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Residential Estate Management Companies
(1 week, 2 days ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Caroline Voaden (South Devon) (LD)
I beg to move,
That this House has considered residential estate management companies.
I thank the Backbench Business Committee for listing this debate. It is a pleasure to serve under your chairmanship, Mr Stuart. It is good to see so many MPs back straight after the Easter break, ready to get stuck into the gritty issue of residential estate management companies, whose poor business practices have affected so many of our constituents. In that spirit, I come here today to address the Minister and to call for urgency from the Government in dealing with some serious issues, and for more regulation and new legislation.
The issues raised repeatedly by constituents cause not just frustration, but in some cases serious distress. They cost significant amounts of money and sometimes lead to the loss of the entire value of a property investment at the point of resale. The situation for both leaseholders and freeholders has become so bad that such estates are now commonly referred to as “fleecehold” instead of leasehold. We note that the Government’s White Paper on leasehold reform, published last month, said that their legislation will make conversion to commonhold easier, but we feel that that will not go far enough. We look forward to seeing the legislation laid before the House. The previous Secretary of State—then the Secretary of State for Levelling Up, Housing and Communities—said that he was a “man in a hurry” to liberate leaseholders from unfair practices. He clearly was not in quite enough of a hurry, so I urge haste on the current Secretary of State.
The Liberal Democrats have long called for reform for the 4.8 million existing leasehold properties in England. In fact, it has been a campaign of ours since Lloyd George introduced the people’s Budget in 1909. We will keep going until we see some change. We want leasehold tenures abolished for all properties, including flats, and we want all existing leaseholds converted into either freeholds or, where appropriate, commonholds. We are disappointed that existing leaseholders are not covered by the Government’s proposals and we urge a rethink.
Matt Western (Warwick and Leamington) (Lab)
I congratulate the hon. Lady on securing this debate. To add to the point she is making, is she not shocked by the scale of what we are seeing across the country? Of the new homes built in 2021-22 by the 11 largest developers, 80% are subject to fleecehold.
Caroline Voaden
Yes, I absolutely agree. I will come on to that a little later.
To get back to the core issue of estate management companies, every type of resident—leaseholders and freeholders—is affected by rogue practices. Perversely, the situation is often more difficult for freeholders, who do not have the same statutory rights as leaseholders to take challenges to a first-tier tribunal. Where the landlord of an estate is a housing association, no one has any right to go to tribunal if that landlord fails to manage the property properly. That, too, needs to be looked at, but it falls outside the scope of today’s debate.
Whichever way we look at it, residents—whether housing association tenants, private tenants, owner-occupiers or retirees, living in a house or a flat—are being ignored, dismissed, intimidated and, frankly, fleeced by management companies that are not subject to any kind of regulation. We have all seen what happened in the water industry when private operators were allowed to focus solely on the profit line, ignoring their responsibilities to the environment while keeping shareholders happy. I believe we are looking at the next great scandal of our time: companies that may be owned by a shadowy collection of overseas investors eating up the smaller players in the UK market, building up their wealth and size so that they can ride roughshod over anyone who is tenacious enough to question their methods or ask for legitimate explanations of where their money has gone.
Calum Miller (Bicester and Woodstock) (LD)
Across my constituency, from the largest developments with more than 1,000 homes to the smallest with just a dozen homes, residents are benighted by the lack of transparency of those who run the management companies. Does my hon. Friend agree that a great step forward would be for the Government to insist on the timely publication of itemised accounts, so it is much clearer to residents how their money is allegedly being spent on their behalf by the management companies?
Caroline Voaden
I absolutely agree and will come on to that as well.
As a new MP coming into this place, I realised that some issues would be pertinent only to my constituency and others would reflect similar casework elsewhere, but when I reached out to colleagues to see who else was dealing with casework about estate management and particularly FirstPort, I was shocked at the response I got. At least half my hon. Friends on the Liberal Democrat Benches are supporting residents whose properties and estates are managed by FirstPort, and a dozen of us were in the room to question managing director Martin King when he responded to our invitation and came to Parliament to answer some of our more urgent questions. Following our invitation, he was also invited by Labour and Conservative MPs. He must feel very popular with so many invitations to Parliament, but it is rather a reflection of the desperation of so many of our constituents, who have exhausted all other avenues to raise complaints with FirstPort.
Martin King’s company manages more than 310,000 homes across England, Wales and Scotland, so we are talking about at least half a million people dealing with just this one company. It is extremely disappointing to report that since the Lib Dem meeting, at which great things were promised, the only response we have received from the south-west regional operations director for the company has been one automatic email reply. It is not good enough.
Max Wilkinson (Cheltenham) (LD)
It is the same experience for residents, is it not? When MPs ask questions of FirstPort, we do not get any replies. People turn up, smile and say nice words—soothing things—but nothing happens. The residents get the same thing. That includes a 94-year-old woman whose daughter contacted me to say that she was refused a request to install a stairlift and she cannot sell the property, because the management fees that FirstPort charges are so high, so she is effectively trapped, unable to get up and down the stairs. Is that not a disgrace and does it not go to show that FirstPort just doesn’t give a damn?
Caroline Voaden
I agree that it is an absolute disgrace. We must have some kind of legislation to bring these companies to book.
In the UK, we have a rather strange situation whereby a new housing estate is built, but the council may not adopt the new area, so the builder has responsibility for roads, green spaces and communal areas and then passes that on to a third-party management company. Residents end up paying council tax on the one hand and estate management fees on the other. These charges can increase at any time, with no accountability or redress.
The Competition and Markets Authority has recommended ending the private estates model, which has been used for 40% of all new builds across Britain in the last five years, and potentially more, as the hon. Member for Warwick and Leamington (Matt Western) said. The CMA has recommended mandatory adoption by local councils of public amenities on new housing estates. Even when roads are accessible to the general public and green spaces can be enjoyed or used by anyone, residents can end up being responsible for their upkeep through service charges. The tenants of such developments pay both council tax and an estate management charge, yet they often receive a far worse service than those who live in adopted developments and are subject only to council tax, so I urge the Minister to consider ending the practice of shared ownership of public spaces for the vast majority of new developments. I would like to see a presumption that the shared areas around new developments are almost always adopted by the local authority where the development is standard in nature.
Ahead of this debate, I asked the House of Commons Library to engage with people who had signed relevant petitions. More than 1,100 people responded, one third of whom were freeholders. Ninety-four per cent said they were unhappy or very unhappy with the services provided by their management company; 94% said the service charges were unfair; and 94% said the transparency of what the service charges were for was completely inadequate.
Olivia Bailey (Reading West and Mid Berkshire) (Lab)
My constituents living in Beansheaf Grange and Fairfields, to name just two developments in my constituency, recognise much of what the hon. Lady is saying. They tell me about high fees, poor service and uncleared rubbish, even leading to marauding rats. Will she join me in welcoming the firm action that this Government are taking to be in a hurry to address this deep unfairness?
Caroline Voaden
I am glad that the hon. Lady says that the Government are in a hurry. We are looking forward to seeing the legislation come before the House.
Out of the 1,100 people to whom I was referring, only 10 were happy with the way things were going with their management company. By anyone’s measure, that is a pretty shocking state of affairs. Respondents talked of shoddy workmanship, years of delays in getting repairs done, charges for gardening where no gardens exist, charges for new windows when windows are not replaced, charges for buildings insurance when there are no communal buildings, charges for new light bulbs when there is no communal lighting—it would be funny if it were not so serious. They talked of broken lifts, flooded car parks, leaking ceilings, including one that has been leaking for nine years, exorbitant insurance charges—the list goes on and on.
John Glen (Salisbury) (Con)
One other aspect worthy of scrutiny is the situation whereby a developer sets up a management company made up of family members of the original developer, leaving residents with a real challenge to get to the heart of who is truly accountable. That is something that I have seen in my constituency, and I am sure that it happens across the country. It is something that the Government need to address in whatever they come forward with.
Caroline Voaden
The right hon. Member raises a very good point. The ownership of some of these companies is murky to say the least.
Service charges are going up way beyond inflation, with no clear explanation of what the increases are for, and management companies refuse to give clear explanations when asked. At Camomile Lawn in Totnes in my constituency, residents were told that the annual contribution to a reserve fund had been increased from £2,000 to £8,000 a year—over 265%. Service charges were raised 23% based on a 10-year plan, but the plan was not shared with the residents, even when they asked. Accounting costs went up 55% in one year with no explanation given. This is a classic example of poor communication and a refusal to engage constructively with residents who want to understand the basis on which financial decisions are made.
The lack of transparency around service charges has been debated in this House many times, not least in December 2023 on Second Reading of the Bill that became the Leasehold and Freehold Reform Act 2024. It is way past time that management companies were required to act responsibly, treat residents with respect and provide timely, straightforward and accessible information to all residents, regardless of their status as leaseholders or freeholders, and regardless of age.
One resident said:
“We feel like we are being taken advantage of because they see us as old.”
That is a common reflection of those living in retirement villages. Too often, questions go unanswered, letters and phone calls are ignored, and justifiable requests for clarity and information on charges get rebuffed or given such poor responses that they do not mean anything. A delay in bill payment caused by asking a legitimate question often leads to a penalty charge for late payment—a sharp practice that clearly has to end. What is more, people are being forced to pay for the privilege of having asked those questions. One respondent said:
“I received a bill of more than £2,000 for incurring charges trying to see where my money was being spent—£25 per email, £35 per phone call and solicitor charges on top. I felt completely robbed.”
Older people often feel bullied by management companies—scared to question charges, confused by badly written statements and threatened with legal action if they are late paying charges because of wanting to question something. One resident said:
“Our management company leverage their familiarity with legal processes and the vast financial resources at their disposal to bully and intimidate leaseholders.”
This is not just about money; it is about how people feel living in a home that they may have put their life savings into buying. These homes are often sold as offering peace of mind, but one respondent said:
“I’m drained, scared and mentally exhausted. It feels like I’m being financially and emotionally worn down for simply asking for basic transparency and fairness.”
Another said:
“My mental health has been seriously impacted by the state of our building. No one should be unhappy in their home or feel like they don’t want to go home.”
When it comes time to sell, it is yet another tale of woe. Management companies do not respond to requests for information from solicitors; sellers are charged thousands of pounds for management packs that are required for the sale but take months to arrive; buyers get frustrated and pull out, and the price of the property is impacted. Meanwhile, service charges keep rising and ground rents keep being charged.
As my hon. Friend the Member for Cheltenham (Max Wilkinson) said, people are trapped in their properties. Service charges can make it impossible to sell, as they have risen way beyond those charged on new properties in the same area. Dr Janet Richardson’s father bought a flat for £106,000 in 2006. In 2022, he had to move into a care home and she tried to sell the flat. Some months after putting it on the market she received an offer for £10,000 below the purchase price, which she accepted, but for months FirstPort did not answer requests for information, so eventually the buyer pulled out. The flat went back on the market at an even lower price, but still has not sold, three years after first being put on the market. Dr Richardson has now had to agree to sell the property through an assured buyer scheme and says there is likely to be nothing left once all the debts have been paid. She has shown me the figures—it has all gone. If FirstPort had done its job properly she would probably have sold the flat for a reasonable amount two years ago, but of course there is no offer of compensation from FirstPort.
Finally, I come to the nightmare scenario that people face if they dare to attempt to get rid of FirstPort as the management company. Resident groups that have made repeated attempts to release themselves from FirstPort’s management have met resistance and obfuscation, forcing them to retain lawyers and pushing legal fees into the tens of thousands. Those cases have taken an emotional toll on residents, many of whom are elderly. One case in my constituency has been going on for three years and is still not resolved.
South-west based Baker Estates has sacked FirstPort from a new estate at Dartington because of non-performance. The Duchy of Cornwall also sacked the company at the vast Nansledan estate in Newquay. It is more than clear that these companies are not doing their job. Their raison d’être is clearly not that of operating in the best interests of their residents. Estate management companies have had it too good for too long.
As we look again in this place at leasehold properties, we must also look at the difficult situation for freeholders on privately managed estates. We need to bring forward leasehold reform as soon as possible. Does the Minister have a timeline for introducing the leasehold and commonhold reform Bill? Will the Government bring forward legislation to allow freeholders to challenge management charges and to take over the management of a development if they wish?
Have the Government considered greater regulation of estate management companies, such as through an ombudsman, so that residents have some recourse when they encounter problems? If not, will they consider doing so? Will they introduce legislation to prevent management companies from charging residents for legal costs when they ask legitimate questions? Will they introduce legislation to professionalise the management of estates and buildings, with a basic level of service required and a mechanism for complaint and escalation that is easily accessible to residents? I look forward to the Minister’s response. I now leave it to other hon. Members to share experiences of the fleecehold nightmare.
Several hon. Members rose—
Graham Stuart (in the Chair)
I do not need to remind Members to bob if they wish to be called in the debate. We are busily counting how many there are. To get everybody in would effectively allow a little more than two minutes each. I do not want to go below that, because it becomes a bit meaningless. We will try to keep everything short, and it would help if interventions were minimised.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
I am grateful to the hon. Member for South Devon (Caroline Voaden) for securing this debate. Since I first wrote on social media asking my constituents whether they had been affected by fleecehold, I have had hundreds of messages, showing how much of a problem this is across the country. The way we build, own and manage homes these days has become incredibly complex. It is frustratingly difficult to unravel it, or to hold anyone to account.
I spent Tuesday taking officers from FirstPort around the Cornish properties that the company manages. It gave the residents a good chance to ask questions about repairs that had not been done and service charges that they felt were not transparent. The officers dealt with queries openly and constructively. However, it is frustrating that it took my intervention for that to happen.
On Wednesday, I visited a relatively new estate in a village in the middle of the constituency, to look at—among other things—broken drains. The drains were not made to withstand cars driving over them, yet they are used in parking bays. The gulley does not drain and is blocked. Neither the builder, freehold owner, managing agent, housing provider nor council has accepted responsibility.
Adoption is an issue. One resident I met had been living on the estate for 13 years. The developer, Persimmon, finished the estate in 2012 but, as I understand it, because the school included in the plans was not finished, the estate is regarded as unfinished. The developer continues to own the roads and some green spaces, and remains the residents’ managing company. Residents are stuck in limbo, unable to take on the freehold ownership, and have no control over the managing agents. Residents have spoken to me about yearly service charge increases, ranging from 16% to 30%. They get a letter from the managing agent with a breakdown of costs, which are very general, lacking any explanation of why they are going up.
Procurement is also an issue. Residents of an estate in Truro were charged more than £12,000 in advance of felling a tree. That was the only quote obtained at the time and was added to residents’ bills as the maximum they could expect to pay, with the difference to be refunded in following years. That still has not happened, although that occurred about three years ago. Communication is a real issue: emails regularly go unanswered, property managers are unavailable or uncontactable, and owners’ meetings have not been held.
I would like to end by quoting one of my constituents, who lives in a fleecehold property:
“Overall it’s their lack of engagement and their attitude towards us that annoys many. They do what they want and charge us what they like and we simply have to pay up. There’s no regulation and virtually no way residents can complain…other than a potentially complex and expensive legal process.”
I am hopeful that this environment will begin to change with the implementation of the Leasehold and Freehold Reform Act 2024 and the introduction of the leasehold and commonhold reform Bill. The Government are committed to ending the unjust practice of fleecehold and will hopefully consult this year on how to reduce the prevalence of private estate management arrangements. I am sure that will be welcomed by my constituents and others across the country.
Lincoln Jopp (Spelthorne) (Con)
I congratulate the hon. Member for South Devon (Caroline Voaden) on securing this debate. I want to give the House a message of hope. FirstPort was responsible for Lendy Place, a development in Sunbury in my Spelthorne constituency some 10 minutes’ walk from where I live. I was contacted by Mr Saponaro, who set up the residents association there. The usual FirstPort management company rap sheet was at play there, with a constant change of account managers, service charge hikes, substandard accountancy and depletion of funds. The company was even at one stage proposing to charge an additional £40,000 to accommodate post-Grenfell regulations. When it was pointed out that Lendy Place was only three storeys high so those regulations did not apply, FirstPort simply said, “Whoops, sorry, we overlooked that,” and the bill went away.
The residents of Lendy Place were so disappointed with FirstPort’s performance that they did what the hon. Member for South Devon suggested, which can be a very tortuous process, and removed FirstPort as the managing agent. The residents are very happy with the new managing agent company, which, if I had texted a lot quicker, I would have a name for. I am meeting the residents of Lendy Place shortly and I look forward to reporting back to the House and similar forums how they went through the process of removing FirstPort. I can tell hon. Members with amazing tales of woe around this Chamber that there is hope. It can be done. With hon. Members’ support and no doubt their tenaciousness, Members’ residents can in future remove substandard management companies from their role.
Andrew Cooper (Mid Cheshire) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stuart. I thank the hon. Member for South Devon (Caroline Voaden) for securing this debate. The Government face many issues as a result of the unholy alliance between weak regulation, private sector greed and the long-term underfunding of local government. We have here a particularly egregious example. Others have spoken, and will continue to speak about the business practices involved in the sector. I want to focus on how we have allowed a system to develop where service charges, and therefore residential estate management companies, are being used inappropriately.
In some parts of the country people pay twice for the same basic services—once for their own and once for everyone else’s. There is an appropriate use of service charging for lifts, common areas and genuinely private outdoor spaces, but it should not be used for sewerage, most highways and the vast majority of play areas and open spaces. It is not uncommon to see a report to the council’s planning committee that says something like, “The council would not wish to take on the inspection and management of these areas.” We know why councils do that, but it must end and the Government need to act accordingly.
My ask to the Minister is simple. The Government should implement section 42 of the Flood and Water Management Act 2010 to require utility adoption for new developments; create an equivalent for highways adoption; and direct councils that the default for publicly accessible spaces is that they are maintained publicly, whether that is by the principal authority or by the town and parish council.
Alison Bennett (Mid Sussex) (LD)
It is a pleasure to serve under your chairmanship, Mr Stuart. Residents in Mid Sussex continue to fall victim to sky-high management fees and poor customer experience on a grand scale by companies such as McCarthy Stone and FirstPort. We need good quality homes for people to live in. We need them for first-time buyers, for growing families and for older people looking to downsize.
Those looking for suitable housing in their later years in Mid Sussex often look to flats run by McCarthy Stone. Sadly, many of them and their families are being badly let down. Perhaps the most shocking example involves a constituent of mine in Corbett Court in Burgess Hill, where McCarthy Stone charges up to £14,000 a year as standard. An elderly Corbett Court resident was charged £8.54 for an on-site staff member to come to their flat and pick up a remote control.
People in all stages of their life are finding themselves living on estates run by management companies like FirstPort. Constituents from Hassocks to Lindfield have written to me, setting out a raft of issues that residents are facing. FirstPort refused itemised breakdowns of fees despite huge increases, and in one instance a constituent was told that they had been incorrectly charged and were immediately told to pay £575 within three weeks—clearly a totally unreasonable timeframe, not least because the mistake had been made by FirstPort. All of that while residents tell me, “FirstPort’s communication has been non-existent and they are not completing their duties.”
People have been through enough. If we want to successfully and sustainably grow our housing offer for future generations—young and old—something needs to change.
Sadik Al-Hassan (North Somerset) (Lab)
It is a pleasure to serve under your chairship, Mr Stuart. I declare an interest in that I own a flat in Liverpool that is currently managed by FirstPort, and I have personally been affected by many of the issues that my constituents have written to me about in recent months. Like many in leasehold flats in Portishead in my constituency, I purchased my first ever dream home off-plan. I am sad to say that that dream has become a nightmare, as it has for so many.
Since coming into office nine months ago, I have been in contact with hundreds of constituents throughout North Somerset who have seen the realisation of long-held aspirations of home ownership turn into a slog to defend their rights against encroaching mega-corporations intent on squeezing every penny possible from ordinary, hard-working people. From those conversations, it has become clear to me that estate management companies are rip-offs; they utilise every legal means at their disposal to squeeze leaseholders out of every last penny they can. By using a complex web of separate legal entities, they can facilitate an intricate trickery, designed to pull the wool over honest homeowners’ eyes to ruin their quiet enjoyment.
To give credit where it is due, the Building Safety Act 2022 was most certainly a step in the right direction, making it clear when and where financial obligations would be laid at the door of freeholders. I am sad to report that in the years since, we have seen freeholders, aided by estate management companies, do everything in their power to delay and resist. It is nothing short of scandalous. I look forward to the inevitable ITV drama that we will one day see, and which will finally prompt sufficient action to bring this sad chapter in our nation’s history to an end.
I could easily stand here and recount for hours the innumerable injustices suffered from estate management companies by constituents throughout North Somerset, but I recognise that my time is limited, so I wish to focus on the pair of buildings only a few minutes’ walk from my constituency office in Portishead, Ninety4 on the Estuary and 110 @ The Quay. After years of dragging their heels, it finally took the residents’ plight reaching regional news to shame the freeholder and developer into agreeing to shoulder the cost. However, since then residents have been subject to an unending stream of additional costs and excessive service fee increases, seemingly as the aforementioned entities try to recoup losses.
With another delay always around the corner, understandably so many of our constituents feel that the system is no longer capable of serving their interests and needs to end. Leaseholders in these buildings feel stuck in this battle, which has been raging for years now, and have felt powerless and trapped, unable to find buyers despite offering significantly under market value. Similarly, potential buyers have struggled to obtain mortgages due to uncertainty over cladding issues, with a deep sense descending on residents of the twin buildings that they may never truly escape the nightmare that they have found themselves in.
Hundreds of constituents, not just in those buildings but in dozens of similar situations across North Somerset, have asked me for help in finally bringing this shameful situation to an end. That is why I am thankful to the hon. Member for South Devon (Caroline Voaden) for securing this important debate. I look forward to seeing what remedies the Minister has in store in the upcoming leasehold and commonhold reform Bill, which I understand will be introduced to Parliament later this year.
Cameron Thomas (Tewkesbury) (LD)
I thank my hon. Friend the Member for South Devon (Caroline Voaden) for securing this important debate.
I purchased my home in 2017. By the time I surrendered a deposit of several thousand pounds, which had taken me a decade to accrue, I had already engaged with a financial adviser, secured a mortgage in principle and researched my eligibility for a Government equity loan. I had already picked the carpets by the time I was told to sign an estate management contract. The concept was completely alien to me; it was explained that on top of my council tax—paid to a local authority to maintain my public services—I would now pay a private company to maintain certain other things around the development. If I declined, I was not allowed to buy a home. It felt a lot like blackmail. It is worse than I realised at the time; the private company is entirely unregulated and it can, and does, charge me and fellow residents whatever it wants for services. Residents can, and often do, see their annual bills rise severalfold.
In serving her local residents, the excellent local councillor Sarah Hands for the Innsworth ward can regularly be found mediating an abdication of responsibility between Persimmon Homes—it still has not passed the estate on to the local authority almost a decade after moving offsite—the local authority, Severn Trent Water and the estate management company. FirstPort is so notoriously difficult to even find a point of contact for that residents give up and then Sarah Hands gets it in the neck instead.
I echo the requests made by the hon. Member for Mid Cheshire (Andrew Cooper). The restructuring of local government gives us an opportunity to end this scam, return estates and services to the local authorities, and outlaw the practice of signing these contracts at the point of house purchase.
Tom Hayes (Bournemouth East) (Lab)
In their interactions with management companies, my constituents feel done to, shut out, left behind and ignored. It feels like my constituents are hearing one message—“You don’t matter”—but my constituents do matter, and I want to represent some of them in this debate; sadly, time will not allow me to mention them all.
Two of my constituents live in two separate properties in Bournemouth East. They have been defrauded by Initiative Property Management, the sudden collapse of which left leaseholders with depleted reserve funds and significantly out of pocket. One leaseholder estimates that they have lost £80,000 and that they and the other residents in their block have lost around £1,200 per flat per year. Another estimates a total loss from fraud at around £10 million. A serious fraud investigation is under way.
