact the location restrictions which are currently in force. Under these restrictions, less healthy products in scope can no longer be promoted in key locations, such as checkouts, store entrances, aisle ends and their online equivalents. The location restrictions are the single most impactful obesity policy at reducing children’s calorie consumption and are expected to accrue health benefits of over £57 billion and provide NHS savings of over £4 billion, over the next 25 years.
We intend to consult in the coming weeks on the secondary legislation to implement the delay to the volume price restrictions.
The Government remain committed to halving childhood obesity by 2030 and delivering on these measures.
[HCWS868]
HMICFRS Inspection Report: National Crime Agency’s Effectiveness at Dealing with Corruption
(10 months, 3 weeks ago)
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The Secretary of State for the Home Department (Suella Braverman)
The National Crime Agency (NCA) leads and co-ordinates the overall law enforcement system response to Serious and Organised Crime (SOC) across the UK. It manages intelligence and information requiring the highest levels of security, with the power to task law enforcement and the capability to address the impact of SOC and counter corruption.
This is the 11th HMICFRS inspection of the NCA and examines how effective the NCA is at dealing with corruption, prejudicial and improper behaviour. This included the vetting of staff, its capability to prevent and counter corruption and insider threats, and its ability to tackle behaviours that discriminate.
I have asked HMICFRS to publish the report. It will be published today and will be available online at www.justiceinspectorates.gov.uk. I will arrange for a copy to be placed in the Libraries of both Houses.
The inspection found that the NCA takes these matters seriously, with a robust vetting process in place and an enhanced apparatus established to tackle corruption and promote professional standards. The report also concludes that the NCA has a more diverse workforce than ever. However, the Agency must continue to promote diversity, particularly in its leadership, as well as its operational units, where a lack of diversity was found. The NCA also needs to strengthen its ability to tackle insider threats and address prejudicial and concerning behaviours.
The Inspectorate raised concerns that gender-based discrimination and casual sexism continue. A zero-tolerance approach must be instilled across the NCA to ensure such behaviours are tackled and misconduct appropriately managed. I expect the Agency to demonstrate leadership in putting an end to any form of discrimination, and to put the appropriate practices and approaches in place to robustly address the concerns raised by the Inspectorate.
The inspection also identified a need to consider possible changes to legislation to clarify and strengthen the Agency’s professional standards, and to allow the NCA to have a Barred List established to ensure those staff who are dismissed for misconduct are prevented from working elsewhere in law enforcement. I am clear that the requisite changes should be made at the earliest opportunity.
The Inspectorate has made 19 separate recommendations which will help ensure that the NCA’s approach to corruption, vetting and standards is more robust and will deliver a safe and secure environment and positive culture for all staff to work in, in turn, helping to increase public confidence in law enforcement agencies.
[HCWS866]
Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
My Lords, welcome to this Grand Committee. If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells ring and resume after 10 minutes.
Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023
(10 months, 3 weeks ago)
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Baroness Scott of Bybrook
That the Grand Committee do consider the Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023.
Relevant document: 38th Report from the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument by the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)
My Lords, these regulations establish a responsible actors scheme for developers under Sections 126 to 129 of the Building Safety Act 2022, focused on the remediation by developers of historic fire safety defects in residential buildings they have developed in England. Developers that are eligible for the scheme but choose not to join, and developers that join the scheme but then renege on their membership commitments, will be prohibited from carrying out major development or obtaining building control approvals.
Following the Grenfell Tower tragedy, it became evident that thousands of residential buildings over 11 metres had serious fire safety defects. This put resident safety at unacceptable risk while leaving many leaseholders facing potentially life-changing remediation costs. This scheme is one part of the Government’s wider response to the building safety issues that came to light following Grenfell. In addition to the scheme, we are protecting residents by investing £5.1 billion in remediating unsafe cladding on 18 metre-plus buildings; securing industry contributions to remediation through introducing a building safety levy; implementing statutory leaseholder protections against unfair costs of remediation; and creating new legal avenues for affected parties to recover remediation costs from those who caused the problem.
This scheme focuses on major private sector developers, which sit at the top of the supply chain and have overall responsibility for their developments. The Government engaged with major developers through a remediation pledge and then a legally binding developer remediation contract. I welcome the action taken by 48 developers that have signed the developer remediation contract; these include the top 10 private sector UK housebuilders. The scheme will create a level playing field whereby eligible developers that commit to remediate are not placed at a competitive disadvantage compared with those that do not.
The regulations set out three descriptions of persons who are eligible to join the scheme. Developers based anywhere may be eligible for the scheme, if they developed relevant buildings in England. First, major housebuilders are eligible where their principal business has been residential property development; they were responsible for the development or refurbishment of one or more 11 metre-plus residential buildings in England in the 30 years ending 4 April 2022; and they meet the profits condition set out in the regulations. Secondly, developers are eligible where they meet the profits condition and they were responsible for the development or refurbishment of at least two buildings that we know are defective because the buildings have been assessed as eligible for a relevant government remediation fund. Thirdly, there is a voluntary eligibility provision. This allows other persons to join, where they were responsible for the development or refurbishment of a building that would require remediation under the developer remediation contract.
The profits condition is focused on typical operating profits averaged across the three years from 2017 to 2019, which were not impacted by the Covid pandemic. Both the profits condition and other aspects of the eligibility provisions make appropriate provision for the complex company group structures used by some developers.
The regulations make clear that registered providers of social housing are not eligible for the scheme. They will not be invited or permitted to join.
The core conditions of membership of the scheme are for developers to commit to identifying and remediating life-critical fire safety defects in residential buildings over 11 metres in height that they developed or refurbished in England in the 30 years ending on 4 April 2022, and to reimburse taxpayers for government-funded remediation of such buildings. To demonstrate their commitment, an eligible developer must enter into a self-remediation contract: a contract containing the terms of the developer remediation contract published by the Secretary of State in March this year. The membership conditions require members to give effect to their remediation and reimbursement commitments in accordance with the contract’s terms.
I turn now to the application provisions. The Committee will be aware that the Joint Committee on Statutory Instruments has drawn attention to two technical aspects of the drafting of these regulations, including one relating to the scheme’s application provisions. I am grateful to the Joint Committee for its time, its valuable scrutiny and its report, which the Government have carefully considered. We have corresponded with the Joint Committee and provided a memorandum setting out our position, which is printed as an appendix to the Joint Committee’s report.
I welcome this opportunity to reaffirm our overall position on the issues raised, as explained in the memorandum. On the application provisions, we consider it to be clear in context that, where the Secretary of State identifies that a person is likely to be eligible for the scheme, they will be invited to join it, but the registered providers of social housing will not be invited to join, as they are not eligible under Regulation 6. In light of the Committee’s report, we will monitor implementation carefully and consider bringing forward amending regulations in the event that the regulations give rise to a misunderstanding in practice as to who is invited or able to join the scheme. The Government will also issue guidance on aspects of the scheme. However, the issue of developer remediation of unsafe buildings is urgent, and I seek the Committee’s approval of these regulations today.
The regulations set out the time period to join the scheme and give developers an opportunity to make representations if they believe that they are not eligible. They also set out how developers can join the scheme in other circumstances, including under the voluntary eligibility provisions.
Membership of the scheme may be revoked for breach of membership conditions or ended without fault where a member has substantially satisfied their obligations. Members will have the opportunity to make representations to the Secretary of State before their membership is revoked. Should an eligible developer decide not to join the scheme by the end of the application period, or should their membership be revoked for failure to comply with the scheme’s conditions, they will, in accordance with the regulations, be prohibited from carrying out major development or obtaining building control approvals.
At this point the developer, and known persons controlled by the developer, will be notified and then added to a published prohibitions list, which will be used by local authorities for enforcement. Only a person named on the prohibitions list will be subject to the prohibitions. The regulations also apply the prohibitions to persons controlled by the developer to make sure that developers cannot easily avoid the prohibitions by continuing their development business through other entities they control. Prohibited persons will be subject to a planning prohibition that prevents them carrying out major development in England, except where planning permission is received before these regulations come into effect. Development of land carried out by a prohibited developer in breach of a prohibition will constitute a breach of planning control.
The regulations include provision that developers notify the local planning authority about their status as a prohibited person, or when the prohibitions are lifted. The Joint Committee on Statutory Instruments has reported on the absence of a specific sanction for failure to give notice under these provisions. I would like to reassure the Committee that these regulations are effective without such a sanction. The primary mechanism for identifying prohibited persons will be the prohibitions list published by the Secretary of State, so local planning authorities will have access to all the information they need even if a developer fails to notify them. In addition, any developer that engages in development contrary to the prohibition will as a result be subject to sanctions through planning enforcement.
The regulations also establish a building control prohibition, which prevents prohibited persons gaining initial and final building control approval in respect of any building work that requires such approval. The prohibitions have limited exceptions. The purpose of these exceptions is to mitigate potential impact on innocent third parties such as off-plan buyers, the wider public and certain entities that are not in the building industry.
The building control prohibition is subject to exceptions that seek to protect innocent third-party purchasers of properties from a prohibited developer, including a specific exception to assist those whose deposits could be at risk if a prohibition came into effect after they had exchanged contracts. There are also exceptions to ensure that emergency repairs and other repairs to any occupied building that are necessary for the safety of residents can proceed.
Both prohibitions are subject to exceptions to exclude critical national infrastructure projects and to permit certain entities in developers’ corporate groups that are not in the building industry to have the prohibitions disapplied to them where this would not frustrate the purpose of the scheme.
I know the Committee will also be concerned about other industry actors, particularly construction products manufacturers. It is unacceptable that cladding and insulation manufacturers have not yet acknowledged their responsibility for the legacy of unsafe buildings. Most recently, the Secretary of State has written to three industry participants, Kingspan, Arconic and Saint-Gobain, and to their institutional shareholders, to make it clear that those manufacturers must contribute to the cost of remediation or may face severe consequences. The Government will consider all options to ensure that construction products manufacturers contribute their fair share.
These regulations launch an important scheme for developers to remediate unsafe buildings. Given the urgency of this issue, we are bringing forward these regulations for a scheme focused on larger developers at speed. We propose to extend the scheme over time to cover all developers that have built defective buildings over 11 metres and should be paying to fix them. I commend these draft regulations to the Committee.
Lord Naseby (Con)
My Lords, I very much welcome the way my noble friend has introduced these important regulations. My dear late father was an architect so I was brought up in that climate, and I do not think anybody in the industry disputes the fact that those responsible for developing unsafe buildings should remedy the defects at their own cost as quickly as possible. That bit seems to be agreed all round.
However, there are some aspects of the scheme that I hope my noble friend will take on board and that should probably result in some changes. The first is the presumption that anyone who has developed a building above 11 metres has to bear the burden of proof that their buildings are not unsafe. That is a pretty costly execution to be done, plus I wonder whether this self-examination is actually the right way forward. What ought to happen is that a regulator should be employed and report accordingly to the Secretary of State.
Secondly—and this is an important dimension—the regulations impose qualifying criteria for membership that appear to bear no rational relationship with the harm identified. Rather than specifying membership criteria by reference to the number of buildings above 11 metres developed, instead the criteria relate to profitability. The result is that a cowboy developer that has built countless buildings of 11 metres and over unprofitably appears to escape the criteria, but for the responsible developer that has built virtually no buildings above 11 metres, profitability is required to join the scheme, with all the obligations that entails.
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
My Lords, there is a Division in the Chamber. The Committee will adjourn for 10 minutes.
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
My Lords, as there is another Division immediately, we will not restart the Committee. We will start it again at 4.25 pm, by which time the second Division will have taken place.
Lord Naseby (Con)
My Lords, I had finished two of the three key features I wanted to address, which were eligibility and obligations. I now turn to probably the most important of the lot: sanctions. As I understand it, failure to join the RAS means exclusion from the planning and building control systems. In effect, that means exclusion from most commercial and residential development in England for all companies, including non-developer companies—for example, an engineering subsidiary wanting to expand.
These sanctions are automatic. The regulations remove discretion in their use from the Secretary of State. The underlying Act originally contemplated the availability of discretion, but somehow it does not appear to have been carried through to the regulations. There are no mechanisms to determine whether the sanctions are proportionate to the risk or the harm. These coercive penalties would also apply to any further membership conditions applied in future, including compulsory financial contributions for works to buildings to which the scheme member had no connection at all.
I conclude with my reading of the situation. The severity of the penalties and the sanctions, the lack of discretion in their application, the arbitrary nature of inclusion in the scheme and the effect on employees, subcontractors, other stakeholders and shareholders seem to me, and to others outside who I have talked to, to be disproportionate and suggest that—I hope—His Majesty’s Government will think again. This industry is absolutely vital to this country; we see that daily in the newspapers.
My noble friend mentioned the material suppliers. In many ways, to any of us who take a real interest in this, they are equally liable. After all, without rotten materials that were highly inflammable, we probably would not have had Grenfell. I am surprised that, if I understand what my noble friend said, so far no single firm in that field has contributed anything or is proposing to join the scheme and contribute.
The other area that my noble friend did not cover was overseas developers. A fair number of projects was undertaken by overseas developers. We have a diplomatic corps in these countries. I hope that our ambassadors or high commissioners in the relevant countries have been given the information to pursue these developers. They should be looked upon just as firmly as are our developers. If they do not wish to contribute at all, frankly, in my judgment they should be barred from working in the United Kingdom in future.
Baroness Pinnock (LD)
My Lords, it is seven years since the Grenfell Tower fire that killed 72 people and devastated the lives of countless others. We owe it to them, and to all those still living in buildings deemed to be unsafe, to find a route to full remediation that excludes innocent tenants and innocent leaseholders from any of the costs.
As the Minister stated, the Building Safety Act included the measures that the Government intended to take to enforce the cost of remediation on those who developed the buildings. They should also have included a route to impose the costs of remediation on those who used the flammable cladding. I know that the Minister referenced this but to date, seven years on, the Government have not been able to find a route to force the three substantial manufacturers that the Minister named to accept responsibility and accept that they ought to pay towards the costs of remediation.
Then there are the construction companies that omitted fire breaks, relied on false material-testing outcomes and relied on building inspectors contracted by the very same construction company. We Liberal Democrats have said from the very beginning, seven years ago, that whatever legislation is passed to put these wrongs right, leaseholders must not pay a penny.
Through the Building Safety Act and this statutory instrument, the Government have focused entirely on the developers. Of course, that is right, but there are government responsibilities here as well. I am talking about all Governments, not necessarily this one. Thirty years ago, those who privatised the Building Research Establishment and the British Board of Agrément enabled building control inspectors to become independent of the local planning authority. All these policy decisions played a part in enabling the Grenfell disaster. I say that because that has been said in the Grenfell Tower inquiry.
No doubt, when the inquiry publishes its findings, hopefully sometime this year, it will expose these facts and attribute relative responsibilities. Meanwhile, these regulations are draconian; in many cases rightly so. However, there are inevitably some unforeseen consequences. The first of these relates to developers that are brought into the scheme and discover that, following intrusive building inspections, their developments need no further action. The noble Lord, Lord Naseby, and I have obviously had access to the same lobbying material from those in the industry who are concerned about some aspects of these regulations.
The principle is sound; the implementation is leading to some circumstances in which those who are not responsible will be required to fund remediation for which they have no part to play. The issues arise, first, from the criteria the Government have set. As the noble Lord, Lord Naseby, pointed to, these are around profitability—so those developers that were unprofitable but nevertheless built these faulty and dangerous buildings are excluded. I am sure the Government did not intend that to be the case, so I hope the Minister will point to the way in which that will not happen. It does not seem right at all, because we know how companies can evade some of the requirements put on them.
The next area has again been raised by the noble Lord, Lord Naseby, but I want to emphasise some of it. I remember the debates on the Building Safety Act. Initially, it was all about trying to ensure that only those developers and construction companies, and those who knowingly supplied flammable cladding—I am still waiting for that bit; I say “knowingly” as it is in the evidence of the Grenfell Tower inquiry—would be made liable for the remediation cost. That is fair and is absolutely the right thing to do. Those who did these things knowingly must be made to pay for them, but not those who did not. Unfortunately, the great scoop of these regulations will pull in some companies and developers that built blocks of flats of over 11 metres but kept to the rules that existed at the time. That does not seem right.
Another issue with these regulations—I am sure that the Minister will recognise this as an unforeseen outcome of them—is that I could see no way by which developers, once they join the scheme and then assess their buildings, at a considerable cost, are able to leave the scheme if they find that there is no action to be taken. This issue was in the lobbying material as well. Perhaps the Minister will either give me an assurance that they can or point me to where it says that they can leave, because that would be helpful.
There is another issue with these regulations, which are very extensive. Many developers are part of a wider family of companies, some of which will have had no part to play in development. That family of companies is being brought into the scheme and could be sanctioned, even if it is a company that has nothing to do with development. That does not seem right either, and I am sure the Government did not want it to happen. It would be foolish, but the sanctions are automatic.
This is all about the unforeseen outcomes of some draconian regulations, which I support. But we have to try to find a way in which good players are able to escape the scheme, and the sanctions and obligations that are part of it.
I will now raise the consequential impact of these regulations on local planning authorities. I remind the Committee that I am a councillor and a vice-president of the Local Government Association. I notice that there is an impact assessment, and calculations have been made of additional costs, but I am not sure that it has taken into account the differential impacts on local planning authorities across the country. The regulations will have very little impact on some, and a major impact on others. For those on which there will be a major impact, there will be expectations of additional members of staff, either in building inspection or as local planners. That does not seem to have been raised in the impact assessment as a calculation of costs to local planning authorities. I know the Minister agrees with the “new burdens” philosophy—the agreement that any new burdens that the Government impose will be met in full—so will the costs be met in full and, importantly, over the lifetime of these regulations?
Secondly, in her opening remarks—for which I thank her—the Minister emphasised social housing remediation a couple of times. Can she remind us where the costs for essential remediation of social housing—either local authority housing or social housing providers—will come from?
My next point is about the end date for the regulations. It seems that they are designed to respond to a specific set of issues so, once all the remediation work has been done, will the regulations cease? I could not find a sunset clause; should there be one? Otherwise, we will have sets of regulations that are no longer relevant.
Finally, I remind the Minister that these regulations address the safety issues facing only those who live in buildings that are more than 11 metres high. She will know what I am about to say, because I feel very strongly about it: those living in blocks that are 11 metres or lower are being forgotten. The leaseholders who live there still face extortionate insurance costs, for example, and many are still trapped in their flats, unable to sell. My big ask of the Minister is this: will she agree to meet those of us in the House who are concerned about this situation to discuss it and see whether we can find a way forward? It is not going away. The Government have tried; I am not pointing fingers. It is just that this is where we are, and we have to try to find a solution.
In conclusion, I totally support these regulations, with the caveats that I have explained. I want them to succeed, but I want the Minister and the Government to think about the unconsidered consequences. I look forward to what she has to say in response.
Baroness Taylor of Stevenage (Lab)
My Lords, I draw attention to my interests in the register as a councillor at both district and county level and as a vice-president of the District Councils’ Network, though not the LGA—yet.
I thank the Minister for introducing the regulations, which we welcome. I am sure all noble Lords want every possible step taken to support leaseholders and to speed up the remediation of these unsafe buildings. Perhaps it is my inexperience in this House, but would it not be more appropriate for legislation with 43 clauses to be considered properly, as a Bill, rather than as regulations? We understand how urgent this is, so if the Minister has done it as a matter of expediency, perhaps she could confirm that it could not have been achieved in another way, allowing full scrutiny of all the issues raised by noble Lords this afternoon.
Baroness Taylor of Stevenage (Lab)
It is unfortunate that we are only now starting to make some progress on the essential remediation works that will allow leaseholders to sleep easily in their beds and begin to get their financial plans and aspirations back on track. I appreciate that some well-intentioned developers have done work in the meantime, but the regulatory framework supporting it is only now coming into play.
I pay tribute to the tireless campaigning groups, both those directly associated with Grenfell and others such as the Cladiators group in my area, driven by Sophie Bichener. I know the Minister is very familiar with Sophie’s case so I will not reiterate all the details, but the firebreaks referred to by the noble Baroness, Lady Pinnock, are a good example of non-cladding-related building fire safety jeopardy. Without these campaigns, we would almost certainly be no nearer having this leaseholder limbo resolved.
The fact that 48 developers have now signed up to the remediation contract is a significant step forward; there is no doubt about that. However, signing up is one thing and action is another. We hope that things will start to move much more quickly now. What steps is the department taking to ensure that developers move as quickly as possible on the remediation steps, and how will it monitor, challenge and enforce where appropriate?
We hope that the reports of full risk assessments by major developers to determine which defects need resolution and which do not are not simply a further device to delay essential works. Can the Minister tell us whether any deadlines are being set for all such risk assessments to be completed?
We would also like some reassurance about how leaseholders will be kept informed and updated on progress. Does this responsibility fall on the developers? If so, how will the department ensure that it has been carried out?
In his Statement on 14 March 2023, the Secretary of State rightly said:
“Those who are responsible must pay”.—[Official Report, Commons, 14/3/23; col. 727.]
While we welcome the fact that 48 builders have already signed up, it is extremely disappointing that some have still refused to do so. We are aware that the Secretary of State has rightly been very robust in his language in trying to bring builders that have not yet signed the contracts into line with those that have. We absolutely support this robust approach and hope that it is successful. If not, as the Secretary of State has clearly stated, such developers will be prohibited from further development. We have heard more about that this afternoon.
It would be helpful to know how such a ban will be enforced. The Minister has set out some further information relating to the enforcement process but it would be helpful to know how it will work. Is it to be done by the department or will it be a new burden on local government—as referred to by the noble Baroness, Lady Pinnock—and will that new burden be fully funded?
We welcome any action to address the building safety crisis, but the remediation contract and responsible actors scheme are still only a partial fix to the problem—in part, owing to the more limited scope of the definition of a relevant defect used in the remediation contract—compared to the Building Safety Act. Signing the contract will not obligate developers to fix all life-critical fire safety defects as defined by the Building Safety Act 2022. The Government acknowledge this in the Explanatory Memorandum, where they state:
“The developer self-remediation approach, and the RAS, is to be expanded over time to cover other developers who developed or refurbished defective 11m+ residential buildings and should pay to fix them”.
Is it intended to extend the contract in future to cover all life-critical fire safety defects? We also have a particular concern regarding the number of buildings covered by the contract. The department itself estimates that only 1,500 buildings will be remediated as a result of the contract, whereas credible estimates put the total number in need of remediation at around 10,000.
The Secondary Legislation Scrutiny Committee comments that
“between 6,220 and 8,890 mid-rise (11 to 18 metres) residential buildings required work to alleviate life-critical fire safety risks due to external wall systems”.
How does the Minister envisage this being resolved and what is the timescale? How many of the outstanding buildings beyond the 1,500 are the responsibility of those developers that have refused to sign the contract?
Meanwhile, ACM cladding remains on faulty high-rise buildings, with remediation not having even started on 22 of them. The building safety fund for remediation of non-ACM cladding and other fire safety defects on high-rise buildings is proceeding at a glacial pace, with just 37 buildings having completed remediation out of the 1,225 applications for funding. The building safety fund for non-ACM high-rise remediation was rated as red in the Infrastructure and Projects Authority annual report for 2022, falling from amber the year before, meaning, to quote the report:
“Successful delivery of the project appears to be unachievable. There are major issues with project definition, schedule, budget, quality and/or benefits delivery, which at this stage do not appear to be manageable or resolvable. The project may need re-scoping and/or its overall viability reassessed”.
Many leaseholders in unsafe buildings waited patiently for years for building safety fund applications to be processed by the department, only to see them terminated. What guarantees are there that any building covered by the contract will not face additional delays to remediation work? Although we welcome the further action proposed in the regulations, some questions remain outstanding. How will leaseholders in buildings with defects outside the scope of the contract get them remediated?
With reference to developer obligations to identify, assess and remediate unsafe buildings, the contract stipulates that they must be carried out “as soon as reasonably practicable”. What assurances can be given to affected leaseholders of their ability to enforce this to ensure that developers are acting within a reasonable timeframe? What is the point of contact in the department and what powers will be used to support them? Why are buildings that are part of national infrastructure exempt? Surely, people working in or living close to such buildings should expect at least as great a level of protection, if not more.
I note the Minister’s comments about prohibited persons, but it is difficult to see how the use of new entities will not avoid those prohibitions and, without sanctions on that, where is the incentive not to do so? Can the Minister explain how new developers will be brought into the regulatory framework?
The Minister raised the critical issue of construction products. Will we receive further regulations on this? It seems they may be necessary. There was a Question today in your Lordships’ House on the manufacturers of construction products used in schools. Surely the manufacturers of construction products must be responsible for adequate safety testing of materials they produce.
I agree with the noble Baroness, Lady Pinnock, about work for remediation of buildings under 11 metres. What assessment has been done by the department of the extent of those issues in lower-rise buildings?
To reiterate, we welcome the additional regulations and encourage the Minister and the Secretary of State to be as robust as is necessary to bring these long-drawn-out issues to a stage of remediation and resolution. We hope that the department will use every power it has to deal with those who are not looking to do the right thing and live up to their responsibilities. The leaseholders in these buildings have been faced with a living nightmare. We owe it to them to get these issues resolved without any further delay.
Baroness Scott of Bybrook (Con)
I thank the noble Lords who have contributed today. I open my remarks and answers to the questions asked by saying that the noble Baroness, Lady Pinnock, is absolutely right: six years ago, 72 people died; that is what we are talking about today and why this is such an important statutory instrument. To the noble Baroness, Lady Taylor of Stevenage, I say that this is secondary legislation to the Building Safety Act 2022; that is how it comes in today.
I move on to answering questions. A number were asked by all three noble Lords, so excuse me if I do not mention each name but I will try to remember them. First, the Government believe that it is fair and reasonable that developers that meet the prescribed eligibility criteria for the responsible actors scheme, including a profit threshold, should be asked to assess whether they have developed relevant buildings that require remediation, and remediate those buildings.
We believe it is appropriate that the Government create a level playing field with consequences for eligible developers that opt not to make these important commitments. The obligations under the scheme and contracts for developers with no buildings to remediate are very modest once they have done the necessary work to check and confirm that they have developed no buildings requiring remediation work. As I said in my speech, an eligible developer that substantially satisfies its obligations under the regulations and the self-remediation terms may be released from the scheme. I think that answers the question from the noble Baroness, Lady Pinnock. We are engaging with a number of developers about the developer remediation contract, and I hope they will respond positively to that engagement.
I move on to the issue of construction product manufacturers. I know that this is a concern of noble Lords and it is an important one. I reiterate that the Secretary of State made clear in a recent letter to the major institutional shareholders in the three companies most involved—Kingspan, Arconic and Saint-Gobain—that, if an appropriate financial package is not agreed, the focus of the department will be trained on them, and the consequences for the relevant construction product manufacturers are likely to be severe. We can do this only one stage at a time, but they are next in line. The Secretary of State made it clear that reputational, legal, commercial or further new tools could all be considered if these firms do not do the right thing.
My noble friend Lord Naseby asked: who says that these buildings are unsafe? The Government believe that it is fair and reasonable that the developers that meet the prescribed eligibility criteria for the RAS, including a profits threshold, should be asked to assess whether they have developed relevant buildings that require remediation. I do not think that is unreasonable.
My noble friend also asked why we were focused on profits. We have used the £10 million average operating profits threshold to make sure that the initial phase of the scheme captures larger, more profitable businesses and those that have developed the majority of the affected buildings.
My noble friend also asked about the application of prohibitions to group companies. An eligible non-member of the scheme will be prohibited along with the entities that they control, so it is not all group companies and an exception is available for entities controlled by an eligible non-member that is not in the building industry. Developers can have quite complex business relationships both here and abroad, and we need to capture those as well.
Building Safety Act 2022 (Consequential Amendments etc.) Regulations 2023
(10 months, 3 weeks ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Scott of Bybrook
That the Grand Committee do consider the Building Safety Act 2022 (Consequential Amendments etc.) Regulations 2023.
The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)
My Lords, these regulations will make technical but important changes to the language used in existing legislation, bringing it into line with the new terminology and processes introduced by the Building Safety Act 2022.
I will start by providing some context for these regulations. After the Grenfell Tower tragedy, the Government recognised the need for an overhaul of our building safety regime. In 2017 we appointed Dame Judith Hackitt to conduct an expert review of the current regime. Her review identified the need for significant cultural and regulatory change, including recommendations focused on the building control process.
Part of the Government’s response to these building control recommendations included the introduction of provisions in Section 33 of the Building Safety Act that repeal Section 16 of the Building Act 1984. The Government consulted on these provisions, and they were subject to pre-legislative scrutiny ahead of formal consideration of the Building Safety Act.
Section 16 made provision for the deposit of plans with local authorities before starting building work, as well as the passing or rejection of the plans. The information provided to building control was not always consistent, nor always sufficiently detailed for the work to be carried out.
Section 33 of the Building Safety Act, which has yet to be enacted, repeals Section 16 and provides instead for a new system of applications for building control approval. For higher-risk buildings, this means a more stringent system, with the building safety regulator the sole building control body. Applicants cannot proceed with work without explicit approval from the building safety regulator.
For non-higher-risk buildings, there is no significant change from the existing procedure. Local authorities and approved inspectors will remain responsible for supervising this work, and work can begin before approval is granted. Applicants do so at risk of having to uncover or change work and could face enforcement action. In addition, provisions in the Building Safety Act largely transfer procedures for appeals under the Building Act from the magistrates’ court to the specialist First-tier Tribunal.
The purpose of these regulations is to align the Highways Act 1980, the Clean Air Act 1993 and 13 local Acts with the terminology and processes that will be established when Section 33 of the Building Safety Act is enacted. Provisions in the Highways Act that relate to the payment of charges for street works when building control plans are deposited are amended to refer to new systems of applications for building control approval. Section 16 of the Clean Air Act is also amended. This section requires local authorities to check the height of proposed chimneys to ensure that they are tall enough to prevent smoke and particulates becoming prejudicial to health. It is amended to replace references to the deposit of plans with provisions that refer to applications for building control approval.
Similarly, 13 local Acts are also amended to replace definitions of the deposit of plans with provisions that instead refer to the new system of applications for building control approval. Further references to the deposit of plans in these acts are also updated to reflect the new terminology. Of the local Acts, 11 contain provisions relating to appeals to the magistrates’ courts. To align these Acts with the new procedure for appeals, the provisions are amended to direct appeals to the First-tier Tribunal. The instrument also contains a transitional provision providing that consequential amendments do not apply to plans for building work deposited before the date on which the regulations come into force.
I wish to reassure noble Lords that they will have the opportunity to scrutinise the specific requirements of the new system of applications for building control approval. These requirements were subject to consultation in 2022 and will be set out in a number of statutory instruments that amend the Building Regulations 2010 and provide for new building control procedures et cetera for higher-risk buildings. The Government will lay these instruments in the coming months.
The Government intend to bring both these consequential amendments regulations and the regulations that create the new building control system into force in the autumn. Without these consequential changes, the provisions of the Highways Act, the Clean Air Act and the 13 local Acts will cease to operate as they do now, as they will no longer have meaning once Section 33 of the Building Safety Act is brought into force. I hope that noble Lords will join me in supporting the draft regulations. I commend them to the Committee.
Lord Stunell (LD)
My Lords, I rise to comment on this statutory instrument and thank the Minister for the introduction she has given to it. It goes in partnership with Section 32, which is not yet in force. She has rightly drawn attention to the fact that it does not cover the question of the actual application process, which is going to be dealt with later. So it is rather a small cog in a very big machine to make sure that the system works effectively.
I do not propose to spend a lot of time commenting on the local building Acts, with which I once used to wrestle in a professional capacity. I am sure that rationalising those makes a great deal of sense, regardless of the building safety and high-rise issues driving this change.
I note the frequent references to the building safety regulator in what the Minister put to the Committee a few moments ago. I share her view that the regulator is an absolutely fundamental part of the new machinery and, clearly, will be pivotal to making sure that, ultimately, the machine moves and works. The Minister will know that I have already expressed my concern about proposed amendments that the Government have brought forward in the levelling-up Bill to potentially change who the regulator is, perhaps on a timescale that could very likely interact with the implementation of Section 32 and the bringing into force of a new application process. What consideration has the department given to the potential for this process and the very tightly drawn and carefully designed machinery, of which this is a small part, to continue to function—or, rather, begin to function—smoothly and without effort or distortion when the new system comes into play, as outlined in the levelling-up Bill amendments by the Government?
That is a matter that we will obviously return to at the Report stage of consideration of that Bill—I do not want to enter that debate now—but I hope the Minister will give us what reassurance she can that the machine of which this is a small cog is intended to continue working seamlessly in the event that the Government proceed with completely reshaping the building safety regulator sometime in the next two years.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank the Minister for setting out the proposals in these regulations. Although it could be considered a minor amendment dealing with just consequential matters, in view of the overall context of building safety and the fact that this is one of a number of steps we are seeing to ensure that the very serious issues that have arisen from the Grenfell Tower disaster and others are taken seriously and acted upon, we need to treat all these regulations with a degree of seriousness.
We were very pleased to learn that proposals for new building regulations were consulted on last year and that new regulations will come forward before the Summer Recess for enactment in the autumn. We look forward to hearing about the new process. As we are not able to amend these through the regulation process, I ask the Minister whether we will have the opportunity to see them in draft form before they come through to us.
