Westminster Hall

Tuesday 1st July 2025 Westminster Hall

Tuesday 1 July 2025

[Peter Dowd in the Chair]

Business Energy Supply Billing: Regulation

Tuesday 1st July 2025 Westminster Hall

09:30

[Peter Dowd (in the Chair)]

If gentlemen, or anybody else, want to take their jackets off, feel free to do so.

[Sarah Edwards (Tamworth) (Lab)]

I beg to move,

That this House has considered regulatory powers over billing of energy supply to businesses.

It is a pleasure to see you in the Chair, Mr Dowd. My constituent Samantha Panton opened the Roasters café on the high street more than 35 years ago. Recently, she received a demand from E.ON Next for £10,000, payable within seven days, with threats to disconnect her electricity and close her business, putting 10 jobs at risk. That debt arose because E.ON Next confused her day and night meter readings. Although she had agreed to a £500 weekly payment plan, the company abandoned the arrangement and instead chose to pursue the closure of her business.

Upon thorough investigation, including a review of her accounts dating back to 2017, I discovered that E.ON Next actually owed her £4,433. When I raised concerns about its mishandling of the credit notes and breaches of back-billing regulations, my communications were ignored. Without enforcement or penalties, there is little incentive for companies to change their behaviour. That situation highlights a wider problem: energy companies impose excessive charges on small businesses while routinely engaging in questionable practices under minimal regulation. Small businesses have limited resources when suppliers act unfairly.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Member on securing this debate. She is raising what sounds like outrageous treatment of a customer and consumer. Does she agree that the Ofgem report was very clear that suppliers should treat domestic and—particularly in this case—non-domestic customers fairly and give them support? It would appear that, in the instance she is outlining and some others that I have had experience of, they are not doing so.

[Sarah Edwards]

Absolutely. I thank the hon. Member for his intervention, because that is exactly what the report found, yet I will go on to argue that not enough progress has been made to make sure that those business customers are treated fairly.

In response to this issue, I have launched a campaign inviting businesses across the country to share their experiences on my website, aiming to expose these harmful practices. I am confident that straightforward regulatory reforms could reduce energy costs substantially without imposing any cost on the Government. No one likes a bully; I certainly do not, and when I see injustice, I want to fix it. Today, I share not only my constituent’s story, but many others. Colleagues here will have heard similar accounts of energy companies refusing to engage, forcing MPs to intervene or send cases to the ombudsman, often without any resolution.

As a member of the Business and Trade Committee, I have explored this issue through roundtables nationwide. Time and again, we hear that energy costs are the second biggest burden for businesses after staffing, with many driven to bankruptcy by the exploitative practices of energy suppliers. I thank the Committee for supporting today’s debate to shine a light on this problem. This is not just about one café; it is about thousands of businesses that deserve better.

From 2022 to 2024, Ofgem reviewed its non-domestic energy supplier sector. It found that 12% of customers had complained and identified four reform priorities: treat customers fairly; support small businesses; billing on tenancy changes and third-party intermediaries. It updated the supplier licence conditions to enforce fair treatment—but is that working? A freedom of information request shows that only two suppliers have ever been fined for licence breaches; many suppliers do not even report them. In my constituent Sam’s case, E.ON Next breached back-billing rules, but likely never reported it. I ask the Minister when the proposed review of those new licence rules will happen, and whether she can guarantee that it will be rigorous and effective. When will the review of Ofgem itself conclude? There is growing concern that Ofgem is not fit for purpose, acting more like a coach than a regulator. We need an enforcement body with teeth, not one that lets suppliers police themselves.

Returning to Sam’s case, my office referred it to the Energy Ombudsman. We were proved correct; E.ON Next had mishandled her account, and she was awarded £200 in compensation—but really, what does a firm have to do to get a meaningful penalty? Threatening to close a business after making mistakes in meter readings, back billing, failing to issue proper credit notes and threatening legal action are apparently not worth any more than £200.

Compare that with fines for a data breach—up to £17.5 million or 4% of global turnover. That is a real deterrent. Why is it that, when the domestic energy market is regulated far more effectively, a blind eye has been turned to such appalling behaviour in the commercial market? Hon. Members may be interested to know that, until December 2024, the ombudsman could act only for microbusinesses, those with fewer than 10 employees—any bigger, and the business was out of luck. Since December, businesses with up to 50 employees can now be represented; but, again, the fine is only up to £10,000.

I met the Energy Ombudsman to ask how its powers were being used to protect businesses from this wild west of exploitation. Since December, it has dealt with 370 small and medium-sized enterprises in its scope, about half within the terms of reference. Of those cases, most complaints were about suppliers, customer service, billing, sales and back billing. It upheld between 40% and 73% of those complaints.

I have serious concerns, however. The ombudsman has never been out to tender and cannot explain how it decides on the maximum £10,000 fine. It appears to have a lack of resources and expertise to investigate complex commercial contracts effectively. Ofgem expects the ombudsman to do that work, but the extended remit has not come with extended expertise. Instead, the system seems designed for volume and profit, but not for protecting businesses from serious harm.

A Yorkshire packaging manufacturer was scammed by Renewco, which arranged a fraudulent energy deal with Emirati Energy. The business owner paid every invoice on time to his broker, but a year later Pozitive Energy, also known as PE Solutions, demanded tens of thousands in unpaid costs. It turned out that Emirati Energy had signed a fake contract with Pozitive on behalf of the business, pocketing the payments while Pozitive received nothing. Both Pozitive and the manufacturer were victims of fraud.

Who is Pozitive Energy? Its turnover rose by 13% to £1.18 billion in 2024, and its net assets were up nearly 500%. With only 30 employees and £139 million of retained earnings, this is a private company with little transparency. We must therefore assume that it is making around £4.6 million profit per employee. Yet Pozitive went after the small business owner and, despite clear evidence of hundreds of customers billed to one address and mismatched paperwork, it did not investigate until the debts piled up.

When the business owner turned to the Energy Ombudsman, he was told to pay the debt anyway. The ombudsman said it was his problem to chase the fraudster. Why should a small manufacturer pay for Pozitive’s failure to vet its brokers? Ofgem does not regulate third-party intermediaries, instead requiring suppliers such as Pozitive to work only with third-party intermediaries in approved dispute resolution systems, giving customers a route to redress if dissatisfied. Pozitive failed to do that—it failed its licence condition.

That is not an isolated case; the commercial energy market rewards suppliers for ignoring fraud, because it can demand payment from unsuspecting businesses once scams collapse. Meanwhile, the Energy Ombudsman lacks real powers and often fails to protect victims. I have heard multiple stories of these disgraceful tactics destroying livelihoods. One broker firm is tracking more than 1,100 complaints with E.ON Next alone. It is defending 80 of them in court, in what is effectively a group action over dodgy practices on deemed contracts. E.ON sold the debt on when the lawsuits loomed, and 13 cases have already been struck out as unenforceable.

Why is business energy so expensive? When a firm moves into new premises, it is put on a deemed contract until it signs a deal. Legally, those contracts should not carry excessive fees or profits, but in practice suppliers have used them to gouge customers. Some firms were charged £1.60 per kWh during the energy crisis, then locked into multi-year deals with no escape clauses. Even now, some are paying £1 per kWh, when a competitive rate should be around 20p to 25p.

Suppliers know exactly what they are doing. They profit by giving brokers hidden commissions: “You can add 1.5p and keep it, or maybe add 2p and give us back a kickback of 0.25p.” Those kickbacks incentivise brokers to push overpriced deals that hurt customers. One product currently offered by Engie has 5p added to each kWh, which the supplier knows is an incentive for brokers to sell its supply over others. Some brokers only work with two suppliers—hardly a broker business by most people’s definition. Suppliers know; Ofgem knows; but small businesses—left with unaffordable bills, faulty meters and unfair contracts—often do not.

If we want a fair market, we must regulate it properly. That means honest enforcement of billing, fair profiles on deemed meters, transparent broker commissions, and meaningful redress when things go wrong. Until then, small businesses will keep paying the price for a system that is rigged against them.

Suppliers such as npower have taken on small customers and used codes on deemed contract meters to extract higher charges because they knew they could get away with it. They should have chosen not to act for those businesses, but instead they have made huge profits. The Energy Consultants Association estimates that misclassification has generated up to £4.5 billion in excessive, unjustified profits since 2017. Small businesses were locked into unfair contracts from day one, paying inflated rates, with no meaningful correction in sight.

I am calling for urgent reforms to protect businesses and ensure that fairness in energy bills is supported, with stronger regulatory powers for the Energy Ombudsman, including higher fines and a wider remit; outlawing back billing beyond six months for business energy customers and greater protections for small businesses against inaccurate and punitive billing. Energy companies must commit to fair and transparent billing systems. There must be a thorough review of debt collection practices within the sector.

I call for all brokers and third-party intermediaries to be fully regulated, for the adoption of a mandatory code of good practice to raise standards and for all brokers to become members of a dispute resolution mechanism to protect businesses. The Government must empower Ofgem or the Financial Conduct Authority to regulate brokers. That can only be done with regulation—but it must happen fast.

What am I going to do? I do not have those powers, but I have met passionate experts and trade bodies who want change. Together, we will launch a kitemark for responsible brokers, because there are many out there doing good work. It will be fair and transparent. We will publish data on energy rates, so that businesses know what a fair price is when reviewing a contract renewal, and create a directory of brokers who have signed up to a voluntary code of practice, giving power back to businesses.

I welcome the Government’s recent move to lower industrial energy prices for high-usage businesses. However, many smaller businesses—the heart of our communities and high streets—are excluded. Those steps are in the Government’s gift to bring down prices, stop fraud and obscene profits, and protect our small businesses. Added to my asks are simple, cost-free reforms such as capping deemed contract rates to stop bad deals being sold as good ones, and ensuring that SMEs get the correct rates on their market-wide half-hourly meters from day one. This Government must back our businesses and make those reforms now.

Hon. Members will be amused to know that E.ON Next sent me a final bill when I switched office supply. My monthly usage is around £300. The bill it sent me was £18,000—it mixed up the day and night meter readings, and no sense checks were done.