Another constituent has suffered at the hands of the management company Scanlans Ltd, which has asked for £5,000 a year from them and other residents but has done nothing to maintain the garden and communal areas. At one point, a dead rat was left in the communal area for months. Scanlans is now in ongoing communication over plans to address those issues, but no clear action has yet been taken.
Another constituent has had to deal with Residential Management Group. RMG refused to deal with a rat infestation, and left the door to the communal area unsecure, with homeless people breaking in to sleep there. The case has been taken up with RMG and is ongoing. The themes that many of us will discuss today are common: excessive and unjustified service charge increases, a lack of transparency and financial accountability, poor communication if any at all, and poor building maintenance and unresolved issues. Enough is enough.
I want my constituents who are watching, feeling let down and having been left out of pocket by unacceptable conduct, to know that as their MP I will continue to fight on their behalf and alongside them for justice. I will continue to work to ensure that nobody else has to suffer the hardships, anguish and abuse that they have suffered. We are fighting this together. We are making progress, and I am pleased that the Government are in a hurry to address this important issue.
Charlie Dewhirst (Bridlington and The Wolds) (Con)
It is a pleasure to serve under your chairmanship, Mr Stuart. I commend the hon. Member for South Devon (Caroline Voaden) for securing and leading this important debate. Many Members are aware of the efforts to change the law and raise the profile of the fleecehold campaign by the Home Owners Rights Network. HORNET has revealed that 960 sites across the UK are affected by this practice, with a staggering 213,000 homeowners affected.
I want to touch on the fantastic local work being done in my constituency of Bridlington and The Wolds. I pay particular tribute to the great work being carried out by the Wolds View action group, which is based on the Bellway estate in Driffield in my constituency, led by Dr Jenny Shaw and the residents of the Wolds View estate. Another affected development, the Mortimer Park estate, which is also in Driffield and was developed by Barratt Homes, consists of 165 properties, with another 120 being built. Those are just two local examples I am aware of, but there are others in my constituency in Market Weighton, Hornsea and Bridlington.
To echo the stories we have heard in this debate, many residents feel that they were not told adequately at the time of purchase about what was to come in terms of estate management. Many feel they face the double whammy of estate management costs and their council tax payments. Further to what the Minister has set out in the House in recent months, I urge him to adopt the Competition and Markets Authority’s 2024 recommendations as a matter of urgency to ensure common adoptable standards, and to mandate the adoption of public amenities on new housing estates.
However, we must not leave existing homeowners in limbo. Residents such as my constituents at Wolds View and Mortimer Park deserve equal protection. I would appreciate the Minister clarifying in his closing remarks what specific protections will be extended to the 200,000 homeowners currently affected. Let us be clear: they are freehold residents who own their own homes. The language used by the Government when discussing this issue has been, on occasion, particularly disappointing, and needs to be clearer when separating the issues of freehold and leasehold. My constituents are not leaseholders in this instance, and it would reassure them if the Minister would outline how the Government intend to address this specific area.
I am grateful for the opportunity to raise these concerns on behalf of my constituents. It is not a local problem; it is a national issue that needs swift and decisive action from this Government.
Ben Goldsborough (South Norfolk) (Lab)
It is a pleasure to serve under your chairship, Mr Stuart. I thank the hon. Member for South Devon (Caroline Voaden) for securing this important debate. This issue comes up time and again in my postbag, particularly from residents in Wymondham town in South Norfolk.
My constituents have raised three clear and pressing concerns, which I hope the Minister will be able to address in his closing remarks. First, there is a glaring lack of accountability and transparency when it comes to estate management companies. Residents are often left with no clear route to challenge fees or demand better services. At a time when every penny counts, we cannot allow these companies to make up charges on a whim and profiteer at the expense of hard-working families.
Secondly, there is no effective legislation compelling developers to hand over services and responsibilities in a timely and orderly fashion, resulting in confusion, inconsistency, and, in many cases, residents caught in limbo. Thirdly, and perhaps most importantly, residents on these estates are paying twice: once through council tax, and again through ever-increasing estate management fees. In return, they often receive a poorer level of service than their neighbours who do not live on managed estates.
I recently sat down with Kevin, a constituent who lives on a Persimmon estate in Wymondham. Like many others, Kevin’s experience has been frustrating and, frankly, unacceptable. Some services on his estate have been adopted; others have not. The local highways remain unadopted, and the water and sewage infrastructure is still being managed by a private management company, because Anglian Water has not yet adopted it. Kevin and his neighbours are left paying for a system that does not work properly, and they are rightly asking: why? I want to put Kevin’s question directly to the Minister: why can developers not be made responsible for the upkeep of estates until full adoption by the relevant authorities is complete?
This is not just a question of regulation but a matter of fairness. If we believe in levelling up and supporting our families in every part of the country, we must act to ensure that residents are treated with respect, and to give them the services they pay for. I look forward to hearing the Minister’s response.
Graham Stuart (in the Chair)
If colleagues are able to speak for 90 seconds, that will be tremendous.
Manuela Perteghella (Stratford-on-Avon) (LD)
It is a pleasure to speak under your chairmanship, Mr Stuart. I commend my hon. Friend the Member for South Devon (Caroline Voaden) for leading this important debate.
For far too long, management companies have operated in a vacuum of regulation, and communities are paying the price. Residents find themselves locked into contracts with no flexibility in payment, and often no cap on the service charges imposed. There is also a lack of transparency, without proper itemised charges being made available to residents, and a lack of communication and engagement with residents about how the companies are adhering to agreed management plans.
This is not just unfair but a recipe for disaster, and it is contributing to yet another housing crisis. Residents in social housing—many housed by the local authority—are not able to keep up with hikes on service charges. Homeowners who want to sell their homes are finding it difficult to do so because of uncapped service charges. These companies are unaccountable, and there is no regulation to stop charges being raised unreasonably, or a service being withdrawn without explanation.
Often the service that residents receive is below standard or non-existent. One of my constituents now pays more to FirstPort in service charges than on her own mortgage. FirstPort takes a 5% fee for major works such as roofing, redecorating and carpeting communal areas, which is abhorrent. If we need to have maintenance companies, then residents should be able to shop around for better deals, and the right to manage should be an easy process for both leaseholders and freeholders.
Furthermore, we see major issues with sustainable urban drainage systems and unadopted roads—infrastructure that is often left unfinished or below standard when developers walk away with no clarity on who is responsible. In some cases, we have even seen roads constructed below adoptable standards, or taking many years to be adopted. Residents are paying service charges, on top of their council tax, for drainage and roads that will never be adopted.
The Competition and Markets Authority recommended that those problems be addressed, but to date that recommendation has not been implemented. Will the Government commit to implementing the CMA’s proposals? I also urge them to consider retrospective powers for councils to intervene where such arrangements are clearly exploitative and unsustainable. At present, local authorities have no power to undo agreements that are already in place.
This issue requires national leadership and statutory oversight. The Government must regulate estate management companies and ensure that residents are not left powerless or trapped in the place they call home.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
Thank you, Mr Stuart. Residential estate management companies are middlemen who sort things out per the lease—or notorious scammers, as our constituents call them. A few weeks ago, residents in Western Circus in east Acton were left without running water—a basic human right—between Friday and Wednesday, so for nearly a week they could not flush the loo, change babies’ bottles, wash their hands or brush their chops. Who was the managing agent? The notorious FirstPort—a word that strikes fear into every MP’s heart. It did not contact residents for over 24 hours.
The building is a new build—I remember going to the topping out ceremony in my hard hat and high-viz jacket. Those 329 flats with 400 residents were left without running water, and for 24 hours they were in complete limbo. When the company finally made contact, it was very half-arsed—sorry, that is not parliamentary language. I was on a Zoom call with residents, and it was very “Computer says no.” There was a reluctance to do anything about it, and I think that is shocking.
People have talked about fleecehold. I have talked to many FirstPort victims: just the other day at my advice surgery, I spoke to a grieving father trying to sort out his son’s estate. He found all these unexpected charges, because FirstPort hoovers up ground rent and then springs all these nasties on people.
Leasehold covers millions of dwellings and is particularly common in London. Reports from the CMA, the Resolution Foundation and Which? have found that people are disempowered and are charged unexpected, unfair fees. People are losing money hand over fist—for what? We do not know exactly.
I think my 90 seconds will end any second, so let me just say that MPs and the Facebook group have been decisive, but it is not good enough. We need proper action, so I am glad the Government will introduce a new commonhold tenure to end the neo-feudal tenure of leasehold, which has been there too long. Western Circus is being run by clowns—it needs to stop.
Richard Foord (Honiton and Sidmouth) (LD)
It is an honour to serve with you in the Chair, Mr Stuart. It is plain from what others have said that this is a sector-wide problem. In 2017, Sajid Javid, when he was the Secretary of State, set up the regulation of property agents working group, under Lord Best. When it reported in 2019, it recommended
“a model for an independent property agent regulator”
and
“a single, mandatory and legally-enforceable Code of Practice for property agents”.
The Government would do well to follow that advice.
I want to refer to the constituency case of Cathy Gardner, a resident of Sidmouth. Since 2017, her insurance premiums payable to Blue Cedar Homes management company have risen from about £100 a year to as much as £900 because she is being charged for every single eventuality, including terrorism. Now, we do not have a great deal of terrorism on the retirement estates of mid and east Devon, so I can be certain that a large cut is being taken out of that fee. We need transparency so we can all know why that is happening and where that money is going.
Daniel Francis (Bexleyheath and Crayford) (Lab)
It is a pleasure to serve under your chairship, Mr Stuart. I thank the hon. Member for South Devon (Caroline Voaden) for securing the debate.
My constituents at Vickers Green in Crayford have experienced similar problems to other constituents. The Conservative council granted their Barratt Homes development, consisting of 247 homes, planning permission in 2009. The local planning committee’s report confirms that management of
“the estate roads, the communal areas, the play facility, the ecological area, the open space area etc”
will technically be the responsibility of the homeowners. It also confirms that the construction and maintenance of internal roads and parking areas, although not carried out by the council, will need to be carried out “to the Council’s satisfaction.” That has caused real problems for my constituents, who are paying their council tax but also having to pay charges for these things.
More recently, my constituents found that FirstPort is their management agent. This year it informed them that there was a £44,000 overspend in 2022, which they are now expected to pick up, in 2025. One constituent was told they had to pay charges for the two months before they moved into their property. Many residents have also seen the £600 charge for picking up responsibility for the communal areas and roads more than double in recent years, and they feel there is a gross unfairness in that.
I therefore welcome the Government’s planned changes. I would also welcome comments from my hon. Friend the Minister about what the Government propose to do to protect leaseholders from the kinds of abuse and poor service they have experienced, and about how some of these communal areas, which would traditionally be maintained by local authorities, might be returned to them, rather than being the responsibility of FirstPort, and therefore of homeowners themselves.
Jim Shannon (Strangford) (DUP)
It is a pleasure to serve under your chairship, Mr Stuart. I commend the hon. Member for South Devon (Caroline Voaden) for setting the scene so well.
I recently met one of the management companies in my local area, where residents had lodged a list of queries after their management fees went up by a substantial amount. They asked where the money had gone. It is difficult to see why fences still need painting when there is a bill for paint, and it is hard to understand why there is a bill for the upkeep of a sign that does not appear to have been cleaned in years. The difficulty with these companies is that, with no regulation of them, residents feel they are being done over.
It might be best if I quote one of my constituents and then offer a solution. My constituent said:
“I am writing as a resident to express serious concerns regarding the management of communal land. Like many homeowners across the UK, I am facing high and increasing charges for substandard maintenance, with no option to switch providers.
The company operates a monopoly in many estates, charging fees that are neither transparent nor fairly regulated. Residents are often left with poorly maintained green spaces despite paying substantial fees. Furthermore, there is no option for estates to collectively choose a different management company, leaving homeowners effectively trapped in an unfair system. I am asking for your support.”
She is asking me for my support, and I am asking the Minister to address this issue.
The solution my constituent suggests is introducing
“a cap on the fees that land management companies like Greenbelt can charge homeowners”
and creating
“a legal mechanism that allows estates to vote on who manages their communal land, giving residents the freedom to choose better service providers.”
She finishes by saying:
“Many homeowners across the UK are affected by this, and I believe it is an issue that requires government action.”
I look to the Minister to ensure that we address this issue UK-wide, and not simply in England and Wales. Residents across the United Kingdom face the same problems as residents in Strangford, and they must be addressed.
Mrs Sarah Russell (Congleton) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stuart. I thank the hon. Member for South Devon (Caroline Voaden) for securing this important debate.
My constituents are being treated as a cash cow. There are managing agents causing a problem across my entire constituency, and I have casework in Alsager, Congleton, Sandbach and Holmes Chapel. I do not have time to go into every one of those items, but the worst—the hon. Member for Honiton and Sidmouth (Richard Foord) referred to this—relates to insurance charges for terrorism. I am not flippant about terrorism, but retirement properties in Alsager are unlikely to be victims of it.
The retirement community in Alsager received a £14,000 bill for electricity in communal areas, where there were approximately three lights. Residents challenged that bill, which suddenly became £7,000, with no explanation as to why it had halved or why it had been £14,000 in the first place. They challenged it again, but they still do not have a proper breakdown as to why so few lights cost so much money—they simply cannot get that information. As others have mentioned, when people challenge bills, they get charged again and again.
There is an absolute lack of transparency about these organisations and about transactions, including where insurance is being bought from connected parties. There is a real question about whether corporate governance as it stands is fundamentally capable of addressing some of these issues.
I absolutely second the calls by my hon. Friend the Member for Mid Cheshire (Andrew Cooper) for the adoption of section 42 of the Flood and Water Management Act 2010, the creation of an equivalent for roads, and the requirement for play areas and public areas to be adopted by local authorities.
I am worried that the charges my constituents see are just the beginning and that, as their estates age, those charges are likely to become significantly larger, particularly in unadopted areas. Will the Minister please confirm what we can do about these many issues?
Olly Glover (Didcot and Wantage) (LD)
It is a pleasure to serve under your chairmanship, Mr Stuart. I thank my hon. Friend the Member for South Devon (Caroline Voaden) for her excellent and comprehensive speech, as well as for securing the debate.
My constituency of Didcot and Wantage in Oxfordshire has seen enormous population growth. New estates affected by these issues include Highcroft and Winterbrook Meadows in Wallingford, Fuller’s Grove and Hamilton Drive in East Challow, Dida Gardens and Great Western Park in Didcot, Kingsgrove in Wantage, and Cholsey Meadows. With 30,000 more homes planned in the surrounding area by 2041, the issue will clearly not go away.
Companies that have caused some of the issues that have come across my desk include not only FirstPort, but RMG, Remus and Home Group. My residents have experienced many of the issues mentioned by hon. Members, including arguments and a lack of accountability regarding responsibility for maintenance issues, a lack of transparency around fees and a lack of ability to influence management companies. As my hon. Friend the Member for Tewkesbury (Cameron Thomas) highlighted, the details of the fees and charges that will apply are sometimes revealed only towards the end of the purchase process, and are mysteriously absent from the pretty brochures that promote such sales.
I have seen examples of residents valiantly taking on estate management companies—for example, Home Group in Mersey Way and Venners Water, in Didcot—and securing far more reasonable charges than those originally proposed. However, that needs to be made simpler, so that residents in Springfield Way, in Sutton Courtenay, and on the Dovecote estate, in Drayton, can build on that excellent experience. We clearly need a lot more regulation because the market has failed in this area.
Nesil Caliskan (Barking) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stuart. My constituents tell me over and over again about the poor performance and lack of accountability of residential estate management companies. In this country, the truth is that there is a complex web of operating companies, parent companies and, in some cases, companies registered in offshore tax havens, with no individuals to hold to account. It should not be like that, and it does not have to be like that.
Some management companies have turned dreams of home ownership into absolute nightmares, and that is certainly the case for my constituents in Barking. Residents of John Miller House and Leslie Hitchcock House on Minter Road face ongoing issues with their management company, RMG, and the district heating system that is in place. They face high, unexplained charges for their energy, including service charges that are not itemised. RMG has failed to install energy meters in individual properties, despite residents asking for them and RMG promising them. In the meantime, constituents in these properties have been charged arbitrary estimates for their energy, including for energy they have not used. RMG has threatened them with legal notices and has in some cases demanded £6,000, be paid in 10 days. That is simply unjustifiable.
In my most recent interaction with RMG, it showed some willingness to engage and to rectify the situation, but it has also been clear that it is acting on behalf of a freeholder—a company called HomeGround. After a little digging around at Companies House, I have established that Baron William Astor is a director of HomeGround. This is a family with a long-standing connection to Parliament who have made their fortune through land and property. Now, they are seemingly exploiting my constituents through unfair energy bills and threatening them with legal action. Frustratingly, I am still waiting for a response from HomeGround. That is just one of the many examples faced by my constituents.
Lewis Cocking (Broxbourne) (Con)
It is a pleasure to serve under your chairmanship, Mr Stuart. I draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests, because I am a local councillor. I also understand this issue more than most, because I live in a leasehold property.
I have a number of cases across my constituency of Broxbourne of leaseholders being ripped off by management companies, including High Leigh in Hoddesdon; Academia Avenue, Robinia Road and Watery Lane in Turnford; Aldermere Avenue and Magnolia Way in Flamstead End; and Eleanor House in Waltham Cross. These companies are completely unaccountable. There is a lack of transparency, and they simply do not care. If they deem that residents have underpaid by £10, or even £1, they are straight round to their door. However, when my residents—or constituents across the country—write or email asking for answers to their questions, these companies are absolutely nowhere to be seen. That is absolutely shocking, and it cannot be allowed to continue. As we have heard from Members across the House, our postbags are full with issue after issue. Sadly, I am yet to come across a company that is good in this area.
In the limited time available, I want to touch on the issue of solicitors and what people are being told when they buy these properties. Solicitors are not doing enough to point out all the red flags, including everything that residents are accountable for, what money they may have to pay and the previous accounts of the different estates. We really need to shine a light on the issue of solicitors; we cannot let them off the hook. I will be interested to hear the Minister’s view on that.
Alistair Strathern (Hitchin) (Lab)
It is a pleasure to serve under your chairship, Mr Stuart. Issues with leasehold, fleecehold and management companies might seem quite parochial, but they are actually quite pernicious and affect an ever-growing number of homeowners across the country. As the CMA pointed out, with over 80% of new developments now subject to fleecehold, it is increasingly the default model for housing delivery. That means that thousands of new homeowners across the country are on the hook for what is effectively a stealth tax, trapped paying a management company for a service—or the lack of a service—that a council would normally provide.
Alongside that, the agency that home ownership is meant to deliver is being undercut. Residents are often hit by punitive mortgage charges by overly penal management companies, and their home sales can fall through as a result of companies not providing paperwork quickly and efficiently. If we are going to live up to our ambition to deliver on the aspiration of home ownership for many more households across the country, we clearly have to tackle fleecehold, which is why I was so pleased to see the commitment in the Labour manifesto to do that.
What do we do? We know that switching on some of the regulatory provisions in the Leasehold and Freehold Reform Act from the last Parliament will have some benefits for these homeowners, but we need to go much further. My ten-minute rule Bill, which was introduced before the recess, set out some important measures on the right to manage and on common adoptable standards, as well as on mandatory adoptions. I think that those will go a long way towards starting to tackle this issue at source for future households.
We need to think about what more we can do to support those homes that are already being impacted. We also need to think about what more we can do in the interim to prevent more unadopted estates from becoming the norm before we can act. I was pleased to join over 50 colleagues in writing to a number of large developers to challenge them on what more they can do with local authorities to prevent unadopted estates from becoming the norm. I would welcome the Minister’s reflections on what more we can do in the meantime to move on that ambition.
Sarah Dyke (Glastonbury and Somerton) (LD)
It is a pleasure to serve with you in the Chair, Mr Stuart. I thank my hon. Friend the Member for South Devon (Caroline Voaden) for securing this important debate. Residential estate management is a scandalous reality affecting thousands of people across the country. Residents are left to navigate this complex landscape alone, often forced to pay escalating and unchallengeable fees for services they did not agree to, provided by companies they cannot remove.
Stephen from Glastonbury is permanently tied, alongside his neighbours, to contracts with FirstPort that are written into the Land Registry. They are charged £560 annually for minimum maintenance of open spaces, with fees rising annually despite declining standards. The residents are billed for obscure services, and when questioned, FirstPort offers vague justifications and claims that costs are rising to meet expectations. Whose expectations? They are certainly not the expectations of residents.
Another constituent, Anne, moved into her flat on Cavalier Way in Wincanton a year ago, having budgeted for a manageable service charge of £750. Within the last few months, she has been hit, without any consultation whatever, with a shocking £7,000 invoice from RMG, the management company, to cover stairwell repairs. By labelling that cost as a budget, rather than a service charge, RMG seems to be attempting to sidestep the legal protections of section 20. When I met other residents of Cavalier Way last week, some told me that their costs were rising by a staggering 479% and that they simply do not have the means to pay those grossly inflated service charges.
The Liberal Democrats believe that that must change. We have long called for leasehold reform and the professionalisation of estate management so that homeowners can control their own properties.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
Thank you, Mr Stuart, but I believe you have mistaken me for another ginger—there are a few of us in this Parliament.
Luke Myer
It is a pleasure to serve under your chairmanship none the less, Mr Stuart, and I congratulate the hon. Member for South Devon (Caroline Voaden) on securing this debate.
We are at the foothills of a historic era for housebuilding, but the question is: what happens after we build those houses? Residents across my constituency are being hit by the fleecehold stealth tax. They pay for services twice: once in council tax and again in estate charges. I recently heard from residents of the Ladgate Woods development, who were contacted by their property management company with an unexpected bill to cover their neighbours’ unpaid bills, despite already having paid their share in full. It cannot be right for responsible residents to be punished for doing the right thing.
Management firms are often faceless companies based miles away—or even abroad, as we have heard today—and they are completely unaccountable. Residents are left powerless, with no control, choice or clarity. There needs to be a clear pathway to the adoption of new developments by local councils, with a timeline for residents. To that end, I support the private Member’s Bill of my hon. Friend the Member for Hitchin (Alistair Strathern); I also take this opportunity to congratulate him on his recent engagement.
It is time that we ended the postcode lottery in which some homes are served by local councils, and others by firms that one would struggle to get on the phone. It is time we strengthened consumer protections for ordinary working families and put power back where it belongs: in the hands of residents.
Monica Harding (Esher and Walton) (LD)
It is a pleasure to serve under your chairmanship, Mr Stuart. I thank my hon. Friend the Member for South Devon (Caroline Voaden) for securing this debate. I have been supporting residents of both freehold and leasehold properties in Esher and Walton who are confronting a system that allows management companies to oversell seemingly attractive properties, but makes it extremely challenging to hold them accountable for overpriced services and service failures, or to get rid of them. I hope that the Government will look closely at the business model of such companies and the tactics that they employ.
In my constituency, I have supported residents of an estate composed of later-living leasehold flats spread across five blocks, who have secured the right to manage away from FirstPort. However, because the blocks are separate buildings, the residents of the 38 flats were required to establish five different right-to-manage companies, even though communal areas remain under the management of FirstPort. I urge the Government first to ensure that separate buildings on a single development can pursue the right to manage together, and secondly, to expand that right so that it covers communal areas. What consideration have the Government given to creating a statutory right to manage for freeholders that encompasses communal areas?
Many leasehold developments are principally intended for the elderly. Elderly residents often live in them for a comparatively short time and selling such leasehold properties is extremely challenging, so families often subsequently look to let them. FirstPort imposes a charge of 1% of a property’s market value as a condition of letting it, and frequently overvalues properties in order to charge more. That one-off payment recurs each subsequent time the property is let. What is the Minister doing to protect elderly people from exploitative leasehold conditions in elderly living accommodation?
Several hon. Members rose—
Graham Stuart (in the Chair)
Order. With apologies to the five or six Back Benchers who have not been called, I call the Liberal Democrat spokesperson.
Gideon Amos (Taunton and Wellington) (LD)
It is a pleasure to serve with you in the Chair, Mr Stuart. I congratulate my hon. Friend the Member for South Devon (Caroline Voaden) on securing a debate on residential estate management companies—an important issue for many of us up and down the country, and many of our constituents.