Two aspects relating to building safety and building control that have emerged in recent years are, first, that the transfer to the private sector—the deregulation —of building control did not anticipate that there would be an impact on the quality or availability of the building control function. Neither did it anticipate the dilution of the independence of the building control function from the development industry.
Secondly, we hope that, as new regulations are developed, attention will be paid to the capacity, resources, recruitment and retention of the building control inspectors to ensure that they are sufficient to deal with what we hope will be tighter regulation for building safety in future.
We note the transfer of the appeals procedure to the First-tier Tribunal. Can we be reassured that the First-tier Tribunal will have sufficient resources to enable it to deal with those new duties? In view of the glacial pace of progress on building safety matters that leaseholders have had to endure, it would be unfortunate in the extreme if the level of appeals resulted in unacceptable backlogs and were not dealt with promptly. It will also be essential that matters such as stop notices are able to be progressed without delay. I hope the resources are there to deal with that.
Baroness Scott of Bybrook (Con)
I thank noble Lords for that and for their brevity; I think that was right, considering that these are quite technical matters. It is important that many of the things brought up by both noble Lords will be discussed further when we bring the building control SIs to the Committee later in the year. In particular, the question of whether building control remains as professional and regulated as currently is an important issue. That has to happen, and we will have that debate.
I was also interested in the capacity of tribunals; that is always important. We know that the magistrates’ courts are probably where a lot of things are being held up. I quite agree that the First-tier Tribunals must have the capacity to be able to deal with things in a timely manner.
As far as the building safety regulator and the LURB are concerned, I can assure the noble Lord that the Government will work to ensure that all these parts of building safety work together and that there is no black hole between one and the other. That will take some timings; I am sure that we will discuss that further before it happens. If the LURB goes through, there will be SIs to change the regulator and to ensure that everything works in a timely manner and nothing is lost in the meantime. I can assure noble Lords that we will work towards that end. To conclude—
Baroness Taylor of Stevenage (Lab)
Before the Minister moves on, it would be really helpful to understand the entire role of the building safety regulator. There has been a lot of heavy lifting as we have gone through the process of the LURB and the Building Safety Act, and it would be really helpful if the entire scope of the building safety regulator could be set out somewhere.
Baroness Scott of Bybrook (Con)
I am more than happy to write to the noble Baroness, and copy in the Library, about what we foresee that to be, although that concerns the LURB and not this instrument. I am happy to have a meeting on that, if necessary, before we go into that part of the LURB on Report.
As I said, these regulations will ensure that the Highways Act, the Clean Air Act and the 13 local Acts will continue to function as intended when the new system of applications for building control approval is brought into force. I hope the Committee will join me in supporting these regulations.
Environmental Protection (Plastic Plates etc. and Polystyrene Containers etc.) (England) Regulations 2023
Lord Harlech
That the Grand Committee do consider the Environmental Protection (Plastic Plates etc. and Polystyrene Containers etc.) (England) Regulations 2023.
Relevant document: 43rd Report from the Secondary Legislation Scrutiny Committee
Lord Harlech (Con)
My Lords, I declare my farming and land management interests as set out in the register. These regulations were laid before the House on 23 May.
The purpose of this instrument is to restrict the supply of single-use plastic plates, bowls and trays and to ban the supply of single-use plastic cutlery, balloon sticks and expanded and extruded polystyrene food and drink containers, including cups. The instrument applies to England only, as environmental protection is a devolved matter. I will cover both the purpose and the impact of the instrument, starting with the former.
It is the Government’s ambition to leave the environment in a better state for the next generation. The Government’s 25-year environment plan and the resources and waste strategy outline the steps that we will take to eliminate all avoidable plastic waste by 2042. Government measures focus on extracting maximum value from plastic materials by making sure that we keep it in circulation for longer, moving away from a “take, make, throw” model and shifting towards a circular economy. Single-use plastic items are especially problematic, as they are typically littered or discarded to general waste, rather than recycled. This is due to the difficulties involved in segregating, cleaning and processing them.
The instrument will restrict and ban commonly littered single-use plastic items that we so often see polluting our environment and are frequently reported in beach litter surveys. These items can endanger wildlife and damage habitats. As well as causing damage to biodiversity, there are also costs associated with their clean-up. It is estimated that the UK spends more than £15 million a year removing beach litter. This does not include the costs imposed on our tourism and fishing industries, which are also impacted.
As is well understood, plastic eventually breaks down into microplastics, ending up in our soils and seas and eventually permeating our food chains. The full impact of microplastics is still being uncovered, especially the impacts on human health. Therefore, to build on the success of other single-use plastic item bans and our carrier bag charge, further action is needed to curtail the use of problematic single-use plastic items and their release into the environment.
Turning to the impact of the statutory instrument, we acknowledge the ongoing voluntary action being taken by industry to reduce the use of these items, led by the UK Plastics Pact. These new regulations will support that and ensure that all businesses move to more sustainable alternatives.
To inform the regulations, we gathered key stakeholder views by running a public consultation on these measures between November 2021 and February 2022. This showed overwhelming support for the regulations, with more than 80% of respondents supporting their introduction. We also consulted businesses, the NHS and charities to determine the scope of the regulations. To minimise the impact on small businesses, we have given a nine-month lead-time since the announcement of the ban.
It is intended that this instrument will come into force on 1 October this year. From then, it will make it an offence to supply single-use plastic cutlery, balloon sticks and certain types of polystyrene, with no exemptions. The ban on the supply of single-use plastic plates, trays and bowls applies only when supplied to the end user —typically a consumer, who will use them for their intended purpose. Businesses can continue to supply these items to other businesses. This allows single-use plastic plates, trays and bowls to continue to be used for packaging, as defined in Regulation 3 of the Packaging (Essential Requirements) Regulations 2015. This is to avoid confusion with the Government’s proposals for extended producer responsibility for packaging, which will give producers responsibility for the costs of their packaging throughout its lifecycle. However, it is important to stress in all cases that we encourage businesses to use reusable alternatives where practical.
We are determined to get this right, and it is vital that businesses and the public are informed about what they can and cannot do. We have recently published guidance for businesses and will publish our guidance for local authorities in advance of this instrument coming into force. The guidance will assist manufacturers, suppliers, retailers and the public in understanding the enforcement and sanctions regime. Defra intends to further raise awareness by meeting local authority representatives to provide further clarity and support on the restrictions and exemptions, and to empower trading standards officers to carry out effective enforcement.
This instrument also makes amendments to the Environmental Protection (Plastic Straws, Cotton Buds and Stirrers) (England) Regulations 2020 and the Environmental Protection (Microbeads) (England) Regulations 2017. These are to amend the civil sanctions provisions in those instruments to provide for fixed monetary penalties, instead of variable monetary penalties. This will ensure consistency with the civil sanctions provisions in this instrument and make enforcement easier for local authorities. The amendments to the 2020 regulations also omit a transitional provision relating to medical devices, which is no longer needed. Finally, I should mention a typographical error in the instrument as laid in draft. The heading preceding Regulation 14, “Part 1—Amendments”, should read “Part 6”. I confirm that our intention is to have this corrected in the draft instrument before it is made.
To conclude, these new regulations send a strong signal to industry and the public that we need to think carefully about the products we buy and the materials from which they are made. This instrument will bring us a step closer to protecting the environment and reducing the risk of harm to human health and marine life. I commend the draft regulations to the House.
Baroness McIntosh of Pickering (Con)
My Lords, I thank my noble friend and welcome him to a speaking role on the Government Bench this afternoon.
I broadly welcome the regulations before us—I just have some queries, which I shall address. In so far as it goes, the ban is very welcome. We are told that the instrument
“bans the supply of single-use of plastic cutlery and balloon sticks and EPS/XPS food and drink containers in England”.
But at paragraph 7.4, the Explanatory Memorandum goes on to say that the,
“ban does not apply to the supply of a single-use plastic plate, tray, or bowl that is packaging as defined in regulation 3 of the Packaging (Essential Requirements) Regulations 2015”.
Apparently, that is to do with extended producer responsibility. Would it not have been better if it had been absorbed in these regulations? From the point of view of producers and users, it would be clearer what is being banned under the instrument and what is not.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I thank the Minister for his introduction to this statutory instrument. Having been around for the previous SI on the banning of microbeads in washable products and plastic straws and stirrers, there are familiar elements. Although single-use plastic straws are already banned, reusable plastic straws are readily available in some bigger supermarkets. Having bought a packet of these for my granddaughter, I can see that they are not reusable due to the difficulty in cleaning them, and that they have a very limited shelf life.
I regret to say that I found the Explanatory Memorandum contradictory and confusing. I am afraid that the Minister has already read paragraph 2.1 out, but I am going to do so again. It says:
“This instrument is being made to restrict the supply of single-use plastic plates, bowls, and trays and ban the supply of single-use plastic cutlery and balloon sticks and expanded and foamed extruded polystyrene … food and drink containers, including cups”.
That is quite clear and understandable. However, if we move to paragraph 6.5, the EM states that
“the market access principles of the UKIM Act will only apply to this instrument in respect of the restriction it introduces to the supply of single-use plastic bowls and trays”.
That may not be contradictory to those who wrote this SI, but I fear it certainly is to me. It also seems that paragraphs 6.4 and 6.5 are something of a “get out of jail free” option. The issue about clarity is one I will return to later.
Single-use plastic bowls and trays, although banned in England, can still be produced in Scotland, Wales and Northern Ireland. Since there is no border between the devolved Administrations, these items will be brought into England. As the supply of all the items listed in paragraph 2.1 to the end-user are banned, this will cause some confusion.
However, it does not apply to single-use plastic bowls and trays if they are used as containers for food at the point of sale in a takeaway. One of the most pernicious forms of litter containing plastic is that which not only occurs around fast-food outlets such as McDonald’s, Kentucky Fried Chicken and Burger King but is strewn around the countryside, where it has been thrown out of car windows or left littering roadside lay-bys. I am struggling to see why these exemptions are being allowed. Can the Minister explain why this is to be permitted into the future? Are the Government relying solely on the extended producer responsibility legislation to sort this issue out?
I turn to the consultation which Defra conducted; the Minister has referred to this. From 20 November 2021 to 12 February 2022, an extensive consultation took place. A good response from all sides was received, with 95% of the public and non-governmental organisations supporting all the bans. However, businesses were less enthusiastic, with 20% opposing any kind of a ban on single-use plastic. On 16 January this year, a further consultation took place by way of a notice in the London Gazette, plus a weblink to the GOV.UK website and Defra’s “relevant” stakeholders, as the department put it. The timeframe for response was 15 days; not surprisingly, there was a small response. Can the Minister say just how small that response was?
I was interested to see that the Association of Chief Trading Standards Officers responded on the enforcement issues; I should declare my interest as a vice-president of the LGA. It is generally accepted that trading standards officers are under enormous pressure already. They are now being asked to enforce this SI and collect the fixed penalty fines, in accordance with the future published guidance.
The regulations will come into force on the 24th day after they have been made. We are debating them today, 20 June; they will doubtless be on the Order Paper tomorrow, 21 June, for agreement in the Chamber. This means that they will come into force on 15 July. Can the Minister assure us that the guidance will be published before 15 July so that trading standards officers know exactly what they are expected to do and how to execute their functions successfully?
Small businesses employing up to 50 people will have over nine months’ grace in which to implement these regulations from the date of the consultation. Can the Minister say whether this is the consultation which ended in February 2022 or the one from January this year, which was somewhat limited?
I turn now to the penalty, or fine. This is fixed at £200 and is a one-off, no matter how many offences there are. It can be reduced to £100 if it is paid within 28 days—a bit like a parking fine. Having looked at the SI—I may have missed it—I cannot see who exactly will be charged with the penalty. Is it the manufacturer, the retailer or the end-user? The level of fine appears to indicate that it is the end-user who will pay. Can the Minister provide clarification, please?
The extensive section in the SI on non-compliance gives the opposite impression. Here the inference is that the manufacturer will be liable for up to 100% of the cost of the compliance notice if they do not comply. As I said earlier, this SI is not transparent but confusing and contradictory.
Nor does the SI go far enough, and I am concerned about the plastics that it does not cover. Oxo-degradable plastics are designed to fragment in the presence of oxygen, but will not break down at all, or only extremely slowly, in environments with relatively low concentrations of oxygen, such as marine environments, or if covered by soil or buried in a compost bin. Wales, which has an international reputation for recycling and waste management, has banned the use of oxo-degradable plastics as they are regarded as one of the most pernicious types of plastic and a source of damaging microplastics. The EU has also banned them. Do the Government have any plans to ban the use of oxo-degradable plastics in England?
There is also the issue of substitution, as referred to by the noble Baroness, Lady McIntosh of Pickering. If single-use plastics are banned, what other unnecessary non-plastic single-use materials are likely to be used as a replacement? The Environment Act 2021 gives powers to implement charges for single-use items, which have so far not been used. What plans do the Government have to begin charging for non-plastic single-use items?
Lastly, the UK internal market is referred to in the SI. What plans do the Government have to conduct a post-implementation review of the 2020 Act? The Act has implications for the Government’s environmental ambitions to leave the environment in a better state than they found it, to which the Minister referred in his opening remarks. I am not convinced that the SI moves us much closer to the Government’s goal.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I fear that I will shortly be interrupted by a Division. I, too, welcome the noble Lord, Lord Harlech, to his place. As Defra will be a recurring theme in his diary, I look forward to working with him in the months ahead.
I am a proud resident of the Potteries, which means that I am not sure why anybody would want to eat or drink from anything other than Stoke-on-Trent-made ceramic plates and mugs—the most sustainable containers from which to eat and drink—yet we find ourselves here to discuss far less sustainable alternatives. It should therefore come as no surprise to the Minister that His Majesty’s Opposition will support this SI. The Labour Party is committed to removing single-use plastics as quickly as possible and moving on to sustainable and, I hope, ceramic alternatives.
However, I am sure it will not surprise the Minister, especially following the interventions so far, that I have a few questions on the detail of the SI and the consultation, implementation and next steps. As the noble Baroness, Lady Bakewell, highlighted, does the Minister really think that 15 days was an appropriate timescale to consult business, local authorities and key stakeholders on the implementation plan and detail of this significant change in regulation and permissible products that are used extensively in nearly every community in the country?
Paragraph 10.8 of the Explanatory Memorandum notes that His Majesty’s Government notified the World Trade Organization of the draft instrument on 21 March 2023 and that:
“No objections have been made pursuant to notification”.
Given that WTO processes are incredibly slow, would we have expected objections within that timeframe? Were any representations made by the WTO which stopped short of being formal objections?
Paragraphs 6.4 and 6.5 of the EM outline the exemption under the United Kingdom Internal Market Act that means that single-use bowls and trays legally produced in or imported into other parts of the UK can be sold in England, irrespective of this ban. Can the Minister inform the Committee whether Defra has done any modelling on how many items are likely to make use of this exemption? What are the process and timescale for conducting the post-implementation review of the United Kingdom Internal Market Act 2020, in which the implications for the environmental ambition of the UK Government should be considered?
Lord Harlech (Con)
I am grateful to all noble Lords for their important contributions to this debate. These measures do not seek to solve the problem of single-use plastic in one go. However, they are an important part of a wider strategy to tackle plastic pollution and serve as an important marker that our reliance on single-use plastics must be reduced. I will address some of the points raised in the debate.
All Peers raised the consultation period. A public consultation around the policy area was carried out from November 2021 to February 2022. I understand that the consultation period on the SI itself was shorter. However, given the correlation between the two themes, it is our view that the public consultation period was long enough to address this SI. Responses from members of the public and non-governmental organisations demonstrated overwhelming support for our proposals, with 95% in favour of all bans. However, responses from businesses were varied, understandably, with approximately 20% opposing all bans, while others were supportive of the proposals but highlighted areas for further consideration to make sure that bans do not have unintended consequences.
We also engaged with relevant sectors, such as the NHS and disability charities, to determine whether any exemptions were needed. Our determination was that no medical exemptions were needed for these bans. We conducted an impact assessment, which covered banning the supply of single-use food and beverage containers made from expanded or extruded polystyrene, or EPS, in England, and banning the supply of single-use plastic plates and cutlery to the end-user in England. A de minimis assessment was carried out for the ban on single-use plastic balloon sticks in line with better regulation guidance, as the annual net direct cost to businesses was estimated to be less than £5 million. All received green ratings from the Regulatory Policy Committee.
The noble Baroness, Lady Anderson of Stoke-on-Trent, talked about costs to businesses and consumers. This is very much about reducing the cost to the environment, so this one SI is not meant to tackle all costs in society.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I was asking about additional costs on food-related products during a cost of living crisis, especially given evidence today suggesting that more people are having to use microwaves rather than ovens. This would potentially be covered by this SI, meaning that there will be an additional cost to the consumer. I asked specifically what debate and discussions the Minister and the department are having with retailers to mitigate the costs being passed on at this time.
Lord Harlech (Con)
I absolutely take the point and I am not downplaying it; I am just saying that this SI is focused on single-use plastics. However, I would like to reassure the noble Baroness that we remain in constant conversation with food retailers and food service providers to make sure that excessive costs are not being put on consumers at this very difficult time.
The noble Baroness, Lady Bakewell of Hardington Mandeville, raised the important issue of who will pay the charge. The supplier of the product will pay, not the end-user; I hope that provides some clarity. She also spoke about Scotland and Wales, the devolved nations. I think we are having a Division.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, there is indeed now a Division in the Chamber. The Committee will need to adjourn for 10 minutes. Does the Minister have much more to say? If not, we might be able to clear this instrument and start fresh after the Division with a new one. Otherwise, we will adjourn and pick up with him later.
Lord Harlech (Con)
I was asked a great many questions and I would like the opportunity to answer.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, in that case we will adjourn the Committee for 10 minutes and return to the Minister afterwards.
Lord Harlech (Con)
My Lords, we were getting on to the topic of how some of the devolved nations are dealing with plastics and recycling. The Government’s view is that plastic pollution is a global challenge and, as such, we welcome ambitious actions from all Governments. All nations across the UK are making good progress on tackling these challenges. However, where areas are devolved, nations are able to act in ways that reflect their circumstances. For instance, the Government moved to introduce restrictions to the supply of single-use plastic straws, stirrers and cotton buds in October 2022, ahead of the Scottish Government. We delayed those restrictions from earlier in 2020 to avoid additional burdens being faced by businesses on top of the challenges already posed by the impact of the coronavirus pandemic. We have to move at pace, but we also think it is right that each of the nations has the flexibility to address its most pressing problems in the timescale it wants.
The noble Baroness, Lady Bakewell of Hardington Mandeville, mentioned how the ban will be affected by the UK internal market Act. The United Kingdom Internal Market Act 2020 (Exclusions from Market Access Principles: Single-Use Plastics) Regulations 2022 created an exclusion from the market access principles in Part 1 of that Act for legislation, so far as it prohibits the sale of single-use plastic plates, straws, drinks stirrers, stemmed cotton buds, cutlery, chopsticks and balloon sticks, and expanded and extruded polystyrene food and drinks containers, including cups. This follows an agreement reached under the then provisional resources and waste common framework. This exclusion does not encompass single-use plastic bowls and trays. Therefore, the market access principles of the UK internal market Act will apply to this legislation in respect of those items.
My noble friend Lady McIntosh of Pickering asked why there are no exemptions, as with plastic straws. Throughout our consultation and post-consultation engagement, we were able to determine that no exemptions were needed in any potential settings. This will give the SI the greatest positive environmental impact.
My noble friend and the noble Baroness, Lady Bakewell of Hardington Mandeville, also mentioned oxo-degradable plastics. We have prioritised work on introducing restrictions on single-use plastic plates, cutlery and balloon sticks and polystyrene food and drinks containers because, at this moment in time, that will have the greater impact on reducing plastic pollution. However, we are aware of oxo-degradable plastics.
I turn to the issue that my noble friend raised about wet wipes. In the Plan for Water published in April 2023, the Government announced their intention to ban wet wipes containing plastic, subject to a public consultation, which will be published in due course. Some 96% of respondents to our 2021 call for evidence supported a ban on wet wipes containing plastics. Therefore, we are keen to deliver this at pace, just not in this particular SI. More information on the proposed timings of any ban will be announced following the consultation.
We are working with local authorities and trading standards to ensure that any breaches of legislation are being enforced. If breaches are identified, it will be the responsibility of local authorities as regulators of the legislation to enforce it and tackle the pollution appropriately.
Baroness Anderson of Stoke-on-Trent (Lab)
Just to clarify, on the trading standards point—we have seen something like 170 fewer trading standards officers in the past 12 years. They are spread in different areas; some local authorities now spend only 50p per resident, while others spend £4.50 per resident on their trading standards function. Can the Minister let me know either now or in writing how we are ensuring that this is being applied equally across all local authorities in the UK, given the varying regulatory framework that will exist and given the enforcement action—as in, the number of people that can enforce?
Lord Harlech (Con)
That is a fair question, although it is slightly out of Defra’s remit, so I think that the best thing to do would be to write to the noble Baroness in response to her question about trading standards officers.
To avoid duplication or confusion with our proposals for our extended producer responsibility scheme, bowls, plates and trays used as packaging by businesses will not be included in the ban. However, we strongly encourage businesses to explore how they can reduce the use of single-use items and move to reusable alternatives instead.
My noble friend Lady McIntosh of Pickering rightly brought up the potential impact on businesses through the introduction of this SI. The largest cost is due to capital investment costs incurred by producers for adapting their production processes. Producers may also incur a loss of profits. Another large cost is due to wholesale prices of wooden cutlery and paper, and food and beverage containers, usually being larger than their plastic equivalents. Businesses will also incur familiarisation costs, additional waste management costs and additional fuel costs. On the question about single-use plastic cotton buds used for medical purposes, there are exemptions for use for forensic and scientific purposes—otherwise, they are totally banned.
If I have neglected to answer any questions, I shall consult Hansard, and do my best to write with an answer. Not wishing to detain the Grand Committee further, I conclude by thanking noble Lords for their contributions.
Baroness McIntosh of Pickering (Con)
If my noble friend is unable to answer today, can he write to us on substituting wood for plastics and the knock-on effect that that would have on the environment and deforestation? I understand that that might be the responsibility of a different part of the department, but the noble Baroness, Lady Bakewell of Hardington Mandeville, and I both asked about that. I understand that it is quite technical, so he could write to us.
Lord Harlech (Con)
I think that I just said that I shall answer in writing any questions that I have not answered now.
Electricity and Gas (Energy Company Obligation) Order 2023
(10 months, 3 weeks ago)
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Lord Callanan
That the Grand Committee do consider the Electricity and Gas (Energy Company Obligation) Order 2023.
Relevant document: 43rd Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
My Lords, I beg to move that the draft order, which was laid before the House on 24 May, be approved. Since it was introduced in 2013, the energy company obligation—ECO—scheme has ensured that around 2.4 million predominantly low-income households have received much-needed support to improve the energy efficiency of their homes. The Government committed in the Growth Plan 2022 and the energy security plan to place a new obligation on energy suppliers to deliver vital energy efficiency upgrades, helping hundreds of thousands more households to take action to reduce their energy bills by making their homes cheaper to heat.
The order delivers on these commitments by introducing a new energy company obligation, the Great British insulation scheme, to run until March 2026. Alongside establishing the GBI scheme, the order introduces some small additions to the existing ECO4 scheme, providing heating support for certain households which are not currently eligible for these measures.
I turn to the detail of the order. The order establishes the GBI scheme in law as a complement to the existing ECO scheme—ECO4—in Great Britain. Its main provisions are: an additional energy company obligation to run from 2023 to 2026, boosting previously planned energy-efficiency investments by another £1 billion across this period; a focus on the rapid installation of the most cost-effective, single insulation measures; and the extension of support through the ECO schemes to a much wider group of households living in the least energy-efficient homes in the lower council tax bands, who are also now challenged by higher energy bills.
The Great British insulation scheme will boost further the support already available through ECO4 that targets low-income and vulnerable households, those most at risk of being in fuel poverty. Energy suppliers must deliver at least 20% of the new help available through the scheme to these households. This low-income group will include those on means-tested benefits as well as households in the least energy-efficient social housing. Fuel-poor homes in the private rented sector will also benefit, building on the provisions of existing regulations.
Working alongside this low-income minimum, the scheme’s flexible eligibility provisions will offer additional routes to reach those on low incomes or in other ways vulnerable, such as through ill health, but where households may not be in receipt of benefits. These flexible eligibility provisions will enable local authorities, energy suppliers, Citizens Advice and the NHS to work together to help those most vulnerable to the effects of living in a cold home.
As with previous ECO schemes, the obligation will be set based on annual bill savings. This incentivises energy suppliers to target those homes where the savings from energy-efficient measures will be greatest, also installing those measures that will have greatest impact. The scoring approach for this will mirror that used for ECO4, minimising complexity and any bureaucracy for industry.
Installation quality will be governed and assured under TrustMark’s compliance and certification framework. The quality of installations, alongside a whole assessment of the property, will continue to rely on independent industry standards—in this case, the publicly available specifications PAS 2030 and PAS 2035. The order also adds to the circumstances in which some heating measures, particularly solar PV and electric heating, can be available for households within the existing ECO4 scheme.
As a direct result of the boost provided by the GBI scheme, we estimate that around 376,000 measures will be installed in around an additional 315,000 homes. This is expected to save households, on average, £300 to £400 per year. To help to insulate as many homes as possible before next winter, the order permits measures installed since 30 March to count towards the suppliers’ obligation target. This provision was signalled to energy suppliers in the Government’s response to their earlier consultation on scheme design, which was published on that date.
I turn for a moment to that earlier government consultation, which was conducted towards the end of 2022. The scheme design encapsulated in the order we are now considering takes forward the main provisions set out within that consultation. The majority of consultation responses supported the proposals, including as central features the extension of energy efficiency help to the wider household group and a focus on the most cost-effective, single-insulation measures.
Baroness McIntosh of Pickering (Con)
My Lords, I thank my noble friend for introducing the order this afternoon, which I warmly welcome. I declare my interest as honorary president of National Energy Action, based in the north-east, an organisation with which I think my noble friend is very familiar. It welcomes the scheme but has one or two issues that it would like to understand better.
I ask my noble friend about the background to how the scheme has been introduced, because it could lead to unfairness in how the money is distributed. In particular, a potential flaw is that the targeting of the scheme is quite loose: it is not tight enough sufficiently to help fuel-poor households, which he said is the purpose of the order. For the majority of the scheme, households are assumed to make a financial contribution to the cost of the measures, which may effectively make a large proportion of the scheme inaccessible to the lowest-income households, which cannot afford to make such contributions. The way in which the policy is funded is therefore potentially unfair. Coupled with the rather loose targeting, this means that low-income households may effectively subsidise higher-income householders’ home upgrade.
I give my noble friend an illustration. The UK Government are assuming that £80 million will be provided in customer contributions over three years to support funding of the scheme. That is based on the assumption that uptake is not disproportionately affected by the level of contribution required. The assumption apparently originated from research based on a survey of 1,000 owner occupiers who fell within the general eligibility criteria. I put it to my noble friend that that may not be representative of low-income households, which I understood was the purpose we are trying to achieve with the order before us.
Similarly, research quoted in the impact assessment assumes that three-quarters of home owners will be willing to contribute towards insulation measures, with almost half willing to contribute £500 or more. Once again, I put it to my noble friend that it is extremely likely that households unwilling or unable to contribute fall into the category of the most financially vulnerable, and therefore in most need of the support given by the scheme.
Those two examples point to the potential for this not being what the Government intended. On vulnerable households, I think my noble friend described the purpose as extending support to households in the least energy-efficient and lowest income bands. I would like to query my understanding. Could the targeting have been better and could we have directed the funding more clearly to those in that bracket?
I warmly welcome the fact that support is being extended to off-grid rural households in Scotland and Wales. Can my noble friend assure me that the grant to English homes in that bracket for the home upgrade funding that he referred to will be as high as for those in Scotland and Wales?
Lord Lennie (Lab)
My Lords, this has nothing to do with the instrument, but I begin by congratulating the noble Lord, Lord Callanan, on his efforts to recruit Sadio Mané to play for Newcastle United when he was recently in Senegal. As a fellow Newcastle United season ticket holder, I can pass on the warm thanks of all fans of Newcastle United. I suppose more unites us than divides us when it comes to being “Howay the lads” fans.
The draft order proposes a Great British insulation scheme, which would require licensed gas and electricity suppliers to promote the installation of energy-efficiency measures, such as loft or cavity wall insulation, across Great Britain. The Department for Energy Security and Net Zero explains that while ECO4 aims to deliver full-house retrofits for low-income and vulnerable households, the new scheme seeks to encourage rapid installation of the most cost-effective, mainly single insulation, measures and to extend support to a much wider group of households in the least efficient and lower council tax banded homes. These are worthy aims.
The department expects the scheme, as the Minister said, to provide around 376,000 insulation measures in 315,000 homes by the end of March 2026, which coincides with the ECO4 scheme’s end date. The department also says that Ofgem, which will administer the scheme, will be required to submit monthly reports on progress to the Secretary of State on suppliers’ performance. What will the Government do if performance is not on target overall? Are there any plans to push beyond the initial target, if performance suggests that this could be possible? Will Ofgem report on the income distribution of household delivery?
Those suppliers required to participate in the ECO4 scheme are also required to participate in the Great British insulation scheme, so the same domestic gas and electricity supply data is being used as under the ECO4 scheme. Were there any issues with the use of this data? If so, have they been addressed and overcome?
Unlike the ECO4 scheme, a minimum level of delivery of the obligation will be set for each of the three phases of the Great British insulation scheme. It requires each obligated supplier to achieve at least 90% of its home heating cost reduction obligation and low-income minimum requirement for phases A and B through measures completed before the end of each phase, with the total obligation required to be met by 31 March 2026. Suppliers will have performance requirements across each phase of the scheme—a new development from ECO4. This is of course a good thing, but how will the performance in each phase be monitored and enforced?
The instrument also sets a low-income minimum requirement. This will ensure a minimum level of support through the scheme for those on the lowest incomes and the most vulnerable—the low-income group, as it is known—while allowing the remaining support to be targeted at a much larger pool of people now challenged by higher energy bills, in other words the general group. There is no upper limit on the amount of a supplier’s home heating cost reduction obligation that can be met through the measures delivered to the low-income group.
The low-income minimum requirement is defined by the instrument as 20% of the overall obligation, and that 20% must be delivered using the standard low-income eligibility criteria. Assuming the distribution is equal, 20% of 315,000 homes is 63,000 low-income households. Given that this scheme will be paid for by all customers but that the much larger benefits will be felt only by benefiting households, does a 20% minimum not feel somewhat low? I appreciate that it is only a minimum, but is there any incentive for the participants to deliver above this 20%? How was this amount reached? Do the Government have an estimate for where they expect this to fall across the whole scheme?
The home-heating cost reduction target is set at a level that assumes that households in the general group —as in Article 12 of the order—will collectively contribute £80 million, as the Minister said, towards the cost of installing the insulation measures, which is equivalent to 10% of the £800 million scheme budget earmarked for this group. This reflects that households in the group will generally have higher incomes and be able to contribute. Any contributions will in practice be a matter for agreement between the customer and the installer, reflecting the measure’s type and property issues.
For the purpose of the home-heating cost reduction target, should a participant elect to go beyond the minimum 20% for the low-income group, would the general group be significantly more burdened by the total contribution required? For example, if, across all providers, the general group averages only 40% of the overall makeup, which I understand is unlikely but a possibility, is it correct that this group would then be required to double their joint contribution to the £80 million home-heating cost reduction target, compared to if it made up the maximum of 80%?
Domestic premises cannot receive more than one insulation measure under the Great British insulation scheme. As long as it is installed on the same day as, or after, the insulation measure is completed, owner-occupied premises in the low-income group can also receive heating control measures under the scheme. The heating control measures must be completed within three months of the insulation measure.
The majority of responses to the consultation addressed the fact that private rented sector households are ineligible for heating control measures, or for cavity or loft insulation, if they are in the general group. These measures are excluded as landlords have responsibilities to maintain and improve their housing. Is that a good enough reason? Why is it acceptable for lower-income households to have to choose between unaffordable bills or a lack of heat because they are renting, if their landlord is not adequately improving their property? For clarity, if a participant offers a combination of an insulation measure and heating control measures to either a household in the general group or a non-owner-occupied household in the low-income group, would the cost be expected to be apportioned between the scheme and the payer or would that not be a feasible option?
Another aspect of the instrument is targeted encouragement to support the development of innovative products and installation techniques. This is of course welcome. Has any assessment been made of the potential impact of this encouragement? What counts as an innovative product or installation technique? Perhaps the Minister can enlighten us on that.
The 2021 Sustainable Warmth strategy announced plans for the expansion of ECO to run from 2022 to 2026, with an increase in value from £640 million to £1 billion per year. This obligation is expressed in terms of outcomes, not expenditure. The obligation is for notional annual bill savings of £224 million to be achieved by 31 March 2026. Part 10 of the instrument amends the 2022 order. Most of the changes are made to enable heating measures that are of benefit to ECO4 households in achieving annual cost savings, and reducing their overall energy bill, to be installed in a wider range of circumstances.