It is time to regulate the sector and to protect and empower businesses, the backbone of our economy. I hope the Minister will have some good news and progress to report on this matter.

09:45

[Jim Shannon (Strangford) (DUP)]

As always, Mr Dowd, it is a pleasure to serve under your chairship. You are maintaining the wearing of a jacket, whereas my hon. Friend the Member for East Londonderry (Mr Campbell) and I have taken advantage of your permission because of the good weather. You have better stamina than me.

I thank the hon. Member for Tamworth (Sarah Edwards) for leading today’s debate and setting the scene incredibly well. If I got an £18,000 bill for normal £300-a-month usage, I would be incredibly worried and anxious, too.

I want to speak on behalf of my constituents and the local businesses in my constituency on which we depend for the success of our local high streets. High streets are under pressure; there are more vacancies in Newtownards high street than ever. The squeezing of profit margins means that many people are considering whether to go ahead with their ideas for a new business, but hopefully what the Government and the Minister are doing will enable entrepreneurs to take advantage of the opportunities. There is no doubt that after the effects of covid, some businesses did not make it. We thank the previous Government for stepping in and responding positively to ensure that those businesses are still here today, but it is crucial that we have proper regulation to stop businesses being burned to the ground financially by crippling energy costs.

In Northern Ireland, the Utility Regulator is the key body responsible for overseeing electricity and gas markets. The Minister knows where responsibility lies. I thank her for her interest in matters relating to Northern Ireland. Her visits to Northern Ireland are an indication of her interest in ensuring that Northern Ireland, which has a different system, is kept under the same rules as those that apply in England, Scotland and Wales; I thank her for all her efforts in that regard. If she lets me know the next time she is over, I will introduce her to some of my constituents in Strangford. They are lovely people— I know that because I am one of them. They are generous and kind; they will not give her a hard time, but they will tell her what they think, in as nice a way as possible.

The UK equivalent of the Utility Regulator is Ofgem, the mainland-wide energy regulator. Energy costs are a reality facing commercial and domestic consumers. We have seen an incredible increase in the last couple of years. Businesses and households are struggling and there is a need for greater regulation to ensure that people are not overcharged beyond belief. The example that the hon. Member for Tamworth gave of a bill for £18,000 was a mistake, of course, but none the less it would shock anyone to their shin bones.

Let me give an example of the problems. There has been an increased use of estimates of energy costs. Energy companies bill businesses based on their rough use of gas and electricity. That results in severe overcharges and a months-long back and forth to get the money back. My goodness—they are quick enough to charge you, but they are not as quick to pay you back when they get it wrong.

I experienced that not long ago when I opened my satellite surgery in Ballynahinch. My constituency of Strangford has grown and has moved further south, and as a result it was imperative to have another advice centre in Ballynahinch to give my constituents the representation that they deserve. We moved premises and were being billed extortionate amounts for gas and electricity, based merely on estimated bills. Thankfully, we were able to get that resolved, but staff and business owners do not always have the time to be on the phone when their energy company is open to resolve such issues. We did get it done. My staff are very efficient and certainly able to respond. What we do for ourselves, we do for others.

[Carla Lockhart (Upper Bann) (DUP)]

Many businesses in Northern Ireland query their bills and recognise that they have been overcharged. It is dispute resolution access that is the problem: that is why many businesses come to us, as elected representatives, to resolve it. Does my hon. Friend agree that there needs to be better, clearer dispute resolution access? Does he also agree that the regulator in Northern Ireland needs greater power to force suppliers to resolve the issue when it is brought to them in a timely fashion?

[Jim Shannon]

My hon. Friend is absolutely right. Perhaps the Minister will be able to tell us about the discussions that she has had with the regulator in Northern Ireland. I know she has been in discussions—I am sure of that. Any tightening of the law such as that referred to by my hon. Friend would be a step in the right direction.

Standing charges are also an issue where businesses have been asked to pay a fee regardless of how much electricity is used. The Ulsterman and Ulsterwoman are renowned for their prudence. The hon. Member for Dumfries and Galloway (John Cooper) will confirm that his constituents are similar. We do not want to pay any more than we should. When we get a big bill and we know it is wrong, we question it. My mum and dad brought me up in a certain way. Because we never had much, we looked after what we had. It was a case of “Look after the pennies, and the pounds will look after themselves.”

It is important that we pay only for what we use. The amount that we pay depends on the supplier, on how we pay for our energy and on where we live, which already seems an unfair process. Additional costs are the norm, as many are aware. In the long term, I look to the smaller family-run businesses, like those in Ards in my constituency. Ards is renowned for the family businesses on the high street, on Frances Street and on Regent Street. They have been there for generations, but if they cannot sustain the energy costs they will be forced to close, so we have pressures building on all of our businesses.

There are certainly benefits to greater regulation of energy costs. I reiterate that for smaller businesses the costs of utilities are massive and should be charged correctly. Northern Ireland’s electricity prices are often slightly higher than the United Kingdom average, owing to grid infrastructure and generation mix. We know from our constituents about the pressures on businesses in Strangford, Upper Bann, East Londonderry and across all of Northern Ireland. More must be put in place to make businesses more energy-efficient, to reduce costs and to encourage long-term affordability

I look to the Minister, who is a genuine lady and has a good heart for these issues. I am hopeful for a response to the questions that colleagues and I have asked, and hopeful that in Northern Ireland we can feel the benefits of the good that has been done on the UK mainland. I look to the Minister for a commitment to business stability in future.

09:53

[Kevin Bonavia (Stevenage) (Lab)]

It is a pleasure to serve under your chairship today, Mr Dowd. I congratulate my hon. Friend the Member for Tamworth (Sarah Edwards) on securing today’s debate and on leading such an important campaign that matters not just to her constituents, but to so many of our constituents and the businesses that they run or use around the country. I also want to recognise the hon. Member for Strangford (Jim Shannon), as ever a champion for his residents, for outlining the experiences they are going through. I am sure that there is a consensus on this pertinent issue not just in this room, but across the House.

I would like the Minister to focus on the issue of uncapped energy billing for businesses. As we all know, household energy in the UK is capped by Ofgem. However, this protection is not afforded to businesses suffering under the rising gas and electricity prices that we have heard about. The issue has most impact on small to medium-sized businesses, as they often need to use large amounts of electricity, and the strain of rising cost is subsequently felt by the consumers as businesses are forced to find ways to counteract their costly energy bills. The escalating price of energy for businesses discourages those with an entrepreneurial mindset, as their goals appear unattainable because of the cost of running a business.

I have seen that at first hand in my constituency of Stevenage. Brand-new lunch spots receive high praise from residents, both online and through word of mouth, yet they end up closing after a few short months because of struggles with money. Those struggles are substantially attributable to the rapidly growing cost of running vital café equipment: temperature-controlled food display cases, display refrigerators, fridges and much more. I have spoken to restaurant owners in Stevenage, and the detrimental effects of rising costs are clear. For example, the owners of Pitta Hub, a relatively new lunch spot in the centre of our town, have shared information with me on its other overheads, in addition to its rising energy bills.

According to Utility Bidder, a well-regarded comparison and switching service, the average small restaurant uses between 15,000 kWh and 25,000 kWh of electricity per year. The lowered profit margins for our beloved small businesses affect the growth and prosperity of towns like Stevenage across the country.

I ask the Minister the following questions. Will the Government consider capping energy prices for businesses, as they do for household energy? What are the Government planning to do to support small and medium-sized businesses, such as those in Stevenage that I have mentioned, in the face of rising energy prices? Businesses are crying out because of these rising prices, and we in this House must heed that call. Today’s debate has shown the importance of protecting independently run enterprises. They are the heart of our towns. Ensuring a semblance of stability for their entrepreneurial owners is vital, both to residents and to the economy of towns like Stevenage across our country.

09:57

[John Cooper (Dumfries and Galloway) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dowd. It is customary to congratulate the hon. Member who secured the debate, but I would like to go further: the hon. Member for Tamworth (Sarah Edwards) is an outstanding champion not only for her constituents—through the Select Committee on Business and Trade, on which I also serve—but for the public more widely, with her expert nose for unfairness.

Many businesses and homes in my rural constituency of Dumfries and Galloway are not on the gas grid and, like so many across the UK that are outwith the urban centres, are reliant on such things as tanker-delivered liquefied petroleum gas or kerosene for heating. But almost without exception, everyone is on the electricity grid and so gets a bill for at least this one utility. Given that ubiquity, people might expect the energy market to be the best regulated, and yet, as we have heard this morning, the regime is less the quiet and precise order that one might expect of an old-fashioned provincial bank and more the rough-house of a wild west saloon. Is there an MP in the House who does not have an example of blundering over bills or of sharp practice?

A small business in my constituency struggled with an electricity bill for an astonishing £18,000—that figure again. It was of such magnitude that it would have sunk a much-loved high street fixture and an important employer. Queries—pleas, indeed—went unheeded. I am pleased to say that, following intervention from my team, the bill was waived when it transpired that the issue was a convoluted tale involving a disconnected smart meter and wildly inaccurate estimated bills. There was a happy ending, but that is surely indicative of a wider problem.

Energy firms are increasingly a law unto themselves and are judge, jury and executioner over bills, billing and the recovery of debts, both real and imagined. Too often, they hide behind automated “computer says no” responses and infuriating call centres whose hold muzak should be the Cuckoo waltz: you hang on for an eternity, despite your call apparently being “very important” to them, although of course they are experiencing a “very high volume of calls” 24/7, 365.

I am a huge fan of the free market. I think it delivers competition, which gives consumers choice, which in turn drives down bills. However, it falls to us in this place to regulate that market: not to put the dead hand of Government on the tiller, to proscribe the private sector or fence it in, but to create an environment that is fair to both sides—industry and public—and is delineated, transparent and responsive.

And so the spotlight shifts from the energy firms to the regulator. Ofgem seems to be the victim of an overly wide remit: it has to deal with networks plus retail, and has ended up being criticised by the industry and consumers alike. It is difficult not to agree that it has lost its way when, as my hon. Friend the Member for Bromsgrove (Bradley Thomas) raised at the Energy Security and Net Zero Committee, it spent taxpayers’ cash on irrelevances such as courses called “Pride in intersectionality” and “Perspectives from Rainbow Regulators”.