My hon. Friend has done a service both to her constituents and to people across the country by exposing, and placing on the record, the scandal of poor management companies. I do not want to denigrate companies that do a good job for the common areas and spaces that they are contracted to look after, but, as we have heard today, Members of Parliament too often hear how far too many companies are fleecing residents, charging rip-off prices and failing to respond to reasonable requests for repairs, information or accounts of how residents’ money is being spent.
Martin Wrigley (Newton Abbot) (LD)
In the town of Teignmouth in my constituency of Newton Abbot, FirstPort has been buying up other management companies, and the sinking funds—the contingency paid by residents—appear to have disappeared: they have been sunk. Does my hon. Friend agree that that should be looked into?
Gideon Amos
I completely agree with my hon. Friend, who is doing a great service to his constituents by exposing that problem.
In too many constituencies, residents are plagued by rogue developers who provide housing under a freehold tenure, but force residents to accept the estate managers or shared owners of public spaces within the developments. We have heard shocking examples from all over the country, which surely demonstrate the scale of the problem and the need to act. In one block of flats in my constituency of Taunton and Wellington, people have been unable to get repairs for a leaking roof from the owner of a building in Corporation Street—it has been leaking for nine years without being attended to.
Dr Roz Savage (South Cotswolds) (LD)
In my constituency of South Cotswolds, there are tragic stories, including about disabled residents being trapped in their flats due to a lift being out of order. Another constituent was informed that their charges had risen from £1,500 to £2,100 per six months. Does my hon. Friend agree that we need urgent action from the Government to end this daylight robbery?
Gideon Amos
“Daylight robbery” is a good way of putting it. Those staggering increases in charges, with very little notice or warning to residents, are experienced in many of our constituencies, including my own.
In my constituency, I am receiving complaints about FirstPort from residents of Parsonage Court in Wellington, and from those of Quantock House, Pavilion Gardens, St George’s Square and Firepool in Taunton. I am also receiving complaints about Cognatum Estates from residents of Cedar Gardens and Fullands Court. These issues are arising in a whole range of properties.
Helen Maguire (Epsom and Ewell) (LD)
One of my constituents, Mr Vivian Lythgoe, is here today because of FirstPort. Unfortunately, he has had to make the painful decision to sell his home because he is fed up with dealing with management companies that are not interested in leaseholders. He has been fighting FirstPort to try to make it carry out basic maintenance, which residents have already paid for. Residents are not cash cows for management companies or footnotes in company accounts; they are people. It is time that they were treated as such. Does my hon. Friend agree?
Gideon Amos
My hon. Friend is absolutely right. It is time for this shocking behaviour to be rectified and for legislation to be introduced. I will continue to work for the residents of the properties in my constituency that I have mentioned, and to get the legislation that we need.
Those who suffer from poor management can, of course, be leaseholders or freeholders. There are 4.8 million residential leasehold properties in England, which is equivalent to a fifth of the housing stock. That system is a relic of the feudal period. Its abolition has long been sought by Liberals and Liberal Democrats. The abolition of residential leasehold could be one of the most important carried-forward pieces of business from the last Liberal Government of about 100 years ago, which goes to show how long overdue it is.
John Milne (Horsham) (LD)
In my constituency of Horsham, we have many similar examples. Would my hon. Friend agree that although we certainly need legislation, the industry could act right now by introducing a voluntary code of practice? The industry does not have to wait for legislation; it should hear the call from across this Chamber.
Gideon Amos
My hon. Friend is absolutely right and is championing the issue in his constituency. The companies watching or reading the debate would do well to listen to his words, because they could easily improve their practices right now by introducing a code of practice, as he suggests.
Liberal Democrats believe that leasehold tenure should be abolished for all properties, including flats. For too long, homeowners have been exploited by what is ultimately a feudal system. Existing residential leasehold should be converted either to freehold or commonhold, as appropriate, and we urge the Government to introduce legislation to make that happen. On commonhold properties and commercial leaseholds, ground rent should be capped to a nominal fee, so that everyone has a degree of control over their property.
Of course, the Conservative Government introduced to Parliament the Leasehold and Freehold Reform Act, which received Royal Assent in 2024. However, the secondary legislation, which would give leaseholders rights over their freeholder landlords when it comes to accounts and accountability in general, has failed to be enacted. Crucially, the Act fails to regulate property management agents. As my hon. Friend the Member for Honiton and Sidmouth (Richard Foord) pointed out, there has been widespread agreement about that since the 2019 report chaired by the Cross Bencher Lord Best, supported by the Liberal Democrats in this House and in the other place. We need to see vital improvements to the 2024 Act. I hope the Minister will today confirm when secondary legislation will be introduced, or indeed other legislation on the regulation of property agents.
Liberal Democrats want the management of buildings to be professionalised. Building maintenance and safety need to be guaranteed, not dependent on whoever happens to be the freeholder. Nowhere has that been more important in terms of safety than in the entirely avoidable but tragic disaster of Grenfell Tower. Putting profit before safety, as Sir Martin Moore-Bick’s report has found, was one of the chief causes of that fire. Just as profit-driven sign-off in the testing of building materials and in the inspection of buildings needs to be reversed with the ending of both the privatised Building Research Establishment and privatised building inspectors, so too there is surely now a need to regulate property agents—for safety reasons, as much as anything else.
Today is also Stephen Lawrence Day. As Stephen was a budding young architect, it is fitting that we are debating regulating building management agents; it would be even more fitting if there was a commitment today to bring legislation forward. Just as leaseholders are charged extortionate amounts while being poorly served by the landlords and estate management companies they employ, too many freeholders of their own homes find themselves beholden to others over whom they have no control in relation to the open spaces and common areas, as my hon. Friend the Member for Glastonbury and Somerton (Sarah Dyke) mentioned.
Claire Young (Thornbury and Yate) (LD)
My own local council is attempting to address the issue of fleecehold through its new local plan, which I commend. Would my hon. Friend urge the Government to bring forward the legislation quickly in order to strengthen the council’s position?
Gideon Amos
My hon. Friend must surely have read the next words of my speech, which urge the Government to make urgent progress on strengthening leaseholders’ rights and on their draft leasehold and commonhold reform Bill.
We should, for example, make sure that legislation strengthens leaseholders’ rights to extend their leases, to buy their freeholds, to take over the management of their buildings and to make commonhold the default tenure. We should also regulate ground rents for existing leaseholders, and freeholders too: it is surely time for legislation to enable freeholders to recover ownership and control over public spaces that surround and adjoin their homes, which are held by others for no reason other than to extract maximum payment. A single freeholder among many who exercises control over common areas, such as access roads and green spaces, should no longer be allowed to hold all other homeowners to ransom with ever increasing charges and unreasonable management practices.
Back in December last year, my hon. Friends on the Liberal Democrat Benches, led by my hon. Friend for South Devon, were the first to bring the directors of FirstPort to the House to account to MPs for their management. My hon. Friend has blazed a trail for those affected by the appalling management of common areas and public spaces.
I return to the issues in my constituency. One resident in Wellington has been unable for over a year to get reasonable adjustments for disabled access to her parking space, even though she is also a cancer sufferer. We have seen now that persuasion on its own is not enough. Just as it is high time for residential leasehold to be brought to an end, it is also time for legislation to enable freeholders of common areas to acquire open spaces and common areas from those who would hold ransom over them. As Liberal Prime Minister Lloyd George pointed out, these practices are not business but blackmail.
Kevin Hollinrake (Thirsk and Malton) (Con)
It is a pleasure to speak with you in the Chair, Mr Stuart. I congratulate the hon. Member for South Devon (Caroline Voaden) on securing this important debate; the strength of feeling from the people speaking has been strong. Companies such as FirstPort should take note of that when it comes to the services they offer.
I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I will keep my remarks brief to give the Minister plenty of time to respond—the ball is very much in his court, as he knows—but I also might give time for interventions from Members who have not been able to make speeches in the main debate. It is safe to say that I will not mention every speech by name, as that would take too long, but I very much agree with the essence of all the contributions today.
I have come across these issues in my constituency, in estates in Malton and Easingwold. FirstPort was invariably the managing agent causing many of these difficulties. The best regulator is always competition. We need to make sure that it is easier for people to manage their own freehold estates and to swap between different managing agents. The speeches today have had in common references to high and sometimes spurious charges, as well as poor and obscure service. That is something I certainly recognise.
I also recognise, and am frustrated by the fact, that local authorities have moved to the model of granting consent for what have become known as fleecehold estates. It seems that residents on these estates do not understand why they have a two-tier system, paying council tax and for the management of the freehold estate, when other people in their locality do not. It is time look at this in more detail and to act. I am happy to have a cross-party conversation with the Minister on how we might work together to make sure this situation does not become worse. We should all note the excellent work of the Competition and Markets Authority on making sure that the default position is to have adoptable standards.
I thank my hon. Friend the Member for Broxbourne (Lewis Cocking) for highlighting a point I do not believe anyone else did: the work of conveyancers. Conveyancers have moved towards a shed-based service. It used to be there was a local, friendly solicitor who would give good advice on a buy and the implications of it, but much of that has gone. We need to make sure our conveyancers are doing the right thing in terms of pointing out to someone buying a fleecehold property the potential problems for which they might have to take responsibility.
As has been mentioned, we legislated in this area in the Leasehold and Freehold Reform Act 2024. This gives the potential to challenge charges, makes the right to manage easier, and opens the door to first-tier tribunals on charges and to an ombudsman scheme. This is where I would like to ask the Minister some questions. He has a role in implementing the provisions of the Act, which will require secondary legislation. As I think was stated in his White Paper, consultation may also be required, both on right to manage and on potential access to ombudsman oversight of the companies managing these estates. He needs to approve an ombudsman scheme and publish guidance. To what timescales does he expect implementation to take place? For the residents Members across the House have discussed, there is clearly a pressing need.
Regarding the White Paper and the potential of the leasehold and commonhold reform Bill, I am interested in which specific further steps the Minister intends to take on oversight of these fleecehold situations. We also need to be clear on exactly where he is going with leasehold reform. The manifesto the Minister stood upon said very clearly that Labour would
“finally bring the feudal leasehold system to an end”.
If that is his intention, is he talking purely about new leases or about existing leases? Clearly there are difficulties around those.
Finally, there is talk about a cap on ground rents. We have previously talked about a peppercorn charge. Where exactly is the Minister going with that? People need to know exactly what his intentions are.
The Minister for Housing and Planning (Matthew Pennycook)
It is a pleasure to serve with you in the chair, Mr Stuart. I congratulate the hon. Member for South Devon (Caroline Voaden) on securing this debate. I commend her for giving the House a much-needed opportunity to discuss the important matter of residential estate management companies in detail. I thank her for so clearly highlighting the pertinent issues in her opening remarks. I also thank all the other hon. Members who have spoken for the insight they have provided. I assure them that I well understand the strength of feeling when it comes to this issue.
The debate as a whole has not only underscored the case for acting to tackle the problems associated with freehold estate management arrangements, but highlighted that those problems take various forms. Part of the challenge facing the Government, and why we believe appropriate consultation in this area is essential, is ensuring that the interventions we make in due course capture the diversity of models and challenges.
We have covered a large range of specific issues today. I will address as many as I can in my response. We have also strayed into leasehold and commonhold. The White Paper is very distinct from the freehold estate issues that the majority of hon. Members have spoken about today and on which I will therefore mainly focus my remarks.
The Government estimate that there may now be as many as 1.75 million homes on privately managed estates in England, although I must make clear that not all of them are liable to pay charges. As the debate has made abundantly clear, the prevalence of such freehold estates creates a wide range of problems—problems that, not least as a result of the dogged campaigning by groups such as the National Leasehold Campaign and the Home Owners Rights Network, are now well known and well understood by the public.
Historically, any given local authority and water company would adopt the respective parts of a new residential estate. They would set clear, adoptable standards and provide oversight to ensure those were delivered, but more recently, and especially over the past 10 to 15 years, we have witnessed the growth of private management arrangements, where shared infrastructure, amenities and open spaces are not adopted and responsibility for the costs of ongoing maintenance instead falls on the residents of the estate through an estate rent charge, which residents pay in addition to council tax. The infrastructure and amenities provided on these estates all too often do not meet the minimum standards for adoption. In the worst cases, residents are left living in unfinished and sometimes dangerous developments.
The problem of unfinished housing developments is obviously not confined to freehold estates, and part of the answer is the proper enforcement of planning obligations, but private management models clearly exacerbate the problems faced by many homeowners in this scenario by leaving them liable for the upkeep of the partially completed or unfinished infrastructure.
That is just one of the many problems that residential freeholders living on freehold estates across the country are struggling with. Others include poor service and abuse at the hands of unscrupulous managing agents—we have heard many such examples in the debate today—as well as limited to no transparency about how the charges they pay are spent, onerous restrictions placed on the title deeds of their properties, and a general lack of control over how their estate is managed. These problems are more acute in some cases than others. For example, the absence of any measure of control is most acute in the case of the approximately 20% of freehold estates that have what is known as an embedded management company set in the title deeds of the relevant properties. To take another example, the challenges associated with opaque fees are magnified in estates where management arrangements are fragmented, with more than one managing company; residents have to navigate multiple companies, each of which levy fees for services in a way that significantly increases the potential for abuse.
As many hon. Members mentioned, last year, the Competition and Markets Authority published its study into the housebuilding industry. I encourage any hon. Member who has not yet had the time to read that report in full to do so. The CMA identified the private management of public amenities on housing estates as a detriment to consumers and concluded that
“the root cause of the aggregate detriment…is the decrease in levels of adoption of amenities by relevant authorities”.
The Government agree with the CMA’s conclusion that the housebuilding market is not delivering for consumers and has consistently failed to do so over successive decades.
As hon. Members will be aware, the report made a number of recommendations to Government and we published a response in full. It called for measures to strengthen protection for existing homeowners, as well as for the Government to mandate adoption of all new estates and to implement common adoptable standards for infrastructure. The Government have accepted many of the recommendations in principle, but we recognise that further work is required in a number of areas.
In the immediate term, we need to introduce protections for residential freeholders on already constructed freehold estates. As hon. Members mentioned many times, part 5 of the Leasehold and Freehold Reform Act 2004 contains powers to establish a regulatory framework that to provide such protections, including the provision of standardised demands and an annual report; giving homeowners the right to challenge the reasonableness of charges levied; requiring estate managers to consult homeowners where the anticipated costs exceed an appropriate amount; and giving residential freeholders the right to apply to a tribunal to appoint a manager in the event of serious management failure. Taken together, these measures will vastly improve the situation for many residential freeholders, improving transparency and driving accountability among estate management companies.
As I set out in my written ministerial statement last November, the Government recognise the importance of acting as quickly as is feasible to implement these provisions, but the establishment of a new regulatory framework through detailed secondary legislation requires us to grapple with a range of technical questions. It is important that we carry out appropriate consultation to make sure that the new system operates effectively and to the lasting benefit of residential freeholders.
John Glen
The Minister is setting out a thorough analysis of the challenge that he faces. Could he say something about the distinction between existing entities and those that are yet to be set up? One of the concerns is that the Government’s legislation will not deal fully with existing arrangements, and that the none of the cases that we have heard about today will get redress from the Government’s intervention.
Matthew Pennycook
To be clear, the protections we are talking about, which we intend to switch on as soon as is feasible and were provided for by powers under the Leasehold and Freehold Reform Act passed by the previous Government, will benefit existing residential freeholders on existing estates. I will come to the prevalence of those arrangements in due course, but I can reassure hon. Members that we intend to carry out that consultation this year, as promised, and that I am doing everything I can to expedite it.
Beyond the short-term need to protect residential freeholders better, we have to take steps to reduce the prevalence of private estate management arrangements, which are the root cause of the problems we are considering today. In my written ministerial statement, I committed the Government to consulting on legislative and policy options to achieve that objective. I hope that hon. Members appreciate that this is not a simple and straightforward area of policy and that the implications of policy choices are potentially far-reaching.
Matthew Pennycook
Yes. I will try to give way to as many hon. Members as I can.
Lewis Cocking
I want to make a point about solicitors’ practices and what information people get when they buy their properties. I think that a number of people go into these contracts under false pretences and do not fully understand what they are responsible for and what they may end up paying for.
Matthew Pennycook
There are undoubtedly issues around the purchase of homes on these estates. For example, it appears to be fairly common for residential freeholders not to be notified of their future liability for charges early in the conveyancing process. We are giving due consideration to those issues as well.
On the prevalence of future arrangements, the Government intend to seek views from a wide range of interested parties, including local authorities, management companies, developers and residential freeholders themselves. Our consultation will need to consider a wide range of trade-offs, including costs to homeowners, costs to local authorities, potential impacts on housing supply and the links with the planning system. As promised, we will consult on that matter this year.
Jim Shannon
Hon. Members have referred to opting out—in other words, if someone is unhappy with their management company, they can opt for another one. Would the Minister consider that, and would it be considered in the discussions he has with the Northern Ireland Assembly and the pertinent Minister?
Matthew Pennycook
Given the time available to me, I will have a separate conversation with the hon. Gentleman outside.
Before I conclude, I want to touch on the issue of managing agents, whose performance can present significant challenges, whether they are chosen by residents or employed by developers. Managing agents perform a critical role in managing and maintaining freehold estates as well as leasehold buildings, and the Government are determined to raise standards among them and drive out abuse and poor service at the hands of unscrupulous agents. We remain fully committed to strengthening the regulation of managing agents of leasehold properties and estate managers of freehold estates. We are looking again at the report published in 2019 by the regulation of property agents working group chaired by Lord Best. At a minimum, we believe that the regulation of managing agents should include mandatory professional qualifications. That will apply whether the agent manages a building or an estate. We will consult on the detail of that matter this year and remain committed to publishing a draft leasehold and commonhold reform Bill in the second half of this year to provide for enhanced scrutiny on the part of Parliament.
I again thank the hon. Member for South Devon for securing the debate and all those who have taken part in it. The Government intend to act, and act decisively, to protect residential freeholders on freehold estates and to reduce the prevalence of these arrangements over the long term. I look forward to ongoing engagement with hon. Members on all sides of the House—I welcome the shadow Minister’s invitation to that end—through both the forthcoming formal statutory consultations and more informal engagement across the House to ensure that we reform the system to the lasting benefit of affected homeowners.
Caroline Voaden
I will be very quick as we are short of time. I thank all hon. Members for coming and sharing their experiences. It is clear that there is a strong feeling in the House that we need to act and that millions of people are being badly served by estate management companies. It is good to hear that looking at the behaviour of estate management companies, as well as the position of leaseholders and freeholders, is on the Government’s agenda. I appreciate that this is a complicated area of legislation; the Minister laid that out clearly. We are willing to work across the House to reach some sensible steps forward in legislation so that there can be redress for people who have until now been badly affected by estate management companies and so that the practice ends forthwith.
Question put and agreed to.
Resolved,
That this House has considered residential estate management companies.
Statutory Sick Pay
(1 week, 2 days ago)
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Graham Stuart (in the Chair)
I will call Imran Hussain to move the motion, and I will then call the Minister to respond. I remind other Members that they may make a speech only with prior permission from the Member in charge and the Minister. As is the convention for 30-minute debates, there will not be an opportunity for the Member in charge to wind up.
Imran Hussain (Bradford East) (Lab)
I beg to move,
That this House has considered the rate of Statutory Sick Pay.
It is a privilege to serve under your chairmanship, Mr Stuart.
Successive Governments have grappled with statutory sick pay, with report after report saying that we need fundamental, root-and-branch change to a system that is letting workers down every day. Frankly, successive Governments have failed to tackle this important issue head-on, with many actively avoiding or dodging it.
I am therefore glad that, within their first 100 days, this Labour Government delivered on our pledges and introduced a transformative, once-in-a-generation Employment Rights Bill to drag workers’ rights into the 21st century. Although the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders), who is largely responsible for the Bill, is not here today, I put on record my thanks to him. In a previous role, I had the pleasure of working alongside him in developing much of the policy outlined in the Bill, which will mean that workers’ rights in our country are fit for purpose.
The Bill makes welcome changes to statutory sick pay. In 2022, a Trades Union Congress survey found that 80% of those earning more than £50,000 a year receive their full pay when sick, compared with only a third of those earning under £15,000. Around half of all employees in the UK get their full pay, just under a third get statutory sick pay, and one in 10 gets nothing at all. Most low-paid employees—around 8 million—are in the middle group, reliant on statutory sick pay.
For those workers, the measures in the Employment Rights Bill are much welcome: removing the three-day waiting period so that workers are eligible for sick pay from day one; removing the lower earnings limit and extending sick pay eligibility to 1.3 million of the lowest-paid workers currently denied it due to the lower earnings limit of £123; and setting the 80% earnings replacement rate. However, as the TUC, the safe sick pay campaign and many others have said, we must not stop here. We must continue to be ambitious in strengthening workers’ rights.
Jim Shannon (Strangford) (DUP)
I commend the hon. Gentleman for securing a debate on this critical issue. In my constituency and probably his, many small and medium-sized businesses are struggling—let us be honest—with the rise in national insurance contributions. Does he agree that, building on Labour’s Employment Rights Bill, the Minister and the Government might need to step in to ensure that such businesses, which are facing rising national insurance contributions, can still deliver statutory sick pay for their small group of employees?
Imran Hussain
Absolutely. I agree with the hon. Gentleman. He makes an important point that I will address more substantially later in my speech. He will also understand that having a healthier workforce and limiting presenteeism would massively increase the productivity of those small and medium-sized businesses in the long run. One of the huge issues we currently face is that people who are too sick to work are being forced to do so, because of the lack of support. That is not good for them or for businesses.
Richard Burgon (Leeds East) (Lab)
I congratulate my hon. Friend on securing this important debate and on running an important campaign to increase statutory sick pay so that it is a real sick pay on which people can rely. He talks in detail about the welcome advances on sick pay made in the Government’s recent Employment Rights Bill, but does he agree that a real concern about those proposals is that 300,000 of the poorest workers could lose out? Do the Government need to look at this again?
Imran Hussain
As ever, my hon. Friend makes an important and pertinent point. If he bears with me, I will address that later in my contribution. It is actually one of two points I want to address.
Hon. Members will know that I tabled two amendments to the Employment Rights Bill to strengthen its provisions on statutory sick pay. The first sought to bring statutory sick pay into line with the national living wage, so that no full-time worker is forced to live in poverty while unwell. The second amendment aimed to guarantee that no worker would be worse off under the new system, regardless of their earnings—my hon. Friend the Member for Leeds East (Richard Burgon) made reference to that, and I will come on to it.
First, I turn to the rate of statutory sick pay. For far too long, our statutory sick pay system has been one of inadequacy, and it has failed workers when they are at their most vulnerable. The pandemic laid bare just how broken the system is. Over a third of workers rely on statutory sick pay, and at a rate of £118.75 a week it is nothing more than a cruel joke—a poverty wage that leaves workers in financial insecurity, instead of being able to rest, recover and take the time they need to return to work fully fit.
The current rate makes up a mere 16.5% of the average weekly wage in the UK, far behind our European counterparts. To name some, workers in Iceland, Norway and Luxembourg are entitled to up to 100% of their pay during sick leave. However, we do not trail far behind only our international counterparts. When statutory sick pay was introduced in the 1980s, it was equivalent to 35% of the average weekly wage—double what workers can expect today. No other financial responsibility in a worker’s life is ever slashed by 83%. When someone falls ill, their bills, their council tax, their electricity bill, their mortgage payments and their grocery bills do not suddenly go down. That poses the question: why does statutory sick pay remain such a paltry sum, forcing people to choose between their health and their financial survival?
We know that the current rate pushes too many workers into the workplace when they are simply not well enough. It entrenches presenteeism, harming public health, reducing productivity and contributing to longer-term sickness and burnout, which makes workers drop out of the workforce entirely. The clear consensus is that the rate of statutory sick pay must increase, and it must increase in line with the national living wage.