Labour’s warm homes plan would upgrade the energy efficiency of about 2 million homes per year. It would upgrade all 19 million homes that need it and help families to save up to £500 on their energy bills. The target of 315,000 homes under this scheme does not really compare. Do the Government accept that this is a drop in the ocean of what is needed? As part of the Labour green prosperity plan, the warm homes plan would give families the grants and loans they need to upgrade the energy efficiency of their homes, cutting their energy bills and emissions. Labour’s national plan would save households £500 a year, cut national gas imports by up to 15% and create over 206,000 full-time equivalent jobs in retrofitting industries.
Lord Callanan (Con)
First, I thank the noble Baroness, Lady McIntosh, and the noble Lord, Lord Lennie, for their contributions. I thank the noble Lord for complimenting my efforts to recruit Sadio Mané—who is a lovely guy, by the way. It is an interesting correlation, thinking about the priorities of most of the population, that if I tweet something on energy efficiency or that I have met someone to do with hydrogen schemes or whatever, I am lucky if I get 700, 1,000 or 2,000 views, but if I bump into a footballer in a hotel and tweet a picture, I get 85,000 views all across Europe. What we need to do is link famous footballers with energy efficiency and then perhaps we will get the message through.
Anyway, I turn now to the subject of the day. Improving the energy efficiency of our homes is the best long-term solution to reducing energy bills—I do not think anybody disagrees with that—and the corollary of tackling fuel poverty. That is why the Government have set a new and ambitious target to reduce our final energy demand from buildings and industry by 15% by 2030. The Energy Efficiency Taskforce is meeting at the moment to try to put some policies behind that. We are also committed to making sure that homes are warmer and cheaper to heat by investing £12 billion in various Help to Heat schemes, such as the home upgrade grant and social housing decarbonisation fund.
The Government remain committed to helping low-income and vulnerable households to reduce their fuel bills and heat their homes, with the new Great British insulation scheme being a crucial element of that help for this winter and for years to come.
I start with the contribution from the noble Baroness, Lady McIntosh, who asked a question on the targeting of the scheme and consumer contributions. This scheme mirrors the eligibility of the ECO4 scheme; there is in fact no limit on how many low-income consumers can be treated through the scheme. There is no mandatory requirement for contributions, and we do not assume any contributions for low-income consumers as we recognise that they are most in need.
The new general group is designed to capture a broader pool of households. I am sure that even the noble Baroness will accept that not everyone in fuel poverty is necessarily on benefits. We have a number of other schemes targeting those on lower incomes. This is the first scheme we have done for a while that allows those in the so-called able to pay grouping in the lower council tax band to also be eligible for support. That is the new general group; it is designed to capture a broader pool of households which are more likely to be able to contribute. Encouraging contributions through the scheme makes the scheme more cost-effective and ultimately enables more homes to be treated and more measures to be delivered. I am sure that is something the noble Baroness would support.
Suppliers are encouraged to leverage higher contributions from wealthier households and for more expensive measures, which would possibly be in bigger homes, ensuring that low-income and vulnerable households receive the support they need. As a market-led scheme, it is ultimately down to the installer to negotiate any contribution that the consumer is willing and able to pay, taking account of any property issues and of the measures to be installed.
The noble Lord, Lord Lennie, asked a question about monitoring. As with the existing scheme, Ofgem will work with energy suppliers to monitor progress and ensure compliance—including, if necessary, considering enforcement action should that be judged appropriate. As the independent regulator, it is ultimately a matter for Ofgem to judge the form and extent of any compliance action appropriate to the circumstances; it is only right and proper that it should do that.
Annual targets will initially be tracked using notified measures alongside other information. For the benefit of noble Lords, all measures that are installed are notified and lodged with TrustMark. Once the Ofgem digital system is in place to support it, this is intended to minimise any additional costs and bureaucracy from annual targets while still managing to drive momentum.
We have allowed flexibility through the analysis to allow industry to decide how to gather contributions. There is no firm requirement on how suppliers must do that. To reiterate—I made this point to the noble Baroness, Lady McIntosh—there are no limits on the number of low-income homes that can be treated through the scheme. We have several schemes currently in operation, as I mentioned, which support low-income households. Of course, the original ECO scheme, ECO4—its latest iteration—the home upgrade grant and the social housing decarbonisation fund are all targeted at those on lower incomes. That is why we wanted this scheme to be open to a wider pool of households that are currently ineligible for any government support through existing schemes. As I said to the noble Baroness, suppliers are encouraged to leverage higher contributions from wealthier households for more expensive measures. Additionally, of course, there is no requirement for consumers to contribute, or to contribute a set amount through the scheme. It is market-led, and it is down to the installer to negotiate a contribution that the consumer is able and willing to pay.
For ease and pace of delivery, the GBIS aims to mirror as much of ECO4 as possible, keeping the same eligibility criteria for the low-income group that industry is currently very familiar with. That will help to ensure that the GBIS is able to deliver energy efficiency measures to those households as quickly as possible and provides energy suppliers with an incentive to deliver to that group, which they are already very familiar with.
The noble Lord, Lord Lennie, asked about innovation. We have a technical panel to determine and approve products as innovative through the scheme to ensure that consumers continue to be protected.
Once again, I thank both noble Lords for their contributions and the points they made during the debate. I also recognise the broad agreement that the scheme should continue at this time and should help to provide the critical support to an even greater pool of households that are currently challenged by higher energy bills. I commend this draft order to the Committee.
House of Lords
Industrial Strategy
(10 months, 3 weeks ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Allen of Kensington
To ask His Majesty’s Government what is their industrial strategy.
Lord Haskel (Lab)
In the name of my noble friend Lord Allen, and with his permission, I beg leave to ask the Question standing in his name on the Order Paper
The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)
The Government have set out an ambitious plan for growth and prosperity. Delivering economic growth in key sectors is a priority and the Chancellor has identified five growth sectors for the UK: digital technology; green industries; life sciences; advanced manufacturing; and creative industries. The Government have announced a £500 million per annum package of support for 20,000 research and development-intensive businesses and £650 million to support the UK’s life sciences sector.
Lord Haskel (Lab)
I thank the Minister, but we are still little the wiser about a strategy. The Prime Minister removed the words “industrial strategy” from the business department. As Chancellor, he scrapped the Government’s industrial strategy and the independent Industrial Strategy Council. Instead, we now get announcements, as now—soundbites instead of sound economics. Can the Minister say precisely when the Government will produce a much-needed comprehensive and co-ordinated industrial strategy? That will help business, industry and investors plan for the long term and, we hope, get some growth and progress back into the economy.
The Earl of Minto (Con)
My Lords, I think noble Lords will agree that this is a time for specialisation rather than a single, overarching, broad strategy. By targeting specifics, such as the five key growth sectors, we can be more effective and, in this age, more agile to respond to change.
Lord Howell of Guildford (Con)
My Lords, does my noble friend agree that a key component of a successful industrial strategy and growth is massive investment, both from foreign sources, on the scale we used to attract and are not attracting now, and of course from pension funds, which are managing trillions and are ready to invest? Does he agree that in the energy sector the attraction is going to be more to quick-build small modular reactors than to any large, rather out-of-date, massive giants which take years to build and are full of risks? Will he advise his friends, as a priority, to put all their efforts behind developing small nuclear reactors as part of our sensible energy strategy and our move to a decarbonised electric sector?
The Earl of Minto (Con)
I thank my noble friend for his comments and his question: indeed, I will. On the specific question of investment, the Government, along with Rolls-Royce, have invested over £300 million in small modular reactors. On inward investment—again, I agree that a massive amount of inward investment is always required—we have arrangements with the UAE, bringing in £5.9 billion, and Qatar, for £10 billion. We know about the Nissan/Envision billion-pound investment up in the north and Ford has put in nearly £400 million recently as well.
Lord Fox (LD)
My Lords, Make UK, the manufacturing organisation—it represents most of the countries’ manufacturers—issued an authoritative report on industrial strategy. Some 99% of respondents said that they believed that the UK should have an industrial strategy—which indicates that they do not think that the UK has one now. Will the Minister acknowledge that the very people who are going to deliver what he talks about have not heard what he thinks he has told them?
The Earl of Minto (Con)
My Lords, I understand exactly the point that is being made. Communication is critical to any successful enterprise, and there is no doubt that the change from a unified industrial strategy to one that is more targeted and focused is, at times, not the easiest message to get across. However, I believe that the five growth sectors for which the specific strategies have been written will be very effective.
Lord Aberdare (CB)
My Lords, an essential part of any industrial strategy is a strategy for addressing the skills needs on which it depends. When the Minister reads the Make UK report that the noble Lord, Lord Fox, has just referred to, he will find that it sets out a long-term vision for UK manufacturing and highlights the failure of current apprenticeships policy to support manufacturers in developing the talent pipeline they need. When will the Government respond to the barrage of demand from employers for a more flexible apprenticeship levy, with greater incentives to offer apprenticeships addressing skills and labour shortages?
The Earl of Minto (Con)
My Lords, I think the whole House agrees with that point, and I can assure the House that the whole question of the apprenticeship levy and the flexibility thereof is being looked at closely right now.
Lord Woodley (Lab)
My Lords, I have raised my serious concerns about the lack of industrial strategy for the automotive sectors, important as they are for our country. But I also pay tribute to the Government for supporting the Jaguar Land Rover battery plant that could easily have gone to Spain—well done. But does the Minister agree that this is small compared with the billions and trillions being set aside by the EU and the USA to encourage investment, particularly in battery gigaplants? What is our industrial strategy for this important sector, which, clearly, as I said last time, is genuinely at a tipping point?
The Earl of Minto (Con)
My Lords, I quite agree with the noble Lord about the success of the announcement from JLR. It is extremely important that we continue to invest in all sorts of technologies and advances. We are continuing to see investment into that sector. As for where the tipping point comes, I am not quite clear. But I will go back and write to the noble Lord with specifics.
Lord Bellingham (Con)
My Lords, is the Minister aware that only 15% of SMEs actually export? If that figure could be increased substantially, maybe to 20% or 25%, it would not only create a lot of jobs but help our balance of trade and be a crucial part of our industrial strategy.
The Earl of Minto (Con)
I entirely agree with my noble friend. I assure him and the whole House that the Department for Business and Trade is specifically making it easier for small and medium-sized enterprises to consider and go through the process that they fear is difficult—and in fact is not so difficult—to start exporting, to the benefit of all.
Lord Anderson of Swansea (Lab)
Do the Government agree that a continuation of steel production in the UK is vital to our industrial future? Therefore, does an industrial strategy include the investment at Port Talbot steelworks which Tata Steel is now wishing to make, without which there will be an enormous hole in employment in south Wales?
The Earl of Minto (Con)
The Government fully recognise the role that steel plays within the UK economy, and they are working with the industry on its decarbonisation options. It is a foundation industry, it is high-wage, and it is extremely important to this country for all sorts of reasons. On the specific issues with Port Talbot and Tata, there are ongoing negotiations, which I am sure the House will realise I cannot divulge. But we are closely involved with Tata, British Steel and Liberty.
Baroness Hoey (Non-Afl)
My Lords, an industrial strategy must be for the whole of the United Kingdom. How does the Minister think it will work in Northern Ireland, since so much in Northern Ireland is still under European Union rules and not British law?
The Earl of Minto (Con)
My Lords, there is a conference later this year on investment into Northern Ireland, which I am sure will prove a successful enterprise. Investment into Northern Ireland is critical; the difficulty we have had with extricating that part of the United Kingdom is well known.
Baroness Chapman of Darlington (Lab)
My Lords, Make UK says that the UK is
“the only leading nation in the world without a comprehensive, long-term industrial plan”.
The Government might be on slightly firmer ground on the UK storming ahead of other economies but a range of initiatives, as the Minister has referred to, is not a strategy. The Government are sitting on their hands and we are losing out to the US and the EU too often when they should be acting. They will have to grip this at some point. When will they?
The Earl of Minto (Con)
My Lords, the Atlantic declaration shows how closely we are working with our American colleagues. The value of trade with that nation is well known and there is no question that we will be able to grow that and continue working with it. The green deal industrial plan is being followed in the EU; I hope that we will get some breakthroughs in that area too.
Inheritance Tax: Cohabiting Siblings
(10 months, 3 weeks ago)
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Lord Lexden
To ask His Majesty’s Government what plans they have, if any, to make transfers of property between long-term cohabiting siblings exempt from inheritance tax.
The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)
My Lords, the long-standing inheritance tax assumption for wealth transfers between spouses and civil partners reflects the formal legal obligations that marriages and civil partnerships necessarily entail. While the Government understand the issue, there are no plans to exempt transfers of property between long-term cohabiting siblings.
Lord Lexden (Con)
My Lords, the Government say that two people who have shared a jointly owned home for years must be in a legal relationship if inheritance tax is to be deferred when they are parted by death. I remind the Government that they blocked my Private Member’s Bill to open up civil partnerships to siblings after its Second Reading, where it gained wide support across the House. This would have enabled siblings to establish legal relationships and solve the problem. Why on earth should the postponement of tax on the death of the first of two people united in a loving association for years require sexual activity between them? Why should the survivor of a chaste relationship have to face the agony of selling the family home on the death of a loved partner to pay an inheritance tax bill? Have this Government no compassion?
Baroness Penn (Con)
My Lords, it is important to set this Question in context. Each individual has a nil rate band of £325,000. Two cohabiting siblings who jointly own a house may have an inheritance tax liability only when the value of the house exceeds £650,000—well in excess of both the average UK house price and the average London house price. There are also circumstances in which inheritance tax can be paid over a period of time, giving the beneficiaries time to adjust to changed circumstances. That facility would enable people in those circumstances to remain in their home, which I believe is the concern at the heart of my noble friend’s Question.
Lord Pannick (CB)
My Lords, I declare an interest in that I acted for the two Misses Burden, who unsuccessfully challenged this policy in the European court in 2008. This is not a question of law but a question of fairness. How can it be fair for two elderly sisters who have lived together for the whole of their lives, jointly own their property and have each made wills leaving the property to each other on the death of the first to be denied a tax benefit enjoyed by married couples and civil partners who may have a far less committed, developed and permanent relationship, or does fairness not count in the implementation of the tax system?
Baroness Penn (Con)
My Lords, the Government have attempted to draw up a system that is fair but recognises the unique status of marriage and civil partnerships. As I pointed out to your Lordships’ House, very few estates fall subject to inheritance tax, and we have put in place processes to ensure that those who live in the same house, for example, are able to meet their obligations over time, to lessen the impact of inheritance tax.
Lord Palmer of Childs Hill (LD)
My Lords, one can leave all above £325,000 to your spouse, your civil partner, a charity or a community amateur sports club. Can the Minister explain how siblings are less important than a community amateur sports club?
Baroness Penn (Con)
My Lords, I do not think that is the rationale behind the approach. The rationale in distinguishing between marriage and civil partnership and other relationships is the unique legal status and the unique legal and financial obligations that people enter into in that regard. As the noble Lord, Lord Pannick, referred to, this question was also referred to the courts, which found in the Government’s favour.
Baroness Browning (Con)
Does my noble friend accept that the Treasury seems to regard inheritance tax as locked into the Ovaltine family of the 1950s with 2.4 children? As my noble friend Lord Lexden’s Question indicates, it is about time that it took a long look at how inheritance tax works for families that do not have 2.4 children. Can I add to the sibling argument, and I declare a personal interest, the parents who take responsibility for disabled adult children for all of their lifetime, where the amount of money that can be passed on during an adult’s lifetime is severely limited on the assumption that lawyers—looking round the Chamber now, there are lots of grins around me—will be able to manage the trusts for that money after the parent has died? The parents want to do what is right for their children during their lifetime.
Baroness Penn (Con)
My Lords, I am happy to look at the specific circumstance that my noble friend raises. I do not think the Government have an old-fashioned view of how families are formed in modern times; that is why the benefits of being able to pass on inheritance, if you are married, is also extended to those who are civilly partnered.
Lord Livermore (Lab)
At the last Budget, the Government abolished the lifetime limit on tax-free pension savings. In the middle of a cost of living crisis, this giveaway for the very wealthiest cost £1.2 billion and increased the value of a £2 million pension pot by some £250,000. It also opened up an inheritance tax loophole whereby it is now possible to accumulate unlimited sums within a pension fund and pass them on entirely free of inheritance tax. What assessment has the Treasury made of the number of very wealthy individuals who will now use pension funds as a vehicle for inheritance tax planning, and at what additional cost?
Baroness Penn (Con)
My Lords, I was disappointed that the party opposite did not support our changes to pensions, which were key for many public sector workers in respect of recruitment and retention for their posts. The primary purpose of a pension is to provide income or funds that individuals can draw on in retirement. If an individual dies before they get to use it for that purpose, we believe their beneficiaries should be able to have those funds, and that is why unspent pension pots do not normally form part of an individual’s estate. As the Chancellor said to the TSC after the Budget 2023, we will keep any changes to the lifetime and annual allowances under consideration and look at the impact.
Baroness Deech (CB)
My Lords, I think the Minister is avoiding the issue of principle. Ever since I took an interest some 15 years ago in the case of the Burden sisters, referred to by the noble Lord, Lord Pannick, I have wondered why the financial inheritance benefits of coupling up are confined to sexual relationships, whether it is husband and wife, civil partners or even a deceased person and the person they lived with. What is so special about the sexual relationship, when you might have two sisters who have been committed for much longer, are unable to marry and have undertaken freely to take care of each other? The Government would not even lose in the end, because the inheritance tax is rolled over. Will the Minister please address the issue of principle?
Baroness Penn (Con)
My Lords, I do not think that I am not addressing the issue of principle; I am just disagreeing with some noble Lords on the conclusions of that question. The Government’s view is that marriage and civil partnership relationships necessarily entail particular legal and financial obligations to one another for the parties concerned. We think it is right that those obligations are reflected in our inheritance tax system. When it comes to the impact of inheritance tax, however, on people in the circumstances to which the noble Baroness referred, there are several measures in place to ensure that those impacts are minimised. Those include the existence of the nil-rate band, which means that the vast majority of people in this country—fewer than 6% of estates this year are due to fall subject to inheritance tax—do not pay inheritance tax. For those who are affected, there are measures in place to ensure the smoothing of those obligations when they find themselves in circumstances that we have heard about today.
Lord Forsyth of Drumlean (Con)
My Lords, following up on that last point, is not the problem that the only people who pay inheritance tax are the middle classes, or people whose only asset is the roof above their heads, whereas very rich people are able to buy farmland and make all kinds of arrangements to avoid inheritance tax? If the Treasury is keen on raising extra revenue, why not abolish inheritance tax and introduce capital gains tax on death, which would provide far more revenue and be far fairer to all concerned?
Baroness Penn (Con)
I have to disagree with my noble friend that the wealthiest do not pay inheritance tax. Statistics from 2019-20 show that tax paid on estates valued at £1 million or more accounted for 82% of total inheritance tax liability for that year. When it comes to reforming inheritance tax and looking at areas such as agricultural property relief and business property relief, we would need to be really careful about considering the impacts of changing that approach on family farms and family businesses before taking forward such changes.
Lord Watts (Lab)
My Lords, the Minister said that the Government introduced the pension changes to help GPs to be retained in the National Health Service. However, is it not the case that the majority of the savings will go to rich people rather than GPs?
Baroness Penn (Con)
I have to disagree with the noble Lord. The feedback we have had comes not just from the medical profession but from people in many other public service jobs who benefit from defined benefit contribution pension schemes and who have found their annual allowance and the lifetime allowance to be a real barrier to staying on in their work. It was in response to campaigns such as those from the BMA that the Government took action.
Defence: Support Ships and Type 32 Frigates
(10 months, 3 weeks ago)
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Lord West of Spithead
To ask His Majesty’s Government when they expect to place orders for (1) multi-role support ships, and (2) Type 32 frigates.
The Minister of State, Ministry of Defence (Baroness Goldie) (Con)
My Lords, the multi-role support ship—MRSS—and the Type 32 programmes remain in the concept phase and have not yet reached the level of maturity for me to confirm when orders are expected to be placed. The programme and procurement strategy for MRSS and Type 32 will be decided following the concept phase.
Lord West of Spithead (Lab)
My Lords, as I stand here today, our great maritime nation has 11 operational destroyers and frigates. Why are we in this parlous state? The reason is that, for many years, up until fairly recently, we have not been ordering ships on a rolling basis. This is absolutely necessary for a proper shipbuilding industry. Indeed, the Government recognise that now and, within the MoD, Ministers understand the need for a rolling programme. We have had some recent orders, but they have stopped. We must keep ordering, otherwise we will have the same problem again. The Treasury does not seem to understand that, if we do not do that, the SMEs and all our trained people will go to the wall, we will not have a proper shipbuilding industry and we will not have a proper fleet. Could the Minister please go to the Treasury, point out the error of its ways, and explain how important it is for us to go down this route?
Baroness Goldie (Con)
I do not impugn the noble Lord’s right to hold the Government to account but I would not wish his persistent interrogation and commentary to imply that our Royal Navy is in some dysfunctional state. The Royal Navy was one of the few navies in the world to have ships in every ocean on the planet in 2022, from the High North to the Antarctic, and from the Baltic to the Pacific. It continues to deliver its commitments by undertaking the biggest recapitalisation of the fleet in a generation, from Type 23 to 26 and 31, and from Vanguard to Dreadnought. It is worthwhile reminding your Lordships that our Royal Navy is one of only three navies in the world to be able to operate to fifth-generation carriers and aircraft, along with the United States and China. The Royal Navy is our British pride and joy. I wish that sometimes the noble Lord, Lord West, would acknowledge that, instead of repeatedly and monotonously talking down his former service. It is time to champion it.
Baroness Smith of Newnham (LD)
My Lords, I do not wish to talk down His Majesty’s Royal Navy. However, like the noble Lord, Lord West, I am keen to ensure not only that we have an effective rolling programme but that our ships should be buoyant and seaworthy, ideally as soon as the trials are over. With regard to moving from the concept phase for the Type 32s, can the Minister tell the House what lessons His Majesty’s Government have learned from procuring the Type 45s and the “Queen Elizabeth” class so that, when the next ships go into service, they will be seaworthy from day one?
Baroness Goldie (Con)
Again, to disabuse anyone of any misconception of the noble Baroness’s question, we have a functional, operational Royal Navy which is discharging its obligations to the country. As regards the more recent types of shipbuilding commissioning by the Royal Navy, such as the Type 26 and Type 31, part of their attraction is their design concept, which means that they are more readily produced, and they have an exportable value, and that means that the sorts of problems to which the noble Baroness refers, which certainly characterise some previous ships, are now much less likely to materialise. What I described to the Chamber with regard to what the Royal Navy is currently undertaking demonstrates beyond a shred of a doubt that it is highly professional, very well-equipped and functional.
Lord Lexden (Con)
My Lords, is it not customary, in the year which sees the Coronation of a new monarch, for the Royal Navy to be reviewed by the new monarch? Will His Majesty review the fleet in the course of the current year?
Baroness Goldie (Con)
That is a matter for the palace. However, I am sure that if His Majesty were to review the fleet, it would be very positively received.
Lord Mountevans (CB)
My Lords, the Minister has made some excellent points in defence of our wonderful Royal Navy. However, the impressive response of Ukraine in the current conflict demonstrates the rapidly changing nature of warfare and the growing importance of agility and flexibility. The Royal Navy is working hard to maximise these latest technologies, including AI. Does the Minister agree that the Type 32 frigate addresses all those developing priorities?
Baroness Goldie (Con)
The Type 32 is conceived as an agile, resilient and capable ship. However, I point out to the noble Lord that we have already, for example, upgraded Type 45s with the Sea Viper Evolution programme and upgraded Type 23s with the Naval Strike Missile in partnership with the Norwegians—the first ship will be ready by the end of the year. In addition, the initial Sonar Type 2150 ships have already been upgraded. We are constantly reviewing how we can keep our fleet swift, agile and effective.
The Lord Bishop of St Edmundsbury and Ipswich
My Lords, given that one of the intentions and evident benefits of a national shipbuilding programme is local economic benefit, including the levelling-up aims of investing in young people and retraining older workers, and that shipyards are, by and large, in areas of deprivation where such benefit is vital, will His Majesty’s Government ensure that current capacity and design skills, apprenticeship training and other essential infrastructure is maintained pending the commitment to the Type 32 frigates and MRSS programmes so that it does not cost a great deal more to initiate these vital programmes?
Baroness Goldie (Con)
I thank the right reverend Prelate for making a number of extremely important points. The whole essence of the national shipbuilding strategy was to ensure that we got shipbuilding in the United Kingdom on to a more stable and sustainable basis. The right reverend Prelate is absolutely right: the MoD’s direct spend supports 29,800 jobs in the shipbuilding industry—that includes submarines—with a further 21,300 jobs supported indirectly. There is an opportunity for shipbuilding in the UK to deliver exactly the sort of benefits to which the right reverend Prelate refers.
Lord Grocott (Lab)
Can the Minister explain how asking questions, however persistently, about providing the Royal Navy with the equipment that it needs is somehow talking it down?
Baroness Goldie (Con)
If the noble Lord had listened to my preface in response to the noble Lord, Lord West, he would have heard me say that I do not impugn the right of the noble Lord, Lord West, to hold the Government to account. However, I think the Chamber would agree that there is a certain predictability to the character of the noble Lord’s questions; I know from first-hand experience the volume of questions with which I have to deal. I am not impugning his right to hold the Government to account but to do so repetitively, without ever counterbalancing the argument by acknowledging some of the Royal Navy’s enormous triumphs, gives a slightly disproportionate and not totally representative picture.
Lord Trefgarne (Con)
My Lords, how many qualified crews do we have to support our destroyers and frigates? Have any been deployed in recent days in search for the missing mini-submarine near the “Titanic”?
Baroness Goldie (Con)
I have no information on my noble friend’s latter point. I can seek specific information about the crew numbers to which he refers and will write to him.
Lord Tunnicliffe (Lab)
My Lords, the Type 32 frigate was announced on 19 November 2020. I understand that, to make the national shipbuilding strategy work, the first ship needs to be laid down by mid-2027. After two years and seven months, the project is still in the pre-concept stage. I think that means, in plain English, that we do not even know what these ships are for. Can the Minister enlighten the House, or will the project slip, so plunging the British shipbuilding industry into chaos once again?
Baroness Goldie (Con)
I have already indicated to the House that this ship is in the concept phase; there is no more that I can add to that. The programme and procurement strategy will be decided following the current concept phase, once that has concluded. However, I would observe that this is part of a shipbuilding programme for the Royal Navy that is substantial, significant and very important for the Navy’s future operational effectiveness.
Lord Houghton of Richmond (CB)
My Lords, on this particular argument I find myself more in favour of the Minister’s point, inasmuch as the lineage of these questions, although entertaining, occasionally gives the impression that the sole purpose of the defence budget is the maritime renaissance. Increasingly, the issue of military advantage will be born not of hardware but of software. Can the Minister confirm that it is this strategic shift, and not necessarily by accounting for military competence and capability in the counting of input numbers, that is the qualitative output of a sophisticated and technologically equipped Armed Forces—the point of the Minister’s expression of frustration—and a more balanced approach to the investment necessary?
Baroness Goldie (Con)
I thank the noble and gallant Lord. He makes the point more eloquently and with greater authority than I can. I do not seek to pre-empt the defence Command Paper refresh, which is imminently in the stages of becoming public, but the hybrid nature of our capability will be obvious from that paper. The noble and gallant Lord is quite correct: we cannot put things in silos. We have to work out what we are trying to deal with, what the threat is, what the hybrid character of the threat is and how we can have a capability—whether by land, air or sea—that will effectively combine to address that threat.
School Buildings: Safety
(10 months, 3 weeks ago)
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Baroness Twycross
To ask His Majesty’s Government what assessment they have made of the safety of school buildings, particularly in relation to the use of reinforced autoclaved aerated concrete, and what action they are taking to address (1) current safety issues, and (2) any disruption to pupils’ education caused by unsafe school buildings.
The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)
My Lords, safe and well-maintained school buildings are a priority. We are actively working with the sector to help identify reinforced autoclaved aerated concrete, or RAAC. If RAAC is suspected, we commission professionals to verify its presence and assess its condition. We support schools, including with capital funding, in measures to ensure that it does not pose any immediate risk and to minimise disruption based on professional advice.
Baroness Twycross (Lab)
My Lords, I thank the Minister for her Answer, but the Government have already admitted that current funding will not be enough to make all schools safe. Will she tell us how long children, parents and school staff will have to wait for schools to be made safe once the data on their condition is finally released?
Baroness Barran (Con)
I want to be absolutely clear to the noble Baroness and the House that the department is not aware of any child or member of staff being in a school which poses an imminent safety risk. We are working as fast as is humanly possible to identify RAAC across the school estate. We sent out a questionnaire last year and nearly 90% of schools and responsible bodies have sent in their initial responses. We are working closely with the structural engineering sector to identify accurately whether RAAC is present and whether it poses a risk.
Baroness Evans of Bowes Park (Con)
Following on from my noble friend’s answer, is she confident that there is enough capacity among surveyors to identify RAAC in schools before, as the noble Baroness said, issues become too serious? We have had similar problems in other parts of the public sector estate, hospitals for instance, where there have been safety issues because of RAAC. Perhaps she could provide us with reassurance on this issue.
Baroness Barran (Con)
I thank my noble friend for her question. I hope it reassures her to know that I have met twice already the leading structural engineering firms. We have looked at different ways that we can accelerate the pace of surveys and are very confident that we will have carried out at least 600 surveys by the autumn.
Lord Addington (LD)
My Lords, will the Minister give us an assurance that any new school is constructed with a material that we expect to have to pull down and will not fall down before we get there?
Baroness Barran (Con)
I can give the House that reassurance. Not only that but any new school we construct will be net zero in operation.
Baroness Berridge (Con)
My Lords, obviously, responsible bodies are legally responsible for the safety of the building. They come in all shapes and sizes. It could be a very strong, robust local authority or a large multi-academy trust with a lot of expertise; conversely, it could be a local authority that is in intervention with commissioners or a trust which has only one school. Of the 10% which have not returned their surveys, can my noble friend the Minister outline how we are going to approach those responsible bodies to make sure they respond and find out whether they are in that risky category because they are weak for other reasons?
Baroness Barran (Con)
I do not think we can say that the 10% which have not responded are weak. We are dealing with it by running a small call centre in the department. There are organisations that we have had to contact multiple times—including, sadly, some local authorities—and we are working with MPs and others to make sure we get all the returns. We are also supporting, in slightly slower time, all trusts to improve their competency in relation to the management of their estate, including rolling out a free specialist capital adviser programme to support them in estate management.
Lord Hendy (Lab)
My Lords, one aspect of safety in schools is fire safety. I declare an interest as a vice-chair of the All-Party Parliamentary Fire Safety and Rescue Group. In 2007, draft guidance was given that predicted that most schools would be fitted with sprinklers and very few would not. In 2021, further draft guidance was published which predicted the contrary: that very few schools would be fitted with sprinklers. I understand the consultation on that has not been published yet and therefore the guidance has not come into effect two years later. I understand, too, that the problem is that there is a division of opinion between the department on one side, which thinks the risk is low, and the insurance industry and fire chiefs on the other, which think the risk is high. Would the Minister be content to attend a meeting of the APPG with representatives of the insurance industry and fire chiefs to see whether there is some methodology to ascertain precisely what the risk is and therefore the need or lack of it for sprinklers?
Baroness Barran (Con)
I would be delighted to meet the APPG, but I remind the noble Lord that there are 67,000 buildings on the school estate and about 450 fires a year, 90% of which cause no significant damage.
Lord Dobbs (Con)
Does my noble friend agree that a much greater danger to children in our schools comes from a judge’s ruling last week that parents are not allowed to know about the relationships and sex education that their children are given? This is a hugely controversial area. Parents may knock on the door of a school to ask what is being taught to their children, and can be denied. Does my noble friend accept that this is a nonsense that undermines the heart of family responsibilities and parental authority? Would the Government please do something quickly to make clear what parental rights are in knowing what their children are being taught?
Baroness Barran (Con)
I am delighted to be able to let my noble friend know that the Government have already acted on this. We wrote to every school to be clear about exactly that relationship between parent and school and that trust, particularly on these very sensitive topics, is essential. Schools should not enter into arrangements with third parties that prohibit them sharing curriculum materials with parents.
Baroness Hussein-Ece (LD)
To get back to the Question about the safety of school buildings, can the Minister give an assurance that schools deemed to be at risk have been made safe or at least closed until urgent repairs can take place? Is she also aware that teachers leaving the profession cite the state of school buildings and the environment in which they work as one of their reasons for leaving?
Baroness Barran (Con)
I am very happy to give the noble Baroness reassurance on that point. To be clear, the returns that we have had from schools about whether they suspect RAAC on their estate indicate that a significant percentage believe they do, but then when we send the surveyors in, in fact they do not. When RAAC is identified, some poses a risk, but some does not. In every case where a risk is posed, whether in a single store cupboard or a whole block, we send our team in and work closely with the school, trust and local authority to provide both practical and financial support to address issues as quickly as possible.