Regulators rest on three pillars: deterrence, detection and enforcement. The first two are intertwined, because if there is no prospect of getting caught, there is no deterrent. Many regulators fail on the third pillar: they talk a good game and threaten all sorts of dire retribution, yet they deliver little enforcement. Ofgem writing to suppliers demanding to know why they have not ended sharp practice such as back billing does not look like a regulatory crackdown; it looks like regulatory breakdown. The Government have been consulting on Ofgem, and the conclusion must surely be that the regulator is having a shocker when it comes to billing.

I hope that the Minister can assure us today that the Government are getting wired right into the fuse box of this vital, but apparently overwhelmed, regulator. Of deterrence, detection and enforcement, the greatest is enforcement. When will the Government apply a bit of that to the regulator itself, so that my constituents can have some faith that the bills piling up on their doormats, and increasingly in their inboxes, are at least accurate?

10:01

[Pippa Heylings (South Cambridgeshire) (LD)]

It is a pleasure to serve under your chairship, Mr Dowd. I join other Members in congratulating the hon. Member for Tamworth (Sarah Edwards) on securing the debate and on her fantastic laying out of the situation. Small businesses are the backbone of our economy: they are 99% of UK businesses and over 5.5 million strong. My constituency has one of the highest concentrations of SMEs in the country. They really matter. They are essential to our communities and our growth.

Almost 45% of nearly 1,300 businesses surveyed by the Federation of Small Businesses at the end of 2024 reported increased costs due to a rise in utility costs. Our small businesses are really struggling and they are being failed by an energy system that lacks due fairness, transparency and accountability. SMEs have been left behind. When the energy bill relief scheme was replaced, support was slashed by 85%, and then it was removed altogether by March 2024. Liberal Democrat analysis estimates that 3.1 million SMEs saw bills rise by £7.6 billion. Today, the average small business electricity bill stands at £240 a month and 92% of SMEs plan to raise their prices due to energy volatility. That is unsustainable.

Domestic customers are protected to some extent by the energy price cap, and larger energy-intensive firms benefit from the brand-new British industrial competitiveness scheme. Is the Minister considering bringing in caps on energy costs for small businesses? In the meantime, owners of SMEs are encouraged to do it alone—independently explore the market and switch to a better deal. Yet we know, and we have heard today, that many small businesses do not have the capacity to undertake the work necessary to find the best energy deal and are vulnerable to exploitation, increasing, rather than decreasing, overall costs. That is where regulation of the energy market for small businesses is so important.

This debate is timely, but this is not a new issue. A 2023 report by Octopus revealed a disturbing picture of the impact on small businesses of a lack of regulation, unscrupulous practices and unfairness in the energy market. Some 3.2 million had had a negative experience with energy brokers and 78% of small businesses demanded that broker commissions be made clearer.

That same year, thousands of small businesses—manufacturers, high street stores, pubs, community organisations, faith groups and charities—joined a £2 billion class action lawsuit to seek compensation for having overpaid for tariffs with energy giants brokered by third-party brokers. That showed that undisclosed broker commissions were being added to the unit cost of gas and electricity, falsely inflating energy prices for up to 2 million businesses and organisations in the UK.

Ofgem’s own data showed that around 37% of non-domestic energy consumers had contracted such third-party intermediaries, and there was evidence of unscrupulous practice by some of those TPIs. We therefore welcomed Ofgem’s December 2024 move to allow microbusinesses with up to 50 employees to access the Energy Ombudsman for alternative dispute resolution, but that left small businesses over the threshold locked out of that recourse to redress and recompense. Ofgem later expanded that offer to small businesses and required the energy giants to be transparent about commissions they were paying to brokers and where they were adding the cost on to consumers’ bills.

However, Ofgem still does not have direct regulatory powers over third-party intermediaries. A consultation on regulation closed nine months ago, so will the Minister set out what the Government will do to introduce a mandatory authorisation regime with standards, registration and enforcement, and when? Businesses deserve transparency and protection. It was encouraging to hear of the kitemarking system that the hon. Member for Tamworth is championing, together with businesses. That shows that there are third-party brokers that are doing this well and want to help businesses, and we need to celebrate that where it is happening.

There are also systemic problems that need to be addressed. They include overcharging, about which we have heard distressing stories from all hon. Members. In May, Ofgem confirmed that 10 suppliers paid out more than £7 million in compensation for overcharging errors. That alone should be cause for alarm. Ofgem data shows that 23% of claims from non-domestic consumers were about billing, and nearly half of all complaints were unresolved. They include incorrect meter readings, inflated charges and poor customer service. Ofgem has now extended its standards of conduct to all business customers, not just microbusinesses. That is welcome, but guidance is not enough, as has been said. We need enforcement and a cultural shift among suppliers. They treat businesses as easy revenue sources, not valued customers.

The Department for Energy Security and Net Zero is currently reviewing Ofgem’s powers, remit and effectiveness, and rightly so. The Department has a big hill to climb, because trust in the energy sector is really low. The non-domestic market in particular has long been the wild west of energy regulation. Ofgem must be equipped not only to set standards but to enforce them, to act swiftly against abuses and to be accountable for the outcome it delivers. I therefore ask the Minister again to tell us about the response to the review. Businesses deserve more than warm words; they need action.

10:07

[Nick Timothy (West Suffolk) (Con)]

I am pleased to respond to the debate on behalf of the Opposition. I congratulate the hon. Member for Tamworth (Sarah Edwards) on securing it. She gave a serious and passionate speech about the injustices experienced by too many businesses, and I commend her campaign and encourage all small businesses to visit her website so that they can tell their stories and give their evidence.

Every Member’s speech confirmed what a significant problem this is. The hon. Member for Strangford (Jim Shannon) reminded us of the effects on our high streets. With his usual journalistic flair for arresting language, my hon. Friend the Member for Dumfries and Galloway (John Cooper) questioned Ofgem’s wide remit, which ranges from regulating careless errors, such as mix-ups between night and day meter readings leading to intimidating demands for bills as high as £18,000, to systemic failures and cynical malpractice. We need the Government to act.

Even apparently innocent mistakes come with a terrible burden for small businesses. We all know the pain and stress of the bureaucracy we have to handle when there is a problem, and sometimes that bureaucracy feels like a deliberate hurdle that has been constructed by the businesses in question. Small firms have to contend not just with high costs, but with lost time, which is a highly precious commodity for them.

We must also consider the systemic problems. The hon. Member for Tamworth mentioned kickbacks for brokers who push more expensive contracts, and she rightly asked about the powers available to deal with errant companies. I thought her comparison with fines for breaches of data laws was apposite. Will the Minister tell us when we can expect the review of Ofgem to conclude? Can we expect increases in the fines levied against companies when they fall short?

As the hon. Member for Stevenage (Kevin Bonavia) suggested, high energy costs themselves are a huge problem. It is not just about the conduct of businesses; we must explore the effects of wider Government policy, too, because no country in history has ever made itself richer by making energy more expensive. First fossil fuels and then nuclear powered the industrial and technological revolutions of the 19th and 20th centuries, and yet it is the policy of our Government to increase the price of energy and make its supply less reliable. They are defying common sense by pushing up demand for electricity with their ideological targets for decarbonising the grid and rolling out heat pumps and electric vehicles. Large-scale electrification is pushing the grid to its limits; it is already struggling to supply new homes, factories and data centres. We can clearly see the effect on energy bills for businesses.

The Climate Change Committee—an unelected and unaccountable quango against which Ministers offer little or no resistance—says the cost of electrification must be shifted on to bills for gas and oil. For years the climate lobby insisted that renewables were cheaper than gas, but now that they have to put their money where their mouth is, they want to put the public’s money where their mouth is—now that the world can see the truth, they want to transfer the massive cost of renewables on to gas bills.

The renewables obligation, feed-in tariffs and the capacity market are all direct costs to business. Environmental levies are already projected by the Office for Budget Responsibility to increase from £9.9 billion last year to £14.8 billion by 2030. Those hidden costs support the complex web of public subsidies that prop up wind and solar. Wind and solar generators are given billions of pounds in subsidies paid through green levies. Without those subsidies, most of them would not be commercially viable. The levies are not the only costs created by a dependence on unreliable renewables; customers also bear the balancing costs that are paid to generators to switch their power on and off. As wind and solar expand, those costs will triple to £8 billion by 2030.

Grid decarbonisation will create a carbon price of £147 per tonne of CO₂, which is 2.7 times higher than the current level. Ever-rising carbon prices will be locked in under the EU reset deal, which will keep us aligned with the EU emissions trading system. We already have the highest industrial energy prices in Europe. Our energy consumption fell last year by 0.1%—we were the only G7 country where that happened, apart from Japan and Germany. Despite global energy demand getting ever higher, our energy supply fell by an average of 2.1% per year between 2014 and 2024. Output from energy-intensive industries has fallen to its lowest level since the 1990s.

Decarbonisation is undoubtedly fuelling deindustrialisation. Just last week, it was announced that a facility in Teesside, one of the largest chemical plants in the country, will be permanently closed. The Grangemouth oil refinery stopped processing crude oil last April. British Steel has been brought to its knees. Yesterday, we heard the sad news about the Prax Lindsey oil refinery.

The Energy Secretary wants to blame international gas prices for our insane energy prices, when he has been throwing policy costs on to British industry to subsidise expensive and unreliable renewables. Now he says he will subsidise heavy industry to counter the cost of the renewable subsidies he is making it pay. There are countries, such as the United States, that rely much more on fossil fuels and have lower energy costs than we do. Labour is trying to con the public by blaming global prices, when it is the one that is piling on policy costs.

10:13

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Miatta Fahnbulleh)]

I thank my hon. Friend the Member for Tamworth (Sarah Edwards) for introducing this important debate, and all hon. Members for their insightful contributions. I assure them all that the Government are taking this issue seriously, and we are working at pace to respond to it.

The experience of Roasters reflects the issues that consumers face in an energy market that, quite frankly, is not working for them. Let me be clear that reforming the energy market so that it works for consumers and is fair is a key priority for this Government. We have made progress already, which I will set out, but we must do more.