That call is echoed by unions such as Unite and Unison, and by organisations such as the Child Poverty Action Group, Scope, Mind and Disability Rights UK. It is also supported by the majority of the British public. I urge the Minister not to ignore the swell of public opinion or the needs of workers across the UK, and to share the next steps that the Government are taking to fairly recompense workers during periods of illness.
The rate of statutory sick pay is not the only change that is urgently needed. Despite the Government’s best efforts, those on the lowest incomes, who do the hard and vital work in our economy, will be financially penalised for falling ill. These are the workers who are the backbone of our economy: cleaners, carers, drivers and retail workers. They are the very people who can least afford it. Low-paid workers—disproportionately women, young people and disabled workers—will still face the hardest burden.
The reality is that the new 80% earnings replacement rate extends sick pay to those who were previously excluded, which is very welcome, but it risks creating a system where some workers are worse off. I have worked with the Minister for many years, and I am sure that this was not the Government’s intention. But under the new rules, the reality remains that more than 300,000 workers earning between £123 and £146 a week could see their sick pay cut, which is something that my hon. Friend the Member for Leeds East referred to.
While previously a worker earning £123 a week was entitled to an earnings replacement of 95%, which is comparable to statutory maternity leave, for example, now a worker earning £124 for three days’ work a week will receive 80% from the first day of illness—£99.22 a week. Under the old rules they would have been entitled to the flat rate of £118.75 from the fourth day of illness. Under the new rules they will be worse off after five weeks. The fact that it takes five weeks to become worse off should not be seen as a mitigating factor, because this is not just about numbers.
The new rules will directly affect workers with chronic illnesses, those recovering from serious surgery and those undergoing cancer treatment. In short, it affects the people who can least afford to take a financial hit at the most vulnerable time of their life. These are workers who rely on every penny that they earn, and they must not be left behind under the new rules. That is the bare minimum that working people should expect.
I ask the Minister to outline how the Government will be supporting workers with chronic illnesses who fall sick, especially those who currently work and rely on disability benefits such as the personal independence payment to be able to dress, wash and get out and about in their daily lives. These workers have been left terrified by the recent announcement of changes to PIP eligibility criteria, and now they could also see statutory sick pay reduced, if they find themselves in that situation.
I urge the Government to think again about making the most vulnerable in our society pay for economic instability that is not of their making. It is not just an economic issue but a moral one. We can and must go further to support workers during their most vulnerable times.
John Milne (Horsham) (LD)
In my Horsham constituency office, I employ a member of staff who has ME. Fortunately, we can be very flexible with their working hours. However, under current law—where statutory sick pay is based on days worked not hours worked—an ME sufferer could easily miss out altogether on sick pay. Does the hon. Member agree that the Government should legislate to ensure that all employees are granted fair access to sick pay?
Imran Hussain
Absolutely—that is the crux. As I said before, I acknowledge that the Government have gone a considerable way. The Employment Rights Bill will make significant changes that allow millions of people to benefit from statutory sick pay when they would not have before. But the journey must not end there. The hon. Member is absolutely right that there are many people who are still missing out—there are 300,000 people who will significantly miss out, as I said.
This is not just an economic issue, and it should not be viewed as one. It is a moral issue. The Government have the power to ensure that every worker—whether in an office, a hospital, a factory or on the frontline—can take the time they need to recover without fear of financial ruin. They also have the power to ensure that no worker, especially those with long-term illnesses, receives less under the new rules than they would have received before. Let me be clear: we cannot allow this opportunity to pass without ensuring that every worker benefits from the changes we have introduced. This is our chance to build a fairer society that treats working people with the dignity and respect they deserve.
I hope the Minister, for whom I have much respect and regard, understands that I come at this from a place of support. He has a long track record of understanding these issues, and this is our opportunity. We must go further, because that is the only way we will address this matter, so I urge him to do so. Will he commit to reviewing SSP so that workers no longer have to rely on poverty pay when they are sick? Will he today commit to reviewing the impact of the new changes, specifically in relation to the 300,000 people who will be worse off under the new 80% replacement rate?
On the second question in particular, I urge the Minister to provide information to allow the House to see the impact on those 300,000 people. I do not believe for one minute that the Government intend to make them worse off; but, equally, I do not think we can just ignore it.
Finally, will the Minister outline exactly what steps he is taking to make sure that those with the most severe illnesses, and those who find themselves sick or in recovery for longer than five weeks, do not find themselves unfairly punished? The Minister knows that if we fail here, we will fail an entire generation of workers.
The Minister for Social Security and Disability (Sir Stephen Timms)
I am delighted to serve under your chairmanship, Mr Stuart. I congratulate my hon. Friend the Member for Bradford East (Imran Hussain) on securing this debate and on the thoughtful way he set out his case.
My hon. Friend is absolutely right to highlight the fact that this issue has been dodged for a long time. Proposals for reform of statutory sick pay were brought forward in 2019; they were paused for the pandemic and never brought back. My hon. Friend and I agree that the Government inherited a statutory sick pay system that fosters economic insecurity at work, particularly for the lowest earners. The pandemic exposed just how precarious work and life are for people on low incomes, with many people forced to choose between health, including the health of others, and financial hardship—an impossible position.
My hon. Friend focused on the rate of statutory sick pay, but I want to highlight the actions that the Government are taking to implement the plan to make work pay—the plan that he has referred to and supported—and ensure that the safety net of sick pay is available to those who need it. I think the change will meet exactly the point that the hon. Member for Horsham (John Milne) raised in his intervention.
Insecure, low-paid and irregular work has been the lot of far too many people for far too long. The Employment Rights Bill, which had its Second Reading in the other place just before Easter—I echo my hon. Friend’s tribute to the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders)—will turn the tide. It is the biggest upgrade to workers’ rights in a generation. It will boost living standards and improve our economic growth prospects, thanks to urgently needed reforms to our economy.
Through the Bill, we are, as my hon. Friend the Member for Bradford East set out, extending statutory sick pay to those earning below the lower earnings limit, and also removing the waiting period, making it payable from the first rather than the fourth day of sickness absence. I think those two points, and in particular the removal of the waiting period, will address the concern raised by the hon. Member for Horsham. These are very important steps to strengthen statutory sick pay, and I am glad to hear the strong support from my hon. Friend and others for the changes.
I heard my hon. Friend’s calls for further reform of the system, including the call to increase the flat rate. The rate of statutory sick pay is designed to balance providing a basic level of support for employees when they are unable to work due to sickness with helping to manage the cost to employers. It is very important to get that balance right. That is where the debate is likely to focus.
The changes through the Employment Rights Bill mean that up to 1.3 million low-paid employees will now be entitled to statutory sick pay, and all eligible employees will be paid from the first day of sickness absence, benefiting many millions. As part of removing the lower earnings limit we committed to a fair earnings replacement. We consulted on the percentage rate last year, and the conclusion from that exercise—the new rate: 80% of normal weekly earnings or the flat rate, whichever is the lower—strikes the right balance between providing financial security to employees while limiting additional cost to employers. That is important because, as set out in the regulatory impact assessment, the reforms will obviously increase the aggregate amount of sick pay that employees receive—an estimated increase of £420 million per year.
At an individual level, the removal of the waiting period means that all employees will receive at least £60 extra at the start of their sickness absence; if they work just two days a week, they will get £150 extra compared with the current system. Removing the waiting period has the added advantage of making a phased return to work easier, which has always been one of the aims for reforming statutory sick pay. That can be a very effective way of helping people and making it possible for them to return from a period of absence and stay in work, reducing the flow into economic inactivity and the additional costs to business. The change also means that an employee who earns just below the lower earnings limit could now be entitled to up to £100, compared with nothing under the current system.
My hon. Friend the Member for Bradford East set out potential benefits from going further for disabled people and people with health impairments. The concerns he set out are among the reasons we set up the Keep Britain Working independent review, which is being undertaken by Sir Charlie Mayfield, who used to run John Lewis, to consider what employers can do in order better to support disabled people and people with health impairments to work, and what the Government can do to promote improved practices on the part of employers. After conducting an initial phase of “discovery” of the underlying issues, the review has launched a call to all stakeholders to engage with the early review findings and to input views, including via a survey launched on gov.uk. I encourage everyone interested in today’s debate to look at the questions in the survey and respond to it.
My hon. Friend suggested that the system ought to be aligned more closely with the national living wage and referred to the amendment to that effect that he tabled to the Employment Rights Bill on Report. The difficulty is that that would increase costs on business by some £1.3 billion per year on top of the changes that we are already making through the Bill, with no mechanism for employers to reclaim those costs. Given the quite substantial differences in how the national living wage and statutory sick pay are calculated, there would need to be big changes to the statutory sick pay system and further consultation with businesses and employees about that. It would also significantly impact the work and scope of the Low Pay Commission. But the big issue is the additional cost to business of going ahead with a proposal along the lines that my hon. Friend suggests and, for that reason, the Government have decided not to do that.
Sometimes, in debates on this topic—my hon. Friend the Member for Bradford East touched on this—the models for sick pay arrangements in other countries are highlighted. They provide a useful and informative comparison, and it is important to look at them. It is also important to recognise that sick pay arrangements sit within the context of different social security systems, different economies and different employment obligations and protections in different countries, so simply comparing sick pay arrangements can be a bit misleading.
Of course, many employers already go beyond their statutory obligations by offering employees occupational or contractual sick pay. Around 60% of employees report being eligible for such arrangements from their employer during sickness absence, but some people will require further support during a period of sickness absence. They may need additional financial support. They may be able to claim more help through the social security system, in particular universal credit—my hon. Friend mentioned PIP as well—depending on their circumstances. We are determined that that support will continue to be available.
My hon. Friend expressed concern that some employees might receive less under the new system than the current one—a point also raised by my hon. Friend the Member for Leeds East (Richard Burgon). The removal of the waiting period will mean that all employees will be entitled to more statutory sick pay for the first three weeks. My hon. Friend the Member for Bradford East talked about five weeks, but with a significant payment up front there will clearly be a period during which people will receive more. Absences in the first three weeks represent 87% of all sickness absences, according to the Department’s 2023 employee survey. The number who are out of work on statutory sick pay for the longer period beyond the one that my hon. Friend referred to will be quite small. I am certainly not claiming that there will not be anybody, but it will be quite a small number.
The changes we are bringing forward will help stop people being forced to work when they are unwell. They will also support very effectively the lowest paid employees, who will always receive the highest income replacement rate of 80%, having not been supported in the past. An alternative approach to removing the lower earnings limit has been suggested, and my hon. Friend touched on it, but we think that would create a pretty unfair system, because some employees would receive a greater earnings replacement rate—up to 100%—than people earning less than them. In an extreme case, 1p in average weekly earnings could potentially make nearly a £24-a-week difference in entitlement. I do not think that would be the right thing to do, and I think my hon. Friend would recognise that that would not be a very satisfactory state of affairs. I have not seen a model that guarantees that everybody will be better off that does not have that problem. The Department will, I hope later this week, publish a fact sheet on gov.uk that addresses those concerns in more detail.
There has been discussion about whether there should be a rebate to employers to help them with the increased cost of statutory sick pay. There has been a rebate system in the past, but it was rather complicated, it was expensive to administer, it was not always taken up by small employers and it did not encourage employers to support their employees. By contrast, under the new system, employers stand to benefit from increased productivity among their employees offsetting the additional cost, which is reckoned to be about £15 per employee per year.
I again congratulate and thank my hon. Friend for securing this debate. I welcome his thoughtful engagement on the important matters that he has raised, not just in this debate, but in the Chamber on Report of the Employment Rights Bill and, I recall, directly with the Prime Minister. He is raising important points in a constructive and thoughtful way. As the changes to SSP being taken forward through the Employment Rights Bill move closer to implementation, we will continue working closely with employees, trade unions and businesses to deliver a system that is fair, supportive and effective for all. To pick up my hon. Friend’s point, we will monitor the impact of these measures to strengthen statutory sick pay, as well as how SSP is used by employers and how effectively it supports employees. I am grateful for the opportunity to set out the Government’s position and I am sure we will talk about it again.
Motion lapsed (Standing Order No. 10(6)).
Retail Investment
(1 week, 2 days ago)
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Callum Anderson (Buckingham and Bletchley) (Lab)
I beg to move,
That this House has considered Government support for retail investment.
It is a pleasure to serve under your chairship, Mrs Hobhouse. I thank my hon. Friend the Economic Secretary to the Treasury for joining us today and for her continued engagement on this subject, and I thank hon. Members from across the House for making time for the debate.
I am grateful for the opportunity to raise the matter of retail investment in the UK stock market. This is about more than just the financial sector or the City of London; it is about how people across our country, from Sunderland to Swansea and Buckingham to Bletchley, can build more secure financial futures while helping the UK economy to grow.
When people use their own money to invest in shares, Government bonds or other regulated financial products, that is a force for good. It gives them agency and an opportunity to own a stake in the companies that they work for, buy from and depend on in everyday life. At its best, it allows people from every corner of our country to share in the success of our economy, to grow their wealth, to build financial resilience and to prepare for life’s great milestones, such as weddings, and unexpected moments.
Retail investment does not just help individuals; it helps companies, too. The capital that individuals invest provides the fuel for companies to expand, innovate and create jobs in every part of the UK. That is good for productivity, wages and Britain’s international competitiveness. Having more individual investors also strengthens our financial markets. They bring more stability, deliver more liquidity to our capital markets and provide a stronger base of support for UK quoted companies, making them more resilient to global shocks—be they pandemics or unexpected impositions of tariffs—and better equipped to focus on building their commercial offer.
The UK has a proud history as a global financial centre. We attract capital from across the world, and we should be proud to do so. We used to pair that with high levels of retail participation by British citizens, but sadly that has changed. The data paints a stark picture. In the early 1960s, individuals in the UK owned, by value, a little over half of all shares traded on the London stock exchange; today that figure is barely 10%. At the same time, overseas ownership of UK shares has risen to almost 58%.
What is more, according to studies from the London-based New Financial think-tank, the proportion of UK households that directly own shares has halved in under two decades, from 22% in 2004 to just 11% in 2022. That is far below the proportion in many developed countries, such as Sweden, where over a fifth of households own shares. There are many interconnected reasons behind those trends, and I do not propose to examine each in detail right now. Of course, some people simply cannot afford to invest, particularly when the cost of living remains high; others feel that they do not know where to begin or do not trust the system to work for them; and many are simply more comfortable with cash, even though it often fails to keep pace with inflation.
Samantha Niblett (South Derbyshire) (Lab)
Does my hon. Friend agree that increasing the participation in retail investment of women, who make up more than 50% of the UK’s population, is crucial not only for gender equality, but for the UK’s economic resilience? At present, women in the UK are significantly less likely than men to invest in stocks, individual savings accounts or pensions, despite often achieving comparable or better returns when they do. By addressing the gender investment gap through education, accessible financial products and tailored support, we can empower more women to grow their wealth independently, reduce long-term financial inequality and boost the overall vibrancy of the UK retail investment market.
Callum Anderson
My hon. Friend is quite right; it is really important that we encourage women and other under-represented groups to invest and participate in owning a part of their economy. By encouraging retail investment we are able to reduce a variety of wealth gaps, including the gender wealth gap. I should add that there is a social justice element, too. People from middle-class or wealthier families are simply much more likely than those from ordinary working-class backgrounds to be exposed to the range of financial options available. That creates an asymmetrical divide in confidence, knowledge and opportunity.
This matters because when UK citizens own less of their economy, the consequences are much more than just financial. It affects the efficacy of our economic model, the shape and direction of our growth path, our ability to support home-grown innovation and even, as we have seen in recent weeks, our economic sovereignty. If we want a strong economy that genuinely works for everyone, we must do what we can to help more of our constituents take part in it, not just as workers or consumers but as co-owners.
I want to reiterate that this is not about helping the City of London. It is about helping everyday people—our constituents—make the most of their money and have a say in the companies that are shaping their lives. We know that long-term investing consistently outperforms keeping money in cash savings or bonds.
Anna Dixon (Shipley) (Lab)
I recently met representatives of Morrisons, the fifth largest supermarket chain in the country, which is headquartered in Bradford. Since 2021, it has been owned by a private equity firm. Does my hon. Friend agree that we need to ensure that we retain family-owned British companies? When they are sold to private equity companies, there is a risk of undermining long-term patient capital and investment in the social fabric as well as the businesses themselves.
Callum Anderson
As I have mentioned ad nauseam since I was elected, my mum works for Morrisons, so I know the impact that various structures of ownership can have on workers and customers. My hon. Friend is right that that is one of the many factors that we should consider as policymakers.
A £100 investment in Government gilts in 1900 would have returned around £463 by 2019. The same investment in UK equities would have yielded £35,000. Despite that, many Britons still keep the bulk of their money in cash. In the G7, only the citizens of Germany and Japan hold more of their national wealth in cash than we do. Inflation, even at modest levels, steadily eats away at its value. I believe that we must do more to help people feel confident in making smart, informed, long-term choices, and that starts with awareness, the right tools and advice, and trust.
Let us take ISAs, the most commonly known product, as an example. In the 2022-23 financial year, the latest for which official statistics are known, more than 12 million adult ISA accounts were active, yet nearly two thirds of the total value—almost £290 billion—was held in cash. That is more than £290 billion earning very little return indeed. Some major high street banks, which I will decline to name, are at the moment offering as little as 1.35% interest on cash ISAs, yet we know that inflation has consistently outpaced that rate for the past four years; indeed, it has sometimes reached double figures.
Many financial experts and advisers will rightly recommend keeping three, six or nine months of living expenses in cash savings. I know from my early career in financial inclusion charities that, for many households, possessing even £500 in emergency savings can often be out of reach. Let me be clear again: this debate is not about replacing or discouraging cash savings—far from it. It is about showing that even small investments—£10, £20 or £50 per month—can make a real difference over time.
If more people invest, our economy will be stronger in the long run. Imagine if we could shift just 10% or 20% of that £290 billion towards more productive, growth-inducing assets. That would mean more companies starting, growing and scaling right here in the United Kingdom and, therefore, more jobs, better pay and more people gaining that crucial bit of additional disposable income to invest for themselves or, perhaps just as importantly, to enjoy life with their families. That is the virtuous cycle that I believe we all agree that we need to build.
How can we—Parliament, Government, regulators and the industry itself—go about working towards that together? Ultimately, I believe that the UK would greatly benefit from a long-term retail investment strategy invested in by Parliament, Government, regulators and the industry. For the purpose of this debate, I think there are four immediate priorities.
First, we need to simplify the ISA framework and reform it to better support British investment. There are four types of ISAs, each with slightly different rules. For many, that is simply confusing and, I think, off-putting. Why not consolidate those products into a single ISA, with stocks and shares ISAs the default but, crucially, people can still hold cash if they choose?
The Government might also wish to consider reviewing the stamp duty framework on share purchases. Currently, it is cheaper for an individual investor to buy shares in Illumina than in Oxford Nanopore, in Lockheed Martin than in BAE Systems, and in Tesla than in Rolls-Royce. Is it time for us to ask ourselves whether we want to continue making it more expensive for Britons to buy British?
Finally on this point, we should ensure that ISA tax exemptions align much better with the needs of the UK economy as a whole. Today, someone can put £20,000 in a tax-free wrapper that invests in companies that create no jobs in the UK, pay nothing into our Exchequer, generate no domestic growth and contribute no intellectual property or research and development. Should we as legislators be asking ourselves whether that is a good use of taxpayer subsidy? Is it time to look again at the original PEP—personal equity plan—model introduced by Nigel Lawson in the 1980s, which required at least 50% of the ISA allowance to be directed towards UK-focused assets? That could strike a better balance between supporting investment freedoms and choice, and the national interest.
Secondly, we must boost, embed and entrench the virtues of financial education, because if people do not understand how investing works, they simply will not do it. I welcome the Government’s continued support for the Financial Conduct Authority’s review of the boundary between financial advice and guidance. It is really important that people can get timely and affordable help when making big financial decisions so that they can make the most of their money, but I think there is scope for us—for Britain—to go further.
Let us be honest: as I said in my opening remarks, kids from wealthier backgrounds are more likely than those from less wealthy families to hear about compound interest, investment portfolios and ISAs at the dinner table. That is why financial education should form a part of everyone’s life, from school right through to retirement, so that people feel confident and well informed at every stage of their life. That means recommitting ourselves to properly implementing age-appropriate financial education throughout our school system, from basic budgeting and saving at a young age, to more sophisticated learning about investment, risk and long-term planning in later school years. This is not just about economics; it is about equity and fairness.
Thirdly, we need to make it easier for citizens to engage with the companies they invest in. I believe that primarily means finishing the work of Sir Douglas Flint’s Digitisation Taskforce at pace, ending paper share certificates and creating a fully transparent modern shareholding system. However, it is also about access to information: right now, only the big top-tier institutions get first-class research; retail investors get patchy websites filled with jargon, if they get anything at all. The UK should be developing high-quality and accessible investment information, especially for those smaller UK firms that have the potential to be the Googles and Nvidias of tomorrow.
Fourthly and finally, we must fundamentally shift the British culture and mindset into individual investing. Too many of our constituents still see investing as something that other people do—something for the wealthy, or the experts, or the lucky to do. We must challenge that mistaken perception head-on. Why not launch a modern, compelling and inclusive public awareness campaign—perhaps a 21st-century version of “Tell Sid”? It should focus on real people, real lives, and real, genuine, tangible benefits that people can see in their local community. It should be visible, too, in universities, in jobcentres, in community places and in our workplaces, because this is not just a personal finance issue; it is a national opportunity.
I think that the case for retail investment is clear and I believe that this Labour Government have the chance to fuse their democratic socialism with a modern brand of democratic capitalism. By helping more people to invest in their own economy, we empower citizens, grow our companies and build a more prosperous country for everyone. I believe that capital markets can and should serve everyone, and that it is our job in this place to make that a reality.
Wera Hobhouse (in the Chair)
I remind Members that they should bob if they wish to be called to speak.
Joe Morris (Hexham) (Lab)
It is a pleasure to serve under your chairship, Mrs Hobhouse. I congratulate my hon. Friend the Member for Buckingham and Bletchley (Callum Anderson) on securing such an important debate and on covering so comprehensively and so vividly the challenges in the retail investment sector.
When I speak to people across my constituency about the challenges they face and particularly when I speak to entrepreneurs, the lack of financial education in schools often comes up; too often, however, a lack of confidence in rural infrastructure is also raised with me, and as the MP for a very sparsely populated seat, I will focus my remarks in part on that issue, as well as on some of the points that are more directly relevant to retail investment.
One of the things I have discussed with local businesses such as the Allendale Brewery, which I managed to visit over the recess, is the lack of targeted support, not just for retail investment but for entrepreneurs in rural areas, to make sure that their business ideas can be brought to completion. Grants or other forms of support relevant to urban areas simply do not exist in rural areas where, to be honest, the jobs created through such investment can have a transformational impact, due to the fact that a couple of jobs created in a small village will have a far greater effect than the creation of a couple of jobs in a city.
While we are talking about banks and large financial services, I also recognise that the withdrawal of those services and organisations from rural communities is incredibly worrying and incredibly damaging to people starting their investment, who cannot see anyone with the knowledge or ability to advise them. People are unable to go to those institutions for life’s expected or unexpected moments. If the proposed Lloyds closures across the Hexham constituency go through, there will be very few bank branches in my constituency, which will present a major challenge. I raised the subject in an Adjournment debate shortly after I was elected, so I know that the Minister is very aware of my position and views on rural bank branch closures, but I will not miss an opportunity to raise it again.
I also quickly want to raise an issue brought to my attention by the Vintage Hub, a fantastic business in my constituency. Its owners, Lisa and Douglas, were faced with a 40% rent increase from Advance Northumberland, an arm’s length body of Northumberland county council, which was simply not sustainable. One of the issues that I constantly hear about is lack of appropriate infrastructure, with the hiking up of rents driving people out of what are often commercially viable businesses. I know that the Vintage Hub is a very successful business, but in the block that it rents three businesses were forced to leave the unit because of the rent rise inflicted on them by an arms-length body of the Tory-run Northumberland county council.