Lord Laming (CB)
My Lords, the noble Baroness knows that schools have made great progress on incorporating children who have special needs of all kinds. Sometimes, the buildings are an impediment to this. Has work been undertaken to ensure that schools are adapted to meet the needs of children with very special needs?
Baroness Barran (Con)
That is extremely important. Access to and the shape of a building should never be an impediment to a child’s learning. That is more straightforward in the new schools we are building, but we are making adjustments and supporting schools through our existing capital programmes to address exactly the needs that the noble Lord raises.
Register of Overseas Entities (Penalties and Northern Ireland Dispositions) Regulations 2023
(10 months, 3 weeks ago)
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The Earl of Minto
That the draft Regulations laid before the House on 26 April be approved. Considered in Grand Committee on 13 June.
Amendments of the Law (Resolution of Silicon Valley Bank UK Limited) (No. 2) Order 2023
(10 months, 3 weeks ago)
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Baroness Penn
That the draft Regulations laid before the House on 27 April be approved. Considered in Grand Committee on 15 June.
Armed Forces Act (Continuation) Order 2023
(10 months, 3 weeks ago)
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Baroness Goldie
That the draft Order laid before the House on 22 May be approved. Considered in Grand Committee on 15 June.
Judicial Appointments (Amendment) Order 2023
(10 months, 3 weeks ago)
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Lord Bellamy
That the draft Order and Regulations laid before the House on 11 and 15 May be approved. Considered in Grand Committee on 15 June.
Lord Davies of Gower (Con)
My Lords, with the leave of the House and on behalf of my noble and learned friend Lord Bellamy, I beg to move the Motions en bloc standing in his name on the Order Paper.
Retained EU Law (Revocation and Reform) Bill
Tuesday 20th June 2023
(10 months, 3 weeks ago)
Lords ChamberRead Full debate Retained EU Law (Revocation and Reform) Act 2023 View all Retained EU Law (Revocation and Reform) Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 145-I Marshalled list for Consideration of Commons Reasons - (19 Jun 2023)
16:04 - Division on Motion A1 - Ayes: 232 / Noes: 187 - Motion A1 agreed.
16:16 - Division on Motion B1 - Ayes: 241 / Noes: 181 - Motion B1 agreed.
Lord Callanan
That this House do not insist on its Amendment 15B, to which the Commons have disagreed for their Reason 15C.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
My Lords, with the leave of the House, at the same time as moving Motion A I will speak to Motion B.
The retained EU law Bill has once again returned to this House from the other place. I am pleased to say that the other place has accepted the final drafting change to Amendment 16, so that matter is now closed. This amendment significantly adds to the scrutiny that Parliament can conduct on this Bill.
However, the House of Commons has now been very clear, for the second time, that it is firm in its position on the remaining two amendments. Noble Lords asked the Commons to think again, and it has reached exactly the same conclusion. Indeed, the Solicitor-General noted the many ways in which the Government have already moved on the Bill to reflect the thoughts and concerns of this House. Therefore, today I propose Motions to accept the Commons position on the Bill and accede to the wishes of the elected House.
With regard to the other Motions in front of us today, Amendment 42D looks to be loosely based on one of the scrutiny provisions of the Legislative and Regulatory Reform Act 2006. However, its use in that Act relates to the legislative reform order power, which is much broader. It can act on any piece of legislation, including Acts of Parliament, whereas the revoke and replace power in this Bill can operate only on secondary retained EU law—in other words, retained EU law that is not primary legislation. We have taken steps to make clear what this retained EU law is by publishing and updating the retained EU law dashboard, and we will be reporting regularly to Parliament on our intentions to reform it. This will allow Parliament a substantial amount of time to scrutinise and report on reforming legislation, if Parliament wishes to do so. As such, these powers are clearly not comparable in terms of scope.
Furthermore, the legislative reform order process is not time-limited. It is still ongoing and available after 17 years, whereas this power will expire three years and three days from today. This is crucial when you consider how long parliamentary processes can take. Amendment 42D envisages up to 60 sitting days for Parliament to consider and debate proposals for statutory instruments, and potentially time after that for further scrutiny before the SIs can be made. We have supported and encouraged the initiative, which started in this House, to maximise transparency around the Government’s plans for retained EU law reform via regular reports to Parliament. In our view, this additional 60-day pre-scrutiny period is simply not required.
Therefore, the Government cannot accept a requirement that would place such a significant time restraint on the usage of the power. Doing so would substantially reduce the time available for the power to be used, which is clearly not an appropriate balance between scrutiny and reform. The clause currently provides for this balance in a much more sustainable way; the third limb of the power already requires the affirmative procedure by default, and the second limb is automatically pushed to the affirmative procedure under specific circumstances. For all other circumstances, the sifting committee exists to recommend upgrading the scrutiny procedure, if Parliament judges it necessary. For all these reasons, the Government cannot accept the amendment.
On Motion A1, of the noble Lord, Lord Krebs, I am once again clear that Amendment 15D is unnecessary. I and many other Ministers have committed to uphold our environmental protections. Equally, the consultation part of the amendment is also irrelevant, as the Government remain committed to consulting on major policy changes, in line with usual practice. We take Dispatch Box commitments very seriously as a Government and will not shirk away from the commitments we have already made during the passage of this Bill.
This amendment is therefore unnecessary. The Government are clear that we have set a strong direction of travel on environmental regulation with our actions across this Parliament, and nothing in this Bill will change that. I therefore ask noble Lords to support Motions A and B on the Order Paper today. I beg to move.
Motion A1 (as an amendment to Motion A)
“Environmental protection
(1) Regulations may be made by a relevant national authority under section 12, 13, 15 or 16 only if the relevant national authority is satisfied that the regulations do not reduce the level of environmental protection arising from the EU retained law to which the provision relates.
(2) Prior to making any provision to which this section applies, the relevant national authority must seek advice from persons who are independent of the authority and have relevant expertise.””
Lord Krebs (CB)
My Lords, I will be brief, because we have debated this many times before. I will simply explain why I found it necessary to come back yet again with an amendment on environmental protection.
In the previous round of ping-pong, on 6 June, the Minister, in urging your Lordships to reject a previous version of my amendment, said:
“we have substantive concerns that this amendment, in the way that it is worded, would actually make it more difficult to uphold those environmental commitments”. [Official Report, 6/6/23; col. 1271.]
When I heard this, I was puzzled. It appeared that the Minister was saying that the problem was with the wording of the amendment, rather than the substance. I wondered which bit of the wording would make it more difficult for the Government to ensure that their policies do not lower standards of environmental protection.
Was it the non-regression element, requiring the Government to commit to not lowering standards if and when retained EU law is changed? Was it the requirement to consult relevant experts before making changes? We know from the past record that, when experts were not consulted, mistakes were made. Back in 2019, when Defra removed a protection under EU law relating to endocrine-disrupting pesticides, and it was pointed out that it had made a mistake, Defra quickly corrected its mistake and re-introduced the regulation. Was it the requirement for transparency—the need to publish the reasons for any change, and the advice received? Or was it, fourthly, the requirement to comply with international environmental treaties to which the UK is a signatory?
None of these four requirements seems to me to stand in the way of the policies designed to protect the environment, so I decided to try to find out. I requested a meeting with Ministers to help me understand how a change to the wording of the amendment would achieve my objective of ensuring that environmental standards are not lowered, without making it more difficult to achieve this end. However, I regret to say that Ministers were not prepared to discuss this with me or to come up with an alternative form of words. Therefore, I have redrafted the amendment to make it even simpler than before, in the hope that I have succeeded in overcoming the objection the Minister raised last time around.
Baroness Jones of Moulsecoomb (GP)
My Lords, I am going to take the liberty of speaking on this amendment because the last time I spoke on an amendment tabled by the noble Lord, Lord Krebs, he said that he liked me speaking because I made him look more reasonable, so I will do my best now. The Minister said that the Commons is very clear on this. I would like to make a couple of points. First, I very much doubt whether any of them knew what they were voting on, because they do whatever the Whips tell them. Secondly, if it is so obvious that the Government are going to do this, why not just accept the amendment? Given that this has been brought back twice, it is clearly something this House cares very much about. Lastly, if the other end is stupid, it is our job to make it clear that it is being stupid and that we think this is a very important amendment to make to the Bill. Obviously, the Greens will be voting for it.
Baroness Parminter (LD)
I rise briefly to add our Benches’ support, if the noble Lord, Lord Krebs, pushes this to a vote. His amendment is a canary in a coal mine—perhaps a Cumbrian coal mine. You put a canary down a coal mine when you want to test whether essential resources that you rely on are about to be lost, to be snuffed out. This is what this is. It is about not just the essential protections for our much-depleted nature, but the essential protections that we as humans rely on: water, air quality and all the ecosystem services that nature provides.
I use that analogy for another purpose, as well. You do not see the canary in the coal mine, but if you talk to the general public about puffins and other wildlife, and all the things they care for when they see them on TV programmes, they know that they want them protected, and they want the Government to act. But we are here at the coalface, mining through the amendments, and we can see the damage that this will do to the protections for people and the animals and wildlife they care for. We are here to bring that canary to the surface. We should do that and press the matter again.
Lord Hope of Craighead (CB)
My Lords, Motion B1, in my name, raises an issue that has been of great concern to many in this House from the outset in our examination of the Bill: parliamentary sovereignty. The clause that causes particular concern, and to which my Motion is addressed, is Clause 15, headed “Powers to revoke or replace”. All the powers that it contains are exercisable by statutory instrument alone, with no provision for active or meaningful scrutiny by either House. That amounts to what the noble Lord, Lord Anderson, described when the issue was before us two weeks ago—without any exaggeration, I think—as a delegated superpower.
It is worth taking a moment to think about the key words that are used to describe the extent of the powers conferred on a relevant authority by this clause. For our purposes, the relevant authority is a Minister of the Crown. Clause 15(2) states that the Minister
“may by regulations revoke any secondary retained EU law and replace it with such provision as the relevant national authority considers to be appropriate and to achieve the same or similar objectives”.
Clause 15(3) states that the Minister
“may by regulations revoke any secondary retained EU law and make such alternative provision as the relevant national authority considers appropriate”.
The subsection (2) power extends not just to achieving the same objectives but to achieving objectives that the Minister considers to be similar. The decision as to whether they are similar or appropriate, about which there may reasonably be more than one view, is left entirely to the Minister.
Subsection (3) goes even further: it extends to the making of such alternative provision as the Minister considers appropriate. There is no limit here to the objectives that are to be achieved. They do not need to be similar—there is no limit to that extent—so they could be different from those of the secondary retained EU law that is being revoked. Again, there could reasonably be more than one view as to whether the alternative provision, whatever it may happen to be, was appropriate.
It is worth reflecting for a moment on the subject matter of what is open to revocation and replacement in the exercise of these powers. This is not simple, routine stuff for which delegated legislation is unquestionably appropriate. It extends to, among other things, major instruments of policy. It extends to fundamental rules relating to public health, trade and the environment, which were handed down to us by the EU and with which we have lived for several decades. It includes, for example, agricultural support, blood safety, fisheries management, food composition standards, nutrition, resources and waste, and the control of ozone-depleting and radioactive substances. Those are just some examples.
Your Lordships might consider it rather strange, given the nature and extent of what is involved, that neither House of Parliament can play any kind of active role in the scrutiny of these regulations. It really is a take-it-or-leave-it system dictated to Parliament by the Executive. The objections to this, which I need not repeat, have been set out many times, and that is what my amendment seeks to address.
I recognise that the previous amendments, which were moved first by me and later by the noble Lord, Lord Anderson, proposed a system that the Minister was right to describe as novel and untested. What I am now proposing is based on a system, as the Minister has pointed out, known as the super-affirmative procedure, which was enacted by Section 18 of the Legislative and Regulatory Reform Act 2006. I shall explain briefly what this involves.
It applies only to regulations made under Clause 15. It proposes a Commons committee—not a Joint Committee, as previously suggested—to sift regulations made under the clause in the light of an explanation by the Minister as to why the regulation is considered appropriate. If, but only if, the committee reports that there are any regulations to which special attention should be drawn, the Minister must arrange for them to be debated on the Floor of each House. The Minister must then have regard to any resolution of either House and may, but is not required to, propose a revised proposal in the light of what has been resolved. The procedure for approval in both Houses thereafter is the affirmative procedure. Finally, the committee may recommend that the Minister’s proposal should not be proceeded with, but the House of Commons has the last word, as it can reject that recommendation. If it does that, the regulations may be laid.
This is a relatively light-touch procedure, which gives Parliament some measure of oversight of what has been proposed. I offer it as a compromise, in the hope that the Minister, despite the remarks he made at the outset of this debate, will feel able to give it serious consideration. At the heart of it all is an issue of principle, which is of basic concern to this House and the other on their entitlement to take an active part in the major exercise proposed. It is in that spirit that I propose to test the opinion of the House, if necessary, when the time comes.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I would like to detain the House for no more than a minute on this issue. I have spoken about it many times in the past.
I support what the noble and learned Lord, Lord Hope, has said on the principle of what we are looking at. It is very important we remember that my noble friend the Minister said, as a defence of the government position, that the House would have a chance to look at these instruments by means of the affirmative procedure —unamendable, as we know—and that it would have the appropriate back-up information. One of the things that has moved on from the days of just framework Bills is the increasing reluctance of the Government to produce the back-up information—impact assessments and Explanatory Memoranda—in time for the House to do its job properly. The spat we had last week about the Public Order Act regulations was the result of this very question of overcasual behaviour.
My noble friend will say that of course we will have absolutely similar treatment—this is the Government’s argument—for affirmative resolutions as we do for primary legislation. I have the greatest respect for my noble friend on the Front Bench—for his patience, courtesy and diligence—but how he can say that with a straight face absolutely beats me. I am sure that the noble and learned Lord, Lord Hope, has done a very important service for Parliament—this House and the other House—in bringing back this issue for us to consider today.
But then we get to the politics—and politics does come into this. The reality is that the reforms that the noble and learned Lord, Lord Hope, many other Members of your Lordships’ House and I would like to see come about will take place only if they are led by the House of Commons. If that does not happen, the Government will immediately say that this is the unelected House trying to tell the elected House how to do its job. That, I am afraid, will be game over. That is why I voted against the fatal amendment in the name of the noble Baroness, Lady Jones of Moulsecoomb. The House would be unwise, within one day of the Commons having passed a resolution, to immediately pass a fatal amendment.
The brutal truth is that we have been unable to get Members of Parliament in the House of Commons in sufficient numbers to understand what we are driving at: that it is not to do with EU law but is about parliamentary sovereignty, as the noble and learned Lord has said. There are stirrings there but they are only stirrings.
The case before us is further complicated by the fact that this is all going into the Brexit meat-grinder. In the debate in the House of Commons on 12 June, Sir William Cash MP said:
“The way the House of Lords has dealt with these amendments demonstrates that the Lords are determined to try, by hook or by crook, to obstruct the House of Commons, which is the democratic Chamber in these matters as far as the electorate is concerned”.
Later in the same speech he said:
“We know from everything that we have heard over the last few weeks on the Bill that there is an intransigence—a stubbornness, if I may say so politely—from our noble Friends in the House of Lords in the face of any attempt to get rid of retained EU law in the way in which we are proposing”.—[Official Report, Commons, 12/6/23; col. 34.]
Lord Pannick (CB)
My Lords, the noble Lord, Lord Hodgson, makes a very strong case that the House of Commons is dealing with this as a matter of politics rather than of principle. I draw precisely the opposite conclusion to that of the noble Lord: it is precisely for that reason that we should send the matter back. We should emphasise, as the noble and learned Lord, Lord Hope, did, that this is a matter of constitutional principle. It is not a matter of whether you support Brexit or you do not support it. It is not a matter of politics, and we should respectfully invite the other House to focus on what we see as the real constitutional issues that lie behind the Motion proposed by the noble and learned Lord, Lord Hope.
Baroness Meacher (CB)
My Lords, I support the amendments tabled by the noble Lord, Lord Krebs, and the noble and learned Lord, Lord Hope, but in doing so I want to put on record, as a former member of the Delegated Powers Committee, my objection to the Government’s rejection of Amendments 42 and 42B, which proposed a very reasonable process, enabling both Houses of Parliament to debate, vote and make amendments to regulations, but only if those regulations involved a substantial change to the law. The Government’s reaction to Amendments 42 and 42B is yet another example of their determination to bypass Parliament as far as possible and enable substantial law changes to be made by Ministers through delegated powers without the ability of Parliament to make any amendments.
The new amendment tabled by the noble and learned Lord, Lord Hope, is very modest indeed: it applies only to draft Clause 15 regulations, the broadest delegated powers in the Bill. Also, although Parliament will be able to recommend amendments to the regulations, it does not enable Parliament to amend those regulations, only to accept or reject them. Justice takes the view that the amendment tabled by the noble and learned Lord, Lord Hope, is a proportionate and necessary compromise, and should be supported.
Baroness Altmann (Con)
My Lords, I apologise to my noble friends on these Benches, particularly my noble friend Lord Hodgson. I have the opposite conclusion from the one at which he arrived. My noble friend suggests that it could be game over if we vote once again to ask the Commons to think again. As far as I can see, if we agree to this, it could be game over for us anyway. The Government’s arguments are that if we do not accept their position, these changes will delay the repeal of retained EU law and have also argued that sufficient scrutiny measures are already in place. We know that is not the case.
Giving almighty powers to Ministers to bypass Parliament upends the norms that have governed our country and given us the international reputation we have built. The possibility of allowing any Minister to revoke secondary legislation, just because it happens to emanate originally from the EU, confuses the issue of leaving the European Union with the issue of parliamentary democracy. A Minister could make, change or repeal laws or rules that they consider appropriate, according to this legislation, regardless of Parliament’s view and regardless of whether that Minister even has any expertise in the areas so well outlined by the noble and learned Lord, Lord Hope, such as public health, agriculture, fisheries and blood safety.
The noble and learned Lord’s amendment gives the House of Commons the last word. This is an existential issue beyond politics, and I urge noble Lords to think beyond this Parliament too. If we set this precedent now for this Government, presumably nothing can stop that precedent being used against these Benches, or in some other unacceptable manner, in the future. That could happen if we give up the idea that Parliament must make the rules, rather than Ministers.
Baroness Butler-Sloss (CB)
My Lords, over the years I have sat in this House, I have become increasingly concerned about the powers which have been taken by successive Governments, particularly this Government, to the detriment of both Houses of Parliament. It seems extraordinary to me that the House of Commons has not yet appeared to realise the extent to which it, quite apart from us, is being marginalised. This is a very concerning matter. It goes, as my noble friend Lord Pannick said, far beyond the politics; this is a constitutional issue about the rights and powers of both Houses. This is just one example—the latest and one of the most disturbing—which this House has seen over a number of years.
I support both amendments, but particularly the amendment of my noble and learned friend Lord Hope. We really have to remind the House of Commons, the other place, what is happening to it as well as to us.
Lord Hamilton of Epsom (Con)
My Lords, I totally agree with the sentiments of the noble Baroness, Lady Meacher, my noble friend Lady Altmann, and the noble and learned Baroness, Lady Butler-Sloss. However, at the end of the day, the House of Commons is the elected House, and it has the right, as the elected House, to be wrong. I am afraid we have to accept that.
If we go on throwing this back, saying it should think again—and the House of Commons thinks again and comes up with yet another quite substantial majority in favour of the status quo—all we are doing is antagonising the other place unnecessarily. I cannot understand why the other place is giving away the powers that it is—in the way that it seems happy to let the Executive take over everything—but that is what it has decided to do. It is the elected House and we should live with it.
Lord Fox (LD)
My Lords, it is an honour to follow so many wise speeches. I am not going to attempt to lengthen this debate or trump that wisdom. In the various iterations of this discussion, we have benefited from having either the noble and learned Lord, Lord Hope, or the noble Lord, Lord Anderson; today, we have both of them in their places. Although I associate myself with my noble friend Lady Parminter’s comments regarding the amendment in the name of the noble Lord, Lord Krebs, I will speak to the amendment in the name of the noble and learned Lord, Lord Hope.
I want to make just two points. First, the objection in the Commons largely and often dwelt on the unprecedented nature of the amendment that was being brought to them by your Lordships last time. In this case, the noble and learned Lord, Lord Hope, has dealt with that issue. This is not an unprecedented situation. It speaks a little to the point made by the noble Lord, Lord Hamilton: it is not that we are bringing back the same amendment, rewritten in different ways. Your Lordships are being asked to re-present a different proposition to the one that was presented last time. The Leader of the House can shake his head but, if he reads the amendments, he will see that they are fundamentally different; I am sure that he knows that in his heart. We are asking your Lordships not to be stubborn, in the words of William Cash, but to offer the Commons a different alternative. Stubbornness is doing the same thing over and over again. This is not the same thing; it is markedly different.
The other point that I want to address, which no one else has addressed, is the one made by the Minister about how much time this would take. I accept that it may take time, but we have to look at what we are doing. First, we are doing important things that Parliament should retain an ambit over. Secondly, the things that we are dealing with are things that we have lived with for many years—indeed, decades. This is not a burning platform; it is stuff that already exists. We are co-existing with it. It is not something that has a blue light on and must be rushed down the road as fast as possible. The argument about time does not count, in my view.
It is clear from what I and my colleagues have said that we support this amendment and will certainly vote for it when the noble and learned Lord, Lord Hope, presses it.
Baroness Chapman of Darlington (Lab)
My Lords, I will speak briefly because I agree with everything that the noble Lord, Lord Fox, just said. We are grateful to the Minister for what he said in his introduction to this debate and to all noble Lords who have contributed and engaged with this Bill since the beginning. However, we on these Benches think that the Government should join us in insisting on Lords Amendments 15B and 42D, as they now are. We agree with noble Lords that their amendments in lieu are sensible compromises and remain deeply concerned by the potential for the protection of our environment, in particular, to be watered down without such protection on the face of the Bill. It seems slightly odd that the Government have compromised on the fundamental purpose and shape of this Bill in removing the sunset, which was a huge thing for them to do. It is strange that they are now determined to hold out on these two relatively minor outstanding issues, which are about improved scrutiny and environmental protection.
The proposal from the noble and learned Lord, Lord Hope, is a proportionate and necessary compromise. The noble Lord, Lord Krebs, is correct to highlight the inadequacy of the verbal commitment offered by the Minister, which obviously may not stand the test of time. These are important principles. Should the noble and learned Lord and the noble Lord wish to test the opinion of the House, we on these Benches will support them.
Lord Callanan (Con)
My Lords, we have had this debate numerous times now, so the House will be delighted to know that I can keep my response fairly brief. I have responded to all the points made previously because noble Lords have repeated many of the points that they made in earlier debates.
Interestingly, the one person who did not repeat the points that he made in earlier debates was the noble Lord, Lord Fox; I was surprised to hear him say that he will support the Anderson/Hope amendment because, in the previous round, in response to a similar point about endless ping-pong made by my noble friend Lord Hamilton, the noble Lord, Lord Fox, said:
“I respectfully suggest that we are not proposing”
endless ping-pong but that
“we are proposing one more ping and one more pong”.—[Official Report, 6/6/23; col. 1262.]
Unlike some of the sceptics behind me, I have faith in what the Liberal Democrats say. I am absolutely certain that, because that is what the noble Lord, Lord Fox, said last time, he will join us in the Lobby this evening. We have hope yet; I am sure that the Liberal Democrats would not want to go back on their word.
Lord Krebs (CB)
My Lords, I thank the noble Lords who have contributed to the debate on my amendment, as well as on the amendment of my noble and learned friend Lord Hope of Craighead. A key word that was mentioned in the contribution by the noble Baroness, Lady Chapman of Darlington, was “compromise”. When my amendment passed at the last round of ping-pong, I asked Ministers whether we could talk about it and try to find a compromise wording that would satisfy the Government and the majority of Members of this House who supported the previous amendment; but no compromise was forthcoming. I thought that when you have a disagreement among reasonable adults, you talk it through and try to reach a compromise. That is not what the Government are trying to do, so I am left with little option but to test the opinion of the House.
I would also briefly like to thank the noble Baroness, Lady Jones of Moulsecoomb, for fulfilling her duty of making me look reasonable, so I thank her for that. I also thank the noble Baroness, Lady Parminter, for reminding us of the important fact that protecting our environment is of huge public concern. I am sure there will be noble Lords who will want to vote against my amendment, and I would like them to ask themselves whether they would be prepared to stand up in front of a television camera and explain to David Attenborough why they think it is not necessary for this Government to maintain our current standards of environmental protections. I wish to test the opinion of the House.
Lord Callanan
That this House do not insist on its Amendment 42B, to which the Commons have disagreed for their Reason 42C.
Lord Hope of Craighead
At end insert “, and do propose Amendment 42D in lieu—
“Parliamentary scrutiny
(1) This section applies to all regulations proposed to be made under section 15 by a Minister of the Crown which revoke any secondary retained EU law and –
(a) replace it with such provision to achieve the same or similar objectives, or
(b) make such alternative provision,
as a Minister of the Crown considers to be appropriate.
(2) Regulations referred to in subsection (1) may not be made (under the applicable provisions of paragraphs 7 and 8 of Schedule 4) unless a document containing a proposal for those regulations has been referred to a Committee of the House of Commons, together with a statement by the Minister of the Crown which explains why the Minister considers the replacement or the alternative provision proposed, as the case may be, is appropriate, and the other requirements of this section have been met.
(3) If the Committee reports that special attention should be drawn to the proposed regulations in question, then subsections (4) to (8) apply.
(4) A Minister of the Crown must arrange for the proposal for the regulations to be debated on the floor of each House within the relevant period referred to in subsection (5).
(5) The relevant period is a period of 60 days beginning with the day on which the proposal and the corresponding statement were referred to the Committee, not including any period during which Parliament is dissolved or prorogued or either House is adjourned for more than four days.
(6) The Minister making the regulations must have regard to any resolution of either House and to any recommendations by the Committee made during the relevant period.
(7) If, after the expiry of the relevant period, the Minister making the regulations wishes to make an instrument in the terms of the proposal (under the applicable provisions of paragraphs 7 and 8 of Schedule 4), the Minister may do so only if the proposal for those regulations is approved by a resolution of each House of Parliament.
(8) If, after the expiry of the relevant period, the Minister making the regulations wishes to make an instrument in the terms of a revised version of the proposal (under the applicable provisions of paragraphs 7 and 8 of Schedule 4), the Minister must lay before Parliament a document containing the revised proposal for the regulations together with a statement of the changes proposed and may make an instrument in the terms of the revised proposal only if the revised proposal is approved by a resolution of each House of Parliament.
(9) The Committee may, at any time before the regulations are laid in draft or made (under the applicable provisions of paragraphs 7 and 8 of Schedule 4), recommend that they should not be proceeded with.
(10) Where a recommendation is made by the Committee under subsection (9), the regulations may not be laid in draft or made unless the recommendation is rejected by a resolution of the House of Commons.””
Lord Hope of Craighead (CB)
My Lords, I am grateful to all noble Lords who spoke to my Motion B1. I have only one comment to make, which is that the noble Lord attributed to me a state of knowledge that I simply do not recognise. It is not my intention to frustrate the intentions of the Government in any way; my amendment is all about the issue of principle to which the noble Lord, Lord Pannick, referred—it is a crucial instrument. That being the point, I beg to test the opinion of the House.
Economic Crime and Corporate Transparency Bill
Tuesday 20th June 2023
(10 months, 3 weeks ago)
Lords ChamberRead Full debate Economic Crime and Corporate Transparency Act 2023 View all Economic Crime and Corporate Transparency Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL 138-I(a) Amendments for Report (Supplementary to Marshalled List) - (20 Jun 2023)
17:50 - Division on Amendment 16 - Ayes: 218 / Noes: 175 - Amendment 16 agreed.
19:14 - Division on Amendment 72 - Ayes: 172 / Noes: 153 - Amendment 72 agreed.
19:29 - Division on Amendment 73A - Ayes: 171 / Noes: 151 - Amendment 73A agreed.
Lord Johnson of Lainston
Member’s explanatory statement
This brings the wording of objective 3 into line with objectives 1 and 2.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, before we begin proceedings, I draw your Lordships’ attention to my interests as set out in the register of interests, including as a director and person with significant control of AMP Ventures Ltd, a person with significant control of Cigarkeep and as a shareholder of several other companies, including a previous shareholder and person of significant control of Somerset Capital Management. As I have set out before, I believe these interests serve only to increase my enthusiasm for this Bill to ensure that the UK remains the best place to start and grow a business while driving dirty money out of the UK. It is at the absolute core of this Government’s mission that we help legitimate business thrive.
I express my gratitude for the vast amount of engagement that has taken place since we concluded Committee in May, and the constructive way in which your Lordships have worked with me, my noble friend Lord Sharpe, my noble and learned friend Lord Bellamy, and all our exceptionally hard-working officials to ensure this Bill reaches its full potential. I am pleased that the Opposition Front Benches remain supportive of the intentions of the Bill and that they desire to ensure it works effectively. I am particularly grateful for the focus they have brought to bear on the drafting of the new objectives for the Registrar of Companies and for the constructive dialogue they have had with the registrar and me in recent weeks. I also give particular thanks to my noble friends Lord Agnew of Oulton and Lord Leigh of Hurley and the noble Lord, Lord Vaux of Harrowden, for their scrutiny of the Bill and their amendments on shareholder transparency, authorised corporate service providers and the register of overseas entities, which we will debate shortly.
Before I turn to the government amendments in this group, I briefly remind the House of the key principles of this Bill. It builds on last year’s Economic Crime (Transparency and Enforcement) Act, which contained key measures to help crack down on dirty money, including from Russia and other foreign elites abusing our open economy. That Act introduced reforms to the UK’s sanctions framework and to unexplained wealth orders and it provided for the introduction of the register of overseas entities.
Forming a key part of the wider government approach to tackling economic crime and sitting alongside the recently published economic crime plan, this Bill will further tackle economic crime, including fraud and money laundering, by delivering greater protections for consumers and businesses, boosting the UK’s defences, and allowing legitimate businesses to thrive.
I direct noble Lords to read the economic crime plan, if they have not already done so, as it contains a significant set of actions. Soon after the plan came out, our Home Office colleagues supplemented it with the launch of the new fraud strategy and in the coming months the Treasury will consult on the future of the anti-money laundering supervisory framework. These are relevant points because they fit within the debate today. My own department will conclude its review of the whistleblowing framework. This is a lot of activity and rightly so, because economic crime is a growing issue and affects people of all backgrounds and businesses large and small.
This Bill will make an immediate difference to real people. For example, we have discussed the problems of fraudsters creating companies using an individual’s or business’s personal details or address without their consent, including to obscure ownership and control of a company. Innocent citizens have been left seriously distressed by huge volumes of post for fake companies arriving through their letterbox and finding to their horror that their credit reference scores have suffered because they have been appointed a director of a debt-ridden company without their knowledge. The Bill introduces safeguards to put an end to these issues.
Elsewhere, the Bill provides vital new powers to underpin our law enforcement agencies; for example, over crypto assets, and to address corporate criminal liability. The powers supplement the £400 million package the Government have allocated to tackle economic crime over the spending review period, including support for the National Economic Crime Centre, reform of suspicious activity reporting and upgrading the Action Fraud service.
The Bill also supports our national security by making it harder for kleptocrats, criminals and terrorists to engage in money laundering, corruption, terrorism financing, illegal arms movements and ransomware payments. We have continuously sought to improve the Bill as it has progressed through Parliament. As noble Lords will know, the Government have tabled a number of significant amendments to be considered at Lords Report stage, including on strategic lawsuits against public participation, corporate criminal liability, the role of authorised corporate service providers and the transparency of information on trusts on the register of overseas entities. We believe these present a significant, meaningful package of measures that demonstrates that we have listened carefully to the concerns of this House.
Yet, throughout the passage of this Bill, it has also been essential to hold uppermost in our minds the fact that the vast majority of businesses are entirely law-abiding, and that the 350 or so pages of the Bill as it now stands and the dozens of secondary regulations which will follow it represent a lot for the business community to grapple with. The reforms in this Bill will touch every company in the country—nearly 5 million of them. The Government have worked very hard to ensure that, despite the length of the Bill, the burdens it will place on businesses are slight. As the FSB has tweeted today:
“The Economic Crime Bill must work for small businesses”.
The estimated net direct cost to the business community of the package of reforms to Companies House is less than £20 million a year. Indeed, these reforms will underpin systems changes that will improve the user experience for company directors. Elsewhere, the Home Office measures in Part 5 will reduce the reporting burdens on businesses, enabling the private sector to work with law enforcement more efficiently and effectively.
I am therefore extremely pleased that we have been able to maintain the support of the business community as the Bill has progressed. Indeed, the Institute of Directors very recently said:
“The UK is rightly seen as a country which champions high standards of business conduct. The IoD welcomes this legislation as a measure that will help maintain the integrity of the UK business system”.
However, that support cannot be taken for granted. As we reach the concluding phases of the Bill’s passage, I hope that noble Lords will work with the Government to ensure that what emerges is an Act which works for the law-abiding majority at a time when so many businesses and businesspeople are under strain. We are doing a great deal, and we need to bed it in and monitor how this will affect businesses before going significantly further.