I was extremely disappointed to learn of another example of a customer receiving incorrect bills and back-billing requests. Ofgem supply licence conditions are very clear: suppliers must take all reasonable steps to reflect accurate meter readings in bills or statements where these have been provided by a customer or taken by a supplier. Suppliers must also take all reasonable steps to obtain meter readings at least twice annually. They must provide historical consumption information to all customers upon request and explain how a customer’s bill was worked out.

[Sarah Edwards]

I thank the Minister for giving us lots of information on challenges and things that companies should be doing. Roasters café had four different smart meters fitted, none of which worked. When my constituent raised the alarm 12 months in and said she did not feel that the final meter was working, she was told, “It’s absolutely fine—it works. There’s no problem.” As we know, there was a problem; it was not making the readings, and it was certainly not smart. Can the Minister speak about the fact that energy companies are imposing these meters, charging for the privilege of going to check them and then claiming that they still work?

[Miatta Fahnbulleh]

We know we have a challenge with smart meters. The majority of smart meters work, but there are far too many cases where they do not. We are working with the DCC and suppliers to make sure that we have connection across the piece and that there is a clear obligation on suppliers to respond to meters that are not working. Ofgem is reviewing this at the moment, and we will set out what we will do to introduce further obligations and ensure compliance on the specific issue of smart meters.

On the wider question about back billing, let me be clear: suppliers cannot back-bill domestic or microbusiness consumers for energy use more than 12 months ago. A company is classed as a microbusiness when it has fewer than 10 employees and turnover of less than £2 million, or where it falls under certain energy-usage thresholds. In February, the Secretary of State wrote to the chief executive officer of Ofgem, asking him to accelerate the regulator’s work on reviewing the back-billing rules as part of its ongoing consumer confidence reforms. Ofgem is in the process of doing that.

The Secretary of State and I have constant meetings with the regulator to make sure that this matter is proceeding with the pace and urgency it requires. It is very clear that suppliers can back-bill consumers only in very specific circumstances; we need to clarify what those circumstances are and ensure far tighter compliance and enforcement on this issue.

My hon. Friend raised a point about the Energy Ombudsman, and what it should do to support businesses such as those in her constituency. We announced an expansion of the ombudsman’s service in December so that small and medium-sized enterprises with fewer than 50 employees can now access it. That means that 99% of businesses in this country can now access that important service. In recognition of the impact on businesses when things go wrong, the maximum award for new business disputes that go through the ombudsman has been doubled to £20,000.

We know that much more must be done to ensure that the ombudsman and the redress service are working for all customers. We have committed to consulting on a range of issues that would strengthen the ombudsman, including introducing automatic referrals to it rather than consumers having to do that themselves. We think that will speed up the process.

We are also looking to reduce the referral waiting time from eight weeks to four weeks so that customers are not waiting in a long and frustrating process before their issue gets redress. Critically, as part of that, we are looking to increase the value of the compensation that is paid to customers when things go wrong and the ombudsman has clearly put in place a judgment that suppliers are not responding to. We also want to make compensation automatic, because that is how we can expand and drive deterrence in the system.

We will look to see how, in instances of, for example, excessively long call waiting times, which consumers find desperately frustrating, unacceptably high bills when suppliers fail to adjust their direct debits, and suppliers not responding to complaints in time or not complying with the Energy Ombudsman, there can be automatic compensation so that consumers get the redress without having to go through the hassle.

[Sarah Edwards]

I thank the Minister for all the additional details and information on where we are hoping to get to. One thing I learned about was the problem of deemed contracts. When a business moves into a premises, they are put on an assumptive contract, but that has caused lots of problems. The ombudsman and Ofgem have decided that they cannot make any rulings on deemed contracts and when a deemed contract becomes an actual contract, and the issues around the money that is then made. Does the Minister have anything to say about deemed contracts, which contribute to a lot of complaints?

[Miatta Fahnbulleh]

We will raise the issue of deemed contracts with the regulator and the ombudsman. More broadly, my hon. Friend has raised specific concerns about the ombudsman’s approach. There is a clear complaints procedure, so if constituents feel that they have not had the service that they require, there is a process to escalate their complaint up the hierarchy of the ombudsman and consumers should use it.

My hon. Friend also raised the important issue of the Ofgem review, as did other Members. I could not agree more; we need a regulator with teeth that is on the side of consumers. As part of our manifesto, we promised to strengthen Ofgem, to ensure that it can hold companies to account for wrongdoing and require higher standards of performance, and to make sure that customers receive automatic customer compensation for poor service. To address that, in December, we launched a comprehensive review of Ofgem. We are in the weeds of that review, which will conclude in the autumn. Critically for me, the review will establish Ofgem as a strong consumer regulator. It will ensure that Ofgem is equipped to address unacceptable instances of customer failing and, importantly, we want it to reset consumers’ confidence in a system that, quite frankly, they have lost confidence in.

In response to the hon. Member for Dumfries and Galloway (John Cooper), the review will specifically look at whether Ofgem has the right remit, mandate, tools and powers to do the job that consumers expect. We want to ensure that all the examples are represented, so we have done a big call for evidence. We are doing huge amounts of engagement to make sure that all the evidence informs the final conclusions of the review. Critically, it will also look at redress, because we know that we need to get that right. The point has been made over and over again that it is about setting in place the right regulatory framework, but also about making sure that there are repercussions when compliance does not happen, and that there are clear enforcement mechanisms. We want to ensure that the regulator has all that.

We know that the cost of energy is a massive issue for businesses across the country, particularly small businesses. This issue, and the question of whether we cap energy bills for non-domestic customers, was raised by my hon. Friend the Member for Stevenage (Kevin Bonavia) and the hon. Member for South Cambridgeshire (Pippa Heylings). We have taken the judgment that the way that we respond to energy bills that are too high is to sprint in order to deliver clean power and break our dependence on fossil fuel markets so that we can drive down costs and bills for consumers. The shadow Minister is wrong: this is not and never was ideological. We have seen the worst energy crisis in a generation and our dependence on fossil fuels was at the root of that. That crisis, not on our shores, meant that businesses and consumers across the country were paying the price. That is why diversifying our energy mix, whether Members believe in net zero or not, and generating home-grown clean energy that we control are the routes out of this bind and out of volatility. That will deliver energy security for families and fundamentally secure family and business finances.

[Nick Timothy]

The Minister, as Ministers do, made a point about the volatility of gas prices. When wholesale gas prices fell and the price cap was lowered, the Labour party put out posters saying, “Labour have just cut your energy bills.” Will she accept that it was wrong for the Labour party to do that, when that fall was because of the reduction in wholesale prices and nothing to do with policy costs, which were actually increasing?

[Miatta Fahnbulleh]

My words were very clear. We welcome the reductions in energy prices, but we were very clear that we are on a rollercoaster: prices go up and prices go down. We must get off the rollercoaster so that we deliver energy security. That will deliver price stability and fundamentally secure family finances.

[Nick Timothy]

Will the Minister give way on that point?

[Miatta Fahnbulleh]

I will make some progress.

I want to end by addressing the issue of energy brokers, which has been raised. We know that many energy brokers can help businesses to save money on their bills with contracts tailored to their needs. However, we have also seen evidence of opaque charging structures and unfair sales practices. We are hugely conscious of that, and last year the Government launched a consultation on introducing regulation of third party intermediaries such as energy brokers, aimed at enhancing consumer protection, particularly for non-domestic consumers, where we have recognised that there is an issue that must be addressed. The consultation has now closed, and I can assure my hon. Friend the Member for Tamworth that the Government are working through the huge volume of responses that we received and will respond in due course.

Finally, to the hon. Members—

[Jim Shannon]

Forgive me for pushing on this matter, but I did ask about the Utility Regulator in Northern Ireland.

[Miatta Fahnbulleh]

I was just coming to that.

[Jim Shannon]

Isn’t that fantastic? Thank you so much.

[Miatta Fahnbulleh]

That was my concluding point, to hon. Members from Northern Ireland, who have raised a really important issue: we are working closely with the Northern Ireland Government to ensure that the improvements we make in the UK market are aligned and that lessons are learnt to ensure that, where we develop stronger and better practice, it is shared with the regulator and the Northern Irish Government. In the end, we must ensure that we have a system that works for all consumers across these isles.

Let me conclude by again saying a huge thank you to my hon. Friend the Member for Tamworth for raising this important issue, and by offering, if she wishes, to meet to talk in more detail about some of the issues she has raised. I am clear that, without a fair, functioning energy market, our clean power mission will not succeed, energy bills will not come down and consumers will not get justice or access to a system that works for them. That is an absolute imperative for us; that is the priority; that is the thing that drives everything we do. We look forward to working with all hon. Members to achieve that outcome.

10:25

[Sarah Edwards]

I am so pleased to have had the support of hon. Members; I remark on the stories that highlight some of the regulatory differences across the Irish sea.

Caps for business energy, or some kind of cap on deemed contracts, could help to bring prices down without costing the Government and would help to get the market into some kind of equilibrium. The attempt to enforce estimated bills is causing absolute havoc. Enforcement must be a priority for the Government, so I welcome what the Minister said about its being front and centre of the reviews and particularly the recognition that more must be done. We must ensure that there are incentives for energy suppliers to businesses to behave appropriately and stop their malpractice.

It is so disappointing that no action has been taken yet to tackle the sector, with no punishment for that poor practice or for the dodgy brokers who are making businesses pay. Those costs get passed on to consumers, and they have made our businesses uncompetitive. It is an abuse of a lax system that is failing every day to protect our valued businesses, so I again call on businesses to fill in my survey and share their stories, and say to them: “Don’t answer unsolicited phone calls; question whether the deal is really a good deal, and help me to call on our Government to continue with the commitments they have made to supporting our SMEs.”

This is no time for half-measures and empty promises. Small businesses, the backbone of our communities, deserve protection, fairness and transparency in their energy dealings. The Government have known about this issue since 2013, so I call on this Government to urgently strengthen the powers of the Energy Ombudsman and outlaw back billing beyond six months. I highlight the abuse of deemed energy rates and half-hourly settlement meters, which are causing all kinds of issues for SMEs, which cannot get the appropriate rate even when they have switched to smart meters. Brokers and third party intermediaries must be fully regulated and held to a strict code of conduct. Many people are calling for fraudsters and excessive bad brokers to be driven out of the sector.