I am sure the Minister is listening to this, but we need to ensure that we develop a financial services growth and competitiveness strategy that does not just prioritise retail investment across the country to restore our high streets, but takes into account the unique circumstances of local communities. It needs to get long-term, patient capital into communities that will otherwise be left behind in the past. I am thinking of smaller villages across the Tyne valley in areas that have been forgotten about for far too long, where we consistently see “To Let” or “For Sale” signs on prominent, attractive high street shops. We need to encourage development. I hope that how best to deploy retail investment capital is a major part of what the Government look at going forward.
Kanishka Narayan (Vale of Glamorgan) (Lab)
It is a privilege to speak with you in the Chair, Mrs Hobhouse. It is a particular privilege to follow my hon. Friend the Member for Buckingham and Bletchley (Callum Anderson), who secured this debate and led it with expected expertise. I know that he brings a great deal of professional experience from his career prior to this place. It also a privilege to see the Economic Secretary to the Treasury in her chair. I know that she also brings vast expertise and experience to this debate from both her time in this place and prior to it. For those reasons, I will humbly keep a short focus on five particular segments of potential retail investors in my remarks.
My hon. Friend the Member for Buckingham and Bletchley was very accurate in noting the focus of the debate. For me in the Vale of Glamorgan, as will be the case for many other colleagues, the focus must be on ensuring that individuals can not only accumulate prosperity through retail investment but ensure dignity, and that is the first segment of particular interest. For millions of households, retail investment is a question of saving up for a rainy day. For many households in the third decile of wealth in this country, with average net financial savings of about £1,500, the path to retail investment is through a low-cost—or hopefully even a zero-cost—accessible money market or index fund. The fundamental focus for those individuals is on how we support not just the right level of interest rate provision from our retail banks, which is absolutely necessary, but the advantages of technology in distributing index funds in a way that is accessible and understandable to many of those households.
The secondary category is novel in its composition: the young in this country. While about 39% of adults in this country have invested actively, an overwhelming third of those started during the pandemic. The vast majority of those who started in the pandemic and afterwards are aged between 18 and 34. The patterns of behaviour in that category are radically different from others across the country: 58% of 18 to 24-year-olds hold cryptocurrency as their primary asset holding; among those aged between 55 and 65, holdings in that asset class are negligible. Cash ISAs are not particularly prominent for those young individuals at the moment. For them, the interesting and salient question is how to make sure that we have a bridge to wider responsible investing across asset classes, which builds for the long term, alongside doing what they want in holding cryptocurrency or other assets.
The third category is critical to the nation’s future and private investment in this country: those who do not invest in equity today. My hon. Friend the Member for Buckingham and Bletchley has come up with a series of good practical ideas on supporting them into equity markets, but given that most of our financial assets up until the seventh or eighth decile of wealth lie in pensions rather than direct financial assets themselves, I feel that pensions will be the primary gateway to ensuring that retail investors have a bit more of a say in allocation that supports the country’s long-term goals.
In the United States a 401(k) culture of people being able to exercise discretion in what happens with their pensions has led to a radical shift in retail holding in equities in particular. The Economic Secretary to the Treasury has been at the frontier of making reforms to our pension system in her prior role and now as well. In addition to supporting funds, shifting their allocation, really pushing ambition on the implementation of the pensions dashboard and in the movement to open pensions, the data, transparency and empowered control that will help many of us to make greater moves into supporting British and wider businesses is fundamental.
Anna Dixon
My hon. Friend makes excellent points about the older generation and their decision making on what to invest in. At the moment older people are often over-saving, particularly in cash ISAs or very low-risk products, because of the lack of funded social care. They are having to hold on to a lot of cash just in case they need to pay for care. Does my hon. Friend agree with me that better advice is needed for pensioners to make retail investment decisions, and a better range of products is needed that will deliver them security in old age in terms of social care, but also the returns in pension income?
Kanishka Narayan
Yes, absolutely. My hon. Friend speaks with a great deal of expertise on this and on the wider question of how we support people with care needs. She is exactly right.
I would be interested in how we support a market in the advice context that goes all the way from what I think the guidance on the boundary of the advice market will do, which is support people getting into the advice context in the first place and ultimately into the regulated part of that market. Again, as a fervent believer in what a reduced cost of delivery through technology can do, I think there is a huge amount of progress to be made in finding different sources of advice for different sets of people. Pensions are a primary point of leverage as we think about where we can make a mark in supporting greater retail investment.
There is a fourth, really important category of those who invest in equities, but do not invest as much in British equities. It is worth distinguishing them from those who do not invest in equities altogether. My broad suggestion there is that we focus as much on the pull as the push and think about why it is that when people in Britain invest in equities, they are not investing as much in British equities. It is very clear that North American funds have had very material inflows over the course of the last decade, compared with actively managed UK funds, which have had outflows since 2016. UK-based index funds also had outflows in the two years prior to 2023. It is probably not surprising that it is in large part down to the returns profile.
If someone invested in the MSCI USA Index, they got a 303% return over the last decade. Return in the MSCI World Index was 213%. If we look at the pattern of retail investment in US companies, we see that it is the highest growth, highest returning and often in some ways the highest engagement companies that get the greatest inflows. Some 30% of retail holdings in the “magnificent seven” tech stocks, as they are labelled, are radically lower in the rest of the S&P. Given that the median age of our top 10 companies in the FTSE is about 150 compared with 40 in the US top 10, it is probably not surprising that people do not feel as captivated by the possibility of investing in Britain.
When we think about retail investment in British assets in particular, we need to think about what we are asking people to invest in and make sure that the wider set of economic reforms that we are focused on are driving at pace a sense that technology and renewable energy—things that build the country’s future—grounded in communities like Hexham and the Vale of Glamorgan are the assets that we support people to invest in.
My final point is close to my heart as a Labour politician, which is that retail investors’ primary experience of a company is the company that they work in. There is a cause here that ties together the cause of worker dignity, worker engagement and retail investment for prosperity. It is a cause close to my heart from the technology sector, because the one thing that has been so remarkable about it globally has been the ability of the technology sector to create prosperity through employee stock ownership. I humbly suggest that the Government consider adapting a very successful enterprise management incentive scheme for employee stock ownership, to make it more attractive in the modern world of technology and artificial intelligence companies.
I am conscious that I have whizzed through those five categories, but at the heart of the issue is a fundamental focus: in supporting both the prosperity and dignity of people in the Vale of Glamorgan and across the country, retail investment will be fundamental.
Daisy Cooper (St Albans) (LD)
May I start by being a little off topic? This is my first opportunity to congratulate you in person, Mrs Hobhouse, on your heartwarming reunion with your family. Congratulations—that was delightful to see over the Easter weekend.
I start by congratulating the hon. Member for Buckingham and Bletchley (Callum Anderson) on securing this incredibly important debate. As he highlighted, the UK has history and status as a global financial centre. We have a reputation for being very strong at securing international investment, but domestic investment has never always been quite as strong. The domestic investment that we do have is often propped up by pension auto-enrolment. That masks the fact that the share of UK wealth in company stocks is the lowest in the G7 and, as hon. Members have highlighted, it is lower now than it used to be.
The net effect is that individuals are missing out on financial returns and on having a stake in our economy, and companies are missing out on investment. That leads many companies to choose not to list here in the UK; they list in other countries where they can secure higher valuations and more capital investment. Other Members have rehearsed some of the reasons for that. Some individuals cannot afford, or feel that they cannot afford, to invest, while others are risk-averse. There are those who lack the knowledge or confidence about how to invest. Some choose to invest in property: house prices and building prices in this country continue to go up and up, and that often means that people choose to invest in that.
As has been highlighted, people are often saving for a rainy day. Our public services remain on their knees, so individuals and families are increasingly saving money, whether for social care, knee operations, private education, healthcare assessments or mental health appointments. Clearly, we need get our public services back on their feet. Boosting people’s confidence in public services will convince them that they will not have to pay out when they should be relying on public services.
We have seen many moves by different agencies to address some of these problems. The Financial Conduct Authority is looking to offer more than just generic guidance on how to invest, and we can all welcome that. Some banks are calling for a badging scheme to identify entry-level investment products. I think we can all welcome that as well, particularly long-term, low-risk investments for those people who want to get going. I am sure that, irrespective of political party, we can agree with calls for greater financial literacy. It is vital that we do more on all these fronts because people are missing out on financial returns and companies are missing out on investment and choosing to go elsewhere.
I was particularly interested in some of the recommendations and calls for action from the hon. Member for Buckingham and Bletchley. I wholeheartedly agree with his call for a long-term retail investment strategy, and I hope that the Minister will say a little more about that. I urge some caution around the call to simplify the four ISAs. Many individuals are fairly au fait with choice, and choice in itself is a good thing. People have more agency when they can choose between different products, and I would be wary about throwing the baby out with the bathwater; if more information is available about the differences between the ISAs, choice is a good thing.
Increasingly, people want to choose how they invest their money. They may want to invest in a particular sector. They may want to make investments in line with their outlook on the world, whether those are green investments or something that has another impact. Some people are willing to sacrifice a bit of financial return if they feel they are using their money for a good cause. I urge the Government and colleagues to reflect on that point. I am interested in the calls to revisit tax exemptions so that we incentivise people to invest in companies that genuinely contribute to building Britain and the British economy and to providing more secure jobs. In addition to the financial literacy, that call for a campaign to, effectively, democratise investment is a really good idea. We Liberal Democrats would be keen to hear more from the Government on that point.
On green investment, we know there is a green stocks and shares ISA. The Government have talked about a social impact investment vehicle; it would be interesting to hear whether they have more to say on that, perhaps before we get to the spending review. I urge the Government to consider tackling crypto scams. We see warnings on an almost weekly basis about such scams, and we would like the Government to do more to tackle them, especially on social media platforms, and guarantee that protections would not be watered down in any future Trump trade deal. We need to see greater stability more generally, of course.
I also urge the Government to consider more long-term, responsible investment opportunities for individuals. At the moment, a lot of people’s confidence in retail investment might be a little shaken because of global headwinds and the geopolitical situation that. None the less, there is still a very strong argument for longer-term investment, and the rewards that can provide.
Finally, I have a comment for the Minister in the spirit of constructive opposition: there are lots of rumours flying around at the moment about whether and how the Government may change various ISAs, and whether they are looking at a particular cap, and that has created a little uncertainty. I have heard from a few constituents anxious about what the changes might be, and what they might mean for them. We all want to make sure that our constituents are well informed and do not take rash decisions because of rumours they have heard, so I urge the Minister to assure us that whatever plans the Government may bring forward will be phased in and that people have no cause to panic or be anxious about what may change. Such reassurances would be well received by some of our constituents.
Mark Garnier (Wyre Forest) (Con)
It is a pleasure to serve under your leadership, Mrs Hobhouse, and I congratulate you on your first Westminster Hall debate as a member of the Panel of Chairs—you have handled it masterfully. I also congratulate the hon. Member for Buckingham and Bletchley (Callum Anderson) on securing this debate. He previously worked for the London stock exchange; he may be interested to know that I started my 27-year investment career as a dealer on the floor of the exchange in what we like to refer to as “the olden days”. There will be an almost unanimous outbreak of agreement across the Chamber. The hon. Member made some very important points. There is one point on which I slightly disagree, but he could basically have written my speech.
One of the things that the hon. Member mentioned is the idea of acclimatising people to the idea of investment. When I was first elected as an MP, a number of us spearheaded a campaign to get investing and financial education into the national curriculum. At the time, it was clear that too many young people were leaving school without any understanding of the basics of personal finance, let alone the potential of sensible long-term investment. Whether it is saving for a rainy day or putting away money to buy a home, making the right investment choices is absolutely vital. Retail investment should absolutely form a cornerstone of any investment strategy, but not enough people are aware of the long-term benefits of stocks and shares investment versus cash deposits.
Polling conducted by Opinium last year highlighted that fewer than half of respondents felt confident about opening a stocks and shares ISA. I have always felt that the lack of knowledge starts with the lack of the right education. Better financial education was recommended by the Parliamentary Commission on Banking Standards when I was on it over a decade ago—a long time before many Members here were elected. In 2014, I thought we had finally settled the debate about financial education in the curriculum. The national curriculum was updated to see financial education become a statutory part of it for the first time. Although it is still on the national curriculum, it has become clear that there is not enough focus on getting schools to teach it consistently. Academy schools that do not follow the curriculum have no requirement to teach financial education if they choose not to.
I thank my hon. Friend the Member for Mid Leicestershire (Mr Bedford) for recently taking up the baton. His private Member’s Bill would make financial education mandatory for all students aged five to 18, which could resolve some of the issues we are debating here.
Of course, things have moved on since my original campaign. It is clear that there is a real appetite for young people to become investors. Although the UK continues to lag behind countries like the United States when it comes to active retail investment, since the pandemic interest in investing has substantially risen among younger age groups, particularly Gen Z. That has partly been driven by cryptoasset investment, which, if I am being entirely honest, is something I find a bit odd.
Younger investors aged between 18 and 24 are more likely than older investors to invest in cryptoassets. A survey carried out by the Financial Conduct Authority showed that 46% of young investors report holding cryptocurrencies compared with just 7% of investors aged 55 to 65. They are influenced by trends they see on social media such as TikTok, with cryptocurrency influencers bragging about fabulous returns—of course, there are fabulous losses as well. The bedrock of financial education is the old adage, “If it is too good to be true, then it probably is.” I am not against investment in cryptoassets, but as any good investor knows they should be seen as part of a balanced portfolio. Any young people with an appetite for taking investment risks should know that they could be better served with investments into the stock market rather than in the volatility of cryptotrading.
I hope the Minister will outline how the Government intend to get our schools teaching financial education. Will she confirm whether the Government support the principles set out in the Financial Education Bill, which has had cross-party support?
Online trading platforms have now made it easier than ever to become an investor. Despite the easy accessibility, the FCA’s 2022 Financial Lives survey showed that while more than 15 million adults in the UK have investable assets exceeding £10,000, more than half hold at least 75% of those assets in cash. There are very good reasons to hold cash, particularly as people get towards retirement age or want to divest to buy a property or a car. It is for that reason that we believe it is important to retain the individual choice of how to use a tax-free ISA and keep its current allowance unchanged. There is another important point about cash ISAs. They provide substantial capital for building societies, which use the capital to lend on in the form of mortgages. If we reduce the amount of money that can go into cash ISA, we potentially reduce the amount of money available to the mortgage market. We need to think in a balanced way.
There are other ways to focus the minds of people, helping them to make better investment decisions, while retaining the flexibility to spend their ISA in their and their families’ best interests. The Investment Association has called for cash products to come with risk warnings, in the same way as all financial products. That could be as simple as comparing the quoted savings rates against inflation—a point the hon. Member for Buckingham and Bletchley made. In that way, an investor would know that their investment could in fact be losing money in real terms versus inflation. Just as we rightly warn investors that markets can go down as well as up, we should also be honest that holding cash, while it may feel safe, risks steadily losing value through inflation.
The Investment Association has also suggested that renaming the stocks and shares ISA the investment ISA could be a way of changing the mindset of investors. I would welcome the Minister’s thoughts on how we can highlight to investors the pitfalls of holding long-term cash. A successful hearts and minds campaign could, according to estimates from Aberdeen, unlock £3.5 trillion of capital for markets, if UK adults held as much wealth in investments as their US peers. That clearly raises another question: how do we encourage retail investment into UK stocks and shares?
If we are serious about encouraging long-term investment and wider public participation in the UK’s capital markets, we must take a hard look at stamp duty on shares—again, the hon. Member for Buckingham and Bletchley made that point. At 50 basis points, the UK has one of the highest rates of this kind of transaction tax in the developed world. We should not be taxing investment in British businesses; we should be incentivising it.
Stamp duty creates a direct disincentive to buy UK shares and disproportionately impacts those investing smaller amounts, for whom every pound counts. It also reduces the attractiveness of London as a global listing destination and adds friction to the secondary market, which ultimately feeds back into the cost of capital for UK firms. In short, stamp duty is a tax on growth, on participation and on financial inclusion. We need to ask ourselves whether that levy, introduced in a very different era, still serves a useful purpose, or whether reform could help us to unlock a stronger culture of long-term share ownership in this country. I ask the Minister to consider whether the tax could be looked at again, particularly for retail investors.
As an idea, perhaps we could also look again at how the ISA tax-free allowance could be incentivised to stay in the UK. I recently spoke to a successful investor, someone who makes full use of his £20,000 annual stocks and shares ISA allowance. As one would expect, he is shrewd with his money, putting it where he believes it will deliver the best returns. In recent years, that has meant investing primarily in the American markets, where growth has outpaced much of what has been available here in the UK. What struck me was a comment he made a little later about his gardener, who is on minimum wage. The gardener can only afford to put a tiny amount of money, if anything, each month into a cash ISA; yet through his taxes he is effectively subsidising a tax break that allows his employer to invest tax-free in overseas companies. That does not feel right, and it is another point also made by the hon. Member for Buckingham and Bletchley.
ISAs are a cornerstone of our savings culture, but if they are primarily being used to funnel capital abroad, it is time we asked ourselves whether the current system is doing what we intended it to do. Perhaps it is time to explore how we can better direct ISA investment towards British companies. I am sure the Minister will be addressing that subject in her speech.
I think we are all in wholehearted agreement on the need for more retail investment in the UK. The opportunity for investment into UK companies is substantial if we can get it right. I am sure the Minister will have a plethora of ideas—she is writing them down ferociously as I speak—and we look forward to hearing what she has to say.
The Economic Secretary to the Treasury (Emma Reynolds)
It is a great pleasure to serve under your chairmanship, Mrs Hobhouse; congratulations on your appointment to the Panel. Thank you for presiding over this very good-natured Westminster Hall debate. I wish everybody a happy Easter—I do not know about everybody else, but for me, it is the first day back from a nice Easter break. I hope people got some rest over recess, and lots of Easter eggs to boot.
I start by congratulating my hon. Friend the Member for Buckingham and Bletchley (Callum Anderson) on securing this debate. He brings great expertise to the House on the issue and many others, and it is great to respond to his thoughtful contribution. He was right to draw attention to the benefits of retail investors to consumers and the country as a whole. As he said, it is a win-win situation: if we get this right, it will benefit savers, who will get better returns, and it will bring benefits to British business by unlocking more capital to boost economic growth. I will shortly respond to the four points that he raised.
Before I do that, I thank my hon. Friend the Member for Hexham (Joe Morris) for his thoughtful contribution. He spoke about the lack of financial education and targeted support for entrepreneurs in rural areas. Like him, I want to ensure that our Government, in our drive to increase economic growth, pursue that in a way that brings about inclusive growth, across the country, in urban and rural areas. I heard what he said about access to cash; I was not in the privileged position of Minister when he secured his Adjournment debate on that issue, but if he would like to meet to discuss it, I would be happy to do that, because it is obviously a concern in his constituency.
I also pay tribute to an excellent speech, as ever, from my hon. Friend the Member for Vale of Glamorgan (Kanishka Narayan), who talked about five categories; I will not go through them all, but I am passionate about the pensions dashboard, having worked on it in my previous ministerial position. It could be game changing in terms of ensuring greater visibility. He rightly said that many people, even if they are not directly invested in the stock market, are invested via their pensions. The dashboard will give them much greater awareness of what they are invested in, what their likely pension income will be in the future, and what they might need to do to top that pension up. I was interested to hear what he said about that and about the culture of investing in North America—but I have a section about that at the end of my speech, so I will not pre-empt it.
I thank the hon. Member for St Albans (Daisy Cooper), who rightly said that London and the UK are a strong international financial centre. We should celebrate the fact that we attract a lot of investment from international investors, including international pension funds and others. She and my hon. Friend the Member for Buckingham and Bletchley both noted that the amount that our own pension funds and investors invest in the UK has decreased, which is worrying.
I thank the hon. Member for Wyre Forest (Mark Garnier) for his many, many questions—I am giving some thought to them as I proceed. He was absolutely correct to say that people think there is a risk to investing in stocks and shares, but particularly in a high-inflation environment—we are not in one now, but in recent memory inflation got as high as 11%—holding savings in cash is not a risk-free option, because inflation will erode the value of the money over time. If people have additional cash above the rainy day savings that the hon. Member for St Albans talked about, there is some merit to looking at what they might do to invest for the long term. Members from across the House talked about long-term investing.
My hon. Friend the Member for Buckingham and Bletchley set out the scale of the challenge and the potential opportunities. As he noted, the UK is an outlier compared with our international peers. He rightly said that the UK is the third worst in the G7—that is probably the simplest way of putting it—in terms of the amount of money that people hold in cash, over everything else. We are behind only Germany and Japan in terms of the amount of cash that people hold in savings. Do not get me wrong; we know there is a role for cash savings, but we have to look at the balance between saving in cash and investing in equities. The research by Aberdeen found that, within the G7, UK consumers have the lowest appetite for investing, which is very concerning.
Many of us hold all or almost all of our savings in cash. The Financial Conduct Authority reported in 2023 that almost 12 million consumers had more than £10,000 in investible assets held mostly or entirely in cash. Of that group, more than 5 million indicated some appetite to invest. I suppose our job as a Government, and as parliamentarians, is to look at what we can do to give people confidence to take that first step into investing.
Of course, the Government understand that people need cash savings for a rainy day buffer. Many of us have those; I lost my seat in 2019, and thankfully I had a cash buffer at that time. Beyond that, there are risks to holding more savings in cash, as I have suggested, given the impact of inflation, and there is an opportunity cost of holding money in cash savings when there are higher returns to be had from investing, and particularly investing in the long term, if that is open to individuals.
The Government want more people to take part in capital markets. The hon. Member for St Albans talked about democratising capital markets—I like that phrase; it is a good thing that we can all agree on—and about the benefits from the returns and long-term financial security that investing in those markets can provide. To make that happen, we need to build a stronger investment environment in this country, and a better investment culture that helps people to engage confidently with investing.
My hon. Friend the Member for Buckingham and Bletchley made four policy suggestions, which were also mentioned by other hon. Members. I will address in turn. First, he called for reform of the ISA system. There was some debate across the House; there was mostly cross-party support for that proposal, but it was nice to see some discussion and constructive disagreement between the Liberal Democrats and my hon. Friend. He suggested that we should consolidate and simplify ISAs, while the hon. Member for St Albans suggested that we should ensure the choice remains available.
We said in the spring statement that we are looking at options for reforming ISAs to get the balance right between cash and equities. I cannot comment on any tax changes or changes to the ISA or savings landscape today, but I can say to the hon. Lady that we will take representations into account very seriously. I will say—I think for the third time in this speech—that cash savings obviously play an important role in ensuring that people have a financial buffer in case something goes wrong.
Daisy Cooper
I recognise that the Minister will not accept my invitation to divulge more information about the Government’s thinking on this issue, but I would be grateful if she could at least confirm that the Government’s position is that they are not ruling out a phased approach to introducing whatever they may introduce. It is important that our constituents who are anxious and worried about their money and what they should be doing with it, and who are currently consulting with financial advisers and whatnot, are given the reassurance they need that whatever changes the Government introduce will be phased in a way that makes it easy for them to make decisions, and that they should not make snap decisions now.
Emma Reynolds
I have heard the hon. Lady’s representation, and I am sure that people in the Treasury hear that representation. I would mention to her more broadly that we have committed to one fiscal event a year, rather than the two or three that we might have seen from the previous Government—we might have got a third one in September, had we not had an early election. I hope that gives her some reassurance.
The hon. Member for Wyre Forest mentioned the issue of building societies, which he also raised with me in the House in Treasury questions. I am in close touch with the building societies and will be speaking at their conference in Birmingham—he might be too, as a west midlands MP; I do not know. I can reassure him that we are in close engagement with them and that we understand and appreciate the valuable role that they play in providing mortgages and other financial assistance to their members. Many of us in this place will be members of and have investments in different building societies.
Anna Dixon
Constituents of mine value the role of the credit union, and the Bradford credit union in particular, for small savers on low incomes. Does the Minister see a role for credit unions alongside building societies in helping to encourage not only saving, but making early steps into investment, as we have discussed in this debate, for some of our poorest constituents?