Turning to the reforms in Parts 1, 2 and 3, which we will debate today and which are the responsibility of my department, I say that noble Lords will know that these measures will fundamentally change the role of Companies House, transforming it from a passive recipient of the data it receives to a proactive gatekeeper that upholds the integrity of the companies register—the most significant reform to the UK’s framework for registering companies in some 170 years. This, of course, means significant changes for Companies House as an organisation—to its systems, processes and culture. Investment in new capabilities is already under way, with a £63 million allocation to Companies House across the spending review period and the creation of some 400 new roles to ensure delivery of the registrar’s new objectives. Furthermore, through additional investment of up to £20 million of allocated spending on economic crime, new anti-money laundering intelligence teams are being created at both Companies House and its close partner the Insolvency Service to tackle the misuse of UK companies, corporate entities and property.
Having met with the registrar, Louise Smyth, several times in recent weeks—I express my gratitude to her and her team for their time; I am sure noble Lord will join me in doing so—I am convinced that she is well aware of both the challenges and opportunities this brings. These are transformative changes that will require a step change in the capabilities and practices of Companies House staff and its systems and users.
I hope that noble Lords who joined our session with the registrar and her team a fortnight ago share my conviction that the registrar and her team will rise to these challenges. Those who attended heard how, even before the reforms reach the statute book, Companies House is breaking new ground with HMRC, the National Crime Agency and others to maximise the power of its data to tackle criminality. The amendments we are about to debate get to the core of these changes.
I turn first to the government amendments in this group, starting with Amendments 1 and 2. The Bill introduces a wholly new set of objectives for the registrar. These are: to ensure that any person who is required to deliver a document to the registrar does so and that the requirements for proper delivery are complied with; to ensure that documents delivered to the registrar are complete and contain accurate information; to ensure that records kept by the registrar do not create a false or misleading impression to members of the public; and to prevent companies and others carrying out unlawful activities or facilitating others carrying out unlawful activities. These objectives were warmly welcomed across the House, as were the amendments tabled in Committee to broaden and strengthen the scope of those objectives.
However, in the interesting and lively debate we had on the subject in Grand Committee, it was apparent that a number of noble Lords felt we could have been more ambitious in the tone the registrar’s objectives set. Mindful of the need to strike a balance between that which is sensibly aspirational and what is simply unachievable, we have looked closely at the drafting once more.
I recall that the language of “ensuring” found your Lordships’ favour in the context of the first two objectives, concerning compliance and accuracy respectively. I trust, therefore, that the House will similarly support our amendment to replicate that language in objective 3, which is concerned with the risk of register records creating a false or misleading impression to members of the public. Instead of tasking the registrar “to minimise that risk”, the intention is that she will now have the more stretching objective “to ensure” that it does not happen. Furthermore, we understand the strength of feeling on the wording of the fourth objective and recognise that noble Lords wanted an alternative to “minimising” the extent of companies’ and others’ unlawful activities.
We have been cautious here for good reason, not wishing to subject the registrar to either unrealistic expectations or the risk of unnecessary legal challenge. However, following dialogue with the registrar, we have resolved to replace the wording
“minimise the extent to which”
with “prevent” in objective 4. I know that the noble Lords, Lord Coaker and Lord Fox, in particular, felt strongly about that point. I hope these amendments will be welcomed as a further demonstration both that we have listened to the views of the House and of the commitment on the part of both the Government and the registrar to improve the quality of register information and work proactively in combating economic crime.
I turn to government Amendments 46 to 48, 51, 54 to 56, 64, and 80 to 82. Companies legislation contains various regulation-making powers allowing the Secretary of State to delegate duties and functions to the Registrar of Companies. For efficient administration, there are instances where it is appropriate for such powers to allow the Secretary of State to confer on the registrar discretion as to how she discharges her statutory duties.
We have identified various new delegated powers within the Bill where such discretion would be beneficial to efficient delivery. The common thread linking them is that they determine, at a high level, how various statutory mechanisms for applications, notifications and appeals to the registrar shall be established through secondary legislation. Although we strive to establish the parameters of such mechanisms as precisely as possible, operational experience shows that sometimes being overprescriptive can hinder efficient administrative delivery.
The primary legislation is not consistent. In some cases, it allows the registrar discretion on all aspects of processes, in other cases only some aspects, and in others, none. These amendments will give the Secretary of State the ability to delegate consistent discretions. These will cover matters such as who she gives notice to when she exercises her powers, periods allowed for certain objections and what material is required to substantiate applications and objections.
Briefly, on government Amendment 40, the Bill provides the registrar with new powers to examine and query applications for company incorporation and restoration and verify certain information. Although it is expected that this will significantly improve the integrity of the register, it is inevitable that criminals will try and, in some cases, succeed in finding ways to circumvent these checks and file under false, deceptive or misleading pretences.
Existing powers, further enhanced by the Bill, allow for the removal of false information from the register—for example, directors’ names and registered office addresses. However, the circumstances in which the registrar can, by her own action, remove a company itself from the register through the process of strike-off are limited. She must be satisfied that the company is no longer operating and is effectively defunct. Forming that judgment and seeing the process to a conclusion is a relatively lengthy process, involving various statutory notification obligations.
It will be immensely beneficial for the registrar to be able to act more quickly than current processes allow. This amendment will allow the registrar to act expeditiously where there is reasonable cause to believe that the incorporation or restoration of a previously struck-off company is based on a false premise. This will mean that she can act much more quickly to expunge potentially fraudulent companies from the register.
Finally, this group contains several minor and technical amendments to Parts 1 and 2 to correct drafting errors or ensure that the drafting works properly—namely, government Amendments 3, 4, 18 and 38. Amendments 3 and 18 correct cross-references in Clause 4 and Schedule 2. Amendment 4 changes the definition of “the registrar” in Clause 30 so that it does not refer to the Companies Act—which is itself not defined. Amendment 38 corrects a mistake in Section 1082(1) of the Companies Act 2006 by spelling out that the power conferred by that subsection is exercisable by regulations—that this was always the intention is clear from the subsequent subsections.
In combination, these amendments will further improve the registrar’s objectives and powers, enabling her to better fulfil her new role. I therefore hope that your Lordships will support these amendments and I beg to move.
Lord Leigh of Hurley (Con)
My Lords, there seems to be a gap, so I will happily fill it. I remind the House of my declaration of interests in the register, which discloses that I am a director of a number of private and public companies, and I am a person with significant control of rather a large number of private companies that should really be consolidated, but there you are. Now that Companies House has made it easier, perhaps I shall do that.
I thank the Minister for the discussions that he has held with me and others between Grand Committee and today. I congratulate him on most of these amendments. It really shows that he and his colleagues have listened, and it is really pleasing to know that our House has contributed to improving this Bill in such a dramatic way, with so many government amendments to the Bill at this stage. Nearly all of them—if not all of them—are going to be welcomed by this House.
There are a few points and comments that I would like to make. We do not have the consistency point that I wanted in the objectives, but the proposals that the Government are making on the objectives are tremendous and will make a big difference to the quality of the Bill. On Clause 40, perhaps the Minister could explain—now or later—that if we are going to have a power to strike off companies registered on a false basis, what about those companies that submit accounts on a false basis? The clause addresses when the companies are created; it does not deal with—I do not think it does, unless it is dealt with elsewhere—those regular company accounts. Perhaps I have misunderstood, and the Minister could clarify.
I turn to my noble friend Lord Agnew’s Amendment 49; he has not had a chance to speak to it, so it is perhaps not right for me to comment on it. There is obviously going to be extra work to do this risk assessment, and I would not want the registrar to be let off the hook by just doing a risk assessment, so perhaps he could clarify that that was not his intention by inserting that clause.
I welcome the discretion that the registrar is given throughout the clauses, especially Clauses 54 to 56. I think that giving the registrar much more discretion is a very good thing. As a result, I would suggest, in advance of my noble friend Lord Agnew’s words, that his idea of a review is a very good idea because, if the registrar is going to be given this discretion and so much is going to happen, it would be helpful for us to see what is happening. We all remember how disappointing the unexplained wealth order legislation is in practice in that nothing much has happened. It would be helpful for us to have an annual or regular update on the implementation of this Bill when it is enacted.
Lord Agnew of Oulton (Con)
My Lords, I thank my noble friend the Minister for all the engagement and patience he has shown over the last few weeks and months, not just with me but with a wide congregation. We now have something that is much better than when it began its journey through the House, so I thank the Minister for that.
I am very pleased with two particular changes in this batch of amendments from the Government. First, that key, vital objective has been added for the registrar, so that it is absolutely crystal clear culturally for the organisation Companies House to know what it has to do. Added to that, giving her more discretion on how she delivers on that is very sound because, of course, it will be a mobile battlefield and she will have to be more fleet of foot.
Lastly—and I have said this before, but I think it is important that it goes on the record—we should not underestimate the extent of the cultural change needed in Companies House to move from being, as my noble friend said, a passive recipient of data to something far more dynamic and intelligent. That is why this reporting to Parliament—albeit with a sunset clause up to 2030—is really important to keep driving the momentum of that change. Every single employee of Companies House will need to be thoroughly retrained in this new mission.
Baroness Bennett of Manor Castle (GP)
My Lords, I apologise for my croakiness; the hay fever is definitely winning. I join others in welcoming, in these government amendments, that we have seen significant change since Committee. It is worth highlighting a couple of comments from the Minister’s introduction. He said that the aim of the Bill to drive dirty money out of the UK; I hope we can all agree that that is essential. He also said that we had seen so many people abusing our open system; I think we have to acknowledge that we invited those people in, and that that is the situation we created. We are now trying to fix it.
In that light, I very much welcome the fact that the Minister said that we need to see how these changes bed in before going significantly further. I want to make sure that we acknowledge, and see on the record, the fact that the Government have acknowledged that this is not enough, and that a lot more will need to be done, in what is, after all, as described by UK Finance,
“the fraud capital of the world”.
Lord Fox (LD)
My Lords, there are political Bills, where the House divides on political issues and argues among itself, and there are Bills of practical importance, when the House can come together and pull in the same direction. We will not all agree about everything, but the motives behind what we are proposing have been similar. In this case, it is about helping to clear up and clean up a bad situation, and to do so in the best possible way. The Minister and his colleagues, the noble Lord, Lord Sharpe, and the noble and learned Lord, Lord Bellamy, must be congratulated on their openness and their listening ears. They have not just listened but acted on what they heard, and we should all be grateful that we have moved in this direction.
I am pleased that I can agree with the noble Lords, Lord Leigh of Hurley and Lord Agnew, in their characterisation of these changes, which are important. I think the change to the mission of Companies House is absolutely fundamental. It is vital that it is there, and it then plays to the point made by the noble Lord, Lord Agnew, about the culture change, as well as, I think, giving the flexibility and understanding that—again, as the noble Lord, Lord Agnew, said—this is going to be a mobile struggle that we have to move forward.
This group of amendments is followed by other groups which are other examples of where listening has turned into positive changes. From these Benches, we are really pleased that we are moving in this direction, and are grateful that we have done that. As we have heard, the Bill is improving as a result. So we are very supportive of these measures, and continue to be supportive of the other measures that we will hear about later.
Baroness Blake of Leeds (Lab)
My Lords, I add my thanks to the Ministers for their regular updates, and the access we have had to their officials. The ability to meet the team from Companies House was particularly helpful and instructive. I too believe that we have a better Bill before us.
Having said that, we must not forget the scale and severity of the consequences of actions of bad actors, particularly the exposure of the public to fraud, nor the victims, who have suffered so appallingly over many years. As we know, the Ukraine war has brought all these issues to a head, necessitating a swift response. I thank everyone involved for responding positively to some of the many proposals that we have put forward.
I will refer particularly to Amendment 2, with regard to the fourth objective. It would be wrong of me not to mention the fact that the noble Lord, Lord Coaker, as has been mentioned, was very forceful in his views that the objective surely must be to prevent unlawful activities rather than to minimise them, as was the earlier wording. I also welcome the change to the third objective, and the increase in the ability of the registrar to strike off companies and take swift action. Again, I think that running through this is the emphasis on the ability to act quickly with clarity.
I acknowledge the amendments in the name of the noble Lord, Lord Agnew, which would bring in a framework of intervention criteria to assist the registrar, and particularly Amendment 57, which recognises the sheer scale of the task ahead of Companies House and seeks full, regular scrutiny. I want to put on record our concern about the sheer scale of the task ahead of Companies House and make it plain that we must communicate to everyone involved that there is a fallback position and that it can come back if the resources are not adequate for the job it has in hand. The scale of change it has to go through, from being a receiver of information to a proactive partner, is quite significant.
I again thank the Ministers involved for their openness and for having moved on a number of our suggestions.
Lord Johnson of Lainston (Con)
I am extremely grateful to all noble Lords who participated in this debate. I shall answer their questions in order.
The financial guru, my noble friend Lord Leigh of Hurley, pointed to Amendment 40. He is right that it does not specifically mention submitting misleading information—this is related specifically to the filing of accounts—but I believe that the Companies Act enables the Secretary of State to issue a winding-up order if there are materially inaccurate filings in the accounts. I am happy to write to him specifically on that issue.
I am grateful to my noble friend Lord Agnew for his comments. I am extremely pleased to come back to the noble Baroness, Lady Blake, about the objectives. We had long and specific discussions about the difference between the words “minimise” and “prevent”. I think the House understood clearly from my approach that I was being carefully guided by our legal advisers. It is right that we should be, and it is also right that we found a word that would be suitable in how the noble Baroness saw the Bill being presented. We want to make sure that we get the language right. It is important that we have remained in our current function to ensure that there is flexibility for the registrar to perform her duties while at the same time sending the appropriate signal.
The noble Baroness, Lady Bennett, rightly commented on the need to continue to review the situation as we see it. I hope that the noble Baroness has been reassured by my attitude to the Bill as it has progressed through the stages in this House. My point was to ensure that we do not deluge businesses with unnecessary obligations at this stage before we know how this process will transpire. I am also very aware of the dangers of being too prescriptive. Technology changes and the activities of criminals change, and it is important that we assess the situation as it stands and work out how to ensure that we can confront those challenges as and when they arise.
I turn specifically to the amendment tabled by my noble friend Lord Agnew, Amendment 57. Reporting by Companies House is an extremely important element of its activities, and I agree that it is important that Parliament is informed about the implementation and delivery of the reforms that we are undertaking. That is why the Government brought forward an amendment in the other place to that effect, which is now Clause 187. I am aware of the comments made about the cultural and operational changes linked to Companies House’s new responsibilities. I hope that through meeting the registrar we felt a sense of reassurance that the head of investigations is extremely dedicated to his task. We believe that the amount of money we are applying to Companies House and the fees, which we will discuss later, will amply cover expenditure, and could be increased if necessary. It is up to Companies House to ensure that it presents to the Government its funding requirements to ensure that it can do its job and perform its tasks.
It might be helpful for me from the Dispatch Box to go through some of the points formally so there is a record of what we expect Companies House to report when it has finished reporting on what it is intending to do—the inputs—and then turn our attention to the outputs, which is the difference between what it is obliged to report to Parliament for the first three years of operation, I think, and what we then expect to be business as usual.
From the discussions with Companies House to date, I can commit that, subject to the successful implementation of the necessary information systems, early reports will cover items such as: the number of documents rejected for not being properly delivered or for a discrepancy; rejected incorporations and name changes; the number of documents removed from the register for being inaccurate, incomplete or fraudulent; and the number of times the querying power is used and the resulting actions taken by Companies House. We are also looking into how we might report on the number of times Companies House has shared data with other organisations and vice versa. I would be happy to explore with Companies House officials how they might incorporate some of the new items in this amendment into its reporting without the need for this statutory requirement, and of course we listen to all sides of the House about other areas where noble Lords feel it would be beneficial for Companies House to report.
Lord Johnson of Lainston
“Objective 4 is to prevent companies and others from—(a) carrying out unlawful activities, or(b) facilitating the carrying out by others of unlawful activities.”Member’s explanatory statement
At the moment the registrar’s fourth objective is to minimise the extent to which companies and others carry out unlawful activities etc. This amendment makes it an objective to prevent companies and others from carrying out unlawful activities etc.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment corrects a cross-reference in Clause 4 of the Bill.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment changes the definition of “the registrar” so it does not refer to the Companies Acts (which is itself not defined).
Lord Johnson of Lainston
Member’s explanatory statement
This amendment makes it clear that a person who is subject to director disqualification sanctions will be so subject both for the purposes of section 11A of the Company Directors Disqualification Act 1986 and for the purposes of Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002.
Lord Johnson of Lainston (Con)
My Lords, the amendments in this group relate to the new director disqualification sanctions measure introduced in Committee. This measure created a completely new type of sanction in the Sanctions and Anti-Money Laundering Act 2018 called director disqualification sanctions. It will be unlawful for a designated person subject to this new measure to act as a director of a company. I welcome the support this measure received from this House in Committee.
Government Amendments 5 to 11 address some technical drafting concerns raised by Northern Ireland officials. The amendments clarify that the definition of a
“person who is subject to director disqualification sanctions”
encompasses disqualification for the purposes of the Company Directors Disqualification Act 1986, which applies in England, Wales and Scotland, and the Company Directors Disqualification (Northern Ireland) Order 2002, which applies in Northern Ireland. This does not alter the legal consequences of the measure but simply clarifies that the definition relates to both Great Britain and Northern Ireland legislation.
The amendments also make clear that the Department for the Economy in Northern Ireland will now be required to maintain information about individuals subject to the new director disqualification sanction in the department’s register of disqualified directors. This mirrors the requirement for the Secretary of State to update the UK-wide director disqualification register, ensuring consistency between GB and NI legislation.
Lastly, these amendments clarify when a designated person, or a person acting on the instructions of a designated person, is responsible for the debts of a company. The current drafting does not address the liability of a third party who acts on the instructions of a designated person. These amendments therefore specify the circumstances in which a third party acting under instructions from a designated person may be liable and clarifies the defences that may relieve the designated person or the third party from personal liability.
The amendments mean that a person will not be responsible for debts incurred when they could not reasonably have known they were subject to director disqualification sanctions. And a third party who acts on instructions that were given by a person who they did not know was subject to director disqualification sanctions, or who they reasonably believed was acting under the authority of a licence, will similarly not be responsible. As a package, these amendments improve the coherence of the new director disqualification sanctions measure.
Government Amendments 52 and 53 amend Clause 101 of the Bill, which inserts new Section 1132A into the Companies Act 2006. Government Amendment 83 inserts into the Bill after Clause 169 a new clause which amends Section 39 of the Economic Crime (Transparency and Enforcement) Act 2022. Both new sections allow the Secretary of State to make regulations which confer power on the registrar to impose a financial penalty on a person if satisfied, beyond reasonable doubt, that the person has engaged in conduct amounting to an offence. These amendments align the drafting with the drafting of Clause 202 of this Bill, which inserts new Section 17A into the Sanctions and Anti-Money Laundering Act 2018. These amendments mean that regulations must provide that no financial penalty may be imposed on a person in respect of whom criminal proceedings are ongoing, or if a person has been convicted of an offence. At the moment, it is the other way around, so criminal proceedings cannot be continued once a penalty is imposed. This is clearly unhelpful, as without amendment, prosecutors’ discretion to prosecute could be infringed upon.
Government Amendment 50 relates to the setting of Companies House fees. It will allow the Secretary of State to take into account additional costs incurred, or likely to be incurred, in relation to the new disqualified directors sanction which the Bill is introducing. Specifically, this amendment will ensure the costs of delivering the licensing function for this sanction can be covered by Companies House fees. Without this amendment, the costs of this licensing regime would fall on the taxpayer. We have made great strides through this legislation to require those that benefit from incorporated status to contribute towards maintaining the integrity of the register and a healthy business environment. It therefore seems reasonable for this to extend to the funding of the licensing regime that enables sanctioned directors to remain compliant and continue lawfully to carry out certain activities within the limitations set out in the licence.
I hope noble Lords will support these amendments. I beg to move.
Lord Fox (LD)
My Lords, again this is a group of amendments with which we can thoroughly agree, which is a nice position to be in. Government Amendments 5 to 11 speak for themselves in the sense of tidying up the situation in Northern Ireland. The one amendment that is worth dwelling on a little bit is government Amendment 50, which gets to the point around resources and having sufficient resources for Companies House to be able to do what it needs to do.
There is a certain irony that, if the Companies House team is successful, there will be fewer companies on the register. So one of the things they will need to consider about fees is that they will be reducing the number of companies or the amount of income that will come per company. One of the issues in setting them is that, if estimates of 5% of companies being fraudulent are right, there will be 5% fewer companies paying the annual renewal. Some people, and some organisations, put that number much higher, so I suggest that the Government think about the success that Companies House will hopefully have in order to set a fee that does not become self-defeating if it removes companies.
The more companies the team removes from the register, the less money Companies House receives in annual renewal. That is the point I am making. I am assuming that this number will come quite soon after this Bill becomes an Act, and it would be useful for the Minister to update us on when we think the secondary legislation will come, because, clearly, Companies House and others will rely on this money for planning ahead. I am assuming the money goes to Companies House and not the Treasury, but perhaps the Minister could confirm that.
If the Minister could say a little around the operation of Amendment 50, that would be helpful—so that I understand it even if everybody else already does. He could say a little about how much money and how changeable it will be in the event that more money is needed to support the drive to remove criminality from our companies. I think that everything else is broadly very welcome.
Lord Ponsonby of Shulbrede (Lab)
My Lords, we agree with all the amendments in this group. This group is all government amendments which make minor changes to ensure that penalties align with previous legislation, that they are taken into account when setting fees and that penalties do not stop criminal proceedings, as the noble Lord explained introducing the amendments.
I take the point the noble Lord, Lord Fox, made about Amendment 50. I presume fees can be updated as the situation evolves regarding the number of companies on the register. Nevertheless, we support this group of amendments and look forward to the Minister’s response to the questions asked by the noble Lord, Lord Fox.
Lord Johnson of Lainston (Con)
As always, I am extremely grateful to noble Lords for their interventions and the points raised in debate.
I turn to government Amendment 50. It is not a technical point, but it would not, in my view, be a point of significant consequence. It is just to ensure that when the Secretary of State has a licensing regime for directors who have been disqualified but whom she may require to perform a director’s duties, such as winding up a business—it is practical to allow disqualified directors in some instances to perform certain functions—the cost for administering that process is met by the fees. I do not imagine that would be a significant component of the Companies House fees. This is a tidying-up point more than anything else. It just means that the taxpayer does not have to pay the bill. If I am wrong in my expectations, I will certainly correct that for the House, but I do not think that is the case. It is a technical point.
We have discussed at great length what we feel the Companies House fees should be. I do not think there is a single similar opinion; every noble Lord in this House has a different view on the exact amount to the nearest 50p it should cost to register a company and to reregister it or confirm the registration each year. The fact is that Companies House now has a licence to propose its budget, which must be agreed. That budget will be met through the fees charged to companies using its services.
The noble Lord, Lord Fox, raised a good point. It is anticipated that some companies will leave the register. I hope that there will not be a significant number of companies forced to leave the register because they are not legitimate companies, but it is right that this investigative power will encourage those companies that should not be on the register to leave. The quantum of the number of companies—I think there are nearly 5 million companies—at any reasonable fee rate, which the discussions established is between £50 and £100, would allow there to be ample funding for Companies House.
To answer the question the noble Lord, Lord Fox, asked about what happens to any excess money raised by fees, there is only one place excess money raised by anything in this great nation of ours goes: His Majesty’s Treasury. We would clearly wish to avoid that. We would rather make sure that the fees were set at the right level.
To end on a serious note, we are not looking to have a fee rate. This is why the Government have been careful not to hypothecate fees for Companies House activity with other activities. It is not right, in our view, to charge legitimate businesses excess amounts of money to cover other things unrelated to their Companies House registration. We have tried to set this in the right fashion. I think this will result in the right outcome. I hope very much that the House will support what are seen as largely technical amendments.
Lord Johnson of Lainston
(i) the instructions are given by a person whom they know at that time to be subject to director disqualification sanctions (within the meaning of section 11A),(ii) the giving of the instructions does not fall within any exception from section 11A(1) created by virtue of section 15(3A) of the Sanctions and Anti-Money Laundering Act 2018, and(iii) the instructions are not authorised,(but see subsection (3A)).”Member’s explanatory statement
This amendment ensures that a person who acts on instructions that were given by a person that they did not know was subject to director disqualification sanctions would not be responsible for all of the relevant debts, and is otherwise consequential on my amendment to page 27, line 16.
“(f) after subsection (3) insert—“(3A) But—(a) a person who is subject to director disqualification sanctions (within the meaning of section 11A) is not personally responsible under subsection (1)(a) for any relevant debts of the company incurred at a time when the person did not know and could not reasonably have been expected to know that they were subject to director disqualification sanctions;(b) a person is not personally responsible under subsection (1)(c) for any relevant debts of the company incurred at a time when the person reasonably believed that the instructions were authorised.”;(g) after subsection (5) insert—“(6) Subsection (7) applies where a person (“P”) at any time—(a) was involved in the management of a company, and(b) acted on instructions where—(i) the instructions were given by a person (“D”) whom P knew at that time to be subject to director disqualification sanctions (within the meaning of section 11A),(ii) the giving of the instructions did not fall within any exception from section 11A(1) created by virtue of section 15(3A) of the Sanctions and Anti-Money Laundering Act 2018, and(iii) the instructions were not authorised,unless P reasonably believed at that time that the instructions were authorised.(7) For the purposes of this section P is presumed, unless the contrary is shown, to have been willing at any time thereafter to act on any instructions given by D.(8) For the purposes of this section instructions are “authorised” if they are given under the authority of a licence issued by virtue of section 15(3A) of the Sanctions and Anti-Money Laundering Act 2018.”” Member’s explanatory statement
This amendment means that a person is not responsible for debts incurred when they didn’t know they were sanctioned, or they reasonably believed they were acting on instructions under a licence. A person who acts on instructions given by a sanctioned person is presumed to be willing to do so thereafter.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment makes it clear that a person who is subject to director disqualification sanctions will be so subject both for the purposes of section 11A of the Company Directors Disqualification Act 1986 and for the purposes of Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002.
(i) the instructions are given by a person whom they know at that time to be subject to director disqualification sanctions (within the meaning of Article 15A),(ii) the giving of the instructions does not fall within any exception from Article 15A(1) created by virtue of section 15(3A) of the Sanctions and Anti-Money Laundering Act 2018, and(iii) the instructions are not authorised,(but see paragraph (3A)).”Member’s explanatory statement
This amendment ensures that a person who acts on instructions that were given by a person that they did not know was subject to director disqualification sanctions would not be responsible for all of the relevant debts, and is otherwise consequential on my amendment to page 28, line 47.
“(f) after paragraph (3) insert—“(3A) But—(a) a person who is subject to director disqualification sanctions (within the meaning of Article 15A) is not personally responsible under paragraph (1)(a) for any relevant debts of the company incurred at a time when the person did not know and could not reasonably have been expected to know that they were subject to director disqualification sanctions;(b) a person is not personally responsible under paragraph (1)(c) for any relevant debts of the company incurred at a time when the person reasonably believed that the instructions were authorised.”;(g) in paragraph (5), in the closing words, after “given” insert “by”;(h) after paragraph (5) insert—“(6) Paragraph (7) applies where a person (“P”) at any time—(a) was involved in the management of a company, and(b) acted on instructions where—(i) the instructions were given by a person (“D”) whom P knew at that time to be subject to director disqualification sanctions (within the meaning of Article 15A), (ii) the giving of the instructions did not fall within any exception from Article 15A(1) created by virtue of section 15(3A) of the Sanctions and Anti-Money Laundering Act 2018, and (iii) the instructions were not authorised,unless P reasonably believed at that time that the instructions were authorised. (7) For the purposes of this Article P is presumed, unless the contrary is shown, to have been willing at any time thereafter to act on any instructions given by D.(8) For the purposes of this Article instructions are “authorised” if they are given under the authority of a licence issued by virtue of section 15(3A) of the Sanctions and Anti-Money Laundering Act 2018.””Member’s explanatory statement
This amendment means that a person is not responsible for debts incurred when they didn’t know they were sanctioned, or they reasonably believed they were acting on instructions under a licence. A person who acts on instructions given by a sanctioned person is presumed to be willing to do so thereafter.
“(5) In Article 22 (register of disqualification orders and undertakings), in paragraph (3), after sub-paragraph (c) insert—“(d) persons who are subject to director disqualification sanctions within the meaning of Article 15A;(e) any licences issued by virtue of section 15(3A) of the Sanctions and Anti-Money Laundering Act 2018 that authorise such a person to do anything that would otherwise be prohibited by Article 15A(1).””Member’s explanatory statement
This amendment ensures that the register of disqualification orders kept by the Department for the Economy in Northern Ireland includes details of persons who are subject to director disqualification sanctions and any licences that allow those persons to act in Northern Ireland.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment means that only non-traded companies are required to keep old information about their members (eg old addresses).
Lord Johnson of Lainston (Con)
My Lords, before we turn to the amendments tabled by my noble friend Lord Agnew of Oulton and the noble Lord, Lord Vaux of Harrowden, I shall briefly outline government Amendments 12, 13, 14 and 15 in this group. Clause 46(4) amends Section 113 of the Companies Act 2006, including by inserting new subsection (6A). This will require all companies to retain information about a member in their register of members where it changes, and to note the date on which the information changed and was entered into the register by the company. The requirements apply only prospectively, not retrospectively. The government amendments target the scope of this requirement, so it applies only to non-traded companies, to ensure that excessive burdens on traded companies with large numbers of shareholders are avoided.
However, these amendments do include a power for the Secretary of State to make regulations which allow for a full or partial reversal of this scope restriction, allowing this requirement to retain old information and note the dates of changes to also be applied in future to traded companies, should it be judged to be useful and proportionate. In considering all the amendments in this group, I remind noble Lords that the UK already has one of the most open and accessible shareholder registers in the world. Disclosure of shareholder information is far from a global norm. In fact, the UK is one of relatively few international countries to have any publicly available shareholder information for companies not listed on its stock exchange. Noble Lords will know that many countries do not even disclose major shareholders or beneficial owners publicly.
The UK led by example with its public register of PSCs. We were the first G20 nation to institute such a register, back in 2016, and we have been a strong voice ever since in promoting the importance of collecting and sharing beneficial ownership information. Numerous jurisdictions, including the EU, the US and Australia, have been influenced by our approach. But a responsible Government must weigh carefully the benefits of further transparency regulations, and the inevitable rules, forms and penalties that would follow, against the costs and impact. The Government support the publication of accurate and useful shareholder information and we are one of the most open countries in the world in this respect—but do we need to go further, and if so how far? What really are we seeking to achieve?
There are over 10 million shareholders of UK companies. At a time when this Government are looking to reduce regulatory constraints on business, even small cost changes to shareholder obligations could very quickly add up to a large drag on our economy. I ask noble Lords to reflect carefully on the value of the amendments we are about to discuss. I beg to move.
Lord Vaux of Harrowden (CB)
My Lords, I shall speak to the amendments in this group in my name, Amendments 16 and 17. I should remind the House of my interest in the register as a non-practising member of the Institute of Chartered Accountants in England and Wales. I also take the opportunity, since it is the first time I have spoken so far, to thank the various Ministers and their officials, and indeed the registrar and her staff, for their constructive engagement and the generosity they have shown with their time. The engagement process on the Bill has been exemplary. We are helped by the fact that this is generally agreed to be a fundamentally good Bill: we are all on the same side here, just trying to ensure that it is as good as it can be.
These two amendments are designed to improve the transparency of ownership of our companies, to ensure we know who really owns or controls them. I remind the House of the words of the Minister at Second Reading:
“The use of anonymous or fraudulent shell companies and partnerships provides criminals with a veneer of legitimacy and undermines the UK’s reputation as a sound place to do business”.—[Official Report, 8/2/23; col. 1250.]
I think we all agree with that.
One of the classic ways to hide the real ownership of a company is through the use of undisclosed nominee arrangements, where a shareholder is named on the register but is in fact holding the shares on behalf of another person. At present, while the company must try to identify any persons with significant control, or PSCs, according to the guidance, all it really needs to do is look at its shareholder register: if there is no shareholder with 25% or over, it can reasonably conclude that there is no person of significant control. For example, if a company has five shareholders, each with 20%, the company can reasonably conclude that there is no person with significant control that needs to be named or verified.
However, what if those five shareholders were in fact holding the shares on behalf of a single third party? That third party would then control 100%. There is an obligation under the PSC rules for that third party to tell the company, but a dishonest actor probably would not do so. The problem is that there is no obligation for the person who is acting as the nominee to disclose that fact, which makes it far too easy for a dishonest actor to hide their identity. The company has the right to ask the nominees, but, remember, the company in my example is controlled by the dishonest actor—so it will not do that. If it is asked, it can point to the fact that it has followed the guidance, having checked its register and not found anyone with a share of 25% of more. In fact, all the dishonest actor has to do to hide their ownership is find five willing people who are prepared to have their name on the shareholder register and hold the shares on behalf of the dishonest actor. There is no comeback for these nominees. They have no obligation to disclose.
Where does one find five such willing people? I suggest that noble Lords would find it interesting to google “nominee shareholders”. They will find pages and pages of businesses that will do this, with few questions asked, for around £200 to £300 a year. They advertise specifically that the nominee service is for the purpose of hiding the true identity of the shareholder. In passing, it is worth saying that many of the people offering such services are the same people who will be the authorised corporate service providers and will carry out the ID verification under this Bill. That introduces an interesting conflict, but I stress: under the current proposals, these people will be doing nothing wrong.