We need more dispute resolution schemes, particularly for brokers. I also urge immediate empowerment to regulate the sector effectively, whether through Ofgem or the Financial Conduct Authority. I call on energy companies to commit to fair and transparent billing and responsible practices. While the industry waits for stronger regulation, I am committed to working with experts, trade bodies and businesses to launch a trusted kitemark, and to publishing fair energy data.

Good brokers typically make between 1p and 1.5p per kWh. We need to create a directory of those reputable brokers that give power back to businesses. Let us act now, before more businesses suffer, before more fraud occurs and before more jobs are lost. One example of excessive profits can be read in law. Expert Tooling had its broker take a 35% profit margin. It paid £125,000 for energy, but the law said that was okay. That is not okay; the future of our high streets, towns and communities depends on decisive action today.

Question put and agreed to.

Resolved,

That this House has considered regulatory powers over billing of energy supply to businesses.

10:31

Sitting suspended.

ADHD: Impact on Prison Rehabilitation and Reoffending

Tuesday 1st July 2025 Westminster Hall

09:30

[Peter Dowd (in the Chair)]

I remind Members that they may only make a speech with prior permission from the Member in charge and the Minister. I understand that there will be interventions, but I exhort Members to keep them very tight. The Minister has kindly and charitably said that he will take 10 minutes, which gives us until 11.20 am for other Members, who should bear that in mind with good faith. As is the convention, there will not be an opportunity for the Member in charge to wind up.

[Tessa Munt (Wells and Mendip Hills) (LD)]

I beg to move,

That this House has considered the impact of ADHD on rehabilitation and reoffending in the prison system.

It is a pleasure to serve under your chairmanship, Mr Dowd. I think we all accept that our prison system faces significant challenges, including poor rehabilitation, high reoffending rates, overcrowding, limited resources and prisoner numbers that have doubled over the last 30 years and now exceed 87,000. The Minister will know that recent estimates suggest that prisoner numbers could surge to almost 100,000 by the end of next year.

In preparing for this debate, I drew on a number of publications with which the Minister will be familiar, but it is noteworthy that many of the studies were undertaken by those with links not only to justice but to the Home Office, the police, health and social care, planning, education, social equality and good government.

[Adam Dance (Yeovil) (LD)]

I have spoken to people who found out in prison that they have neurodiverse conditions such as attention deficit hyperactivity disorder, which I also have. If they had been supported at school, things would have been different. Does my hon. Friend agree that we need to roll out universal screening for all neurodiverse conditions at primary school level?

[Tessa Munt]

I could not agree more; that might help us to understand the interaction between behaviour and authority.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for securing this debate, and she is right to raise this issue, which is very prevalent in Northern Ireland. There is a lack of specialist staff and training in adult ADHD, which is becoming a bigger part of the conversation. More needs to be done to rehabilitate in a certain way to ensure that prisoners are in a position to learn. Does the hon. Lady agree that, specifically for adult ADHD, the Government need to allocate more to training to ensure that prison staff are equipped to support people in prison settings who have ADHD?

[Tessa Munt]

I agree with the hon. Gentleman and will come to that in a moment.

The impact of ADHD on rehabilitation and reoffending sits at the junction of many different interests. It seems likely that supporting people with ADHD could be a critical part of delivering the Government’s aim of rebuilding confidence in the criminal justice system. There is a clear link between ADHD and contact with the criminal justice system, and ADHD is significantly over-represented in prisons. While just 3% to 4% of people in the general population are currently identified as living with ADHD, the National Institute for Health and Care Excellence estimates that the proportion is up to 25% in the prison population. Up to a quarter of people in prison are living with ADHD, but studies show that 41% of women in UK prisons meet the criteria for an ADHD diagnosis.

[Warinder Juss (Wolverhampton West) (Lab)]

Prisoners often leave the prison system with just one week’s worth of medication, and they then have difficulty getting back into the healthcare system. Does the hon. Member agree that we need a holistic approach to the Probation Service that co-ordinates the health and social care system to act as a bridge between the criminal justice system and wider community services?

[Tessa Munt]

Indeed, I do agree. Our interaction with the NHS needs to be far better. I will come to that later.

In December 2020, the then Lord Chancellor and Secretary of State for Justice took the important step of commissioning an independent review into neurodiversity in the criminal justice system. The review was led by the chief inspector of prisons, Charlie Taylor; the chief inspector of probation, Justin Russell; and the chief inspector of constabulary and fire and rescue services, Sir Thomas Winsor. The resultant report concluded that when ADHD goes unrecognised or unsupported, the cycle of

“crime, arrest, court, prison, probation and reoffending”

will repeat itself. That is likely to be because the root cause driving that cycle of constant repetition is not currently being addressed in a structured or uniform way in the criminal justice system.

According to the report, the identification, support and management of neurodiverse individuals, including those with ADHD, is “patchy, inconsistent and uncoordinated”. It exposed

“serious gaps, failings and missed opportunities at every stage of the system.”

To put it simply, the report identified that the system was not adequately supporting neurodiverse individuals.

There are many elements of the prison environment that can cause distress to neurodiverse people, including busy and noisy wings, cell-sharing and frequent changes in daily routine. There is no consistent approach to screening for ADHD across prison services, and no single screening tool is used as a standard across the system. The lack of consistent screening means that people who come into the system with ADHD are not identified in a timely manner, or indeed at all.

[Carla Lockhart (Upper Bann) (DUP)]

Does the hon. Member agree that there is also a real problem with data collection, which means that the extent of the problem in our prison service is not known? We experience that problem in Northern Ireland, and I am sure it is the same across the United Kingdom.

[Tessa Munt]

Indeed, there is no consistent data collection. That is a problem not only in Northern Ireland, but in England and Wales, which the debate is primarily about. If someone is identified and diagnosed, it can be hard for them to access the right care and support due to fragmented care pathways. That is compounded by limited awareness and understanding of ADHD in the prison services.

[Clive Jones (Wokingham) (LD)]

I think all Members present will have heard from desperate parents whose children cannot get the ADHD medication that they need. Does my hon. Friend agree that the scandalous failure to provide care sets those children up to fail and that, tragically, the consequences are that some end up as the offenders we are discussing, instead of fulfilling their full potential?

[Tessa Munt]

I could not agree with my hon. Friend more. His point is similar to the one made by my hon. Friend the Member for Yeovil (Adam Dance): the earlier we screen, the better we will be able to understand how people learn. In the long run, if life is not education, I do not know what it is—I am sure the Minister will have some sympathy with that point, because he and I both served on the Education Committee between 2010 and 2015. We need to make sure we have far better screening so that people can understand how both young and older people learn. We should never finish learning.

The report observed that only 24% of prison staff had received some level of training about neurodiversity. I accept that that was back in 2021, but I doubt it is much different now. A basic level of awareness of neurodiversity and the needs of neurodiverse people was lacking among frontline staff. The lack of training, combined with staff shortages in prisons, can impact the management of neurodiverse prisoners. Those working in prisons must be able to recognise that the behaviour of some prisoners may be linked to ADHD, and a lack of training for those in mental health teams can result in misdiagnoses or suboptimal treatment. There is an ongoing need to better embed training for prison officers and extend the establishment of neurodiversity support managers across prisons in England and Wales, as mentioned earlier.

The structural changes that are taking place in NHS England, which has commissioning responsibility for offender health services, might provide an important opportunity to consider some of the challenges, and to develop new models for supporting people with health and care needs to access the right care and treatment in the community. That is particularly important where an unmet need has the potential to have a direct impact on an ex-offender’s likelihood of reoffending. Will the Minister outline the measures that are currently in place, and what he plans to offer, in the way of support and continuity of care for neurodiverse prisoners after their release, particularly in healthcare settings?

The Ministry of Justice’s cross-Government neurodiversity action plan, published in 2022 in response to the independent review, was a step forward in the official recognition of the unmet need around neurodiversity in the criminal justice system. Some promising steps were taken to advance the commitments in the plan, such as the recruitment of more than 100 neurodiversity support managers in prisons and the roll-out of neurodiversity training in some settings. But data remains insufficient and fragmented, as the hon. Member for Upper Bann (Carla Lockhart) said, and that poses challenges to the effective assessment of the impact of interventions. Will the Minister outline what steps the Government are taking to monitor the number and availability of neurodiversity support managers in prisons across the country, and what measurements are being used to assess the impact of their work?

It is important to keep up the momentum behind the neurodiversity action plan. However, the 18-month review and update committed to under the action plan, which was due in early 2024, has not been published. I would be grateful for further details from the Minister on his plans to continue the implementation of the neurodiversity action plan. Will he outline what steps were taken last year and will be taken to implement the plan? When will the 18-month review, which was due in early 2024, be published?

The ADHD taskforce was established in 2024 and recently published an interim report on the state of play in ADHD care, with its final report due this summer. The taskforce has taken a cross-Government approach, rightly recognising criminal justice as a key focus. The taskforce interim report highlights a number of important and pressing issues, particularly the need for better data to understand where and how people with ADHD are interacting with public services; the relationship between education, health and wider support in relation to outcomes for people with ADHD, including contact with the criminal justice system; and the value of earlier intervention.

What steps have the Government taken and will they take to engage with the ADHD taskforce and wider stakeholders to address the barriers and implement the recommendations highlighted in its interim report and forthcoming final report? Many reports show us that people with ADHD are more likely to struggle with impulse control, emotional regulation and memory recall. We understand that those behaviours can lead to early school expulsions, unstable employment and contact with the criminal justice system.

Once someone is in the system, ADHD can affect how they interact with the police, legal advisers, the judiciary, court staff and probation officers. That can increase exponentially the risks around unreliable statements, misunderstood behaviours and disproportionate sentences. Responses to their environment can lead neurodiverse people to exhibit challenging behaviour that could result in their being disciplined or sanctioned, and affect their engagement or consideration for rehabilitation programmes.