Emma Reynolds
Credit unions, mutuals and co-operatives play a hugely important role in our economy and our society. That is why the Government—as my hon. Friend will know, given that she stood on the same Labour manifesto as me—promised in our manifesto to double the size of the mutuals sector, why the Chancellor asked the FCA and the Prudential Regulation Authority to look at the mutuals landscape in the Mansion House speech in November and why we have supported the establishment of the co-operatives and mutuals council—I actually went to the first meeting. As my hon. Friend said, credit unions play an important role in encouraging savings, particularly for those on low incomes. We have also launched a consultation on whether the common bond needs to be more flexible so that more people can benefit from credit unions, and that is also in train.
Coming back to the issue of ISA reform, the hon. Member for St Albans rightly said that there has been some market volatility recently. I will not comment on the day-to-day movement in markets, but I will say—I think she was also making this point—that if people are in a position where they can invest in stocks and shares in our stock market or other forms of investment, they need to take a long-term view of that. Often, that investment gives better returns than just putting something away into a cash account.
Analysis by AJ Bell from February this year suggests that someone who put away £1,000 in an average-performing cash ISA every April since their introduction in 1999 would now hold about £34,000. If their savings had instead kept up with inflation, they would now have £38,000, so that person would have lost out on £4,000. That goes to show how inflation can reduce the value of cash savings over time. In contrast, if that same individual had decided to invest in a stocks and shares ISA, they could now have around £83,000—over twice as much as their cash savings would have been. That demonstrates that if someone has the confidence and the ability—we are not talking about everybody here—to invest for the longer term, they will most likely get a better return. We need to ensure that people have the confidence and ability to engage with investing, and thus to benefit from the financial security and greater returns that investing can often provide.
My hon. Friend the Member for Vale of Glamorgan talked about people on lower incomes. On that, I will take the opportunity to say something about the help to save scheme, which is targeted at working households on low incomes. It offers a 50% Government bonus on savings of up to £50 a month over four years. The Government announced at the autumn Budget last year that the help to save scheme has been extended until April 2027. From 6 April this year, we have extended eligibility for help to save to all universal credit claimants in work as well.
The second issue raised by my hon. Friend the Member for Buckingham and Bletchley was about financial education. In fact, most hon. Members who spoke talked about its importance. One of the major barriers to investing for consumers is a lack of support to make financial decisions. We know that only 8% of adults received regulated financial advice in the 12 months to May 2022, but guidance does not often go far enough to help consumers feel confident to make a decision. We have a big advice/guidance boundary gap. Many of our constituents are therefore not getting the help they need to make their money go further. Some keep a lot of their money in savings, losing out on potential returns, and others do not regularly review their investments, or invest in products that do not meet their risk appetite.
Together with the FCA, the Government are developing a new regime called targeted support, which would allow regulated firms to provide suggestions appropriate to consumers with similar characteristics. For instance, the regime would enable firms to suggest that an individual with substantial savings could consider opening a stocks and shares ISA. It would also enable firms to suggest options for how to generate an income from an individual’s pension pot, appropriate to consumers with similar needs. The FCA will consult on the rules that will underpin targeted support in the first half of this year. Getting those reforms right will help consumers make better-informed decisions, engage in capital markets, and ultimately to be in a position to get better returns on their savings in the longer term.
My hon. Friend the Member for Buckingham and Bletchley reflected on how financial education can help level the playing field for those from less wealthy backgrounds. I really liked how he expressed in his speech the asymmetry between those who already come from a wealthy background, where this might even be discussed at the dinner table, and those in a less privileged position, who are not aware of some of the opportunities. If they are not aware, even if they were given the opportunity they would not have the confidence to take it.
In England, the independent curriculum and assessment review is considering how to ensure that he curriculum is fit for purpose. The shadow Minister, the hon. Member for Wyre Forest, talked about the importance of financial education. I cannot give him any guarantees right now, because as he will know, although we have had the interim report of the curriculum review, we are still working through some of the details. I met the Minister for School Standards to discuss this work and to make sure that my work on financial inclusion and the work of the curriculum review go hand in hand. I cannot give him any guarantees on private Member’s Bills right now, but I can take the question back to the Government Whips, who will tell me where we are. As I understand it, the private Member’s Bill on financial education that he talked about is not due to be introduced until 11 July.
We are working with the Department for Education, and the Department for Education is working across Government on how we can ensure that the curriculum review improves financial education for our young people, which I would like to see. Indeed, it was striking that in the interim review parents and pupils said that finance and budgeting was the top area they would like to see more focus on in schools; that was encouraging.
Thirdly, my hon. Friend the Member for Buckingham and Bletchley asked for action to make it easier for our citizens to engage with our capital markets. The importance of UK capital markets was mentioned by many speakers, but particularly by the hon. Member for St Albans, my hon. Friend the Member for Vale of Glamorgan and the shadow Minister. We want to make UK capital markets as attractive as possible to retail investors. Our capital markets are already among the strongest and deepest globally. I know some concerns have been raised, but more than £25 billion of equity capital was raised in London last year, more than in the next three European exchanges combined. I am keen that we do not talk ourselves down. Of course, we must recognise challenges where they arise, but we must also recognise our strengths. We are the world’s largest international bond market, with more than 16,000 active bonds traded on our markets, representing over £4.1 trillion across 55 currencies.
We want to go further to reinvigorate capital markets to ensure that they support both UK and global growth. We are currently developing a financial services growth and competitiveness strategy, and have identified capital markets, and retail participation within those markets, as a priority growth opportunity in that strategy. That strategy will come later this year, and I am sure the hon. Member for Wyre Forest will quiz me about it in the weeks and months to come.
The Government are focused on making our markets more competitive, including by supporting the FCA’s work to reform the UK’s prospectus regime to give investors access to better quality information to support their decision making, and supporting the FCA’s proposals to cut red tape for corporate bond issuance, which will encourage companies listed on stock exchanges to offer bonds in smaller sizes to improve investment opportunities for retail investors. The Government have also legislated to enable the FCA to reform the UK’s retail disclosure regime to ensure that consumers have access to the most useful information to support their investment decisions. The FCA’s consultation has just closed and the Government look forward to seeing its final rules later this year.
My hon. Friend the Member for Buckingham and Bletchley also raised the work of the industry-led digitisation taskforce, which is looking at how we can improve the system of share ownership in this country and, as part of that work, at how we can remove all paper shares. The taskforce is currently finalising its final report—my hon. Friend will have seen the interim report—and the Government look forward to receiving it, and will respond in due course.
Finally, my hon. Friend the Member for Buckingham and Bletchley called for a fundamental shift in how we think about investing in our country. He is right to say that investing should not be for just the wealthy, or those with expertise; we need to build an investment culture that enables newcomers to invest confidently and grow their financial resilience. I want to deliver that change but I know that the Government, and indeed parliamentarians, cannot deliver that shift on our own. We need to work closely with regulators and industry and, as my hon. Friend suggests, make the case to consumers for investing. I thank my hon. Friend for outlining his proposal for how we could do that.
We are thinking carefully about these matters and look forward to working with my hon. Friend and others across the House to help build the strong investment culture that we want. As part of that work, we are of course looking at international examples; the shadow Minister mentioned the importance of that. Many hon. Members will be familiar with how Americans talk a lot about their 401(k)—or so I am told—and how Australians talk a lot about their supers. A few months ago, I was talking to a financial services senior leader who told me that when she lived in Australia, her cleaner often looked at her super on her phone, and tracked the return on her investment. I would love to see that sort of inclusive, democratic access to investment opportunities in the UK. I am not being patronising—I have a fantastic cleaner too, and I would like to see her in that position. We want to ensure that people across society get these opportunities. We also want people to engage with their pensions more closely, as I have already mentioned in response to my hon. Friend the Member for Vale of Glamorgan.
If I do not get to all the questions raised by the hon. Member for Wyre Forest then I am sure that I can write to him, or we can have a discussion after the debate.
My hon. Friend the Member for Vale of Glamorgan talked about what the Government could do to promote employee share ownership. The previous Government launched a call for evidence on the save as you earn and share incentive plan schemes. The Government will use that call for evidence to consider opportunities to improve those schemes, and I thank my hon. Friend for his interest in that.
The hon. Member for St Albans talked about advertising on social media. She will know that under the Online Safety Act 2023 large internet platforms will be required to put in place systems and controls to avoid fraudulent advertising appearing on those platforms. We also welcome Ofcom’s work to bring forward codes of practice on what actions firms should be considering. However, she is right to raise the issue as a matter of concern; the Government are concerned about it.
I have answered the question from the hon. Member for Wyre Forest about the private Member’s Bill on financial education, but I am sure that he asked me other questions that I have not quite got round to; I beg his forgiveness. I also answered his question on what we can do together to ensure that people know there are risks involved with holding cash above certain levels, and about the erosion of people’s cash savings by inflation, but if he wants to repeat any of the other questions, I am happy to respond.
Mark Garnier
I think the Minister has covered most of my questions, but I will review and we can perhaps have a conversation later.
Emma Reynolds
Such great cross-party working—do not tell anyone else about it! It is really good to work with the hon. Gentleman. I remember fondly—well, not that fondly—being a shadow Minister and having very good, if different, working relationships with the Ministers who I shadowed. I very much welcome the constructive way in which he has contributed to the debate and I look forward to Thursday, when we will debate the Bank Resolution (Recapitalisation) Bill.
I thank my hon. Friend the Member for Buckingham and Bletchley for securing this debate and I also thank all the hon. Members who spoke. It has been a very constructive and interesting debate, certainly from my perspective, and I thank all hon. Members for their contributions. The Government are determined to make the UK’s retail investing environment more attractive and to boost the UK’s investment culture, and I will reflect carefully on the points raised.
Callum Anderson
I had no idea, Mrs Hobhouse, that this was the first Westminster Hall debate that you have chaired. Given that we have 20 minutes left, hopefully this is the start of a good track record for you of ending debates in time.
Once again, I am really grateful for the opportunity to bring the debate to Westminster Hall, and to the Members from all parts of the political spectrum who have contributed in a thoughtful and considered way. And as I said at the beginning, I thank the Minister for her continued engagement and patience with me as I bring the issue up again and again. Clearly, there is a lot of cross-party political consensus. There is therefore a big opportunity for Britain to reinvigorate our capital markets and, as the hon. Member for St Albans (Daisy Cooper) said, to ensure we can democratise share ownership. I again thank everybody for spending an hour of their time contributing to the debate.
Question put and agreed to.
Resolved,
That this House has considered Government support for retail investment.
Point of Order
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Steve Yemm (Mansfield) (Lab)
On a point of order, Mrs Hobhouse. On 25 March, in a Westminster Hall debate on the subject of construction standards for new build homes, I made a reference to PR Power Saving Solutions Ltd. I should have drawn attention at that time to my entry in the Register of Members’ Financial Interests, in which I record a campaign donation from that company. I apologise to you, and to the House, for that oversight, and I am grateful for the opportunity to correct the record.
Wera Hobhouse (in the Chair)
I am grateful to the hon. Member for giving notice of his point of order. He has put his correction on the record.
Automation: Economic Benefits
(1 week, 2 days ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
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John Slinger (Rugby) (Lab)
I beg to move,
That this House has considered the potential merits of automation for the economy.
It is a pleasure to serve under your chairship, Mrs Hobhouse. I do not want to sound too dramatic, but hon. Members should know that this is an historic debate: it is the first time, to my knowledge, that automation specifically has been debated in Westminster Hall, and perhaps even in Parliament. This will also perhaps be the first speech in rather a long time about business and innovation not to focus solely on AI, which I am sure is a relief to us all.
I am going to argue that automation is not a threat to the UK economy; it is one of the greatest untapped opportunities that we have. From boosting productivity to creating high-quality and high-skilled jobs, automation can power our growth, competitiveness and resilience, but for reasons that I will touch on, and which I would be grateful for colleagues’ views on, the UK is, unlike in so many other areas, sadly not yet a world leader. Before I get too far into my speech, let me define automation as the action or process of introducing automatic equipment or devices into a manufacturing or other process or facility. It is not just about robotic arms.
There are a few problems relating to automation. One of them, at the most basic level, is that automation—robotics—conjures up deep-set primordial fears in many people. It is the fear of the march of the robots, of Terminator, and perhaps at a less hyperbolic level, of machines taking our jobs, particularly in manufacturing. Perhaps even in this place we fear automatons taking over our roles as Members of Parliament. I will argue strongly against such fear regarding automation.
I want to dispel the myth about robots stealing jobs. It simply does not stack up. In the UK, unemployment sits at 4.4%, similar to the US, where it is about 4.2%, but the United States has 300 robots per 10,000 workers—more than double the UK’s figure. The same is true for Japan, where the unemployment rate was just 2.4% in February 2025, despite its having 419 robots per 10,000 workers. In South Korea, the trend continues: unemployment stood at 2.9% in March 2025, even with an impressive 1,012 robots per 10,000 workers. Automation replaces tasks, not people, and in so doing it creates better-paid, more fulfilling jobs.
The current situation in the UK, according to the latest International Federation of Robotics figures, shows just how far British manufacturing has to climb in terms of automation adoption. The UK is now 23rd in the global robot density league table—that is not a phrase that I thought I would necessarily read out in the House, but I have just done so—with 119 robots per 10,000 workers, compared with a global average of 162. We have also dropped out of the top 10 global manufacturing nations, sadly; we are now in 12th place. Our global competitors are investing heavily in productivity. Sadly, in too many cases, we are falling behind, notwithstanding the excellent work of the Minister and the Government in this regard.
The UK is lagging behind for three main reasons: first, a reluctance to invest in capital equipment; secondly, perceptions of complexity and high up-front costs around robotics and automation; and thirdly, a lack of confidence and clear guidance, especially among small and medium-sized enterprises. Both Automate UK and the Manufacturing Technologies Association have highlighted that investment and confidence gap.
Matt Western (Warwick and Leamington) (Lab)
As my hon. Friend says, productivity in this country has flatlined since 2008. It is great that he has secured this debate, because productivity is one of my pet subjects, and as he has said, the Manufacturing Technology Centre is doing some fantastic work. I am sure he will have seen the video last week of Chinese robots running a marathon—what an extraordinary sight that was. Does he agree that while we need to develop all sorts of policies, fiscal incentives are key to getting the investment that businesses need to deliver on increasing robotisation and automation?
John Slinger
My hon. Friend makes a very good point. I am hopeful that the Minister will refer to some of the measures that the Government can take, and are already taking, to increase productivity. I must say, as someone who is running the London marathon on Sunday, I am slightly worried about the rapid rise of robots in that particular field—I am certainly going to beat any that I see.
The Manufacturing Technologies Association is calling for Government leadership to break down the barriers and deliver a national framework to accelerate adoption. While knocking on doors, which I am sure many colleagues were also doing over the Easter break, I met a young entrepreneur who has a small robotics and automation systems business. He wanted to expand but was not aware of what finance was available to make the capital investments he needed, nor of how he might take on an apprentice or two. I helped as far as I could as an MP by signposting him to the right people, but it shows a lack of cut-through regarding support for automation.
I have seen the potential of automation first hand on visits to companies like FANUC UK, in my constituency, part of a high-tech cluster at Ansty Park, which also includes the London Electric Vehicle Company and the Manufacturing Technology Centre, or the MTC, which I am proud to represent and champion here. I have seen how automation transforms jobs, shifting roles towards programming, maintenance and process design. I have also witnessed, first hand, how automation—due to its requirement for high-skilled workers—stimulates company investment in skills development, with apprenticeship programmes, outreach to schools and sponsorship of competitions. FANUC UK is a long-standing sponsor of the WorldSkills UK industrial robotics competition.
I have met apprentices at FANUC, the MTC and elsewhere, and seen their excitement and enthusiasm—as I am sure colleagues across the House have—when meeting young people who are training to become the masters of machines, unleashing economic potential and enabling new innovations to be born and grow. The MTC, which forms one of nine Government-backed Catapult centres that bring together industry and academia to turbocharge innovation and solutions—its progenitor being my noble Friend, Lord Mandelson—even runs an education campus. The generous sponsorship of £15 million over 15 years by Lloyds Bank has enabled it to offer numerous apprenticeship programmes that cater for our most innovative companies.
Another concern raised with me by businesses I have visited is that companies do not want, or are unable, to invest in automation and therefore cannot expand to meet the demand for their products and services. However, some solutions are already under way. In addition to the excellent work of FANUC UK in my constituency, the MTC is taking a leading role in the debate about automation, and having an effect. It is providing independent advice to help businesses on their first automation journey, and has opened a new robot experience centre, giving companies the chance to test, trial and learn in a risk-free space.
The MTC is also focused on upskilling and reskilling, with targeted workforce development especially for SMEs, which are, of course, the backbone of our economy. It is also driving the west midlands robotics and autonomous systems cluster, helping to build a strong regional ecosystem. There are lots of phrases that I am quite surprised to be saying, but none the less, this is the kind of support businesses need—and it is replicable at scale.
There is a huge prize available to the UK. Make UK estimates that if we scale up our SME manufacturers, we could add £83 billion to our manufacturing output—lifting us to seventh in the world rankings. To deliver that, we must double our robotics adoption by 2030.
Mrs Sureena Brackenridge (Wolverhampton North East) (Lab)
I represent a constituency with a long and proud tradition of manufacturing heritage. While discussions on automation usually focus on AI, I am grateful to my hon. Friend for recognising the importance of robotics in this sector. The UK lags behind its global competitors in robot density; we are the lowest among the G7 nations. That gap reflects missed opportunities for productivity and growth. Does he agree that it is vital we invest in robotics to rejuvenate our manufacturing base, create high-skilled jobs and apprenticeships across the west midlands, and back projects such as the green innovation corridor in Wolverhampton North East to secure our place as global leaders?
John Slinger
I wholeheartedly agree. Automation and robotics are really just a modern tool, and we would not be against businesses and manufacturers using the most effective tools. It is vital that they are able to adopt this particular form of tool to enable them to develop the most innovative products that can drive our economy in the west midlands, which I know my hon. Friend and I agree is vital for our region, and for the UK more widely.
In our constituencies, people young and old have the aspiration to utilise automation to chart new manufacturing territory. Notwithstanding the excellent work of organisations such as those I have already mentioned, of the local chamber of commerce, which I have met, or of local councils such as Rugby borough council and its new business hub in the town hall, or indeed the excellent work of the Minister and his colleagues, there is more to be done to educate people about the benefits of automation and provide the ecosystem needed, with more skills, training, grants and networking opportunities —and through this, to empower people.
I urge the Minister to work on a clear road map to match our competitor industrialised nations on robotics and automation with specific attention to SMEs, which make up 95% of UK manufacturing. The road map should aim to address perceptions of automation, lack of knowledge about procurement and accessibility to finance. To drive productivity, create high-quality jobs and unlock growth, I urge the Government to develop a national programme to supercharge automation adoption. I would be happy to facilitate ministerial engagement with the MTC team to explore its successful model and how it can be rolled out across the UK.
I ask that, as the Minister and his colleagues finalise the much-needed industrial strategy, they give a renewed focus to the huge potential that automation offers to our businesses, to UK plc and to our people—particularly the younger generation. They want to be the architects of our industrial future and automation can help them to achieve that. It is not just about machines; it is about people, equipping our workforce, empowering our SMEs and delivering prosperity in every region of the UK. Automation is how we will get there.
I came into this House because I believe that democratic politics work. I believe in government and the need for good government to provide the support, the ecosystem and more that is needed to unleash the potential of our country. I know that the Minister and the rest of the Government agree that more than ever we need a dynamic partnership between the Government, skills providers, colleges, universities and businesses—large, medium and small—that helps our manufacturers, our innovators, benefit from automation in a way that has not happened before.
It is not the robots that we should be worried about; it is not building enough of them. I think it is safe to say that we are in the middle of the creation of—willing or otherwise—a new technological, industrial, defence, trading and perhaps even geopolitical paradigm right now. As it is being reforged, with the metal still molten, the need for home-grown advanced manufacturing and innovation is growing, as is the importance of improving productivity and unleashing innovation. I hope that in today’s debate I have spoken up for the robots and for automation, because they are not the dystopian usurpers of human inspiration and productive labour; they are, in fact, the enablers of it.
The Minister for Creative Industries, Arts and Tourism (Chris Bryant)
Finally, somebody speaks up for the robots. We have been waiting for centuries. The robots have been clamouring outside, waiting for the moment when somebody would speak up for them, and I am sure that they will be delighted about the way that my hon. Friend the Member for Rugby (John Slinger) has done so today.
My hon. Friend made a point right at the beginning about the cultural aspects of how we view the word robotic, which was interesting, was it not? If we say that a politician is robotic, we somehow dismiss them and think that that is inappropriate. Instead, it might actually mean that they are accurate, precise and do things on time. In addition—I suppose this is because I am the Minister for the creative industries—it makes me think of “Hamlet”. Are robotics good or bad? Well, as it says in “Hamlet”:
“There is nothing either good or bad but thinking makes it so.”
I think that is part of the problem we have here. For some reason or other, we have decided that automation is bad, but actually my hon. Friend is quite right to say that in so many different regards it can only possibly be good.
Often, robotics can take away the drudgery from a repetitive process that a human being might find difficult to maintain in as accurate a way as a robot. It can enhance productivity; several Members who are not even obsessed with this matter are none the less interested in how we can improve our productivity in the UK, because it is one of the ways in which we fail economically. Robotics can also improve the quality and reliability of a product. So, a business that significantly invests in automation can end up, despite the up-front capital costs, recouping that investment much faster than it would if it had relied on other means of producing its goods.
Automation is not about stealing jobs; it is about enabling humans to do other things, including other jobs where human creativity and human ability and the relationship of one human to another may be more important than the repetitive element of the work.
My hon. Friend referred to running the London marathon and asked whether robots can run a marathon for us. I do not think that is the point of a marathon. The point of a marathon is that it is far too long; it is a preposterously lengthy race. I have run the London marathon three times. I had decided that I was not going to race against anybody else; I was just racing against myself, to get to the end. That is my advice to him about how to run a marathon. It was all going swimmingly until I got to the very end—to the last 200 yards—and two women dressed as Bakewell tarts overtook me. Then, I was very upset and decided that I was going to beat the tarts, and I did. However, the point is that there are things where only we humans can compete and where only we can make a difference.
Robotics can also provide solutions to pressing social problems, including autonomous vehicles for transport, which we have not referred to yet, and robotic maintenance and monitoring, supporting clean energy transition. Robotic innovations can also enhance social care, which might be a very significant part of improving productivity and the quality of the care that can be provided, so that the personal human involvement is not about doing the drudgery.
Robotics can also help with surgery in hospitals. It is depressing that we have lagged behind many other countries in bringing, for instance, laparoscopic robotics into hospitals up and down the land. I had two such operations last year; if tea is poured into me, it just pours out as if I were a colander. The significant improvement in the amount of time, the accuracy, the safety and the lack of infection that laparoscopic robotics can provide in surgery is absolutely significant. For instance, as in my case, the ability to remove a melanoma from inside a lung—collapsing the lung and then removing the melanoma—is quite extraordinary and would never have been possible unless we brought automation into the system. However, that requires capital investment.
My hon. Friend is absolutely right that we are not a world leader in automation; I wish we were. I have slightly different figures from his—mine might be a year out of date—but I think that, according to the International Federation of Robotics, we were 24th in the world in 2023, but it may be that in 2024 we were 23rd in the world. My hon. Friend pointed out that we are not in the top 10—we are the only G7 country not to be, which is an embarrassment for us. This country has innovated in so many areas, although once we have innovated we have sometimes found it difficult to take things to market and get them invested in—other countries have been better at that—so that is one of the things that the Government need to address. That is shameful. As several Members said, it is part of the problem with our productivity. If we could only get to par with others in the top 10, we would improve our productivity by roughly 20%. British Ministers have been dreaming of that kind of significant improvement in productivity for the past 15 or 20 years, because that would enable the economy to grow far more significantly.