Amendment 16 aims to close this loophole by making it a requirement for shareholders to state, as well as their name and address, whether they are—or, importantly, are not—acting as a nominee. If they are acting as a nominee, they would have to provide the name and address of the person on whose behalf they are holding the shares. I said that it was important that they should state that they are not holding the shares on behalf of someone else; that is because they would then have to lie actively if they are a nominee but do not disclose it. I believe that there is a real difference between lying actively and just keeping quiet passively—that is, turning a blind eye, as has happened all too often in the past.
This simple step of making people declare whether they are a nominee should make it much more difficult for dishonest actors to find people willing to act as nominees. They will need to find someone who is willing actually to lie on the record rather than just to keep quiet. Having this information will make it much easier for companies to identify hidden PSCs. Knowing which shares are held by nominees will also assist Companies House and organisations such as Transparency International to focus their attention where the risk is greatest.
We have heard the Minister telling us that we have to be careful not to create too great a burden on legitimate businesses. I agree with him, but I do not think that this would do that. Shareholders already have to provide their name and address. I struggle to understand why it would add any material extra burden to have to make a simple declaration—perhaps even as simple as ticking a box—and to provide the details of the actual beneficial owner. I really do not see that as adding any significant additional effort. In any event, there are significant benefits that arise from a company structure; it really cannot be too much to ask that the beneficial owner of the shares is disclosed in return for having those benefits.
I turn now to my second amendment in this group, Amendment 17. The Bill introduces a welcome identity verification requirement for persons with significant control, but that applies only to shareholders who own 25% or more. I should say that I know the Minister will correct me on that point, because it also applies to those who might have below 25% of the shares but otherwise exert control. He would be right, but in practice the 25% level is the driver. As my previous example shows, it is quite easy to structure a company so that there is no apparent 25% shareholder. There is certainly a legitimate debate to be had over where the correct level to trigger identity verification should lie, but I do not hear many people arguing that it should be as high as 25%.
Amendment 17 would reduce the level to require identity verification from 25% to 5%. Why 5%? There are a number of precedents. For UK listed companies, 3% shareholdings must be disclosed, with an exemption for fund managers, who must disclose at 5%, so 5% is deemed of sufficient importance for all listed companies to disclose. The rules around entrepreneur relief, which gives a reduction in capital gains tax payable on a disposal, state:
“A company is your personal company if you hold at least 5% of the ordinary share capital and that holding gives you at least 5% of the voting rights in the company”.
So tax rules consider that 5% gives sufficient influence for the company to be treated as your personal company, and there is a high degree of consistency supporting a 5% level. As I say, though, there is potentially a debate to be had about that level.
Again, I am sure we will hear that we should not create an undue burden on innocent parties, so let us consider the impact of that. I understand that the average number of shareholders for UK companies is two, so for the average company the amendment would create no additional burden; they already have to verify the identity of their shareholders. It would apply only where a more complex shareholder structure has been created with a greater number of shareholders. Yes, it would create a little more work for them, but in fact it would only increase the maximum number of ID verifications required by a company from a maximum of four to a maximum of 20, which should be easily manageable. We are not talking about companies having to verify hundreds of IDs.
Both these amendments would make a significant difference to the transparency of the register, helping to ensure—to get back to the Minister’s words that I referred to earlier—that we make it more difficult for criminals to use anonymous or fraudulent shell companies. I will listen carefully to what he has to say in response, but I give notice that I intend to divide the House on at least Amendment 16 unless he is able to provide very strong assurances.
Lord Agnew of Oulton (Con)
My Lords, I support Amendments 16 and 17 from the noble Lord, Lord Vaux. I shall also speak to my Amendment 19.
I do not want to repeat everything that the noble Lord has said, but I received a letter from my noble friend the Minister yesterday on this subject that included the subheading, “Transparency over shareholders and nominees”, and one of the arguments that the Government are making is that this could cause a significant cost to the economy. We have just heard from the noble Lord, Lord Vaux, that that is, frankly, a fantasy; if the average number of shareholders per company is two—perhaps the Minister could confirm that, but it is certainly my instinctive understanding—then what is the cost?
In any case, that should be put against the cost to the economy of the fraud and economic crime that is happening at the moment at an increasing rate. We have endlessly reminded ourselves that 40% of all crime in this country is now economic crime. I know from my time in government that the loss to fraud in government alone each year—this is the bottom-end estimate by the NAO—is £30 billion, and a lot of that is facilitated through the holes in the Companies House structure. I urge the Minister to think hard about this because it is a great opportunity, at minimal cost to the economy or to business, to make a substantial change.
Lord Fox (LD)
I shall speak to Amendment 16, to which I have added my name, and I support the noble Lord, Lord Vaux, in his clear outline as to why this is an elegant solution. It is so because it would push the onus on to the supplier of the service and make them decide whether to lie or tell the truth. A lie detector, in a sense, for dishonest actors is a very good way of exposing this practice. It is not unreasonable to know who is behind a company; in fact, it is perfectly reasonable that we should.
Amendment 17 from the noble Lord, Lord Vaux, also contains an important point: at what point does the cut-off come? It will be interesting to hear what the Minister has to say about the continuum between 25% and 5%. The Government have chosen 25%, which is a very large number when you think about it. The numbers breakdown given by the noble Lord, Lord Vaux, is clear that it would not mean that a huge number of people had to be identified, even if his suggestion of 5% was adopted by the Government.
If the noble Lord chooses to move Amendment 16 then it is safe to say that we on these Benches will support it, and we will wait to hear what the Minister has to say on other matters.
Baroness Blake of Leeds (Lab)
I thank the Minister for his comments on the government amendments. We support Amendments 16, 17 and 19. They would significantly help improve the integrity of the register. This issue has been raised in amendments throughout the passage of the Bill. While we welcome many of the other changes that the Government have made and the manner in which they have collaborated with colleagues to make the Bill stronger, the issue of nominees represents a weak point in the Bill. We must know which bad companies and actors are acting fraudulently in order to fight fraud, corruption and economic crime.
A point that has repeatedly been made is that, as things stand, shareholder information is incomplete. It is difficult to identify the real owners of certain companies, which reduces the reliability of shareholder information published by Companies House, which we are all determined to improve. That undermines the corporate register as a whole.
As I said, we support Amendments 16, 17 and 19. I was struck by the comments of the noble Lord, Lord Agnew, about the cost of fraud to the economy, which we need to keep front of mind when we are told to be concerned about the cost of putting these measures in place. I confirm that, if the noble Lord, Lord Vaux, is minded to test the opinion of the House on Amendment 16, these Benches will support him.
Lord Johnson of Lainston (Con)
I thank the noble Lord, Lord Vaux of Harrowden, and my noble friend Lord Agnew of Oulton for their amendments. If noble Lords allow me to, I will just set the scene.
We have made some significant advances in understanding who is behind a company and who is running these organisations, which is at the core of these measures. By understanding who the people with significant control are, we will be able to crack down on crime and the dirty money going through the system. That is at the core of it, as far as we are concerned; any other changes around that are fundamentally peripheral.
On a comment made by the noble Lord, Lord Vaux, a nominee is obliged to declare if they acting on behalf of a person with significant control, as is the company collecting the data. If they are acting as a nominee in a collective way to achieve a threshold of 25% or above, or acting as a person of significant control, that nominee has to declare themselves a person of significant control. There is no additional benefit from changing the rules to see how people who stand as nominees are listed as such. It is important for me, for Companies House, for this Government, for the House and, frankly, to reduce crime with this Bill to understand who is behind the companies, and these measures do that.
My concern, if we try to track every move, is that we will bring into the criminal and penalties regime a large number of people who do not necessarily know that they have to register—for example, if they are a registered nominee on behalf of a very small shareholder. We are concerned that we may go too far at this stage. We need to see how the work that Companies House does develops before expanding the regime.
I stress that the work that we have done on PSCs is at the core of the Bill. Most of the government amendments reframe the existing PSC information gathering and disclosure rules to make them clearer and to work more effectively with a centrally held PSC register. This may be covered a little later, but it is worth noting that it is not necessarily for the company to hold the register of PSCs any more; the registrar will now hold this information centrally.
The amendments we are proposing make provision to require more information to be provided by UK companies concerning the transparency of their ownership, including full explanations to be given by companies which claim they are exempt from the PSC requirements, and for notifications to be made to the registrar where a company believes it has no PSC. That is a relatively unique point but it is certainly possible, and so the company has to then explain why it has none. Every company will have a person of significant control listed and registered de facto; if it does not, it will have to explain why that is the case.
My noble friend Lord Agnew rightly pointed out that the average number of shareholders is two—I think it is actually 2.2. If you look at the 4.8 million or so companies that are registered and add up the numbers of companies with one, two or three shareholders, from memory—no doubt my officials will correct me—you would account for 80% of all companies, at around 4.1 million or 4.2 million. Some 3.7 million companies are held by one shareholder, who will automatically be a person of significant control. If you have two shareholders, the assumption is that you will probably have two shareholders with significant control, and so on. You are looking at a relatively small number of shareholders in the 10 million or so shareholders of the 4.8 million or so companies who would not necessarily fall, specifically and immediately, without debate, into the PSC legislation.
I turn to Amendments 19 and 16, put forward by my noble friend Lord Agnew and the noble Lord, Lord Vaux. I have some specific text about the improvements we are going to make to the Bill, and I will read it out to make sure I get the wording right on what we believe we can take to Third Reading. I stress that we welcome greatly the work we have done in this area, and I hope the noble Lord, Lord Vaux, sees the spirit with which I have entered into the debate, particularly around the issue of classifying who is a nominee and who is not. The Government have great sympathy with the intention around that, and I will come on to talk about it in a moment.
As I say, these amendments are not ones that we would be keen to accept. I do not believe they achieve their intent, and they risk disproportionate burdens on legitimate actors and Companies House. The Government considers that further amendment is not warranted because the provisions in the person with significant control framework already require the whole process of disclosure of a PSC behind a nominee. To reaffirm, if a nominee does not declare that they are acting on behalf of a PSC, or becomes a PSC on account of their nominee holdings, then they are committing an offence. I believe the company is also required to collect the information, so there are a number of tiers around this structure.
I emphasise to noble Lords one more time how the existing requirements achieve what we in this House want to achieve. Where a company sees that it has a shareholder with over 25% of the shares or voting rights, or otherwise knows or has reasonable cause to believe the shareholder may fall under the definition of a PSC, the company is obliged to check with the shareholder whether they are in fact a PSC, and the shareholder is obliged, on pain of criminal sanction, to respond.
It is worth mentioning to the House that we talk at length about the 25% threshold but, as the House well knows, a person with significant control can own one share in a shareholding of a billion shares and would still be registered as the PSC if they controlled the business. This legislation is quite well crafted, if I may say so, to ensure that we catch the people who are exercising control over these businesses.
I repeat that the shareholder is obliged, on pain of criminal sanction, to respond. If the person responds to deny that they are a PSC, despite meeting the share-ownership voting rights threshold for qualification, the implication is that they are holding the shares as a nominee for a PSC. Under the Bill, shares held by a person as nominee for another are treated as held by that other and not by the nominee for the purposes of assessing who a company’s PSCs are. That is an important point, and I hope it gives noble Lords some reassurance.
The Bill gives companies the power to require third parties to provide information about the PSC they are holding the shares for. The nominee commits an offence if they fail to respond or give a false statement in response. Amendments I will bring forward at Third Reading will make it easier to prosecute these offences—I will come on to this momentarily. The Government’s position is that it would not be proportionate to require all shareholders to state whether they are nominees or to provide information about who they are holding the shares for. If a company had cause to believe a minority shareholder knew who its PSCs were, the company already has the power to require the shareholder to provide that information.
If noble Lords’ proposals became law, they would be difficult to enforce effectively, and it is unlikely that bad actors would comply with the new requirements. This measure would create a large and expensive haystack with few, if any, needles to find inside. It would therefore serve only to impose new undue burdens on the law-abiding majority, which the Government are actively seeking to avoid. As several noble Lords heard directly from Companies House executives earlier this month, gathering more and more information on shareholders would risk diverting its resources away from material intelligence work and more harmful cases and into more administrative work. An important point to emphasise is that we want Companies House to focus on running an effective companies register and on catching the criminals who are abusing our system.
I am sure that noble Lords who have greater experience than me in this House—looking around, I cannot see one with less experience sitting on the Benches—will know that, if we make too prescriptive legislative statements for these operational entities, they can easily become distracted by the minutiae to try to get to the nth degree and, because of the implementation of the legislative processes placed upon them, not necessarily focus on the core tasks. I repeat again my sympathy and empathy with noble Lords putting these amendments forward. However, I am extremely concerned that they would place undue burdens on individuals, and in particular on Companies House, which would then be distracted from its duties. At the same time, we believe that we have brought in a strong framework which will ensure that we deter crime while allowing legitimate businesses to function.
I appreciate noble Lords’ concerns that the current framework may not always lead to the disclosure of all PSCs, and that having further information about minority shareholders acting as nominees could in theory be useful to help flush out undeclared PSCs. However, the Government’s position is that there is no evidence that any additional benefit would outweigh the costs to all companies and that the totality of measures in the Bill, such as the registrar’s new objectives and powers, will serve better to deter non-compliance and flush out such persons.
I now come to the undertaking to bring forward amendments at Third Reading. The amendment in the name of the noble Lord, Lord Vaux, has stressed the importance of the transparency of ownership and control of companies. The Bill already makes great strides forward in this area, as I am sure the noble Lord knows. However, after further review of the PSC framework and the changes made to it by the Bill, the Government have identified a number of necessary improvements, and I undertake to bring forward amendments to address this at Third Reading.
The current legislation allows companies to maintain their own PSC registers and to then notify the registrar of changes to those locally held registers. The Bill changes that framework so that after it is brought into force the registrar will maintain a central PSC register for all companies. Most of the amendments will reframe the existing PSC information-gathering and disclosure rules to make them clearer and work more effectively with a centrally held PSC register.
The amendments will include provisions which will enable those persons thought to be PSCs to confirm that they are, and to confirm their details before those are published. The amendments will also make provision to require more information to be provided by UK companies concerning the transparency of their ownership, including for explanations to be given by companies which claim they are exempt from the PSC requirements, and for notifications to be made to the registrar where a company believes it has no PSC. The amendments will align the drafting of false statement offences relating to the PSCs of UK companies with other similar offences in the Bill.
I regret that these amendments could not be finalised for Report, but, given the strength of feeling that noble Lords have demonstrated today on ensuring that this legislation is as robust as possible, I trust they will welcome them. We of course stand ready to engage with noble Lords on these amendments ahead of Third Reading.
Finally, on Amendment 17, put forward by the noble Lord, Lord Vaux, my officials have analysed what the cost to businesses would be should identity verification requirements extend beyond directors, PSCs and filers. As I mentioned to noble Lords, the individuals—as in the numbers of companies covered—will be broadly covered, in my estimation, to the tune of about 80% of the number of people who are single shareholders or shareholders of companies containing one, two or three, and then of course all the other companies, in theory except in rare circumstances, would have PSCs associated with them. The verification process will be deep and significant, and will cover many millions of people who will be required to formalise their identity through these processes.
This analysis estimates that introducing identity verification for all shareholders in non-traded companies could have a net annual direct cost to business of up to around £150 million. I will say that again, so that noble Lords may hear it: we believe that these measures, if introduced, could have a net annual direct cost to business of up to around £150 million. The costs and methodology have been published on GOV.UK, and I am happy to share them directly with noble Lords, if that would be of use.
Lord Johnson of Lainston
Member’s explanatory statement
This is consequential on my amendment to Clause 46, page 35, line 29.
“(6B) Where any of the information required to be entered in a company’s register of members changes and, at the time of the change, it is a traded company, the company is not required to include or retain the old information in the register.(6C) The Secretary of State may by regulations—(a) amend subsection (6A) so as to provide for it to apply in relation to traded companies, and(b) repeal subsection (6B) in consequence.(6D) Regulations under subsection (6C) are subject to affirmative resolution procedure.”Member’s explanatory statement
This amendment means that traded companies are not required to keep old information about their members (eg old addresses). It also confers a regulation-making power to require them to keep old information in future.
“(g) after subsection (8) insert—“(9) In this section—“non-traded company” means a company that is not a traded company;“relevant market” has the meaning given by section 853E(6);“traded company” means a company any of whose shares are admitted to trading on a relevant market or on any other market which is outside the United Kingdom.””Member’s explanatory statement
This is consequential on my other amendments to Clause 46.
Lord Vaux of Harrowden
“113BA Required information about members: nomineesThe required information about a member includes a statement by the individual, or where the member is a body corporate, or a firm that is a legal person under the law by which it is governed, by an officer of that body corporate or firm, as to whether or not they are holding the shares on behalf of, or subject to the direction of, another person or persons, and if they are—(a) where any such person is an individual, the information required by section 113A in relation to that individual;(b) where any such person is a body corporate or firm that is a legal person under the law by which it is governed, the information required by section 113B in relation to that body corporate or firm.”Member’s explanatory statement
This amendment would require a person or firm holding shares as a nominee to declare whether or not that is the case, and to provide the details of the person or persons on whose behalf, or under whose control the shares are held. This would assist the company in identifying Persons of Significant Control, and would introduce an offence for a nominee who did not declare themselves as such.
Lord Vaux of Harrowden (CB)
My Lords, I thank the Minister for his response and for his undertakings to bring further amendments at Third Reading. I will make just a few comments. First, in terms of Amendment 17, which I do not intend to move, I find the concept that it is going to cost £150 million a year frankly unbelievable. A small number of companies—as the Minister pointed out—verifying up to a maximum of an additional 16 shareholders, and in most cases fewer, cannot possibly come to £150 million a year. I am afraid I find that unrealistic.
To move to Amendment 16, I want to correct something that the noble Lord was saying about nominees having to declare that they are nominees. That is not actually correct. What has to happen is that the company has to look at its shareholder base and see whether it has anybody who is a PSC—a person with significant control. If it has no shareholders over 25%, it can conclude that it does not have any. If there is a PSC behind that, the PSC has to declare it, but if that is a bad actor, they are hiding and will not declare it. The nominees need to declare they are nominees only if the company seeks out and asks them. We are talking about a situation where a bad actor controls the company—so guess what? It will not. There is nothing there at the moment that makes nominees have to disclose the fact that they are nominees. I think the idea that disclosing nominees would create too much noise for Companies House is ridiculous. It does the opposite. It identifies where the risk lies.
We have heard from the noble Lord, Lord Agnew, about requiring risk assessments and a risk-based approach. This allows us to see which companies are most at risk of having bad actors who are hiding behind nominees, by ensuring that they are disclosed. The point here is to make it more difficult for bad actors. You make it much more difficult for bad actors if people are unwilling to be nominees. At the moment, there is no downside, so there is a huge industry of people who are prepared to do it for almost nothing—there is no risk to them. If we put a risk on those people and make them have to lie actively and on the record to say that they are not a nominee when they are, you will get many fewer people who are prepared to do it. That will make life a lot more difficult for the bad actors, and the nominee industry will have to clean up its act. So I am afraid that I have not heard anything that changes my mind, so I wish to test the opinion of the House.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment corrects a cross-reference in Schedule 2 to the Bill.
Lord Johnson of Lainston
“Use or disclosure of profit and loss accounts for certain companies
(1) The Companies Act 2006 is amended as follows.(2) After section 468 insert—“468A Use or disclosure of profit and loss accounts for certain companies(1) The Secretary of State may by regulations make provision requiring the registrar, on application or otherwise—(a) not to make available for public inspection profit and loss accounts, or parts of them, delivered to the registrar under—section 443A (micro-entities), orsection 444 (other small companies);(b) to refrain from disclosing such accounts, or parts of them, except in specified circumstances.(2) Regulations under subsection (1) which provide for the making of an application may make provision as to—(a) who may make an application;(b) the grounds on which an application may be made;(c) the information to be included in and documents to accompany an application;(d) the notice to be given of an application and of its outcome;(e) how an application is to be determined;(f) the duration of, and procedures for revoking, any restrictions on the making of information available for public inspection or its disclosure.(3) Provision under subsection (2)(e) or (f) may in particular provide for a question to be referred to a person other than the registrar for the purposes of determining the application or revoking the restrictions.(4) The circumstances that may be specified under subsection (1)(b) by way of an exception to a restriction on disclosure include circumstances where the court has made an order, in accordance with the regulations, authorising disclosure.(5) Regulations under subsection (1)(b) may not require the registrar to refrain from disclosing information under section 1110F (general powers of disclosure by the registrar).(6) Regulations under this section may in particular confer a discretion on the registrar.(7) Regulations under this section are subject to affirmative resolution procedure.”(3) In section 1087 (material not available for public inspection), in subsection (1), after paragraph (bb) insert—“(bba) the following— (i) any application or other document delivered to the registrar under regulations under section 468A (regulations protecting profit and loss accounts for certain companies);(ii) any information which regulations under section 468A require not to be made available for public inspection;”.”Member’s explanatory statement
This allows the Secretary of State to make regulations requiring the registrar not to disclose profit and loss accounts for micro entities and other small entities. The regulations might cover all such accounts or only accounts relating to certain descriptions of company (see section 1292 of the Companies Act 2006).
Lord Johnson of Lainston (Con)
My Lords, government Amendment 20 will give the Secretary of State the ability to make regulations to specify what aspects of the profit and loss account delivered by companies that qualify as micro-entities or small companies might be withheld from public inspection. Such regulations would also set out the parameters and circumstances in which the information may be withheld.
Currently, Section 468 of the Companies Act gives us the power to specify the form and content of the profit and loss account that is to be delivered to Companies House. However, it does not provide us with the power to collect information and then withhold it from public inspection. Making the profit and loss accounts of micro-entities and other small companies available to the public benefits users of the register, such as credit agencies. It is a highly valuable data source and would aid the detection of economic crime.
We are of the firm belief that the Bill’s provisions requiring such accounts to be delivered to Companies House are important additions to transparency requirements. We know that the minimal requirements that currently exist make incorporating as a micro-entity, or as another small company, open to abuse by those who wish to present a false picture of a company’s financial position. However, I am mindful of the concerns raised by some noble Lords and stakeholders about the potentially negative impacts on privacy and competition for small business owners; they point to the risk that increased transparency might lay SMEs open to unwelcome commercial pressures.
We have also received some correspondence from small business owners who are concerned that publishing accounts will, in effect, reveal their personal salary. For example, the director of a small accountancy company from London wrote to us to complain that publishing their profit and loss account would let their neighbours and competitors know what they earn. The owners of a small company from Shoreham-by-Sea have written to us to express their discomfort with their earnings being viewed by clients and subcontractors, who might seek to gain commercial advantage with the information. The Federation of Small Businesses today tweeted:
“Requirements to declare profits and losses would leave small firms open to a high level of risk. … Commercially sensitive information could be used against them by competitors and suppliers”.
To recap, we are not looking not to collect this information; we are looking to ensure that there is a full review in terms of what level of information we publish.
Following Royal Assent to the Bill, and prior to exercising this power, the Government will consult further with business groups, credit lenders, the accountancy sector, enforcement agencies and others to understand what, if any, information should be withheld from the public register. The amendment therefore gives the right level of flexibility to enable the Government to formulate a balanced approach between the information required to be included on the public register and the privacy of small businesses. I beg to move.
Lord Leigh of Hurley (Con)
My Lords, we have discussed this concept of disclosure at earlier stages. Of course, if a person does not want anything disclosed, they could become a sole trader or a limited liability partnership or a partnership, in which case very little, if anything, needs to be disclosed. My question and concern is just to understand the approach that government will take to this. Is it the intention just to give a blanket exemption for, perhaps, companies in defence or companies with complicated IP or companies in sensitive sectors? Is it to respond to those who make the request generally in the affirmative or to ask further questions to determine why a company should be exempted from disclosure? If a company simply asks to be exempted because it does not want its competitors to know, will that open the floodgate to everybody to do the same? I am not sure that “because we don’t want our competitors to know” is a particularly good reason, to be honest. I am therefore a little nervous about this clause, particularly because it is a bit vague. It just talks about regulations, and Section 1292 of the Companies Act 2006 is just an empowering section on regulations. We are opening the door very wide, and I hope that the Minister, in due course, will be able to give us some very clear guidance on what the Government have in mind.
Lord Vaux of Harrowden (CB)
My Lords, may I very briefly support what the noble Lord, Lord Leigh, has just said? This amendment troubles me a little bit. The Companies House information is important for people who are dealing with those companies, be they suppliers or customers. When we were doing the inquiry into digital fraud for the committee on digital fraud, we met a range of fraud victims. For those where it was relevant, what was interesting was that every single one of the people whom we met, before they parted with their money, had gone to Companies House and had a look at the company. They took comfort from that and lost their money. The information there is important, and reducing the amount of information on it should be done only with real thought and consideration.
I get it that in certain circumstances it makes sense for companies to be able to apply that certain information should not be made available—there are plenty of situations where one could think that makes sense. However, this amendment goes a lot further than that. It gives the Government the power to make regulations to allow micro and small companies to make all or parts of their accounts public on application or otherwise. In theory, therefore, those regulations could simply say that no micro or small entity needs to publish anything. That would be going far too far, so it would be good to understand from the Minister what is actually intended here.
Lord Johnson of Lainston (Con)
I thank my noble friend Lord Leigh and the noble Lord, Lord Vaux, for their comments. It is absolutely right that we have this brief discussion about this point. Just to reaffirm, the intention of the amendment is not to suppress information or increase opacity. It is to give the opportunity to be discretionary in terms of what is published and what is not published. Section 468 of the Companies Act provides us with the power only to prescribe the format that small and micro entity accounts are received in but not to differentiate between what is received and what is included on the public register. The first point, therefore, is that it just gives flexibility, which, I think, noble Lords will agree is sensible.
The second point is that we have received a number of representations from small and micro-entities that are naturally concerned about the publishing of information that relates specifically to their own wealth. There is concern that they may be open to a higher degree of fraud and that they will receive undue commercial pressures as a result of, say, a landlord being able to see what their turnover is and so adjusting their rent upwards accordingly, and so on. The point is that I am speculating.
If noble Lords will allow me to say so, the intention of this amendment is to allow us the flexibility to consult broadly with all stakeholders—I listed clearly that these include credit lenders, enforcement agencies, small businesses, micro-entities and others—in order to work out what the right level of information is. It may be all of it, but this amendment certainly gives the Secretary of State, in some situations and for some specific cases, an opportunity not to publish this information, although it will still be retained by Companies House. That flexibility is absolutely right; it is right that this House allows the Secretary of State that level of flexibility. It is also right that this House will no doubt engage in a meaningful and useful debate on levels of transparency, but at least we now have flexibility.
Lord Johnson of Lainston
Member’s explanatory statement
This has the effect that the registrar is required to make verification statements available for public inspection. A “verification statement” is the statement that an authorised corporate service provider is required to make to confirm that it has verified an individual’s identity.
Lord Johnson of Lainston (Con)
My Lords, as we discussed in Committee, identity verification is at the heart of the reforms in this Bill. It is essential that the framework for this is robust and reliable, including the role of authorised corporate service providers. I am therefore grateful for noble Lords’ continued input to ensure that the Bill is as effective as possible in this area, making sure that we really know who is interacting with Companies House.
This group of amendments contains several measures to strengthen arrangements, including in response to sensible suggestions put forward by the noble Lord, Lord Vaux of Harrowden, and my noble friend Lord Agnew of Oulton. This is a significant package of measures from the Government to improve the Bill and address the concerns of the House. I very much hope that the House will therefore support these amendments.
I turn first to government Amendments 21 and 22. This group of amendments relates to the verification statements that authorised corporate service providers, known as ACSPs, must deliver to the registrar when they verify an individual’s identity. Amendment 21 will require that all verification statements are made publicly available on the register. This responds directly to concerns raised by Members of both this House and the other place—including the noble Lords, Lord Vaux and Lord Fox—by increasing the transparency of the verification checks carried out by ACSPs. The statements will be made public.
Amendment 22 requires ACSPs to specify their anti-money laundering supervisor—or supervisors if they have more than one—on the statement. It also enables the Secretary of State to make further provisions regarding the contents of the statements via regulations so that this can be adapted if there is ever a need for different information to be available in the public domain. These regulations will be subject to the affirmative procedure to ensure appropriate scrutiny. Our intention is to align ACSP verification statements with those required for overseas entities under Section 16(2) of the Economic Crime (Transparency and Enforcement) Act 2022. Given that this area was previously discussed in Committee, I very much hope that noble Lords will support these amendments.
I turn now to government Amendments 34, 35 and 37. Reflecting on contributions made by noble Lords in Committee, for which I express my gratitude, my officials have been scrutinising the ACSP framework and looking for ways to strengthen it. Amendment 34 therefore clarifies that regulations can be made that impose duties on ACSPs to provide information to the registrar where this relates to monitoring compliance with any requirements under any part of the Companies Act 2006. This includes the requirement to carry out identity checks to the correct standard. It removes any ambiguity in the original drafting, ensuring that the information that can be requested is not limited to information relating specifically to Clause 64 only.
This is important as it means that there is no uncertainty regarding the use of the power to make ACSPs provide information on the identity checks that they carry out, the detail of these checks being in Clause 63. Tightening up the wording in this manner therefore ensures that the registrar will have the right tools to monitor ACSP compliance—something that the Government take very seriously. We want only legitimate actors to perform these identity checks and make filings on behalf of others.
Lord Agnew of Oulton (Con)
My Lords, I thank the Minister for a very comprehensive set of government amendments. He has completely revolutionised the impact of the Bill in relation to ACSPs. I congratulate him and his staff on that. It is important to remind noble Lords about why this is so important. Around half of all company formations occur through the offices of an ACSP. Frankly, it has been a cowboy environment. At the moment, they are not even required to be approved under the fourth anti-money laundering directive. So at one stroke with this Bill we will see a much cleaner field and a proper alignment of interests in that it will be in their interest to behave with integrity if they are to remain in business. I will not go through the comprehensive package, but my noble friend should be congratulated. This is probably the single biggest improvement to the Bill in the Companies House section.
Lord Vaux of Harrowden (CB)
My Lords, I also thank the Minister for having listened to the points that were made in our previous debates about the importance of ACSPs’ verification statements being made publicly available and for making this comprehensive suite of amendments. Indeed, I think he has gone further than my original amendments on the subject and the Bill is considerably strengthened as a result. I am extremely grateful.
Perhaps I may add one quick word in support of Amendment 93 from the noble Lord, Lord Agnew. A very high number of the ACSPs are going to be authorised and regulated by HMRC, and it is an unfortunate truth that such regulation is not the principal function of HMRC. Accordingly, that regulation has been somewhat light-touch. I ask the Minister to reassure us that considering how HMRC carries out this role will be an important part of the forthcoming consultation on AML regulation? The only requirement to become an ACSP is to be regulated for AML, so we need to make sure that regulation is robust and that only genuine, suitable persons are therefore authorised.
Baroness Altmann (Con)
My Lords, I thank the Minister and congratulate him on this suite of amendments. I know that my noble friend is keen that this should be a really landmark Bill and that he has worked really hard to listen carefully and ensure that it is as robust as it can be. I know his dedication to this matter, and I thank him for it.
Lord Leigh of Hurley (Con)
Although my noble friend the Minister has described me in very flattering terms today, for which I am grateful, I will not add to the flattery, as his noble kinsman is no longer sitting next to me. I just want to add a note of caution, because it is on the record in Amendment 93 from my noble friend Lord Agnew, on the possibility of HMRC taking AML to be of equal priority to tax collecting, essentially. I declare an interest as chairman of the Finance Bill Sub-Committee of the Economic Affairs Committee that investigated R&D tax credits, which led to HMRC’s accounts being qualified given the level of uncertainty. I just want to put it on the record that we all want HMRC to focus on tax collection, with fraud focused on in other areas.
Lord Fox (LD)
The Minister will be blushing with the fulsome praise that he has received. I think he described it as a significant package of improvements and as major steps. The noble Lord, Lord Agnew, went further and described them as revolutionary changes. The Minister can be sure that he has hit an important nail very firmly on the head with this set of amendments. I think we all believe that this makes the Bill a much better Bill, and for that, we are very pleased.
Baroness Blake of Leeds (Lab)
I rise just to add our support for the amendments. I emphasise the concern that has been raised in Amendment 93 from the noble Lord, Lord Agnew, in terms of recognising the significant function that HMRC has. I listened to the noble Lord, Lord Leigh, with interest. I think there is some issue with looking at the two functions equally and making sure there is no conflict between them.
Lord Johnson of Lainston (Con)
I thank all noble Lords who have spoken during this debate, and I am grateful, personally, for the kindness they have shown to me as a new Minister on this Bill over the last few months. I am grateful for the high degree of collaboration and the sense of common purpose that all Members of this House have shown in trying to create a truly effective Bill to change—after 170 years—Companies House and what it can do for companies and to eradicate crime at the same time. I thank all noble Lords, my officials and the Government for the work we have done together.