Other reports, such as that published in December 2024 by Takeda, on reforming justice and tackling the unseen challenge of neurodiversity in the criminal justice system, have concluded that there is a need to reassess our approach to managing offenders and consider more innovative ways to interrupt the cycle of reoffending. That includes better approaches to addressing the unmet needs of neurodiverse individuals, where conditions such as ADHD may have a direct impact on offending. Does the Minister agree that, in the light of the challenges, criminal justice services should adjust the way people with ADHD are managed, to improve rehabilitation and reoffending outcomes?

Will the Minister address the matter of women who meet the criteria for ADHD in prisons? ADHD in women is often misdiagnosed or missed altogether. Women are more likely to mask symptoms, presenting as anxious, depressed, having eating disorders or as emotionally distressed. That means that for many women and girls their ADHD is often diagnosed late or not at all. More work is needed to understand the experience of women in the criminal justice system who have ADHD. They are likely to experience multiple barriers and may be impacted by co-occurring mental health issues or other disadvantages. For example, one in three women in prison self-harms—the rate is eight times higher than that on the men’s estate—and there is a strong correlation between ADHD in women and self-harming.

These issues are directly relevant to the Government’s wider ambition to reform the way female offenders are managed in England and Wales, including the intention to close one women’s prison and increase the management of female offenders in the community. That in part recognises that many women are imprisoned for lower-level offences. For example, in 2023, theft from shops was cited as the most frequent offence committed by female offenders, accounting for 40% of women’s prison sentences shorter than six months.

Evidence also demonstrates that the incarceration of women can have a broader impact on families and children. Many women are primary carers, and their imprisonment can result in children being displaced, amplifying cycles of trauma and disadvantage over the generations.

The establishment of the Women’s Justice Board presents an opportunity to address these issues, so will the Minister outline whether the board is currently considering neurodiversity and the impact of ADHD on women in prison within its remit? Will the Minister commit to ensuring that ADHD is meaningfully embedded and accounted for in the work of the board in order to ensure that the experiences of women with ADHD in the criminal justice system are a priority? The Government have stated an ambition to address the challenges of prison capacity and to shift the approach taken to women offenders. It is important to recognise that ADHD screening, a coherent care pathway and improved awareness and training in prisons could play a part in achieving that ambition.

In summary, my current membership of the Justice Committee and my membership of the Education Committee during my service here between 2010 and 2015, along with my meeting experts in ADHD and criminal justice more recently, has emphasised to me the need to take a different approach to identifying and supporting neurodiverse prisoners to help those individuals to make new lives and thereby to help the Government to make sure that prison is effective and efficient at turning prisoners’ lives around.

A new campaign focusing on the unique experience of neurodiverse individuals with ADHD in the criminal justice system explores evidence-based opportunities to improve support and outcomes. Will the Minister meet me and representatives of that campaign to discuss the challenges facing individuals with ADHD in the criminal justice system and the steps that might be taken to meet people’s needs and improve outcomes in relation to rehabilitation and reoffending? I have asked a number of questions, which I provided to the Minister and his team. I recognise that he will not necessarily be able to answer eight questions right now, but would he possibly give me the honour, first, of a meeting and, secondly, of a response to my questions?

11:19

[The Parliamentary Under-Secretary of State for Justice (Sir Nicholas Dakin)]

It is a complete joy to serve when you chair, Mr Dowd, and a pleasure to respond to the contribution made by the hon. Member for Wells and Mendip Hills (Tessa Munt) to set out this very important matter. I will do my best to answer her eight questions.

I thank all Members, on both sides of the Chamber, for their considered contributions to today’s debate. This has been a measured and helpful discussion underscoring the importance of recognising and responding to the needs of neurodivergent offenders, including those with attention deficit hyperactivity disorder. There is a huge prevalence of neurodiversity in our prisons: studies have estimated that at least half of the offenders in our jails have some kind of neurodivergent need, though the figure is likely to be even higher, with about a quarter of prisoners thought to meet the ADHD diagnostic criteria. As the hon. Member for Wells and Mendip Hills said, NICE calculates that figure as up to 25%, including 41% of women. As the inspectorates have highlighted, for these offenders prison can be particularly difficult and distressing, leading to challenging behaviour that could result in their being unnecessarily sanctioned or disciplined.

Prison is rightly first and foremost a punishment, but it must also reduce reoffending. Offenders deserve the opportunity to turn their lives around so that they can play their full part in society on release. We need to make better citizens, not better criminals. Above all, we want to ensure that every offender gets the rehabilitation they need to protect the public. That relies on ADHD and other neurodivergent needs being picked up quickly, and on offenders getting the support that they need so that they can engage with support, treatment and education. There is a great deal of good work already under way.

I will answer the questions asked by the hon. Member for Wells and Mendip Hills. On what measures are currently in place and what we plan to offer in way of support and continuity of care to neurodiverse prisoners on their release, my hon. Friend the Member for Wolverhampton West (Warinder Juss) rightly identified the key role of probation. There is guidance and training for probation staff to help them to understand ADHD, how needs can look different for different individuals, and that some needs are not visible. Probation staff are skilled at taking a strength-based approach in assessments for pre-sentence reports and sentence plans. Together, that can help our practitioners to adapt the work they do with offenders, whether that is in a one-to-one context, such as supervision appointments, in group settings in a behaviour programme, or in unpaid work placements.

In addition, the Probation Service has commissioned neurodiversity specialists in five probation regions: Yorkshire and the Humber, the north-west, the west midlands, the south-west, and Wales. Those services offer direct support to people who are diagnosed with or suspected to have a neurodivergent condition; supporting engagement with their orders or licences, they provide briefings to probation staff designed to help them to identify factors that may be related to neurodivergent conditions, and give guidance on how best to support the rehabilitation of these individuals.

The hon. Member for Wells and Mendip Hills asked about neurodiversity support managers. We have neurodiversity support managers in all our public prisons, and they have a whole-prison approach to neurodiversity. That includes: improving processes to identify and support prisoners with neurodivergent needs; providing training and guidance for prison staff; and ensuring that neurodivergent prisoners can access education, skills and work opportunities within the prison.

Neurodiversity support managers also ensure that reasonable adjustments are made to prison environments to make them more supportive of neurodivergent needs. They are frequently recognised in His Majesty’s Inspectorate of Prisons reports for their positive impact in prisons, with recent reports from HMP Kirklevington Grange and HMP Warren Hill highlighting their support for prisoners as an example of good practice.

The 2021 joint inspectorate neurodiversity review of evidence, which the hon. Member for Wells and Mendip Hills cited in detail, suggested that at least 50% of prisoners have a neurodivergent need, although many will not be diagnosed. In response to the review, the previous Government published a cross-Government neurodiversity action plan in July 2022, with updates in the January and September of 2023. I am pleased to tell hon. Members that we will publish a final update to the action plan later this year, which will respond directly to the joint inspectorate’s report and set out a cross-system strategy to further improve outcomes for neurodivergent people, building on the vital work of the ADHD taskforce.

I welcome the publication of the ADHD taskforce’s interim report. It is a timely and important piece of work that outlines the systemic challenges in ADHD services across the country and sets out both short and long-term recommendations to improve support for people with ADHD. Many contributions made by Members highlighted the issues in other services, which is why the report is important. I am grateful to colleagues across Departments who have worked collaboratively to shape the recommendations.

The report rightly makes clear that no single Department can resolve the challenges alone. ADHD, when left unsupported, can lead to a cascade of negative outcomes: school exclusion, unemployment, substance misuse, involvement in crime, and, tragically, sometimes suicide. We will continue to work with the taskforce and together across Government to achieve the report’s aims.

In youth justice, youth offending teams are increasingly tailoring interventions to children’s specific needs, including those with neurodiverse conditions, with 95% of practitioners reporting that assessments and planning now take into account individual vulnerabilities. Where children are detained in youth custody, all children receive a comprehensive health assessment that screens for a range of needs, including mental health and neurodiversity when they first arrive. All education providers across the three public young offender institutions also have a special educational needs co-ordinator who, in collaboration with NHS England, conducts assessments for children who may have undiagnosed needs, including ADHD. We are having a roundtable later today with education providers to look at alternative education providers outside of the youth justice estate to look at ways of bringing their expertise into the youth custody system so that we can learn from others and improve the way we do business in the youth custody service.

The hon. Member for Wokingham (Clive Jones) drew attention to focusing on and analysing needs. His Majesty’s Prison and Probation Service takes a needs-led approach to supporting people in prison, including those with ADHD. This ensures that needs are identified as early as possible so that appropriate reasonable adjustments and support are provided throughout custody. To improve current screening processes, HMPPS is procuring a new needs assessment tool. I am pleased to confirm that Do-IT Solutions has been awarded the contract for this tool, which will be introduced as part of the new prisoner education service. The tool will identify individual strengths and additional learning needs, including those associated with autism spectrum conditions and ADHD.

[Tessa Munt]

Will the tool be used for every entrant to the prison estate or is it for those who might be suspected of having some sort of neurodiversity?

[Sir Nicholas Dakin]

My understanding is that it will be, but I will write to the hon. Lady to confirm the details.

To pick up on the point made by the hon. Member for Upper Bann (Carla Lockhart), data on prisoners with ADHD may be held locally by prison healthcare providers, but is not held centrally by NHS England. Where it is known, 55% of prisoners who took an initial assessment via the prison education service and then enrolled on a course had a learning difficulty or disability. We continue to work to improve our data collection and information sharing. This includes plans to integrate screening results and any information relating to additional need into digital learning and work plans to support prisoners’ education, skills and work progress through custody. But this area needs more work.

On the issue of women, the Prisons Minister in the other place, Lord Timpson, leads on the Women’s Justice Board—indeed, he chairs it. It is a passionate area of interest for him and the Lord Chancellor. I will write to Lord Timpson to flag the issue of ADHD, but I am sure it is already on his radar and in his work plan. If it is not, it will be soon. There is a neurodiversity support manager in every female prison and they have all had specific training on women with ADHD.