My hon. Friend had a different figure for the significant improvement that we could see in gross value added. My figure is that £150 billion could be added to our GVA by 2035 if we seize hold of the opportunities that robotics and automation provide.
My hon. Friend referred to some of the problems. As I said earlier, I think one of the problems is reluctance. That is partly due to an ethical question: how do we ensure that people do not lose jobs but find different jobs in which they are more effective, productive and engaged? There are also some moral anxieties about robotics—perhaps some of the films that we have produced over the years, which he wittily referred to, have not entirely helped in that.
Another issue is access to cash—in particular, to capital financing. In the discussions I have had as a Department for Science, Innovation and Technology Minister, people from the industry have repeatedly said to me, “It is easier if you are in London and the south-east than it is if you are in the rest of the United Kingdom.” That is another aspect that we need to change. These issues are about automation not just here in London but throughout the United Kingdom, and in so many different sectors. I have responsibility for space, and obviously robotics and automation are a key part of delivering an ambitious space programme in future years. I believe we can be a world leader if we focus on the things that we are particularly good at, and where we have a unique contribution to make, but I am conscious that we need to get the security aspects right.
There are things that we are already doing. As my hon. Friend knows, the Government have a Made Smarter adoption programme, whose budget we doubled to £16 million a year, starting from 1 April 2025. That will undoubtedly make a difference. As he said, we are developing an industrial strategy. Members might think that the country should always have an industrial strategy, a bit like they might think that we should always have a digital inclusion strategy. Those two things have to go hand in hand. We are developing an industrial strategy and, just as in space, we are rightly focusing on the things where we have a unique capability. Through the Department for Business and Trade, we have decided to focus on sectors where we think there is an opportunity for economic growth and where the UK has something special to offer.
I am really glad that the advanced manufacturing plan includes work on robotics, which is key to several elements of advanced manufacturing. I am slightly in danger here, because I have read it and I cannot tell my hon. Friend what is in it given that we will be publishing it later, but it has not got to its final draft yet. I think that a lot of things that he has been saying will be reflected in that document.
My hon. Friend said that this was not about AI, but sometimes robotics and automation are referred to as “embodied AI”. Obviously, there are significant elements of robotics that work best when they include a learning capacity. That is why I am really proud of the AI opportunities action plan that we launched earlier this year. It has 50 different proposals. We are taking action in relation to all 50, and have been consulting on two. That includes looking at the AI skills gap—a significant aspect, which hon. Friend mentioned. We need to make sure that we have the skills in the UK to develop automation.
Likewise, we have to look at whether we have enough AI graduates coming out of universities, or even starting in that education process. That too is not just a matter for one part of the country; it is a matter for economic growth throughout the country. We also need to increase the diversity of the talent pool that comes into that world. It is not just in one industry, such as automotives, where that might be significant, but a whole series of industries—nearly every one—and also lots of our public services that could be better delivered using embodied artificial intelligence. Similarly, we need to look at the education pathways into AI, and therefore into robotics as well.
Part of DSIT’s funding to UK Research and Innovation goes to Innovate UK, which is responsible for the catapult centres. That includes the one to which my hon. Friend has already referred, the high value manufacturing catapult. DSIT is providing £8.8 billion to UKRI in this financial year; Innovate UK will receive £948 million of that. The high value manufacturing catapult is a strategic research and innovation hub for industry, commercialising the UK’s most advanced manufacturing ideas. The seven centres help businesses to transform the products they sell, the way they make them and the skills of their workforce, to remain competitive globally.
I am delighted that, as has been mentioned, we have had a historic debate on automation. I hope I have not provided a robotic answer to my hon. Friend’s questions. I very much hope that when we produce our industrial strategy in the next few weeks and months, he will be proud to say that we are embracing and fully behind this drive for greater productivity through greater automation, while always holding on to the belief that it is not about replacing people’s jobs. It is about enabling people, with that human element, to play the human role they need to play in whatever industry it may be, whether the creative or automotive or other. My final thought is that the marathon is far too long a distance. I wish him well. I hope he comes in at more than three hours and 24 minutes.
Question put and agreed to.
Road Safety and Active Travel to School
(1 week, 2 days ago)
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Olly Glover (Didcot and Wantage) (LD) [R]
I beg to move,
That this House has considered road safety and supporting active travel to school.
It is a pleasure to serve under your chairship, Mrs Hobhouse. I am pleased to introduce this topic, not least in my role as Lib Dem vice-chair of the all-party parliamentary group for cycling and walking.
Walking and cycling statistics published by the Department for Transport in 2023 show that children have been walking and cycling to school less and less, albeit that the latest data gives hope of a recovery. Figures from the UK national travel survey indicate that the number of children aged five to 15 who walk or cycle to school declined from 67% in 1975-76 to just 47% in 2023. Department for Transport figures suggest that only 3% of children cycle to school, while in London the school run contributes to one in four cars on urban roads at peak times, even in such a densely populated area.
However, half of children tell us that they want to cycle more. Many children already walk and wheel for part of their journey, but a third want to walk and wheel even more, and they need to feel safe in order to do so. During this debate, at least three people in the UK will be killed or seriously injured on our roads. For us as a society, that shocking level of road violence has become normalised, and we must do better.
Beyond the tragedy of injuries and fatalities, why does that matter? First, we all want cleaner air, more accessible streets and healthier children and adults. We also want to empower our children and adults and to create the choice to walk and cycle to school. Although some parents and children need to drive to school, we need to recognise that many would like to walk and cycle but are currently deprived of that choice and freedom.
Sarah Dyke (Glastonbury and Somerton) (LD)
I was recently privileged to be one of the first cyclists to use the newly opened section of the Curry Rivel Active Travel Group’s car-free path—a transport-free route along the A378, which is a really busy road. It benefits pupils at many of the local primary schools and the local academy. With half of local pupils ineligible for free secondary school transport, the path provides a safe space. Does my hon. Friend agree that investing in active travel routes is key to supporting safe and sustainable school journeys, particularly in rural areas?
Olly Glover
The example my hon. Friend gives from her constituency shows what dedicated infrastructure can achieve in getting more people walking and cycling.
What needs to change, and how? First, as my hon. Friend just said, infrastructure and street design are incredibly important. We know from countries with high rates of walking and cycling that safe and pleasant streets are essential. The majority of accidents in the UK involving those who are cycling occur at junctions, making those areas critical points for targeted interventions. Research consistently identifies the failure to look properly as the leading cause of road injuries among those who are cycling and other road users.
I would love to see infrastructure of the quality in Assen, Groningen, Utrecht or Rotterdam—or any other Dutch town or city, for that matter—everywhere in the UK, but there are things we can do in the meantime. In London, there is an example just down the road from this place, where Westminster’s pioneering of side street zebra crossings—zebra crossing markings without the cost of having flashing lights—is a great example of a simple, low-cost intervention. The evidence shows that those crossings are already saving lives and increasing people’s confidence in walking and cycling.
Afzal Khan (Manchester Rusholme) (Lab)
Greater Manchester is prioritising road safety by implementing 100 school streets by 2028. Those are areas around schools that limit traffic during drop-off and pick-up times, which will make walking, wheeling and cycling to school safer for young people. Does the hon. Member agree that funding school streets will create safer, more reliable and more child-friendly environments around schools?
Olly Glover
That is a very good example of how spending money well can lead to a big difference.
I have already mentioned the Netherlands, but my hon. Friends on the Lib Dem Benches would be disappointed were I not to bore them to tears by wanging on about the Netherlands at greater length. If I might plug an opportunity for hon. Members to see for themselves the marvels that have been achieved there on active travel, the APPG for cycling and walking plans a trip to the Netherlands in September.
In my constituency, there are many schools where lots of pupils and parents would like to walk and cycle but cannot because of infrastructure or other barriers. The Europa school in Culham is located on a major A road, and for years the parents and the school have campaigned for a crossing to connect the school with the nearby village of Culham across that A road. They have finally got a commitment that that will happen in the next year, but still the so-called cycle path that runs near the school is nothing of the sort: it is a pavement that someone has decided people can cycle on. It is not wide enough, and there have been collisions because of that. Far more needs to be done.
Matt Western (Warwick and Leamington) (Lab)
Last September in my constituency, a new school, Oakley, opened without even a direct footpath to the site, and certainly no cycleway. Sadly, within four weeks, there was a serious accident involving a child who had to be airlifted some 60 miles. Does the hon. Member agree that schools should not be allowed to open until such provision is put in place?
Olly Glover
The hon. Member gives a really strong example of how, when we plan new developments and new areas, there is no excuse for not getting the infrastructure right from the off.
Milton, a village where I recently lived, is split in two by the A34 and the enormous Milton interchange roundabout. The St Blaise school on the south side of the parish is effectively cut off from the older side of the village. Even though parish council meetings are only a mile away, people drive to them because although there have been plans for a footbridge over the A34 for ages, the money has, inexplicably, somehow run out. Villagers and parishioners are therefore not able to make the most of the opportunity to cycle or walk that very short distance.
This issue is not just about infrastructure; it is also about training and confidence to go walking and cycling. The Bikeability training programme, which rolls out cycle training across our schools, reduces risk, increases confidence and encourages long-term health and environmental benefits. It is the largest road safety programme in the world, and it is owned and funded by the Government. Local authorities with higher amounts of Bikeability level 2 training show significantly lower numbers of cyclists killed or seriously injured.
It would be interesting were Bikeability to be included in the national curriculum, just as swimming is; we can imagine how many essential, life-saving, lifelong skills would be formed. However, long-term, secure funding for Bikeability training for children and adults is essential to give providers stability and to enable sustainable planning for delivery. Indeed, 10 or 20 years ago many local authorities did provide free or very low-cost adult cycle training, but sadly many of those programmes have been cut back.
Layla Moran (Oxford West and Abingdon) (LD)
Will my hon. Friend join me in commending the Bikeability Trust? In Oxford West and Abingdon, 61% of year 6 students take level 2 training, but 76% is considered an achievable target for 2025-26. Does he agree that without the Bikeability Trust, none of that would be possible?
Olly Glover
My hon. Friend gives an excellent example of the benefits of Bikeability. Since 2007, Bikeability cycle training has been delivered to over 5 million children in England. In my Oxfordshire constituency of Didcot and Wantage, 61% of year 6 pupils were booked on a Bikeability level 2 course in 2023-24; we aim for three quarters by 2026. In Oxfordshire, uniquely, Bikeability training is delivered by the fire service, for some very interesting historical reasons.
Following Bikeability training, the proportion of children reporting an intention to cycle one to three times per week for school travel increases, from 5% pre training to 24% post training. However, historical delays in funding and an annual funding model have meant that there has been no increase in Bikeability instructor numbers. That needs to change because there is an ongoing need to train more than 300 instructors a year to maintain numbers lost through retirement.
Another theme is culture and leadership. Pavement parking—
Dr Scott Arthur (Edinburgh South West) (Lab)
I thank the hon. Member for giving way with almost perfect timing. Bikeability is not the only non-infrastructure approach. Every school in my constituency benefits from a 20 mph scheme that covers most of Edinburgh and—I think he is about to touch on this—a pavement parking ban. Those non-infrastructure approaches can be delivered cheaply and quickly. Does he agree that we need more of those in the UK?
Olly Glover
Yes, tackling pavement parking is essential, because three quarters of children support stopping cars parking on the pavement, as do 58% of parents and guardians.
Councils in Wales and in most of England have limited pavement parking powers, relying on cumbersome street-by-street traffic regulation orders. In contrast, London councils have had powers to enforce against pavement parking since the 1970s, and Scotland gained them last year. Councils know their areas best, and the Liberal Democrats are calling for traffic regulation orders to be made easier for local authorities to process, so that they can take action on pavement parking more swiftly and at lower cost.
The upcoming road safety strategy is an urgent opportunity to save lives by tackling issues such as pavement parking. It must include measures to initiate a comprehensive road danger review; improve awareness of and adherence to the highway code; improve the safety of home-to-school travel; and deliver the integration of national strategy and funding with local policy.
Aphra Brandreth (Chester South and Eddisbury) (Con)
The hon. Member is giving an interesting speech and making important points, but distances in some rural areas mean that walking, and often cycling, are not feasible. Does he agree that any review needs a particular focus on rural roads and should perhaps support reducing speeds outside schools? In constituencies such as mine, there is not yet a policy of having 20 mph. Perhaps he can give some examples of rural roads in the Netherlands.
Olly Glover
The hon. Lady is absolutely right. This is not one size fits all, and we need to recognise the different characters and characteristics of our areas. However, in the Netherlands there would always be this thing called a cycle path next to rural roads, so there is that segregation and people have confidence. That is the key difference. Even in places in the UK with lots of land, that is not something we generally see. It is important that, as elected representatives of our communities, we lead by example where we can and walk and cycle where possible.
In conclusion, we can empower young people to walk, wheel or cycle to school by providing them with the confidence to do that through schemes such as Bikeability and by putting in place measures to keep them safe, such as those around pavement parking and around infrastructure and street design improvements. I thank the Minister for already having kindly agreed to see Bikeability training in action in my constituency, and I look forward to hearing more about the Government’s plans for this topic, including what they plan to do to make it normal, rather than an eccentric exception, to walk or cycle to school.
Wera Hobhouse (in the Chair)
I intend to call the Front-Bench spokespeople at about 7.5 pm. The debate is heavily oversubscribed, so I am putting an informal time limit of two minutes on all speeches. Even with that I might not get everybody in, but let us see how it goes. I call the Chair of the Transport Committee.
Ruth Cadbury (Brentford and Isleworth) (Lab)
I congratulate the hon. Member for Didcot and Wantage (Olly Glover) on securing the debate and on his excellent speech. I will focus on the school streets initiative, which has already got many more families in Hounslow walking, cycling and scooting to school, and it will have a similar effect elsewhere. The school streets initiative protects those who already walk, scoot and cycle. Being in an urban area, the majority of our schoolchildren and their families do walk, but there is some very selfish behaviour from some parents who want to drive all the way to the school gates and back out again if it is in a cul-de-sac. I have seen some very dangerous behaviour, as I am sure other Members have.
In Hounslow, there are about 30 school streets. Around 25% of car trips in the morning peak seem to be related to families on the school run. The school streets initiative is an important measure, but it can also support wider ambitions to improve air quality and reduce collisions. Hounslow has monitored the implementation of the initiative at three schools. It has seen an increase in walking, wheeling and cycling of almost 10% in the morning peak and almost 12% in the afternoon peak. There has been no displacement of traffic on to boundary roads as a result of the schemes, and there has been an increase in overall pedestrian movements, which shows that, as a travel behaviour policy, it has benefits beyond the school.
I heard from a headteacher who really welcomed the scheme’s implementation outside her school. She said that many more families now feel safe to walk towards the school gates, and she no longer has to speak to parents numerous times about safely driving to school. The scheme works using an automatic number plate recognition system.
Finally, I reinforce the request that the Minister introduce a default pavement parking ban, as we have in London, that allows exceptions when there is no other option and that focuses on national targets for increasing walking, cycling and wheeling.
Brian Mathew (Melksham and Devizes) (LD)
It is an honour to speak under your chairship, Mrs Hobhouse. I thank my hon. Friend the Member for Didcot and Wantage (Olly Glover) for securing the debate.
Giving children the opportunity to safely walk or cycle to school is vital. It not only ingrains healthy habits in children from a young age, bringing them closer to the nature and scenery that can be found in areas such as my constituency of Melksham and Devizes, but it teaches them road safety lessons, fosters independence and helps prevent climate change. Active travel practices in schools can also reduce traffic volume in our towns and villages as the number of cars around schools are reduced, thus minimising both pollution and the risk of road accidents.
I commend Holt VC primary school in my constituency for its Big Walk and Wheel programme earlier this year, which saw many children in the village walk and cycle to school and take part in a walking bus. We need to encourage more of this. In Bradford-on-Avon, a town in my constituency that suffers greatly from traffic congestion, traffic is even worse during term time. This has meant more dangers for those on the road, especially children.
During my time as a Wiltshire councillor, I worked with the Wiltshire Climate Alliance, as well as a number of other active travel-and-road-safety groups, to improve safety for those who use our roads—from cyclists to pedestrians, horses and horse riders. Unfortunately, that failed, but I hope the upcoming road safety strategy can be effective. Let us make travel to school not just pleasurable, but safe.
Julia Buckley (Shrewsbury) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Hobhouse. I congratulate the hon. Member for Didcot and Wantage (Olly Glover) on securing this vital debate. I am a member of the all-party parliamentary group for cycling and walking, which he chairs. Cycling is a key priority for my constituency of Shrewsbury, where 68% of pupils aged 10 and 11 were trained under the famous Bikeability scheme at school. Unfortunately, in our historic town, we have in recent years allowed the car to dominate most of our neighbourhoods to the detriment of road safety.
Just last month, on 20 March, I met the young people on the Shrewsbury youth council at the Grange Centre in Harlescott, and listened to their feedback on our Shrewsbury Moves plan for more active travel. They told me they do not feel safe cycling on the roads due to the speed of drivers and lack of cycle paths. Does the Minister agree that investment in segregated routes to create that all-important separation between cyclists and motor vehicles is vital to enabling and encouraging more people to cycle and walk short journeys, such as across my congested, yet beautiful town of Shrewsbury?
Freddie van Mierlo (Henley and Thame) (LD)
It is a pleasure to serve under your chairship, Mrs Hobhouse. I congratulate my hon. Friend the Member for Didcot and Wantage (Olly Glover) on his excellent pronunciation of Dutch towns, including Groningen. It is fair to say that in this debate there is a lot of agreement on the benefits of active travel, but even when local authorities have the ambition to deliver cycle schemes, land ownership all too often gets in the way. In my own constituency of Henley and Thame, residents have tirelessly campaigned for a greenway cycle route between Haddenham and Thame. These settlements are just three miles apart.
The project received a welcome boost this year when Oxfordshire county council assigned £200,000 for further optioning, but for now the development is marooned until a process of land assembly is completed, which requires lengthy negotiations with landowners. Road projects, for which compulsory-purchase powers are wielded readily, do not suffer the same fate. Officers in my own highway authority tell me there are few precedents for cycleways making successful use of compulsory purchase orders, but are keen to learn more. CPOs for cycle schemes are easily challenged as it becomes impossible to make the case for one specific route over another, and councils are reluctant to pursue a CPO because of the risk of losing the case and of the process becoming a fruitless, costly exercise.
Other villages in my area—Watlington, Chinnor and Sonning Common—all hope to have cycle ways. I very much hope that the Minister will say whether she will support councils to use CPOs to progress active travel schemes by issuing strengthened guidance and perhaps by revisiting some of the words of the Senedd on this issue in 2019.
Andy MacNae (Rossendale and Darwen) (Lab)
It is a pleasure to serve under you, Mrs Hobhouse, and I thank the hon. Member for Didcot and Wantage (Olly Glover) for securing this very important date, for which we do not have nearly enough time.
I have talked before about Burnley Road in Bacup several times in debates, both here in Westminster Hall and in the main Chamber. There have been serious injuries and fatalities at various points on this main road and speeding is endemic. One house has been hit three times by out-of-control cars. Residents cite numerous close calls and the fear that that generates.
Thorn primary school is set back to the east of the road, with many of its pupils living to the west. If those pupils wish to walk to school, they must cross the busy road at a point where there is no lollipop service, 20 mph zone or zebra crossing. Pupils and parents do not feel safe making the crossing and so drive to school, which in turn leads to congestion, pavement parking and close calls on the roads immediately around the school. Such is the concern that pupils at Thorn have started road safety campaigns calling for action. For instance, William Cartwright, a year 6 pupil, came to one of my surgeries to push the case. He has to cross Burnley Road every day with his two younger brothers and friends. He says:
“Cars travel very fast. We often have to run across the road and I’ve nearly been hit several times.”
He has just started a petition, which already has 350 signatures.
However, when I asked Lancashire County Council to explore options for a crossing point, I was told that historical casualty figures for that particular section of road did not justify an intervention. That sort of response, which dismisses community concerns, flies in the face of common sense. As William says, we should not have to wait for an accident to happen before something is done.
Across Rossendale and Darwen, parents and children are telling us that it is only a matter of time before someone is seriously hurt or killed near our schools. We must do better and listen to our communities. Local authorities should draw on all available data to assess risk, adding in community feedback and lived experience, and actually prevent harm. That, of course, is exactly what happens elsewhere in Europe and in forward-looking authorities in the UK. The Government’s new road safety strategy must ensure that the very best risk-based practices are followed throughout the country. If that happens alongside all the other measures that we will hear about today, we can make active travel, with all the benefits it brings, a genuine option for our schoolchildren.
Caroline Voaden (South Devon) (LD)
It is a pleasure to serve under your chairmanship, Mrs Hobhouse.
Imagine being 14, 15 or 16 and being stuck in a rural village. For rural kids, bikes mean freedom. We have to make it easier to create cycle paths alongside dangerous rural roads, so that kids can have the freedom to travel independently. On that note, I would like—surprisingly—to do a shout-out for South West Water, which is seeking planning permission for a solar farm on the edge of Totnes. After 20 years of campaigning by local councillors and a very committed group of activists, South West Water has finally agreed to put a cycle path through that solar farm. We have not quite got it over the line yet, but I am putting on the record today that we really want to see it become a reality. It will link to Totnes a village that is just a few miles away, giving people there the ability to cycle into town safely, thereby cutting down on the amount of traffic coming into our small rural town.
Such cycle routes are absolutely vital in rural areas, where the roads are extremely dangerous. They connect communities, allow people to avoid dangerous roads and provide a safe option for healthy active travel, which is so important for health and wellbeing as well as the environment.
I would like to give a shout-out to Jon Oliverio, who lives in Torbay in my constituency. He is an absolute cycling champion and youth mentor, who has helped thousands of children and adults to gain the confidence to cycle safely and independently, inspiring lifelong habits, promoting wellbeing and sparking a love for cycling that has truly rippled out across families and communities. We need more people like Jon.
Josh Newbury (Cannock Chase) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Hobhouse. I thank the hon. Member for Didcot and Wantage (Olly Glover) for securing this debate.
Just a few weeks ago, I visited Hazel Slade primary academy in my constituency. Pupils there told me in no uncertain terms that each day they are frightened when they walk to school. They told me what they want to see to make them feel safer and asked for my help to make it happen. Parents, children and teachers have all told me that they want to see a road safety assessment carried out and traffic calming measures put in to reduce the risks posed by dangerous driving along Rugeley Road and Cannock Wood Street. Parents should be able to trust that every day their child will get home from school safely.
Between 2018 and 2023, there were a staggering 869 road casualties in Cannock Chase, including two fatalities on the Rugeley Road between Hazelslade and Brereton.
In Bridgtown, where the A5 separates older and newer parts of the village, parents and wheelchair users have told me that they feel they are taking their life into their hands by crossing a major road, and that their county councillor has ignored their pleas for support for a proper pedestrian crossing. Choosing active travel should not come at a risk. Proper pedestrian crossings, school-appropriate signage and enforceable speed limits are all needed to stop those risks. As we lack that in many parts of Cannock Chase, parents often feel that they have no choice but to drive their children to school.
That brings me to roadside parking by schools, an issue that all too often exacerbates those risks to children, as I am sure we have all seen. Many drivers in Staffordshire know that enforcement is limited, so parking on double yellow lines is becoming increasingly common, partly due to a lack of penalty notices and partly due to a lack of parking options. That is the case for nearly every school in my constituency, so to support active travel and to ensure that we are able to keep streets safe, stronger enforcement options are vital. I would like to see the county council take up the offer from our parish councils to work together on that.
For now, it is clear that it is the responsibility of local authorities to take steps to reduce collisions. I once again voice my full support for the residents of Hazelslade, Bridgtown and all the towns and villages that I represent in demanding further action on road safety.
Richard Foord (Honiton and Sidmouth) (LD)
It is an honour to serve with you in the Chair, Mrs Hobhouse. Across mid and east Devon, I have heard time and again from young people who want safer ways to get to school by foot and by wheeling. Students at Sidmouth college have been asking for something very simple: a cycle path between Sidford and Sidbury. Right now, the main road between those two villages is narrow, winding and dangerous, especially for schoolchildren walking or cycling. When there is a bus, cost is a barrier. Without a dedicated path, young people are missing out on after-school clubs, social time or extra help with learning. A safe cycle path would give those young people real independence; it would help them to stay active and healthy, and it would cut down on car use.