However, we have not finished; we are only half way through. I thank my noble friend Lord Agnew for his Amendment 33. I appreciate the strength of feeling, but we would not wish to impose a duty on Companies House to carry out, as he has described, risk assessments. All ACSPs must be supervised for anti-money laundering purposes, and supervisors will already carry out risk assessments on them. I am aware of the concerns surrounding the supervisory regime, and I can confirm that the Treasury will publish a consultation on its structural reform. I believe this is to take place within the next month, which is very important and will be welcomed by this House and help inform further debate.
As I have just set out, the Government have tabled amendments to strengthen the ACSP regime, enabling Companies House to act if it has knowledge that a person is not fit and proper to carry out the functions of an ACSP, and to strengthen the registrar’s powers to request information. We are enabling the registrar to focus her attention on high-risk ACSPs rather than making it a duty to do so. A duty would reduce her operational flexibility—for example, inadvertently preventing her spot-checking the identity verification done by lower-risk ACSPs. We engaged with the registrar fruitfully on this subject only a few weeks ago. It is for these reasons that I urge my noble friend not to move his amendment.
I turn to Amendment 93. While the Government agree wholeheartedly on the crucial role that supervision must play in tackling economic crime, we are not keen to support this amendment. Under money laundering regulations, HMRC already has anti-money laundering supervisory functions and it takes them very seriously. HMRC is one of 25 supervisors of the money laundering regulations, alongside the Financial Conduct Authority, the Gambling Commission, and 22 accountancy and legal professional bodies. HMRC supervises around 30,000 businesses across nine sectors.
HMRC’s anti-money laundering supervisory function is resourced through the fees that it collects from the businesses it supervises, and these fees are solely for use by HMRC’s anti-money laundering supervisory function. HMRC attaches great importance to its anti-money laundering work, including its supervisory function. For example, in 2022-23, HMRC carried out over 3,200 anti-money laundering compliance interventions, including desk-based reviews and face-to-face visits. It also refused 439 applications to register from businesses considered inappropriate or unsuitable. The number of staff working on supervisory activity has more than doubled from 197 in 2018 to 397 in 2023; in 2022-23, they issued a total of 770 penalties, totalling £5.5 million. Specifically, £1.2 million of this amount came from trust or company service providers.
HMRC also works to help businesses understand the risk of money laundering. In 2022-23, its relevant web pages saw nearly 475,000 hits and it issued 850,000 alerts to businesses telling them about changes to law, inviting them to webinars or raising awareness of emerging risks.
The proposed amendment would duplicate the work that HMRC already does. It could make HMRC responsible for all anti-money laundering supervision, when Regulation 7 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 states that certain persons are subject to supervision by certain supervisors. For example, it states that
“the FCA is the supervisory authority for … credit and financial institutions”.
So it would not make sense to mandate that HMRC supervises them. HMRC would not necessarily have the expertise that it would need to supervise all sectors—for example, lawyers or large-scale financial institutions—and it would cut across existing regulatory relationships such as those between the banks and the FCA.
In conclusion, I urge noble Lords once more to support the government amendments that I outlined earlier, which address specific concerns raised during our debates. I believe they will deliver our shared ambition for a robust ACSP framework.
Lord Johnson of Lainston
“(2A) A verification statement must also specify the authorised corporate service provider’s supervisory authority or authorities for the purposes of the Money Laundering Regulations.(2B) The Secretary of State may by regulations make further provision about the contents of verification statements (including provision amending this section).”Member’s explanatory statement
This amendment requires a verification statement to specify the authorised corporate service provider’s supervisory authority or authorities. It also confers a regulation-making power to make further provision about the contents of verification statements.
Member’s explanatory statement
This amendment spells out that the power conferred by new section 1110A(4) is exercisable by regulations.
Member’s explanatory statement
This is consequential on my amendment to Clause 63, page 55, line 8
Member’s explanatory statement
This amendment requires a reverification statement to specify the authorised corporate service provider’s supervisory authority or authorities and to contain anything else required by regulations.
“(7) In this section—“Money Laundering Regulations” means the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692);“supervisory authority” means an authority that is a supervisory authority under the Money Laundering Regulations (see regulation 7 of those Regulations).”Member’s explanatory statement
This is consequential on my amendments to Clause 63, page 54, line 34 and page 55, line 8.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment is consequential on my amendment to page 59, line 36.
Member’s explanatory statement
This amendment is consequential on my amendment to page 57, line 16.
(d) the registrar is not required by subsection (4A) to refuse the application.(4A) The registrar must refuse the application if it appears to the registrar that the applicant is not a fit and proper person to carry out the functions of an authorised corporate service provider.”Member’s explanatory statement
This amendment requires the registrar to refuse an application for authorisation as a corporate service provider if it appears that the applicant is not a fit and proper person to become an authorised corporate service provider.
Member’s explanatory statement
This is consequential on my amendment to Clause 69, page 64, line 10.
(b) provide for circumstances in which the registrar may suspend a person’s status as an authorised corporate service provider pending a decision by the registrar under regulations made by virtue of paragraph (a).(2A) The provision that can be made under subsection (2) includes provision as to—(a) procedure;(b) the period of a suspension;(c) the revocation of a suspension.”Member’s explanatory statement
This amendment and my amendment to leave out lines 1 to 13 on page 60 are intended to narrow the power to make regulations for suspension of an authorised corporate service provider’s status so that it is available only pending a decision as to termination of an authorised corporate service providers’ status.
Member’s explanatory statement
This would remove the power to make regulations for suspension of an authorised corporate service provider’s status. My amendment to page 59, line 36 introduces a narrower power to suspend.
Lord Johnson of Lainston
Member’s explanatory statement
This ensures that the registrar can obtain information about compliance with provisions such as new section 1110B of the Companies Act 2006 (see Clause 63), including from former authorised corporate service providers (including suspended providers).
Member’s explanatory statement
This is consequential on my amendment to page 60, lines 16 to 23.
Member’s explanatory statement
This is consequential on my amendment to page 60, lines 1 to 13.
Member’s explanatory statement
This is consequential on my amendment to page 60, lines 16 to 23.
Lord Johnson of Lainston
“(zi) after “may” insert “by regulations”;”Member’s explanatory statement
This amendment corrects a mistake in section 1082(1) of the Companies Act 2006 by spelling out that the power conferred by that subsection is exercisable by regulations (that this was always the intention is clear from the subsequent subsections).
Lord Johnson of Lainston
Member’s explanatory statement
This is consequential on my amendment to Clause 69, page 64, line 10.
Lord Johnson of Lainston
“Registrar’s power to strike off company registered on false basis
(1) The Companies Act 2006 is amended as follows.(2) After section 1002 insert—“Registrar’s power to strike off company registered on false basis1002A Power to strike off company registered on false basis(1) The registrar may strike a company’s name off the register if the registrar has reasonable cause to believe that—(a) any information contained in the application for the registration of the company, or in any application for restoration of the company to the register, is misleading, false or deceptive in a material particular, or(b) any statement made to the registrar in connection with such an application is misleading, false or deceptive in a material particular. (2) In subsection (1) the reference to an application includes any documents delivered to the registrar in connection with the application.(3) The registrar may not exercise the power in subsection (1) unless—(a) the registrar has published a notice in the Gazette that, at the end of the period of 28 days beginning with the date of the notice, the name of the company mentioned in the notice will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved, and(b) the period mentioned in paragraph (a) has expired.(4) If the registrar exercises the power in subsection (1), the registrar must publish a notice in the Gazette of the company’s name having been struck off the register.(5) On the publication of the notice in the Gazette the company is dissolved.(6) However—(a) the liability (if any) of every director, managing officer or member of the company continues and may be enforced as if the company had not been dissolved, and(b) nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register.”(3) In section 1024 (application for administrative restoration to the register), in subsection (1), for the words from “section” to the end substitute “—(a) section 1000 or 1001 (power of registrar to strike off defunct company), or(b) section 1002A (power of registrar to strike off company registered on false basis).”(4) In section 1025 (requirements for administrative restoration), for subsection (2) substitute—“(2) The first condition is that—(a) in the case of a company struck off the register under section 1000 or 1001, the company was carrying on business or in operation at the time of its striking off;(b) in the case of a company struck off the register under section 1002A, at the time of its striking off, the registrar did not have reasonable cause to believe the matter set out in section 1002A(1)(a) or (b).”(5) In section 1028A (administrative restoration of company with share warrants), in subsection (1), for “or 1001” substitute “, 1001 or 1002A”.(6) In section 1029 (application to court for restoration to the register), in subsection (1)(c)—(a) omit the “or” at the end of sub-paragraph (i);(b) after that sub-paragraph insert—“(ia) under section 1002A (power of registrar to strike off company registered on false basis), or”.(7) In section 1030 (timing for application to court for restoration to the register), in subsection (5)(a), after “company)” insert “or section 1002A (power of registrar to strike off company registered on false basis)”.(8) In section 1031 (decision on application for restoration by the court), in subsection (1)—(a) after paragraph (a) insert—“(aa) if the company was struck off the register under section 1002A (power of registrar to strike off company registered on false basis) and the court considers that, at the time of the striking off, the registrar did not have reasonable cause to believe the matter set out in section 1002A(1)(a) or (b);”; (b) in paragraph (c), for “other case” substitute “case (including a case falling within paragraph (a), (aa) or (b))”.”Member’s explanatory statement
This Clause amends the Companies Act 2006 to confer on the registrar a power to strike off a company where the company was registered on a false basis, and makes provision for restoration of such a company to the register.
Lord Johnson of Lainston
“(1A) In section 9 (registration documents), omit subsection (3).”Member’s explanatory statement
This is consequential on the other amendments made by Clause 69.
“(3) After section 1067 insert—“Who may deliver documents to the registrar1067A Delivery of documents: identity verification requirements etc(1) An individual may not deliver a document to the registrar on their own behalf unless—(a) their identity is verified (see section 1110A), and(b) the document is accompanied by a statement to that effect.(2) An individual (A) may not deliver a document to the registrar on behalf of another person (B) who is of a description specified in column 1 of the following table unless—(a) the individual is of a description specified in the corresponding entry in column 2, and(b) the document is accompanied by the statement specified in the corresponding entry in column 3.
1 | 2 | 3 | |
Description of person on whose behalf document delivered (B) | Description of individual who may deliver document on B’s behalf (A) | Accompanying statement | |
1 | Firm | Individual who is an officer or employee of the firm and whose identity is verified (see section 1110A). | Statement by A— (a) that A is an officer or employee of the firm, (b) that A is delivering the document on the firm’s behalf, and (c) that A’s identity is verified. |
2 | Firm | Individual who is an officer or employee of a corporate officer of the firm and whose identity is verified. | Statement by A— (a) that A is an officer or employee of a corporate officer of the firm, (b) that A is delivering the document on the firm’s behalf, and (c) that A’s identity is verified. |
3 | Firm | Individual who is an authorised corporate service provider (see section 1098A). | Statement by A— (a) that A is an authorised corporate service provider, and (b) that A is delivering the document on the firm’s behalf. |
4 | Firm | Individual who is an officer or employee of an authorised corporate service provider. | Statement by A (a) that A is an officer or employee of an authorised corporate service provider, and b) that A is delivering the document on the firm’s behalf. |
5 | Individual | Individual whose identity is verified. | Statement by A— (a) that A is delivering the document on B’s behalf, and (b) that A’s identity is verified. |
6 | Individual | Individual who is an authorised corporate service provider. | Statement by A— (a) that A is an authorised corporate service provider, and (b) that A is delivering the document on B’s behalf. |
7 | Individual | Individual who is an officer or employee of an authorised corporate service provider. | Statement by A— (a) that A is an officer or employee of an authorised corporate service provider, and (b) that A is delivering the document on B’s behalf. |
This changes the categories of people who may deliver documents on another’s behalf. Among other things, it means an individual whose identity is verified can only deliver documents on behalf of a firm if they are an officer or employee of the firm or one of its corporate officers.
Lord Johnson of Lainston
Member’s explanatory statement
This allows officers as well as employees or authorised corporate service providers to deliver documents on behalf of a disqualified person.
Member’s explanatory statement
This is consequential on my amendment to Clause 69, page 64, line 10. An employee delivering a document under new section 1067B(2)(b) must be acting in the course of their employment without the need for express provision to that effect.
Member’s explanatory statement
This amendment removes the requirement for a statement to include certain information that will be covered by the statement that a person must make under new section 1067A of the Companies Act 2006 (inserted by Clause 69) when delivering documents.
Lord Johnson of Lainston
“(4A) Regulations under this section may in particular confer a discretion on the registrar.” Member’s explanatory statement
This amendment enables any provision made by regulations under new section 1094A of the Companies Act 2006 to confer a discretion on the registrar.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment is consequential on my amendment to Clause 88, page 76, line 11.
“(8A) Regulations under this section may in particular confer a discretion on the registrar.”Member’s explanatory statement
This amendment enables any provision made by regulations under new section 1088 of the Companies Act 2006 to confer a discretion on the registrar.
Lord Johnson of Lainston
“(ba) any function of the Secretary of State under or in connection with regulations under section 1 of the Sanctions and Anti-Money Laundering Act 2018 that make provision in connection with licences of the kind mentioned in section 15(3A) of that Act;”Member’s explanatory statement
This enables fees set under the Companies Act 2006 to be set at a level to cover the Secretary of State’s costs in connection with licences for people who are subject to director disqualification sanctions under the Sanctions and Anti-Money Laundering Act 2018.
Lord Johnson of Lainston
“(1A) In section 243 (permitted disclosure by registrar), for subsection (6) substitute—“(6) Regulations under subsection (4) may in particular confer a discretion on the registrar.(6A) Provision under subsection (5)(d) may in particular provide for a question to be referred to a person other than the registrar for the purposes of determining the application.””Member’s explanatory statement
This amendment enables any provision made by regulations under section 243 of the Companies Act 2006 to confer a discretion on the registrar.
Lord Johnson of Lainston
(i) proceedings have been brought against the person for that offence in respect of that conduct and the proceedings are ongoing, or(ii) ”Member’s explanatory statement
This amendment and my other amendment to Clause 101 would mean that regulations must provide that no financial penalty may be imposed on a person in respect of whom criminal proceedings are ongoing; at the moment it is the other way around so that criminal proceedings cannot be continued once a penalty is imposed.
Member’s explanatory statement
See the explanatory statement to my other amendment to Clause 101.
Lord Johnson of Lainston
“(4C) Regulations under this section may in particular confer a discretion on the registrar.”Member’s explanatory statement
This amendment enables any provision made by regulations under section 1097A of the Companies Act 2006 to confer a discretion on the registrar.
Lord Johnson of Lainston
“(11A) Regulations under this section may in particular confer a discretion on the registrar.”Member’s explanatory statement
This amendment enables any provision made by regulations under section 1097B of the Companies Act 2006 to confer a discretion on the registrar.
Lord Johnson of Lainston
“(11A) Regulations under this section may in particular confer a discretion on the registrar.” Member’s explanatory statement
This amendment enables any provision made by regulations under section 1097C of the Companies Act 2006 to confer a discretion on the registrar.
Lord Johnson of Lainston
“(3) In this section “the Companies Acts” has the meaning given by section 2(1) of the Companies Act 2006.”Member’s explanatory statement
This amendment inserts a definition of “the Companies Acts” into the Limited Partnerships Act 1907.
Lord Johnson of Lainston (Con)
My Lords, the amendments in this group relate to Part 2, which includes a number of reforms to prevent the abuse of limited partnerships. These measures are incredibly significant and will enable fundamental change in the transparency of limited partnerships while maintaining their crucial position as legitimate vehicles for doing business. They are the biggest changes to the legal framework for limited partnerships since the Limited Partnerships Act 1907.
We must keep in mind that limited partnerships, including Scottish limited partnerships, facilitate legitimate and important commercial activity. They are used across the UK in a variety of sectors, particularly in the private equity and venture capital industry, as well for a variety of other purposes, such as oil and gas exploration and production and real estate.
The measures in the Bill were formulated after several rounds of consultation to deliver the right balance of more transparency without undermining the use of these structures by legitimate business. The British Private Equity and Venture Capital Association reports that, in 2021, £17.3 billion was invested into UK companies from private equity and venture capital, with nine in 10 investments directed at small to medium-sized enterprises. We do not want to disrupt this activity, nor the 2 million or so people who are employed by companies backed by private equity and venture capital who use these vehicles.
Before I turn to the government amendments, it may be helpful to clarify a few points about the structure and principles of limited partnerships. These are business associations made up of one or more general partners who are responsible for the management of the partnership, and one or more limited partners who cannot partake in management and whose liability is limited to the amount they invest. In the Bill, to achieve more clarity over limited partnerships and those who have influence and control over the partnership, the Government have rightly focused on creating more transparency over the partners, and specifically the general partners. The Bill already ensures that, in future, we will know the names, addresses and dates of birth of all partners in a limited partnership, and all of this information will need to be confirmed at least annually. It is important to have these points in mind before we turn to the amendments tabled by my noble friend Lord Agnew.
In the meantime, I have a handful of minor government amendments to Part 2, which concerns limited partnerships—Amendments 58, 59, 60 and 61. These are required, in the most part, to correct drafting errors, by adding missing definitions and removing ones which are not essential. Amendment 60 is a minor change to the information that has to be delivered by general partners of a limited partnership when they give their annual confirmation statement. It means that a notice changing a general partner’s registered officer must be delivered at the same time as a confirmation statement, if the registered officer is not ID verified. I beg to move.
Lord Agnew of Oulton (Con)
My Lords, I shall speak to my Amendments 63, 69 and 70. Again, I am grateful to my noble friend the Minister for his engagement and for his detailed letter to me recently to allay many of my concerns.
The Bill goes a long way to deal with the opacity of LLPs and LPs. It is very important that we regard them as similar in the level of transparency needed as we would consider for a company. We know there have been plenty of examples in the past where they have been used as a front for a lot of very bad activity.
I am not going to press my amendments today, and I thank my noble friend the Minister for his amendments. He has said to me that the Government plan to bring forward some work very soon after the Bill. I would be quite interested if he could just give us some sense of the timescale for this work. His brief said:
“Following Royal Assent, the Government intend to bring into force provisions to require a company director to be a natural person, with limited exemptions for corporate directors”.
If my noble friend could give us a timeline for that, I would be most grateful.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment removes the definition of a term that is no longer used in the section.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment means that notice changing a general partner’s registered officer must be delivered at the same time as a confirmation statement, if the registered officer is not ID verified.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment corrects a mistake. A statement under 8R(4) is not required to confirm that an individual is an individual whose identity is verified.
Member’s explanatory statement
This is consequential on my amendment to Clause 69, page 64, line 10.
Lord Johnson of Lainston
Member’s explanatory statement
This is consequential on my amendment to Clause 91, page 77, line 34.
Lord Johnson of Lainston
Member’s explanatory statement
This is consequential on my amendment to Clause 142, page 138, lines 18 to 25.
Member’s explanatory statement
Certain documents under the Limited Partnerships Act 1907 can only be delivered to the registrar by authorised corporate service providers or their employees. This amendment adds officers of authorised corporate service providers to those who are allowed to deliver those documents.
Member’s explanatory statement
This is consequential on my amendment to Clause 69, page 64, line 10. An employee delivering a document under new section 1067B(2)(b) must be acting in the course of their employment without the need for express provision to that effect.
Member’s explanatory statement
This amendment removes the requirement for a statement to include certain information that will be covered by the statement that a person must make under new section 1067A of the Companies Act 2006 (inserted by Clause 69) when delivering documents.
Lord Johnson of Lainston
“Information about changes in beneficiaries under trusts
(1) Schedule (Duty to deliver information about changes in beneficiaries) (duty to deliver information about changes in beneficiaries) imposes further duties on registered overseas entities to deliver information.(2) The amendments made by paragraph 2 of Schedule (Duty to deliver information about changes in beneficiaries) do not apply in relation to any statements or information delivered to the registrar under section 7 of the Economic Crime (Transparency and Enforcement) Act 2022 during the period of 3 months beginning when that paragraph comes fully into force.”Member’s explanatory statement
This introduces the new Schedule to which it refers and makes transitional provision.
Lord Johnson of Lainston (Con)
My Lords, as noble Lords well know, the Economic Crime (Transparency and Enforcement) Act 2022 created a new register of overseas entities, requiring overseas companies owning or buying property in the UK to give information about their beneficial owners to Companies House. The register launched successfully on 1 August 2022, and companies in scope that already owned property had until 31 January 2023 to apply for registration. As of 18 June, more than 28,000 entities out of some 30,000 had registered, which represents a very good rate of initial compliance. Since 1 February, all non-compliant companies have been restricted in their ability to sell, lease or raise finance over their land; this remains the case until they comply. Companies House is beginning the process of assessing cases for additional action. This second economic crime Bill we are debating today makes a number of changes to further strengthen the register.
I will speak first to Amendment 85, a fairly minor amendment that the Government have tabled to strengthen the register. Schedule 6, which was inserted into this Bill in Committee, sets out the anti-avoidance measures that we debated a few weeks ago. These measures require that beneficial owners must report every change in beneficiary for the relevant period to Companies House. The anti-avoidance measures are effectively time limited because they impose a requirement on overseas entities to make a one-off submission to Companies House as part of their annual update. The Government have decided that it is therefore appropriate to limit the time within which the power related to them can be exercised; this demonstrates the Government’s intention to use the power only for the purposes that I described during our previous debate. The measures include a power to exclude descriptions of beneficial owners from the requirement to comply with Schedule 6. As I set out in Committee, this power will be used to exclude structures such as large pension trusts, where this requirement would be disproportionately burdensome.
Furthermore, turning to Amendment 86, because regulations made using this power may engage issues of devolved competence in Scotland, we have inserted a mechanism to ensure that Scottish Ministers must be consulted before regulations are made, if those regulations would be within Scottish legislative competence. These minor changes to the power will have no impact on the effectiveness of the anti-avoidance measures. I hope noble Lords will agree that they are appropriate.
During the passage of this Bill many concerns have been expressed about the use of trusts. I note that my noble friend Lord Agnew of Oulton has tabled Amendment 89, which would require Companies House to publish information about trusts that is obtained for the register of overseas entities but that is not available for scrutiny. The Government have tabled a number of amendments that are intended to address concerns in this area.
Amendment 71 will strengthen the reporting requirements and close a potential gap in the information provided to Companies House. Overseas entities registered on the register of overseas entities are required to update annually the information that they have provided to Companies House. They must provide an update that includes all in-year changes to the entity’s beneficial owners. Where the entity is associated with a trust, only a snapshot of the trust information is currently required to be provided with the annual update. This leaves a small risk that a beneficiary determined not to be registered might use convoluted means to ensure that they are not a beneficiary at the time of the update but become so immediately afterwards.
We have discussed this issue at length, and I hope noble Lords are pleased with the amendment that we are bringing forward at this time. It will ensure that in-year changes to beneficiaries must be reported to Companies House in the same way as is required for beneficial owners. There is nowhere to hide. Information supplied to Companies House via this amendment will be required to be verified along with all the other information that is being provided.
The amendment also includes a power for the Secretary of State to make exceptions to the duty to provide the in-year beneficiary information. This power will be used to exempt structures such as large pension fund trusts, where it would be disproportionate to expect them to provide every change that occurs in a given period. A number of multinational corporations use trust structures for their pension funds. One example we are aware of, which is a British multinational, is a fund registered on the register of overseas entities with over 8,000 beneficiaries. There are numerous and regular changes to the beneficiaries in circumstances such as this and the Government consider it unreasonable to expect such structures to deliver the new information that will be required.
Before regulations under this power are made, the Secretary of State must consult the Scottish Ministers and Northern Ireland Department of Finance. This is because these issues may engage areas of devolved competence. A number of consequential amendments, Amendment 76, 77 and 84, are also required so that the new provisions work as intended.
I turn to government Amendment 78. We have listened to the strength of feeling among parliamentarians, on all sides and in both Houses, that information about trusts supplied to Companies House as part of the registration of an overseas entity should not be withheld from public inspection. I stress that all the information held by Companies House about trusts is available to HMRC and law enforcement bodies. While the Government remain of the view that, in most circumstances, it is appropriate to withhold information about trusts, good arguments have been made that more transparency is required. In particular, it would seem appropriate to allow certain people, such as investigative journalists, to access the information under certain circumstances.
That is why we are tabling an amendment to create a regulation-making power by which the Secretary of State can set out details of who may apply to access trust information, how to apply and the circumstances in which an application can be made. To achieve this, we will also need to widen the scope of the protection regime in Section 25 of the Economic Crime (Transparency and Enforcement) Act to allow for people who are involved in trust arrangements—settlors, beneficiaries et cetera—to make an application. This does not require an amendment to this Bill as it can be achieved via regulations using the Section 25 power.
The Government intend to use this new power to provide a mechanism for access that is as straightforward as possible. My officials will work with Transparency International and other stakeholders and prepare regulations as soon as possible. I am happy to commit to keeping interested Peers informed and involved. Minister Hollinrake and I will keep a close eye to ensure that the processes Companies House put in place off the back of these regulations are indeed straightforward.
There will be some information that will not be appropriate for release, such as the day of date of birth of a person or their usual residential address. These will remain protected. In addition, given that most trusts are family affairs, and many are set up for minors or other vulnerable people, there may be other reasons why a given piece of information may not be suitable for release.
Before regulations under this power are made, the Secretary of State must consult with the Scottish Ministers and the Northern Ireland Department of Finance. This is because these issues may engage areas of devolved competence.
Finally, this group contains minor and technical Amendments 87 and 88. I hope that these amendments, in addition to the mechanisms already in place on the register of overseas entities, will provide sufficient reassurance to noble Lords and I beg to move.
Lord Vaux of Harrowden (CB)
My Lords, I have submitted Amendments 72 and 73 in this group.
Amendment 72 is designed to close an anomaly that arose in part because of the rushed nature of the emergency first Economic Crime Act. Unlike any other corporate register that I can think of, the register of overseas entities is required to be updated only annually. In contrast, the register of persons with significant control of UK Companies must be updated within 14 days of the company becoming aware of the change. This does matter. It means that the register can be as much as a year out of date, with changes potentially made to who owns or controls the overseas entity in the meantime.
The purpose of the register is to ensure that we know who owns UK property, so this anomaly creates a very real gap. There is a risk, for example, that an innocent third party could unknowingly find themselves buying a property from a sanctioned individual, thus allowing that sanctioned individual to realise and export the value of the property. By the time the register is updated, perhaps many months later, the money will be long gone.
There was a rather technical reason why we could not close this anomaly at the time of the first Act. The main penalty for failing to update the register is that property transactions cannot be registered. That would create a risk for an innocent buyer, if the register had to be updated within 14 days, because the innocent buyer could not know whether or not the company was in breach, and therefore the innocent party might not be able to register the transaction.
Lord Agnew of Oulton (Con)
My Lords, I shall speak to my Amendment 73A, which I apologise is a late manuscript amendment, with two supporting amendments. This is not in any way a change of the wording of my original Amendment 89, but I apologise to my noble friend the Minister that this was tabled only at around lunchtime today as I was only alerted by the Public Bill Office very late last night.
To remind noble Lords what I am worried about, which this amendment seeks to deal with, the amendment requires Companies House to publish information about trusts obtained in the newly created register of overseas interests that is not available for scrutiny. Nearly half of all trusts now registered with Companies House are shown to own assets anonymously. That is the background, and we heard just now from the noble Lord, Lord Vaux, about the so-called lacuna which is being advertised brazenly by large firms of solicitors—I have seen the same briefing notes and these are not back-street operators. That is the picture today.
My noble friend the Minister has tried very hard to deal with this within the limitations of his department, let alone his own ability to influence what seems to be a very entrenched position across government. But the amendment that he is proposing simply does not cut the mustard because it talks about “may” use a power—not “will”, “can” or “does”, but “may”. The other concern is that it then talks about a consultation, but we know that consultations are the oldest trick in the book, frankly, for kicking cans down the road, so I do not get much reassurance from that.
I also have practical concerns also about how the—albeit improved—access to the register is likely to work in a practical way. We have seen with HMRC how badly it works at the moment, and it is very hard to get information. It seems that, under the new regime, we might be able to get information only one request at a time, which means that it will be impossible to get a full picture of what is going on, so you will not be able to carry out large-scale investigations to uncover wrongdoing.
I do not like to put forward a sour note, because I know how hard my noble friend has worked on this Bill and in his engagement with all noble Lords, particularly me, but I really feel that, as my noble and learned friend Lord Garnier said in Committee, we can register as much as we like, but if we cannot see what is inside then the whole thing is a futile exercise. I ask my noble friend the Minister to reconsider. I am afraid I am minded to divide the House on this, unless I hear something convincing.
Lord Wallace of Saltaire (LD)
My Lords, I am neither a lawyer nor a company formation specialist although, in a career as an international policy researcher, I have not only dealt with the Crown dependencies and some of the overseas territories but also spent some time in conferences with senior Swiss bankers, from which I benefited both from learning an enormous amount about their charm and discretion and from eating a number of wonderful meals.
In opening, the Minister said there will be nowhere to hide; the noble Lord, Lord Vaux, has said there will be always somewhere else to hide. At present we are engaged in doing our best to make it more difficult, and as difficult as possible, to hide who owns what, particularly when they are overseas, in the expectation that we will never succeed entirely in catching everyone because the cascade abilities of trusts in one place, partly owned by trusts in somewhere else, will always defeat us in some instances. We on these Benches will support Amendment 72 and Amendment 89 if it is pressed.
The statement that the Government will consult further on how to ensure that these measures can be used to maximise transparency is encouraging, but I share the limited scepticism expressed by the noble Lord, Lord Agnew, of how far that will take us when we are involved in this rather important Bill. We are in support of the maximum possible transparency. We know that the purpose of a great many overseas trusts is precisely to conceal, and we wish to extend that transparency as far as possible. Therefore, we on these Benches will support these amendments.
Lord Ponsonby of Shulbrede (Lab)
My Lords, we too will support the amendments if they are pressed by both noble Lords in due course.
The government amendments in this group are technical in nature and address the issues to do with overseas trusts, trust transparency and various anti-avoidance mechanisms.
I am glad to hear about the wonderful meals that the noble Lord, Lord Wallace, has had in Switzerland over the years, but I am sure that you learn a lot from those sorts of experiences about the sophistication of the types of arrangements which we are talking about.
As usual, the noble Lord, Lord Vaux, has done the House a favour, and we will support Amendment 72 if he presses it to a vote. He is proposing a practical solution to a current anomaly in the register, which he explained very fully. I know that the noble Lord, Lord Agnew, has been working tirelessly on the issues to which he just spoke, and if he indeed chooses to press his Amendment 73A to a vote, we will support him there as well.
Lord Johnson of Lainston (Con)
I thank noble Lords for their input to this important debate and, as always, I thank the noble Lord, Lord Vaux, and my noble friend Lord Agnew.
I will first attend to the matter of information transparency in respect of trusts on the register. It is important to clarify a few points. First, this information is being recorded at Companies House, so at no point are trusts or individuals able to conceal the information from law enforcement authorities or from the registrar, and that is an incredibly important point that noble Lords made. We are not discussing here about not collecting information or about not enforcing the collection of information—the liabilities and penalties that go with non-application of the information. We are talking about the publication of information, and it is important that we make that clear.
Secondly, we have listened carefully to all sides of this House and have introduced an additional amendment to enable interested or relevant parties to access the information held at Companies House on these trusts. This was not initially in the Bill either in the other place or here but, after very sensible discussions with myself—I hope noble Lords will agree that they were sensible—it is absolutely right that there is an opportunity for people to access the register. That is an important point again; I would not like this debate to be one-sided. This is not a situation where a Government are somehow trying to protect people or to allow them to obscure their assets or to commit crimes through opacity. This is about a workable system that allows our economy to function but at the same time provides essential safeguards that no Member of this House would like to see derogated. We have introduced a public interest access amendment, which will enable investigative journalists and other specific entities to access and make inquiries as to the beneficial ownership of trusts.
My noble friend Lord Agnew made an inquiry as to the use of the word “may” in giving permissions. As I understand it, that is simply the legal term that is used in these cases. I am happy to seek further advice around that but I do not think that necessarily changing one word would make the difference that my noble friend seeks. The important point is that we have made this commitment. This is a dramatic change from two months ago, when we started having these conversations. The Government as a whole, and many individuals within that Government, are extremely keen to see transparency brought to bear on this register and to enable people access to trust beneficiaries. There has been a fruitful and deep debate about it.
Lord Johnson of Lainston (Con)
My apologies, it is the register of overseas entities. I thank the noble Lord for the correction.
I can see where the noble Lord is coming from here, but I think we have to be quite careful. Perhaps I might be allowed to go through some specific points which may help this House come to a better conclusion, and then the final point is relatively brief.
It remains the case that the Government do not believe that these amendments will achieve their aim without causing additional burdens on both overseas entities and third parties, or without adding a further layer of risk and complexity for third parties transacting with the entity. Again, I stress my significant sympathy with the noble Lord for this amendment and with the people who support this amendment. Personally, I am extremely desirous of making sure that we have timely information that could be presented, but there are specific technical reasons why we would resist this. However, we would be delighted to have further conversations. It is important that the Government get the balance right between ensuring that we know who the beneficial owners of these entities are and continuing to provide a welcoming investment environment. I would not underestimate the need for a simple structure that enables people to use our systems as company structures in order to do business here and in the rest of the world.