Mr Speaker, I am grateful once again to the right hon. and hon. Members who have contributed to the debate, particularly the hon. Member for Wells and Mendip Hills, who led it. I am very happy to meet her at a later date to further explore the matter. As the ADHD taskforce has rightly pointed out in its interim report,

“ADHD, when unsupported, is a potent route into educational failure, long-term unemployment, crime, substance misuse, suicide, mental and physical illness.”

We have made significant progress to support neurodiverse people in the criminal justice system, including those with ADHD, but there is still much more to do, which is why this debate and the interest and commitment of the hon. Lady and other hon. Members is so valuable and helpful to all of us. I look forward to continuing to work with the taskforce and colleagues across Government to ensure that neurodiverse offenders are given the support they need to turn their backs on crime for good.

[Peter Dowd (in the Chair)]

I thank the Minister for his largesse and for promoting me to Speaker.

Question put and agreed to.

11:29

Sitting suspended.

Hospitality Sector

Tuesday 1st July 2025 Westminster Hall

[Dawn Butler in the Chair]

14:30

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

I beg to move,

That this House has considered Government support for the hospitality sector.

I draw Members’ attention to my entry in the Register of Members’ Financial Interests; I have also received hospitality from UKHospitality and from the British Beer and Pub Association that falls below the registrable threshold.

I am pleased to open this debate on a subject of national and local importance: the future of our hospitality sector. From pubs and restaurants to hotels and leisure centres, hospitality is more than just a convenience; it is the beating heart of our communities. It provides first jobs, second chances, career ladders and gathering places. It employs 3.5 million people and contributes £140 billion in economic activity and £54 billion in tax receipts to the Exchequer each year. Yet the sector faces an existential threat—not from a lack of demand, but from deliberate political choices made in last autumn’s Budget and the spring statement.

Those choices have hit hospitality harder than any other part of the economy. The Government’s 2024 Budget, far from being fair or progressive, has dealt a brutal blow to our high streets and local economies. The cumulative effect of increased employer national insurance contributions and cuts to business rate relief, alongside the increases in the national living wage, has added £3.4 billion to the sector’s annual cost base. Let us be clear: those numbers are not abstract. They represent shifts that businesses feel every single week and to which they are taking action in response.

Early Government figures show that 100,000 jobs were lost in just one month. That is not a warning sign —that is a siren. Part-time and entry-level workers have been the hardest hit; not highly paid City graduates, but bar staff, kitchen porters and hotel receptionists in every village, town and city across our country. The problem is even more damaging because it flies in the face of the Government’s own stated missions. The Government claim to want regional growth and better living standards across the UK, but the Budget has cancelled investment, reduced hours and led to closures in exactly the communities that need regeneration the most. The hospitality sector has outgrown the wider economy in recent years, yet it barely even features in the Government’s new industrial strategy. There are just three mentions of hospitality in the whole strategy, and one of those was because the Government had mis-spelled “hospitals”.

Hospitality is a proven route to social mobility and opportunity, accessible to everyone, not just a privileged few. Yet the Government’s actions directly contradict their levelling-up agenda. They talk about growth, but strangle the sectors that deliver it. They talk about fairness, but penalise the poorest workers. They talk about opportunity, but crush the businesses that provide it. They have forgotten that enterprise is not just about spreadsheets—it is about people, purpose and pride.

Even before the Budget, hospitality businesses were paying twice as much tax as financial services relative to their profits. That is an astonishing imbalance. Of course, hospitality was particularly hard hit by the pandemic and by lockdowns. Many hospitality businesses are still carrying the burden of covid debts, with repayments that have taken them from being thriving businesses to ones that barely break even.

[Gregory Stafford (Farnham and Bordon) (Con)]

I held a pub and hospitality roundtable in my constituency, where publicans stated that the changes in the Budget had been worse than covid for their balance books and the viability of their businesses, because at least during covid the then Conservative Government gave relief and help to them; this time, they have received nothing.

[Mike Wood]

My hon. Friend is absolutely right. The changes to employer national insurance contributions have meant that 774,000 workers, many of them on lower incomes or working part time, are caught in a net that punishes job creation. The cut in business rate relief from 75% to 40% has driven otherwise viable businesses into the red, hitting pubs such as the Green Man in my constituency, which has seen its business rates bills rise from about £140 a month to nearly £350 a month—before a single customer has been served or a single pint pulled. A third of hospitality businesses now operate at a loss. That is not sustainable, and it is not fair.

According to UKHospitality, the Government’s measures will cost the sector at least £3.4 billion, including a £1 billion cost from the national insurance contribution increases alone. Of course, those tax rises came in at exactly the same time as the increase in the national living wage, adding even more pressure to small business employers such as the tea room at Ashwood Nurseries, in my constituency, which already operate on tight margins.

Let me be clear: no one opposes fair pay. I am proud that the previous Government introduced the national living wage, and increased it to give workers’ incomes a boost. However, if the Government want sustainable wage increases, they cannot also pile on non-wage costs at the same time—and that is before the impact of their employment rights package, which comes into force next year. The data already shows the consequences starkly. The Office for National Statistics confirms that since the October Budget, the hospitality sector has shed 69,000 jobs, even before the latest figures from His Majesty’s Revenue and Customs. That is 3.2% of all hospitality jobs. To put that in context, the overall economy lost 1.2% of jobs in the same period, so hospitality’s job losses were 266% higher than the national average.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I too remind the House of my entry in the Register of Members’ Financial Interests. In Orkney and Shetland, the food and drink sector is an integral part of our local visitor economy, as is the hospitality sector, but neither is part of the Government’s industrial strategy. Does the hon. Gentleman agree that, if we were to bring food and drink and hospitality into the industrial strategy, we would not suffer the salami slicing of over-regulation that we are seeing, especially in Scotland, where the self-catering industry is now being hit with another round of regulatory burdens?

[Mike Wood]

The right hon. Gentleman is clearly correct. One of the dangers of trying to pick winners is that those that do not make the priority list are, almost by definition, left behind. Major sectors such as hospitality and food and drink employ so many people, in every constituency, right across the age groups and in every demographic possible; leaving them out sends a very unfortunate signal, at the very least, and could be very damaging, if not corrected quickly.

A third of hospitality businesses report that they operate at a loss, with jobs lost, hours cut, investment cancelled and, sadly, many businesses closing. The Office for Budget Responsibility warns that 60% of the national insurance contributions burden will be passed on through lower wages, hitting workers despite the Chancellor’s promises. These are not abstract statistics; they are real people’s lives. Overwhelmingly, young, part-time, ethnic minority and lower-income workers are disproportionately represented among those hit, despite those being the very groups that the Government claim they want to support. The Government’s policies are deeply regressive.

It does not have to be this way. Hospitality is not asking for handouts, but for a level playing field. The sector is resilient. After the 2008 crash and during covid, it helped to revive communities and restore confidence and, within the right framework, it can do so again. It has the potential to grow six times faster than the wider economy, to create half a million jobs by 2030, and to breathe life into areas across the country, not just in the overheating south-east.

In order for the sector to do that, however, the brakes must be taken off, and there are simple, targeted steps that the Government could take now. They could protect the high streets by quickly introducing a proper reform of business rates, with a maximum discount for venues under £500,000 rateable value. They could scrap the proposed additional levy on larger hospitality businesses, which are so important to many of our communities and provide so many jobs. They could create a new lower rate of national insurance contributions for those earning between £5,000 and £9,100, to reverse April’s job losses and make it easier to hire again.

The Government could also extend the differential duty rate introduced by my right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak), to help to put pubs, bars and clubs on a level playing field with supermarkets by charging lower duty on draft beer in cask and kegs than is charged on bottles and cans. They could look at ways to reschedule those covid-19 loans, to give firms some breathing space to increase the chance of them actually being able to repay those debts as successful businesses. Each of those measures would stimulate growth, protect jobs, and help every region of the UK to thrive.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

It is perhaps a pity that one particular political party in Scotland is not represented in this debate today, because this summer, in the village of Achiltibuie in north-west Ross and Cromarty, I spoke to a barman who could not stay for the rest of the year because he had nowhere to live. Accommodation is a critical problem in the remote parts of the highlands. The SNP Government should address that; I dearly hope that this debate will be looked at, read up and acted upon, because this is a critical issue.

[Mike Wood]

Hospitality, as I have said, is so important in every part of the United Kingdom. We need Governments in every part of the United Kingdom to recognise that and to take the appropriate action, although I hope the hon. Gentleman will excuse me if my focus is primarily on those decisions that can be taken in Westminster and by the Government at a national level.

My challenge to the Minister today is simple: will he listen, if not to me, then to representatives from across the hospitality sector who are clear that the Government are getting this wrong? Will he support a sector that contributes £54 billion in tax receipts— far more than it gets back? Will he stand by his Government’s own missions of fairness, opportunity and growth, or will he continue policies that undermine them at every turn?

Hospitality is being taxed out of existence, and that is a political choice. We need a change of course not just for the sector, but for every community that depends on it. We need policies that reflect the value that hospitality brings—economically, socially and culturally—and we need action now.

[Dawn Butler (in the Chair)]

I remind Members that they should bob if they would like to contribute to the debate. Informally, speech times should be around four minutes.

14:42

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

I thank the hon. Member for Kingswinford and South Staffordshire (Mike Wood) for leading today’s debate on a subject that is important for all regions in the UK, but particularly for mine. For Cornwall, the visitor sector is still an important core industry. Cornwall is a top UK tourist destination, with tourism providing 15% of Cornwall’s economy. Tourism and hospitality account for one in five jobs in the Duchy and well over 90% of our visitors come from within the UK.

In my constituency alone, there are 1,761 hospitality businesses—placing us 21st out of all UK constituencies—with a turnover of more than £4.5 million. Cornwall is a national landscape. People come from far and wide to visit our beautiful beaches and dramatic coastline. They stay in our hotels, B&Bs and holiday lets, drink in our pubs and eat in our array of brilliant cafes and restaurants. The hospitality sector in Cornwall is dynamic, creative, and one of the mainstays of our economy. However, our reliance on what is often still a seasonal sector can make us vulnerable. After the post-covid boom, Cornwall really suffered and by summer 2024 Tim Jones, chairman of South West Business Council, argued that tourism in the south-west as a whole was at its lowest for 10 years.