We have a separate problem in Ottery St Mary. Coleridge bridge was built back in 2011 but was damaged over a year ago by a storm. Parents are now driving their children to school where previously they went over that footbridge. The bridge repair is being held up by environmental permits, and I have asked Department for Environment Food and Rural Affairs to find a better balance. Of course, protecting our biodiversity and our rivers is vital, but so is the safety of our children. We are having children risk their lives in the dark hours during wintertime by going on very narrow pavements and into the road.
The third example that I want to speak on is the King’s school in Ottery, which proposes a multi-use path from Feniton to Sidmouth along an old railway line. A survey by the Otter Trail group found that 73% of local people currently felt unsafe cycling in the Otter valley.
To recap, the Sidbury-Sidford cycle path, the Coleridge bridge and the Otter trail are all practical, community-backed projects that Devon county council really ought to get behind. The Westminster Government have a role to play in getting behind rural local authorities to enable them to make more safe routes to school.
Matt Rodda (Reading Central) (Lab)
It is a pleasure to serve under your chairship, Mrs Hobhouse. I thank the hon. Member for Didcot and Wantage (Olly Glover) for his work in securing today’s debate. I realise that time is pressing, so I will try to keep my remarks to two or three key points that affect my constituents within Reading. First, I offer my wholehearted support to the enhancement of walking and cycling around the country, and I also reiterate both the health and environmental benefits of this important work.
There has been some excellent work in my constituency, and I want to pay tribute briefly to some of the people involved in the roll-out of School Streets, which is heavily dependent on a partnership between Reading borough council and local volunteers. That is working extremely well: it is reducing pollution, increasing health and offering young people the chance to walk to the local school in a number of parts of our town—that is making a big difference locally. However, it depends on a lot of good will and I urge more people, if they are able to volunteer, to come forward. The volunteers in some schemes at the moment are under some pressure, and it is important that we grow that project across the town on a much wider basis.
I also want to mention the importance and benefits of building more safe cycle and walking routes. We have had some real success in recent years building a new foot and pedestrian bridge over the River Thames between the two main bridges used by cars and heavy lorries. That has significantly enhanced walking and cycling into the town centre from the north of the town and other routes have been opened up, a number of which have not been accessible for some time. In other local areas in town, that has increased walking and cycling, such as the work along Bath Road, as well as a number of other paths and routes. Innovation is key. We should look at innovative ways of encouraging children to use active travel, such as the wonderful scheme called Beat the Street in my area, which has been extremely successful.
Layla Moran (Oxford West and Abingdon) (LD)
I thank you for chairing the debate, Mrs Hobhouse, and congratulate my constituency neighbour, my hon. Friend the Member for Didcot and Wantage (Olly Glover), on securing it.
I am the MP for the dreaming spires. If we think Oxford, we think Headington stone and copper roofs and bicycles everywhere; indeed, 20% of people in Oxford commute to work by bike. I am also proud to be the MP for the No. 1 school in the country for cycling to school, Cherwell school in north Oxford: 58% of the students cycle and only 11% get there by car. In part, that is facilitated by an incredibly popular segregated cycle lane that runs all along the road towards the school, but many parents will point out that the cycle lane is at the very end of the commute to school, and there are no segregated cycle lanes all the way up the Banbury Road and the Woodstock Road. There was a plan for the Woodstock Road and a plan to look at feasibility on the Banbury Road, but the Labour city council decided that it wanted instead to spend the money on what local people call the vanity bridge to nowhere, elsewhere in Oxford. That was a crying shame, because the return on investment of segregated cycle lanes is not to be underestimated.
In Abingdon, we have our own problems. National cycle route 5 passes through the town centre, but cyclists need to dismount exactly halfway down the route. Councillor Neil Fawcett has been instrumental in securing funding for a redesign, as a result of which the route will be safer and faster.
Oxfordshire is led by the Liberal Democrats and we are greatly ambitious for cycling in our county. We want to increase the number of cycle trips from 600,000 a year to 1 million by 2031. My question to the Minister is: what other pots of money are there that we can bid for? Each one of these schemes is incredibly good value for money. They produce safer, faster and healthier schemes, which is what we all want for our constituents.
Wera Hobhouse (in the Chair)
I will impose a one-minute limit on speeches now, so that we can get as many in as possible.
Steve Yemm (Mansfield) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Hobhouse. There are 33 MPs sat in this room participating in this very important debate. The same number of children aged seven and under are killed or seriously injured on our roads every three weeks. That shows the importance of the debate, and I know that Members from across the House will want to do everything they can to change that statistic.
The main point that I want to make in the seconds that I have left is that it is up to us and our communities to make sure that we always think creatively to help alleviate traffic problems. That needs to be part of the mix, including for formal traffic calming measures. We should not wait for a tragedy to force us to take action. I look forward to hearing what the Minister feels she can do to support the work that communities like mine are doing.
Steff Aquarone (North Norfolk) (LD)
There are so many ridiculous things about modern housing developments, but chief among them is the fact that they are still designed around car usage as the primary mode of transport. An obsession with winding roads to the depths of rabbit-warren estates will never encourage people to use active travel. Instead, we need to build new housing developments with cycle lanes, footpaths and green corridors at their heart.
Current planning legislation gives precious little power to planners when facing the greed and legal appetite of property developers, but we cannot carry on building houses people cannot afford, with designs that are making people unhealthy, car-dependent and isolated. We can ingrain the same walking and cycling culture that my North Norfolk villages have developed over decades for the homes, families and children of the future. The question is, will the Government legislate to make it possible?
Alex Mayer (Dunstable and Leighton Buzzard) (Lab)
I think everyone in this room agrees that walking and cycling are good; they are good for health, for the environment and for young people’s social skills. I also think they are a selling point for people trying to sell houses. In my constituency, there is a development called Bidwell West. For the last decade, there have been pretty pictures of children cycling to a local school, only that school has not yet been built, which is a bit of a problem. Children have to go a mile and a half away, on a completely and utterly unsuitable road, with a lack of footpaths—there are footpaths, but they have to cross from one side of the road to the other—water running off the nearby fields and a lack of street lighting, because it was not built for that. My question to the Minister is: how do we make sure that this does not happen as we build more houses, which we desperately need?
Marie Goldman (Chelmsford) (LD)
It is genuine pleasure to serve under your chairship, Mrs Hobhouse. I thank my hon. Friend the Member for Didcot and Wantage (Olly Glover) for securing this important debate.
We are very short on time, so I just want to shout out a charity that has been doing excellent work for nearly 100 years. It is called Living Streets, although it used to be known by different names, and it has been encouraging walking, cycling and active travel for a really long time. I recently had the pleasure of walking around the streets of my constituency with people from the charity to see the challenges that people who are trying to walk, cycle and wheel are facing, which we have talked about, such as pavement parking and potholes not just in the roads, but on the pavements. There are pedestrian railings and barriers by pedestrian crossings that have been damaged. A car mounted and damaged a pedestrian barrier very close to where I live about two years ago, and Essex county council has failed to replace the barrier, despite being told about it many times. There is so much that we can do. We should take the example of Switzerland, where children as young as four walk to school by themselves every day. It can be done if we put the infrastructure in place.
Andrew Cooper (Mid Cheshire) (Lab)
It is a pleasure to see you in the Chair, Mrs Hobhouse. I will make three points.
Affordability can be a barrier to children taking up active travel to school. We have a great local charity in my constituency called Changing Lives Together, which runs a scheme called ReCycles. The scheme, which was launched last year, saves bikes from going to waste by refurbishing and reusing them, and taking old donated bikes to do so. It has have saved about 220 bikes to date. I hope that we can encourage that type of scheme nationally to allow people to overcome the affordability barrier.
On infrastructure, we need a cultural shift in how we plan and think about development. Section 106 agreements need to give greater consideration to active travel routes to ensure that new developments do not just provide homes, but create safe environments for children to travel to school.
Finally, we should take the opportunity afforded by the curriculum and assessment review to embed cycling and active travel in our education system. Just as swimming has been part of the curriculum since 1994, Bikeability level 2 at key stage 2 would equip children with the skills and confidence needed to cycle safely.
Rachael Maskell (York Central) (Lab/Co-op)
To incentivise walking, wheeling and cycling, and to form habits, we need to invest in capital and revenue infrastructure, skills development and, above all, ambition—not least because half the number of girls as boys travel to school by bike. With Active Travel England in the heart of my constituency, I recognise the importance of that.
We need to ensure there is safe space around schools, as we have heard; that we slow traffic, as with Acomb primary school and Acomb Road; and that we stop the chaos outside schools, as with Our Lady Queen of Martyrs school on Hamilton Drive. We also need to ensure that school travel plans are active in driving the ambition that every family should be engaged in active travel. I ask the Minister to review that, and to encourage simple measures—as Chris Boardman says, we should use paint and plastic before the hard-wired infrastructure.
Wera Hobhouse (in the Chair)
I am sorry, but I will have to stop Back-Bench contributions here. Members have been incredibly good at sticking to a very tight time limit. I call the Liberal Democrat spokesperson.
Mr Paul Kohler (Wimbledon) (LD)
It is a pleasure to serve under your chairship, Mrs Hobhouse. I congratulate my hon. Friend the Member for Didcot and Wantage (Olly Glover) on securing the debate. His opening speech was thoughtful, and the speeches of so many Members from across the House were heartfelt and often heart-rending.
As Members from across the House have made clear, children across the country should feel safe when attending school, and parents, teachers and children should feel confident in cycling or walking to school. In many cases, however, that is very difficult. We know that walking and cycling to school brings huge benefits to children’s health—both physical and mental—and to the environment and the wider community, yet fewer children are doing it. As my hon. Friend the Member for Didcot and Wantage made clear, in 1975 around two thirds of children walked or cycled to school, but today that figure is under 50%, with just 3% cycling.
The decline is not inevitable. In fact, many studies have shown that schools, parents and children themselves would like the ability to walk or cycle to school, but many barriers remain. Road safety around schools remains a key issue. Last year, 64 children under 16 were killed on our roads and more than 12,000 were injured—34 every single day.
It is concerning that the danger is greatest in the places where children should be the safest: near their schools. I have sadly seen the tragic consequences of that in my constituency. In July 2023, there was a tragic road incident at The Study school in Wimbledon, which took the lives of two beautiful young children. The matter is still under investigation by the police, so I will be circumspect in my comments. Suffice it to say that when I met school staff recently, they made it clear that further steps must be taken to improve road safety around the school to prevent such an incident from happening again. Many schools, especially in rural areas, sit on or near roads with 40 mph or even 50 mph speed limits. That is simply unacceptable.
We know that children are more at risk between 3 pm and 6 pm, on their way home from school, and yet Government action remains piecemeal, reactive and underfunded. The UK once led the world in cutting road deaths. Bold steps such as drink-driving laws, seatbelt rules, safer infrastructure and education campaigns massively reduced incidents in Great Britain, but we are falling behind. Countries across Europe have made active travel safer and more accessible, while our progress has stalled. The Liberal Democrats are consequently calling on the Government to publish the long-overdue road safety strategy without delay.
Lisa Smart (Hazel Grove) (LD)
I add my voice to my hon. Friend’s call for the Government to get on with updating the road safety strategy. At the moment, they are suggesting that local communities must wait for three serious accidents or deaths for a fixed speed camera to be installed. Does he agree that we should shift the thinking, look at fixed speed cameras more as a preventive than a punitive tool, and update the guidance accordingly?
Mr Kohler
My hon. Friend is absolutely right that we must be proactive, and not reactive to death. We must anticipate accidents and do something before they happen.
The strategy must prioritise children and active travel, and draw lessons from past successes, including the road safety plan of the year 2000, which had a transformative impact and helped halve fatalities in just a decade. The lack of specific active travel infrastructure is linked to that. We must continue to improve the provision of safe cycling and walking routes across our communities. We must improve parents’ and schools’ confidence in children using active travel to get to school.
Research from Cycling UK shows that the appetite is there. In rural areas such as Devon, 84% of people support more walking and cycling, but more than 80% feel that their local roads are unsafe. When the Department for Transport asked families what would help children walk to school, the most common answers were safer roads and safe crossing points. Improving the provision of designated routes, safer crossings and better lighting is vital to improving active travel.
The Government must also properly invest in cycling and walking infrastructure, and put a new comprehensive active travel strategy in place. Their increase in funding for active travel is welcome, but they must ensure that the money is spent effectively and targeted at where it is needed.
Anna Dixon (Shipley) (Lab)
Does the hon. Gentleman agree that schemes such as the Great Northern Railway trail, which provides a secure, segregated green cycleway and walkway linking towns, villages and local schools, are where active travel investment should be prioritised? As the hon. Member for Didcot and Wantage (Olly Glover) mentioned, we must ensure that planning regulations make greenways much easier to install.
Mr Kohler
I totally agree: that is exactly the type of thing that we must prioritise. Yes, money is tight, but we must spend it where it will be most effective.
We must integrate active travel infrastructure with public transport and key community sites, including schools. As my hon. Friend the Member for Didcot and Wantage and others made clear, it is key that we improve cycle training for everyone, including young people. We must give all children access to cycle training, which will teach them the skills they need to be confident at cycling. That will not only get them into habits that will last a lifetime, but will save lives. As we have heard repeatedly, Bikeability training is shown to lower fatalities and serious injuries on the road.
Those improvements must also come from working with communities and parents. Although there are parents who drive their children to school—
Wera Hobhouse (in the Chair)
Order. Will the hon. Gentleman bring his remarks quickly to a close?
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship this afternoon, Mrs Hobhouse. I congratulate the hon. Member for Didcot and Wantage—and possibly for the Netherlands—(Olly Glover) on securing this important debate. In just an hour of Westminster Hall, we have had many contributions, far more than normal, including from the hon. Member for Brentford and Isleworth (Ruth Cadbury), who I served on the Transport Committee with in the last Parliament, and who of course now chairs that Committee, and from the hon. Members for Melksham and Devizes (Brian Mathew), for Shrewsbury (Julia Buckley), for Rossendale and Darwen (Andy MacNae), for South Devon (Caroline Voaden), for Cannock Chase (Josh Newbury), for Honiton and Sidmouth (Richard Foord), for Reading Central (Matt Rodda), for Oxford West and Abingdon (Layla Moran), for Mansfield (Steve Yemm), for North Norfolk (Steff Aquarone), for Dunstable and Leighton Buzzard (Alex Mayer), for Chelmsford (Marie Goldman), for Mid Cheshire (Andrew Cooper), for York Central (Rachael Maskell) and, of course, my constituency neighbour the hon. Member for Henley and Thame (Freddie van Mierlo).
I saved that one for last because the hon. Member for Henley and Thame spoke of the Haddenham and Thame greenway, which I have always supported. A significant chunk of it falls in my Mid Buckinghamshire constituency, from the village of Haddenham through to the Oxfordshire border. I believe we have a meeting coming up to discuss how to progress that. It is a project that should go ahead, for many of the good reasons that have been outlined by others in this afternoon’s debate, but it has a potted history of falling over at various hurdles, most recently as we came out of the pandemic. I gently say that it was actually Oxfordshire that pulled the funding plug on the project at that point, but I am delighted that it is back on track and that we are making progress.
The importance of road safety and how we improve it is something that we should all consider very carefully. There are always improvements that can be made to road safety, not least outside schools, and it is important that we reflect on those tragedies that some Members have spoken about that have occurred outside schools. Any death or injury of a child is one too many, and we must all take steps to prevent those. Indeed, nowhere is road safety more important than outside schools. To declare an interest of sorts, with three children—two at primary school and the youngest due to start primary school this coming September—it is something that I consider very carefully.
It is through that rural lens that I will make my first comments. It is undoubtedly the case that in many rural communities, no matter how much parents, or indeed the children themselves, may want to cycle or walk, the practical realities of not having a school in every village, of 60 mph country lanes with no pavements connecting villages, often going some distance, mean that many parents simply have no choice but to insist that they drive their children to school or that their children get the bus—where such a thing is still available. Indeed, although I do not want to set off the grammar school debate, in counties such as Buckinghamshire that have grammar schools, there is some considerable distance for that age cohort of pupils to travel—going from the edge of the county to get to the grammars in Aylesbury or Amersham, for example—where cycling or walking simply would not be practical.
While I want to encourage those who wish to cycle or walk to school, for some, driving is a necessity due to time. People have busy lives; all our constituents have busy lives; we have busy lives. To accompany a child, particularly of primary school age, on a walk or cycle to school may take significant time out of that parent’s, carer’s or guardian’s day—time that they may not have. It is therefore important for us not to judge those parents who make the choice to get their children to school by a different route.
Joe Morris (Hexham) (Lab)
I hope the Opposition spokesperson can do me a favour: a charity in my constituency headed by David Dixon, the bicycle mayor for Tynedale, and supported by No. 28 Community House in Hexham, is trying to get Northumberland county council to support a pretty innovative cycle to school initiative in Hexham. However, it is falling on deaf ears with the Tory group in Northumberland County Hall. Could the hon. Gentleman possibly have a word with some of his colleagues there?
Greg Smith
I think I am grateful for that intervention. I am not sure whether I have any contacts in the Conservative group on the hon. Gentleman’s council, but I will gladly see if I can get that message passed to them.
In the limited time we have available, I would like the Minister, when she sums up, to consider a few practical points about how we might start making this problem better. I will start with getting the basics right. When I drop my middle child to school—a rural primary school in a village—I watch a particular taxi driver pull up on the zig-zag lines every single morning. The dirty look I give him does not appear to be doing very well in stopping that behaviour. If we cannot enforce the basic rules that we already have outside schools, what hope do we have of making it better? I ask the Minister to reflect on how we can better enforce those rules and implement the important points that many hon. Members made about yellow line parking and pavement parking.
I also ask her to consider the physical infrastructure near schools, such as narrowing sight lines, which force drivers to slow down; there is a lot of evidence out there about those and other physical infrastructure such as chicanes. On the question of speed—I promise that I will draw to a conclusion very quickly, Mrs Hobhouse—we have heard examples from the Netherlands, but I have seen examples in France and some parts of the USA of variable speed limits outside schools at drop-off times. Can that be considered in this country, perhaps to answer the very good challenge laid down by my hon. Friend the Member for Chester South and Eddisbury (Aphra Brandreth)? There is a lot more that can be done in this area, and I urge the Minister to get on with it.
The Parliamentary Under-Secretary of State for Transport (Lilian Greenwood)
It is a pleasure to serve under your chairmanship this afternoon, Mrs Hobhouse. I congratulate the hon. Member for Didcot and Wantage (Olly Glover) on securing this debate and on his compelling arguments for more active travel and for improving road safety. We heard from 23 hon. Members—probably more, if we include the recent interventions—and I value their contributions to the debate. I cannot possibly answer all the issues raised, but I welcome the support for further action on these issues. I am responding as the Minister responsible for road safety.
I share the hon. Gentleman’s ambitions for active travel. Whether it is walking, wheeling or cycling, it is positive to see more of it. I am sure we have all seen how much quieter the roads are during the school holidays. That is a visible reminder of how many children are being driven to school and how much less congestion there could be if more people felt able to walk or cycle their children to school—or to let their children walk or cycle to school themselves, as perhaps some of us did when we were young.
Transport is at the heart of our mission-driven Government, and active travel is one of the strongest interventions that we can make to boost the health of the nation. Building safe, accessible and high-quality active travel infrastructure gives people the choice to walk and cycle. It can also improve the safety of our roads, reduce the number of collisions and, very importantly, cut the number of people who are killed and seriously injured. I assure hon. Members that we are keen to support local authorities to develop the infrastructure that works for their local area, whether that is introducing lower speed limits, segregated infrastructure or improved or new crossings, as a number of Members mentioned.
Deirdre Costigan (Ealing Southall) (Lab)
Labour-run Ealing council has introduced 41 school streets across the borough, which has caused a 29% increase in children walking and cycling to school and taken one in five cars off the road in terms of school runs. Will the Minister look at that sort of evidence when she is coming to her road safety strategy, and will she consider visiting constituencies such as mine to see the success of Ealing Labour’s programme?
Lilian Greenwood
My hon. Friend highlights the fantastic work that many local authorities are doing, and I welcome the evidence that she shared.
Since Active Travel England was created, we have seen a fivefold improvement in schemes meeting minimum quality standards, ensuring that what is being built is of a higher quality, enhancing safety and increasing uptake while reducing collisions. That represents a significant improvement, considering that 70% of people cite safety as the main barrier preventing them from walking, wheeling or cycling. The work of Active Travel England is key to delivering high quality and value for money improvements to our roads and the public realm. That includes rural areas.
As a number of hon. Members rightly highlighted, this is about not only safety, but extending opportunities for young people and others who cannot or do not want to drive. As part of its role, Active Travel England is improving connections with new housing developments. That is vital for places experiencing housing growth, as a number of hon. Members mentioned. Where roads and public services, including new schools or health centres, are being built, it should be the perfect opportunity to build in active travel infrastructure from the start, which is much cheaper and easier than trying to retrofit it later.
Lilian Greenwood
I will not, because I am very conscious of the time.
If we want to encourage modal shift and improve health through transport, we absolutely must improve safety on the roads. People will only change their travel behaviour if they feel that it is safe for them and their families. As has been mentioned repeatedly, too many people, including children, are killed and seriously injured on our roads. That is precisely why this Government, alongside investing in active travel, are developing the first road safety strategy in more than a decade.
I wholeheartedly agree that we can and should do better than a decade of stagnation when it comes to road deaths. The Department is considering a variety of road safety measures for inclusion. As we develop the strategy, I am committed to continuing to engage with hon. Members, stakeholders and road safety organisations. I very much welcome the many suggestions made this evening, and I look forward to publishing the strategy in due course—I hope that that will be sooner rather than later.
One issue often mentioned by members of the public that can have a significant impact on the school run, and in particular on more vulnerable road users, is pavement parking. Many hon. Members have raised it in this debate. Interestingly, by coincidence, I met Guide Dogs, Living Streets, Sustrans and Transport for All just this afternoon to discuss the issue. The Department intends to publish a formal response to the 2020 consultation and to set out next steps on this policy area in due course. In the meantime, highway authorities can of course introduce and enforce specific local pavement parking restrictions if they so wish.
Tom Hayes (Bournemouth East) (Lab)
Cycling is great for young lungs and kind to the environment. Will the Minister join me in commending Avonbourne boys’ and girls’ academies, Avonwood primary school and King’s Park academy in Bournemouth East for their fantastic work in spotting cycling infrastructure opportunities and getting them built?
Lilian Greenwood
I am delighted to recognise that fantastic work. Giving children the opportunity to walk, wheel or cycle to school is fundamental to their development and, as many people have said, builds good habits from an early age. When a quarter of children leaving primary school are overweight and 40% of primary school children are being driven to school, now is the time to provide healthier alternatives.
A number of hon. Members talked about school streets. Active Travel England recently published guidance that will assist local authorities in planning, developing and implementing school streets. As a direct result of its funding, 180 school streets have been developed, and of course there are many more. They are a great opportunity, and the benefits speak for themselves: cleaner air, fewer cars, less congestion, improved physical and mental health, and of course safer roads. I would love to mention the school streets trial in Hackney, which has provided fantastic evidence; my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury), the Chair of the Select Committee, talked about the evidence from Hounslow, and we also heard about Ealing.
Alongside school streets, Active Travel England is funding a wide range of support to enable more children to walk, wheel and cycle to school, including Bikeability cycle training, which I am keen to see, the Living Streets Walk to School outreach programme and Modeshift support for travel planning.
I am conscious that I have run out of time. We have announced a further £300 million for active travel and we will set out plans for future years following the spending review. I had better sit down now, but I am sure there will be many more opportunities to discuss these vital issues in the days ahead.
Question put and agreed to.
Resolved,
That this House has considered road safety and supporting active travel to school.