In England and Wales, the Land Registry estimates that it receives around 3,000 applications each month affecting titles registered to overseas entities. Around two-thirds of these are registrations of leases, transfers or charges. Each of these transactions would trigger the proposed requirements. This is the point of having to register at each transaction. Even if the update is simply a statement confirming that there are no changes to report, the statement must be verified each time, filed at the right time and repeated if the completion date of the transaction changes. That is important to note, because anyone who has been involved in a property transaction knows that the transaction date can change regularly and I do not think it is necessarily proportionate for these entities, particularly when we have made it very clear—and this is thanks to the interventions of noble Lords on all sides of the House—that we are ensuring that the history of activity in these trusts is properly recorded, so there is, as I believe the noble Lord, Lord Fox, said, nowhere to hide. Also, 14 days is considered to be a challenging timeframe within which to require an update, especially given that it is required to be verified before submission to Companies House. Again, I sympathise with the concept, but the practicalities and mechanics of this are believed to be highly impractical.
As I have mentioned, some overseas entities would have to make many updates each year. Any noble Lords who have bought a property will know that completion dates can change, which can be very frustrating. Every time they change you would be required to provide the register with further information no more than 14 days before the new completion date and have that information verified. This would be burdensome.
My officials have also informed me that, in discussions on this amendment, while the Law Society understood the purpose of the amendment, it also highlighted how onerous it could be in least some situations. It expressed serious concerns about the drafting of the amendment relating to the provision of a statement no more than 14 days before the completion date of a transaction. The Law Society of Scotland, in discussion with my officials, also expressed reservations—so we have the Law Society and the Law Society of Scotland expressing significant reservations. I do not think any noble Lord in this House would want to go against the significant reservations of either the Law Society or the Law Society of Scotland, which have significant concerns about the potential negative impact on the Land Register of Scotland and people transacting with overseas entities.
I believe that this amendment would be disproportionate. We have made significant changes to how activities are reported, so that no one can hide in the accounts of these entities, which previously they could, by selling and buying during the process of the annual update. I ask the noble Lord, Lord Vaux, not to move his amendment.
I thank the noble Lord, Lord Vaux, for tabling Amendment 73. It relates to scenarios in which land is held by an overseas entity under a nominee arrangement. For example, a trust can instruct a law firm to act on its behalf as a nominee and the law firm therefore appears on the register in its capacity as the registered beneficial owner of the overseas entity holding the land. The overseas entity is required to provide information about its beneficial owners to Companies House. However, in this case, because the law firm nominee is not a trustee of the trust that has instructed it, no information about the trust is required to be provided.
We agree that this gap in the requirements should be closed. I thank the noble Lord for his input and, along with Transparency International, for bringing it to our attention. However, the drafting of the amendment is not quite right, so I cannot accept it today. Instead, the Government will undertake to table an amendment to address this gap at Third Reading. I trust this will satisfy the noble Lord. and respectfully ask him not to move his amendment.
Lord Vaux of Harrowden
“Updating the register of overseas entities
(1) The Economic Crime (Transparency and Enforcement) Act 2002 is amended as follows.(2) In section 7, after subsection (8) insert—“(8A) A registered overseas entity must, as soon as reasonably possible and in any event within 14 days of becoming aware of any change, deliver to the registrar details of any change to the information that has been previously provided to the registrar in accordance with section 4 or, if information has been previously delivered to the registrar under this section, any change to the latest information provided under this section, including the date such change occurred. (8B) A registered overseas entity must deliver to the registrar the information required in accordance with subsection (8A), or deliver to the registrar a statement that there has been no change to the information currently held on the register, no more than 14 days prior to the acquisition or disposal of any qualifying estate in the United Kingdom.(8C) For the purposes of this section, “qualifying estate” has the meaning given by paragraph 1 of Schedule 4A to the Land Registration Act 2002.”(3) In section 8, at the end of subsection (3) omit “(1)”.”Member’s explanatory statement
This amendment would require that changes be notified to the registrar within 14 days of becoming aware of such change, bringing the register into line with the rules that apply to Persons with Significant Control under the Companies Act 2006, and adds an obligation to update the register immediately prior to property transactions in order to protect innocent counterparties.
Lord Vaux of Harrowden (CB)
My Lords, I thank all noble Lords who have taken part in this short debate. I thank the Minister for engaging on the subject as he has done. He used the words “jaded” and “cynical” earlier, and I hope he does not think they apply. In most cases, our engagement on all this has been extremely constructive, and I thank him, in particular, for what he has just said on Amendment 73. We will wait with interest to see the amendment, but I am glad that the Government recognise that there is a real problem.
In respect of Amendment 72, the Minister made a few points. First, he suggested that it would introduce a further layer of cost and risk. As I said before, I fundamentally disagree with that. The costs are pretty small. All we are asking is that, in the same way the PSC register is updated, it is updated on a timely basis within 14 days of any change, and that it is updated 14 days before a transaction. Yes, there is a small cost there, but, in most cases, because the register is updated regularly anyway, all that would be required is a confirmation that it is up to date. There are lots of papers and documents and things that are brought into a property acquisition—the usual searches, et cetera—and this would just be another one. It would not add a significant cost, in my view. It would actually reduce the risk to the innocent party because the innocent party would now know who they were dealing with. If we do not do this, they will not know that, because it could have changed any time in the last 12 months. To be clear, we are not talking about trusts here; we are talking about overseas entities.
Another comment is that 14 days is too difficult. I do not understand that. It is apparently because it has to be verified. It is exactly the same requirement as it is for persons with significant control, who also will need to be verified. There is no difference. If it is too difficult for this, it must be too difficult for that, or, if it is okay for persons of significant control, it is okay for this. I reject the concept that it is too difficult.
The Minister mentioned significant reservations from the Law Society. I think that was the meeting that I was at. I know first hand that it had significant reservations about my initial drafting of the amendment, which is why, as I explained earlier, the amendment changed to meet those reservations. My understanding when I left that meeting was that, while it did not necessarily like this concept—to be honest, it would not, would it?—I think it was relatively comfortable that it now worked. We are getting into he-said-she-said territory here.
I did not hear anything that changed my view that we needed to change this anomaly. It is not acceptable that innocent parties can end up accidently enriching a sanctioned individual, for example. I would like to test the opinion of the House.
Lord Agnew of Oulton
Lord Agnew of Oulton (Con)
My Lords, I am most grateful to the Minister for his response to my opening comments on this amendment. However, I remain very concerned. I shall make four very quick points. I am very conscious that people want to get home; I was told we had to wrap things up by 7.30 pm, and we will not be far off that.
First, we already know how the register is working, as we have had real-life experience over the past year. Just to give noble Lords an idea of it at the moment so we know what needs to be improved, it is already possible to request information from HMRC if a trust is based outside the UK and the EEA. However, HMRC can provide this information only if it relates to very specific types of trust. Astonishingly, an overseas trust that owns an overseas company that holds UK land is not required to register with HMRC’s Trust Registration Service, so the information cannot be requested. We know that is happening now.
Then we can move beyond that. We talk about interested parties having access, and the Minister talks about widening that access, but we need to see how it has been working in reality. Transparency International has so far made six requests to HMRC for information under the Trust Registration Service. Every single one has been rejected. The reasons given were: “The trust is not required to register”; “The trust may not have registered”; “The details you have provided did not allow us to match a trust; “The trust may be registered but it is not covered by the data”; “The trust may be registered but is not recorded as having a controlling interest”; and “However we cannot confirm which specific reason or reasons apply”. That is how it works at the moment. I cannot see why the Government cannot improve that without a consultation.
I also reject the Minister’s comments on confidentiality and his assumption that this is about a completely open register for anybody to get any information. We repeatedly said at Second Reading and in Committee that there are many legitimate people who deserve confidentiality. The example I use is of a female popstar who buys a house. She does not want fans on her doorstep. There are people escaping bad experiences in other countries and so on. What the consultation should be about is transparency but what exceptions would exist for those who are legitimate in seeking them.
Let me sum up why I am so worried about a consultation. I take very seriously the commitments given to me by my noble friend, and I thank my noble friend the Chief Whip who took time to meet me a couple of hours ago and intervened to try to get some strong reassurances in the Bill. However, I say for those who have not been a Minister that the way consultations work in government is that if it is not primary legislation, there is a thing called a write-round. Round it goes to every department, but guess who sits at the top of the top trump game? It is our friends the Treasury. Having been a Treasury Minister for two years, I can offer the House three examples of why I do not think it will—
Lord Agnew of Oulton (Con)
Okay, I will not. I shall give one example, which is golden visas. Golden visas were known for five or more years to be a conduit for bad money into this country. Everybody knew that, but it took the Treasury five years to finally close that loophole. That is why I do not like the idea of a consultation. I would like to test the opinion of the House.
Lord Johnson of Lainston
“(ba) any application or other document delivered to the registrar under regulations under section 23(1A) (disclosure of protected trusts information);”Member’s explanatory statement
This means that applications or other documents delivered to the registrar under new section 23(1A)(inserted by my other amendment to Clause 162) are not to be made available for public inspection as part of the register of overseas entities.
Member’s explanatory statement
This is consequential on my amendment to Clause 69, page 64, line 10.
Lord Johnson of Lainston
Member’s explanatory statement
This is consequential on my amendment to insert a new Schedule before Schedule 6.
Member’s explanatory statement
This is consequential on my amendment to insert a new Schedule before Schedule 6.
(c) the disclosure is permitted by regulations under subsection (1A).(1A) The Secretary of State may by regulations make provision requiring the registrar, on application, to disclose relevant protected trusts information to a person (unless required to refrain from doing so by regulations under section 25).(1B) In subsection (1A) “relevant protected trusts information” means protected trusts information other than information as to—(a) the day of the month (but not the month or year) on which an individual was born, or(b) the usual residential address of an individual.(1C) The regulations may make provision as to—(a) who may make an application;(b) the grounds on which an application may be made; (c) the information to be included in and documents to accompany an application;(d) the notice to be given of an application and of its outcome;(e) how an application is to be determined.(1D) Provision under subsection (1C)(e) may in particular provide for a question to be referred to a person other than the registrar for the purposes of determining the application.(1E) The regulations may include provision authorising or requiring the registrar to impose conditions subject to which the information is disclosed (including conditions restricting its use or further disclosure).(1F) The regulations may create offences in relation to failures to comply with conditions imposed by virtue of subsection (1E).(1G) The regulations must provide for any such offence to be punishable—(a) on summary conviction in England and Wales, by a fine;(b) on summary conviction in Scotland, by a fine not exceeding level 5 on the standard scale;(c) on summary conviction in Northern Ireland, by a fine not exceeding level 5 on the standard scale.(1H) Regulations under this section may in particular confer a discretion on the registrar.(1I) Regulations under this section are subject to affirmative resolution procedure.”Member’s explanatory statement
This confers a regulation-making power on the Secretary of State to make provision requiring the registrar to disclose protected trusts information where an application is made by a person in accordance with the regulations.
Lord Johnson of Lainston
“24 Consultation about regulations under section 23(1) The Secretary of State must consult the Scottish Ministers before making regulations under section 23 that contain provision that would be within the legislative competence of the Scottish Parliament if contained in an Act of that Parliament.(2) The Secretary of State must consult the Department of Finance in Northern Ireland before making regulations under section 23 that contain provision that—(a) would be within the legislative competence of the Northern Ireland Assembly if contained in an Act of that Assembly, and(b) would not, if contained in a Bill for an Act of the Northern Ireland Assembly, result in the Bill requiring the consent of the Secretary of State under section 8 of the Northern Ireland Act 1998.””Member’s explanatory statement
This requires the Secretary of State to consult before making regulations about the disclosure of protected trusts information (see my amendment to Clause 162, page 152, line 16) if that provision would be within the legislative competence of the Scottish Parliament or Northern Ireland Assembly.
Lord Johnson of Lainston
Member’s explanatory statement
This amendment is consequential on my amendment to page Clause 163, page 153, line 21.
“(7A) Regulations under this section may in particular confer a discretion on the registrar.”Member’s explanatory statement
This amendment enables any provision made by regulations under new section 25 of the Economic Crime (Transparency and Enforcement) Act 2022 to confer a discretion on the registrar.
Lord Johnson of Lainston
“(4A) Regulations under this section may in particular confer a discretion on the registrar.”Member’s explanatory statement
This amendment enables any provision made by regulations under new section 28A of the Economic Crime (Transparency and Enforcement) Act 2022 to confer a discretion on the registrar.
Lord Johnson of Lainston
“Financial penalties: interaction with offences
In section 39 of the Economic Crime (Transparency and Enforcement) Act 2022 (financial penalties), in subsection (4)—(a) for paragraph (a) (but not the “and” at the end) substitute—“(a) no financial penalty may be imposed under the regulations on a person in respect of conduct amounting to an offence if—(i) proceedings have been brought against the person for that offence in respect of that conduct and the proceedings are ongoing, or(ii) the person has been convicted of that offence in respect of that conduct,”;(b) in paragraph (b), omit “or continued”.”Member’s explanatory statement
This amendment provides that regulations must provide that no financial penalty may be imposed on a person in respect of whom criminal proceedings are ongoing; at the moment it is the other way around so that criminal proceedings cannot be continued once a penalty is imposed.
Lord Johnson of Lainston
“SCHEDULE 5A DUTY TO DELIVER INFORMATION ABOUT CHANGES IN BENEFICIARIES1_ The Economic Crime (Transparency and Enforcement) Act 2022 is amended as follows.2_(1) Section 7 (updating duty) is amended as follows.(2) In subsection (1)(a) and (b), for “statement and information mentioned” substitute “statements and information mentioned”.(3) In subsection (3)—(a) omit the “and” at the end of paragraph (a);(b) at the end of paragraph (b) insert “, and(c) the statement in row 1 of the table set out in subsection (4A), or the statement and information listed in row 2 of that table.”(4) In subsection (4)—(a) omit the “and” at the end of paragraph (a);(b) at the end of paragraph (b) insert “, and(c) in the case where the information provided under subsection (1)(b) includes information that a person who ceased to be a registrable beneficial owner was a trustee, the statement in row 1 of the table set out in subsection (4A), or the statement and information listed in row 2 of that table.”(5) After subsection (4) insert—“(4A) This is the table referred to in subsections (3)(c) and (4)(c)—
Statement | Information | |
1 | A statement that the entity has no reasonable cause to believe that anyone became or ceased to be a beneficiary under the trust at a time during the relevant period when the trustee was a registrable beneficial owner of the overseas entity. | |
2 | A statement that the entity has reasonable cause to believe that at least one person became or ceased to be a beneficiary under the trust at a time during the update period when the trustee was a registrable beneficial owner of the overseas entity. | 1. The information specified in paragraph 8(1)(d) of Schedule 1 about each such person, or so much of that information as the entity has been able to obtain. 2. The date on which that person became or ceased to be a beneficiary under the trust, if the entity has been able to obtain that information.” |
Statement | Information | |
1 | A statement that the entity has no reasonable cause to believe that anyone became or ceased to be a beneficiary under the trust at a time during the relevant period when the trustee was a registrable beneficial owner of the overseas entity. | |
2 | A statement that the entity has reasonable cause to believe that at least one person became or ceased to be a beneficiary under the trust at a time during the relevant period when the trustee was a registrable beneficial owner of the overseas entity. | 1. The information specified in paragraph 8(1)(d) of Schedule 1 about each such person, or so much of that information as the entity has been able to obtain. 2. The date on which that person became or ceased to be a beneficiary under the trust, if the entity has been able to obtain that information.” |
This requires an overseas entity that has a beneficial owner who is a trustee to provide information about changes in beneficiaries under the trust that take place during an update or other period (rather than just providing a snapshot of the beneficiaries at the end of the period).
Lord Johnson of Lainston
“(1A) No regulations may be made under sub-paragraph (1) after the end of the period of two years beginning with the day on which the Economic Crime and Corporate Transparency Act 2023 is passed.”Member’s explanatory statement
This provides that the power to make regulations under new paragraph 9 of Schedule 6 to the Economic Crime (Transparency and Enforcement) Act 2022 (exclusion of descriptions of registrable beneficial owner) cannot be used after the end of the period of two years beginning with the day on which the Bill receives royal assent.
“(1A) The Secretary of State must consult the Scottish Ministers before making regulations under sub-paragraph (1) that contain provision that would be within the legislative competence of the Scottish Parliament if contained in an Act of that Parliament.”Member’s explanatory statement
This requires the Secretary of State to consult before making regulations under new paragraph 9 of Schedule 6 to the Economic Crime (Transparency and Enforcement) Act 2022 (exclusion of descriptions of registrable beneficial owner) that contain provision that would be within the legislative competence of the Scottish Parliament.
Lord Johnson of Lainston
“““the Companies Acts” has the meaning given by section 2(1) of the Companies Act 2006;”Member’s explanatory statement
This amendment inserts a definition of “the Companies Acts” into the Economic Crime (Transparency and Enforcement) Act 2022.
Lord Johnson of Lainston
“(1A) In section 21 of the Land Registration etc. (Scotland) Act 2012 (application for registration of deed), the subsection (5) inserted by the Economic Crime (Transparency and Enforcement) Act 2022 is renumbered subsection (4A).”Member’s explanatory statement
This amendment renumbers a provision to avoid two subsections which were inserted into a section by different Acts at around the same time from having the same subsection number.
Stop and Search
(10 months, 3 weeks ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Ponsonby of Shulbrede (Lab)
My Lords, I remind the House that I sit as a youth and adult magistrate in London and that I regularly deal with knife-crime cases. In concluding her Statement in the other place, the Home Secretary said:
“It is always heartbreaking and distressing to read reports about stabbings and shootings. I am struck by how often mothers of murdered young black men say that stop and search could have saved their sons’ lives. We owe it to them to heed their call”.—[Official Report, Commons, 19/6/23; col. 570.]
I too have spoken to the mothers of murdered young black men, and I have heard some of them say that stop and search could have saved their son’s life. But what I have also heard mothers say, much more forcefully, is that their sons were routinely and repeatedly stopped by the police, and that this led to a breakdown in trust of the police, so their sons felt that they had nowhere to turn when they felt threatened.
Very often in court, when I have a young man in front of me for a knife-crime incident, he says that he was carrying it for his own protection. This is a deadly cycle of mistrust and escalation, which has led to a 70% increase in knife crime over the last seven years. Knife-enabled rapes and knife-enabled threats to kill are at record highs, with some of the steepest increases in the suburbs, smaller cities, towns and counties.
The Statement says:
“Black people account for about 3% of our population, yet almost a third of under-25s killed by knives are black. Ninety-nine young people lost their lives to knife crime in England and Wales in the year to March 2022: 31 of them were black; 49 were white; 16 were from other ethnic minority groups; and three victims did not have their ethnicity recorded”.—[Official Report, Commons, 19/6/23; col. 569.]
This is a profound problem, which calls for an integrated and sustained response.
I welcome the references to the introduction of stronger community scrutiny and better data collection. These were first recommended many years ago. Can the Minister explain what is meant by “stronger community scrutiny”? There are different models of community scrutiny in different parts of the country. Indeed, there are different models within London. What do the Government mean by “community scrutiny” in the context of knife crime?
What about other repeated recommendations such as police training on the use of force, training on de-escalation and communication skills and proper data collection on traffic stops? None of these was referred to in the Statement. How many of the 18 recommendations by the Independent Office for Police Conduct last year have been fully implemented? The noble Baroness, Lady Casey, called for “a fundamental reset” of the Met’s use of stop and search powers. Is this Statement part of that reset?
Body-worn video cameras should have been a game-changer in the effectiveness of stop and search. They should have been, but have they been? Can the Minister say how many stop and search operations are carried out without body-worn video and why that may be?
I agree that stop and search is a necessary tool as part of a proper strategy, but we need that wider strategy too. Why is the violence reduction unit approach being used by the Home Secretary in only 18 areas, when knife crime is rising in communities across the country? Why has there been no new serious violence strategy for five years? Why is there no comprehensive action on youth mentors and support for early intervention?
Stop and search must be applied judiciously, proportionately and legitimately. It can save lives. At present it comes with the cost of distrust and alienation. It must be applied as part of a wider strategy to rebuild trust and re-energise policing by consent.
Lord German (LD)
My Lords, we on these Benches look at this Statement in respect of whether it will produce the outcome the Government are seeking, which is, of course, a reduction in knife crime. Regrettably, I believe this Statement is one which ramps up the rhetoric that strong-arm actions will put an end to knife crime. That rhetoric needs to be tested against the evidence to see whether it works.
Police stop and search is an intrusive power that is used disproportionately against visible minorities. You are seven times more likely to be stopped and searched by the police if you are black than if you are white, if suspicion is required; and 14 more times more likely to be stopped and searched if no suspicion is required. The proposal in the Statement from the Home Secretary is based on suspects of violent crime and talks about the implications for the black community, but there is a danger that these figures can be easily misinterpreted. There is a difference between a few people committing a large number of offences and a large number of black people being involved in violent crime. I suspect that the reality is the former. Perhaps the Minister could confirm that when referring to the figures in the Statement.
More than that, the Government’s own research suggests that stop and search is not an effective deterrent in reducing offending. Operation Blunt 2, from 2008 to 2011, demonstrated that ramping up stop and search in order to reduce knife crime has little or no effect, but Operation Trident in the early 2000s demonstrated that where police and the black communities worked together to reduce black-on-black shootings, there was a significant increase in prosecutions and a reduction in the number of offences. Also, the Government’s own evidence, which they chose to look at in respect of the use of stop and search, produces at most a static response, but often, it shows that simply increasing the use of that power is unlikely to reduce crime. That was the Government’s own evidence in the research they commissioned.
On the one hand, we have the noble Baroness, Lady Casey of Blackstock, pulling in one direction, as mentioned by the noble Lord Ponsonby, in wanting stop and search to be based on collaboration, listening and engagement; and on the other we have this Government pulling in the opposite direction, by increasing the number without that necessary collaboration. So, do the Government believe, against their own evidence, that if stop and search goes up, crime will come down? Have the Government considered the lessons learned from Operation Blunt 2? Secondly, do the Government agree that if a community views police activity as unfair, public trust and police legitimacy are weakened?
Finally, how do the Government intend to ensure, as the Statement says, that “every community” is
“able to trust in stop and search”.—[Official Report, Commons 19/6/23; col. 570.]?
How is that going to be brought about? How can it be brought about without the necessary collaboration which was part of the Casey report? I would be grateful if the Minister addressed those issues, because without that certainty, it is more likely that the rhetoric will fail and we will not enable the desired outcome which all of us want, which is to achieve a reduction in knife crime.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, I thank the noble Lords, Lord Ponsonby and Lord German, for their remarks. I defer to the extensive front-line knowledge of this subject of the noble Lord, Lord Ponsonby; I know he does a great deal of work on this. I shall make a few general remarks and then address some of the questions that have been posed.
It is not just my view but the view of the police that stop and search is fundamentally about saving lives and keeping the public safe, and that, where used proportionately and judiciously, as the noble Lord, Lord Ponsonby, said, it works, and I will attempt to provide the statistics that prove that. For example, since 2019 more than 40,000 weapons have been seized through stop and search and 220,000 arrests have been made. The 2021 inspectorate report concluded that the vast majority of stop and search decisions are based on reasonable grounds. That is potentially thousands of lives saved and countless violent incidents prevented.
The noble Lord, Lord German, referred to Operation Blunt 2, which I think he said took place between 2008 and 2011. In 2010, this was written, and I agree with it:
“If serious violence can be prevented, then police officers must be empowered to conduct blanket stop-and search-operations which target the most likely individuals. Yes, it is a draconian power; yes, its use should be limited. But there are circumstances where such powers are absolutely necessary”.
That was the noble Lord’s colleague, the noble Lord, Lord Paddick, writing in the Daily Mail in 2010, and I agree with him.
To those who claim that it is a disproportionate or racist tool, I say that we must be honest about what this means for victims. Black people are four times more likely to be murdered than white people, and they are more likely to be victims of knife crime than young white men—that is the disproportionality that we are focused on stopping. It is important that we look at the matter with a cool head and on the basis of the evidence.
The emerging picture based on London suggests that, when we adjust the data to consider the proportion of suspects in an area and its demographics, rather than considering the data for the country as a whole, the disproportionality of stop and search falls away hugely. My right honourable friend the Home Secretary referred to this as
“a more sophisticated approach to calculating disparity”.—[Official Report, Commons, 19/6/23; col. 570.]
I urge noble Lords to consider and reflect on those facts, while acknowledging that more work needs to be done on the methodology.
Of course, it is right that the powers are used in a responsible and measured way, which is why engagement with communities has to be respectful, as both noble Lords noted. It is right that the powers are subject to the highest levels of scrutiny. We now see very few complaints about individual stop and searches. Training on legal and procedural justice has improved, and we have seen confidence levels increase.
As outlined in the Statement, the Home Secretary wrote to all chief constables, and one of the things she asked of them was to be “proactive” in publishing body-worn video footage. That will obviously protect officers who conduct themselves properly, but it is also designed to instil greater public confidence, which is the linchpin of our model of policing by consent. The Government are looking carefully at strengthening local community scrutiny.
Transparency is of course vital, as is community engagement. We want every community to be able to trust stop and search, and we want to present a clear picture of the stop and search landscape that shows the good work being done on the front line. The Government will amend the Police and Criminal Evidence Act 1984 Code A to make clear when the police should communicate when suspicionless powers are used in a public order and Section 60 context. Suspicionless stop and search must be used responsibly, but we cannot do without it.
We are also mandating data collection on stop and search, to which I referred, as part of the annual data requirement for the government statistics bulletin that is published every year. We collect more data on stop and search than ever before, and this is posted online, enabling police and crime commissioners and others to hold forces to account for their use. Disparities in the use of stop and search remain, but they have continued to decrease for the last three years.
I said that there will be a more sophisticated approach to calculating disparity in the Metropolitan Police Service, which is where about 40% of stop and searches take place—I note the noble Lord’s point about various regional disparities in methods. I do not know the precise answers to his questions about regional engagement, but I will endeavour to find out and report back as soon as I am able.
I do not have the statistics to hand on body-worn video, and in fact I do not know whether the data is collected—I certainly hope it is. I would like to look into that further and report back to the noble Lord, Lord Ponsonby. The fact is that there is broad cross-community support for this in principle, especially for searches for weapons, but we acknowledge and stress that this is contingent and fragile. So, to that end, this transparency is absolutely necessary.
I was asked about the serious violence strategy and the various programmes and what have you that the Government have put in place. The Government made £110 million available this financial year, 2023-24, to tackle serious violence, including murder and knife crime. This includes funding for a network of 20 violence reduction units, delivering early intervention and prevention programmes to divert young people away from a life of crime, and bringing together local partners to tackle the drivers of violence in their areas. VRUs follow a public health approach and have reached over 215,000 vulnerable young people in their third year of funding alone.
There is further investment in our Grip hotspot policing programme, to which I have referred from the Dispatch Box before. It operates in the same 20 areas as VRUs and is helping to drive down serious violence by using data processes to identify the top serious violence hotspots. Those two programmes alone have prevented an estimated 136,000 violent offences in their first three years of operation.
We invested £200 million over 10 years in the Youth Endowment Fund, which provides funding for over 230 organisations that have reached over 117,000 young people since it was set up in 2019.
Finally, we have introduced the serious violence duty, which requires public bodies to work collaboratively, to share data and information, and to put in place plans to prevent and reduce serious violence within their local communities based on a public health approach to tackling the scourge of knife crime. Objectively, it is not right to say that the Government have not updated their serious violence strategies and processes.
I remind the House that serious violence reduction orders are being trialled; they have been since April. For the edification of the House, six SVROs have been issued—five in Merseyside and one in the West Midlands. Four of those are live in the community and two will become live when the offenders are released from prison. Officers will now proactively stop and search those with an order, deterring them from carrying weapons and making it more likely that they will be caught if they persist in doing so. It is obviously too early to assess the success or otherwise of this program but anecdotal evidence so far from the Merseyside Police would suggest that it is proving a very useful tool.
I am proud of this Government’s achievements on policing: we have a record number of police officers, more than ever before; 100,000 weapons have been seized since 2019; and crime is falling—in fact, serious violent crime has fallen by 40% since 2010.
As I have said before from the Dispatch Box, percentages are a very dry way of looking at this. We all have to bear in mind the points I made in my opening paragraph of remarks that this is really about individuals. The fact is that the disproportionality around stop and search should be borne very carefully in mind when we look at the proportion of those who are most badly affected and most likely to become victims.
I hope that I have answered the main questions. If I have not, I will come back to them.
Lord Hayward (Con)
My Lords, I live in a street in inner London which is well known to the noble Lord, Lord Kennedy, as he went to school via it. On Thursday night, I chaired the selection of the impressive Festus Akinbusoye, the police and crime commissioner of Bedfordshire. He knows only too well how you can achieve from an ethnic minority in the police community. On Friday, I had seven police cars and ambulances outside my house, dealing with a machete attack in the house next door. The police dealt with the case in an exemplary manner but, as the noble Lord, Lord Ponsonby, identified, there is the risk of alienation. From the pictures I have, not one of the policemen dealing with that case was non-white. Is it really surprising, when it comes to stop and search, that there is alienation among the ethnic communities, when one faces that sort of position? Could my noble friend the Minister identify what efforts are being made to improve the diversity of police forces across the United Kingdom?
Lord Sharpe of Epsom (Con)
I thank my noble friend for his question, and I am delighted to hear him describe the police’s activities as exemplary. I have three points to make on this subject.
First, the police themselves, in particular the Metropolitan Police, have said that they need to do a good deal more in this regard, and I certainly trust them to do that. The Metropolitan Police, under Sir Mark Rowley, should be given time to make the changes we all want to see.
Secondly, I emphasise again that young black men are disproportionately more likely to be victims of serious and violent crime, but the 2021 report by the inspectorate concluded that the vast majority of searches were conducted on reasonable grounds. It is for the police to make sure that their powers are understood and to explain themselves carefully. The expanding use of body-worn cameras, to which we have referred, will go a long way to help that. As I said earlier, we should all accept and acknowledge that community support is there in principle, although it is contingent and fragile. These measures will go a long way to solidify that while trust is being restored.
Finally, I am pleased that my noble friend has mentioned Festus Akinbusoye. He is an excellent PCC, and I am sure that he will become an excellent MP in due course. He has long been a supporter of mine, and it is a great pleasure to return the favour.
Lord Davies of Brixton (Lab)
My Lords, I hope the Minister will agree with me that the all-too-common stereotype of knife crime being simply a black issue is dangerously counterproductive, and that when the Home Office says that stop and search works, it is a statement that is more in search of a headline and, in practice, needs to be heavily qualified. The figures show, I believe, that stop and search on its own is a blunt and ineffective tactic. What we need to do is understand better the root cause of this sort of crime and the reasons why some of our young people feel that they need to carry a knife. There are many causes, of course, but I would suggest that lack of faith in the police is an important one, particularly among those who suffer from this type of crime. In large part, this is driven by what the Independent Office for Police Conduct found to be the “disproportionate impact” of stop and search on black, Asian and minority ethnic communities. When making a Statement about suspicionless stop and search, how can the Minister fail to make any reference to the well-evidenced racist and discriminatory use of it when we know that this leads to less, not more, confidence in policing?
Lord Sharpe of Epsom (Con)
My Lords, I am afraid that I disagree with the noble Lord in his assertions. Earlier, I gave statistics on the number of knives that have been removed from the streets and the number of crimes that have been prevented because of stop and search. I will give some more examples. In Manchester, the chief constable, Stephen Watson, has said that a 260% increase in the use of stop and search over a defined period correlated with a 50% reduction in firearms discharges and a fall in the number of complaints. I think that there has been a concerted effort to improve; my right honourable friend the Home Secretary said this the other day in the House of Commons. We need to improve the way in which stop and search is applied but also understood; to the point made by the noble Lord, Lord Ponsonby, it has to be applied judiciously, proportionately and legitimately.
On the proportionality side, I go back to my original comments. Young black men are disproportionately likely to be the victims of crime. There are disparities in the use of stop and search—they remain and we acknowledge them—but it is positive that they have continued to decrease from nine and a half times in 2017-18 under the 2011 census data to 4.9 times in 2021-22 under the 2021 census data. I also referred to the changing methodology in collecting these statistics, which brings the numbers down even further. However, as I say, that methodology is very much in its initial stages. We will work more on it and will, I am sure, hear more about it.
Lord Teverson (LD)
My Lords, was not the exhortation by the Home secretary to chief constables an example of the Executive getting involved in operational matters? It seems to me completely straightforward that it was. Is that not wrong in terms of the way our policing should work?
Lord Sharpe of Epsom (Con)
No, I do not think it was. She has written to all chief constables and asked them to provide strategic leadership and direction when it comes to the use of stop and search powers. That is not operational. She asked them to ensure that every officer is confident in the effective and appropriate use of all stop and search powers, including the use of suspicionless powers. That is not operational. Investigating instances where somebody is obstructing or interfering with the use of these powers and, if necessary, making arrests is not operational. As I have also said, she asked them to be proactive in publishing body-worn video footage, which will protect officers who conduct themselves properly and will also lead to instilling greater public confidence.