During the peak season, the Cornish population grows fivefold, putting strain on local NHS, water, roads and policing. To give an example, around 700 people turned up to A&E in Cornwall on August bank holiday Monday. Fair Funding for Cornwall is a campaign that Cornish politicians of all stripes have been pushing for years. I am very pleased that this Government have recognised visitor numbers, coastal areas and sparsity in the recent local government funding review and in the review of the Carr-Hill formula for NHS GP funding. I hope that follows through into more support for our services and infrastructure.

I have spoken to many businesses since I was elected a year ago, and I know that some of them have been struggling. Rising costs, high energy bills, staff shortages and pandemic debts have forced some to close up, or to consider doing so. That will have a knock-on effect on the number of employment and apprenticeship opportunities available to our young people, who have already suffered from years of broken education and isolation during covid, and a lack of special educational needs and disabilities support in schools over the last decade. The businesses themselves are often family-run, close-knit and the centres of their communities, so their loss is felt greatly.

The Government have taken some steps to support hospitality. I served on the Bill Committee for the Non-Domestic Rating (Multipliers and Private Schools) Act 2025 last year, and I welcome the provisions it contained to introduce permanently lower rates for retail, hospitality and leisure businesses with rateable values below £500,000 from 2026-27.

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

When the hon. Lady was on that Bill Committee, did she consider the fact that a large part of the hospitality sector in Scotland would have no business rate relief, even though businesses in the south could get it? It was a favour done for England and Wales, but did not help Scotland.

[Jayne Kirkham]

As I recall it, we did not specifically consider Scotland—or I certainly did not. The Government did prevent a business rates cliff edge in April 2025 in England by extending business rate relief at a rate of 40% for 2025-26. I would welcome the Minister’s confirmation that those permanently lower rates will compare to current rates, rather than the pre-pandemic ones.

I look forward to the launch of the Government’s holiday let registration scheme later this year. If that includes registration of safety check documents and, potentially, inspection, it will ensure safety and quality standards, levelling the playing field between hotels, B&Bs and short-term lets. There are more holiday lets and second homes in Cornwall than there are people on the housing waiting list, which stands at more than 25,000. The industry in Cornwall is supportive of a scheme where safety checks are required for holiday lets, as the good providers are doing those anyway. Registration would also show us where the gluts of holiday let properties are.

For people working in the hospitality sector to live in the communities in which they work, we need investment in public transport and to tackle the housing crisis. Measures on second homes and the Government’s pledge to build more council and affordable homes on stuck sites, such as the Pydar development in Truro in my constituency, are welcome. I look forward to a strategic place partnership with Homes England to make that happen for Cornwall.

Cornwall’s chamber of commerce has said that better transport connectivity is the No. 1 priority for the businesses it represents, so I welcome the Government’s transport funding announcements. Recent upgrades to the A30 were helpful, but protection of our airport public service obligations and upgrades to our rail service —upgrading to electric power or batteries, and providing better wi-fi to make the journey of more than five hours from London to Falmouth more bearable—would be very welcome. Improved bus services are obviously very important. I welcome the commitment to the £3 fare cap, but in rural areas, getting to work and back home is often difficult, particularly after 6 pm, and that needs tackling.

There are many opportunities and challenges facing Cornwall and its tourism industry. The challenges include wages and secure working hours, as many jobs in hospitality are insecure. The Government’s new commitment to end zero-hours contracts if—crucially—the employee does not want them, and to provide average-hours contracts, will help. Cornwall has been awarded accreditation as a living wage place, and many firms are very proud of that. The rises in the minimum wage over the years, along with the increase in training needs after the pandemic, have made life difficult for hospitality businesses, but they recognise that paying good wages is crucial for the retention of staff.

The potential of a tourism tax—how it could be levied and collected in a way that was not detrimental to our hotels, B&Bs and holiday parks, and that would encompass direct booking websites—has been discussed for a long time in Cornwall. The continuation of funding for local visitor economy partnership programmes, such as Visit Cornwall and the Tourism Industry Council, is important to enable our hospitality sector to market itself at home and abroad. Our hospitality sector in Cornwall has the potential to thrive, but it needs the right conditions and support to do so.

15:00

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

At the start, I declare an interest, as my children and I own a cinema, restaurant and big visitor centre in Fort William, employing more than 100 people. I was brought up in a rural inn and my brother has a brewery. I am steeped in the hospitality sector.

At the autumn Budget, the Government increased the rate of NIC by 8.7%, which, added to other measures, resulted in an increase of 12.4% in payroll for hospitality businesses like mine. That is four times the rate of inflation. The hospitality sector in my constituency and other remote areas faces additional challenges, particularly the cost of energy. Businesses that cannot access mains gas often have to use electricity, which is four times the price of mains gas. A hotel in rural Britain, whether it be in Cornwall or the highlands, would need to pay £100,000 to heat itself using electricity; using mains gas, the cost would be £25,000, and if it were in America, heating would cost £10,000.

Environmental tariffs are on the wrong energy source. They are on renewable energy and not on imported carbon fuel mains gas. That is just so wrong. The Government declared that they are a growth Government; we now know that they meant growth in costs rather than growth in revenue. The impact of the autumn Budget was a 2% increase in the cost of the public sector and a 2% reduction in the private sector. It seems that the hospitality sector is bearing the brunt of that.

I would say that the hospitality sector in rural Britain has not struggled more in my lifetime. Both the last two Governments have plucked the golden goose of hospitality so often that it no longer has any feathers.

14:51

[Anna Gelderd (South East Cornwall) (Lab)]

It is a pleasure to serve under your chairship, Ms Butler. I thank the hon. Member for Kingswinford and South Staffordshire (Mike Wood) for securing this important debate.

For many in this Chamber, I imagine that the first thing that comes to mind when I mention Cornwall is our world-leading beaches, our coastal villages and our incredible hotels and restaurants. Tourism is a key part of our local economy, and our wide range of hospitality venues, powered by hard-working, often local staff, are what make that offer possible. In South East Cornwall, hospitality supports many local families and households, but the work is often seasonal, unreliable and involves unsociable hours. It can be a difficult way to make a living and the difficulty is compounded by an affordable housing crisis in Cornwall. I welcome the Government’s efforts to fix that.

We need more first homes for local families. Alongside my Cornish colleague and hon. Friend the Member for Truro and Falmouth (Jayne Kirkham), I look forward to a strategic place partnership for homes in Cornwall. That is why I welcome the Government’s efforts to improve employment rights in the hospitality sector. The Employment Rights Bill, currently progressing through the other place, tackles exploitative zero-hours contracts and one-sided flexibility, and ensures day one rights.

There is more we can do to support a modern, vibrant hospitality sector—one that reflects Cornwall’s rich heritage and unique position. Our venues celebrate Cornish-grown and Cornish-made products through local food, local art and Cornish talent. That helps our communities, strengthens our economy and builds pride in place, but we need more year-round employment, as residents need that security and are often left struggling in the off-season, and align education and training with actual local job opportunities. Cornwall has so much to offer, which is reflected in the number of visitors we attract each year, but we need a strong system that supports and improves our communities and welcomes visitors.

We have so many brilliant local businesses, such as the Finnygook Inn in Crafthole. The pub, which I know well, employs local people, supports regional producers and offers a warm welcome to all. Like many other pubs, the Finny plays an essential role in the fabric of my local community but, like others in the sector, it is struggling under the pressure of high VAT rates, and the UK’s hospitality rate is higher than that in many other countries. For venues that focus on fresh, home-cooked meals, VAT recovery is limited, which creates a real financial strain. That issue was raised during the pandemic.

I ask the Minister: what support is available for vital businesses like the Finnygook Inn, and how are the Government working to deliver more sustainable solutions that reflect the value that these venues bring to our economy, and to the life and wellbeing of our communities? I know just how important this topic is to businesses and communities across South East Cornwall.

14:50

[Damian Hinds (East Hampshire) (Con)]

It is a great pleasure to see you in the Chair, Ms Butler, and a privilege to take part in these proceedings under your guidance. I congratulate my hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood) on setting out his case—our case—so comprehensively and compellingly.

It is a shame that hospitality does not make the cut as a growth sector for the Government’s industrial strategy, for it is a huge part of this country’s economy and employment. We must never forget that there are relatively few power sectors in employment, and principal among them are hospitality, retail and personal care. In my constituency, hospitality accounts for about 200 outlets, and about 2,000 people are employed in the sector. As in retail, employment in that sector really does go throughout the entire country.

As it happens, hospitality was my career before I came to this place. We used to define the term “hospitality” a bit more narrowly—it really used to mean hotels. That was the business that I worked in, and latterly I worked a little in the licensed trade. In my time as a Member of Parliament and a Minister, I have worked very strongly with the sector, particularly on employment opportunities, as it is foremost in getting young people into work. There is a debate going on in the main Chamber that is very relevant to this issue. Hospitality helps people who are furthest from the labour market to come back into work, and it also supports a lot of people in part-time work.

The sector has just withstood two very big blows: first, the cut in business rates relief, which has a major effect on the fixed cost of businesses even before a pint has been poured, as a number of Members said; and, secondly, the enormous increase in national insurance contributions. We often talk about the rate going up from 13.8% to 15%, which does not sound very much, but the bringing down of the threshold has a huge effect. As I said, the sector employs a lot of part-time people, and it is with those people in particular, and of course with younger people coming into the workforce for the first time, that that is felt.

There are many things that we could talk about, but time is short and colleagues are many, so I will concentrate on one issue: the Employment Rights Bill, which the hon. Member for South East Cornwall (Anna Gelderd) talked about, and specifically zero-hours contracts. I am afraid that that type of contract has a totemic significance for Labour politicians, way beyond the number of people affected or involved. It dates back to the time when the last leader of the Labour party, who now sits as an independent, made bringing down the number of people on zero-hours contracts one of his great crusades. When I was at the Department for Work and Pensions, we looked a bit more deeply at how many people are on such contracts, and it turns out that fewer than 3% of people rely on a zero-hours contract for their primary job; on average, they worked not zero hours but 25 hours a week, and most were not seeking more hours. They also—this came as the greatest shock to people in general—had higher average job satisfaction than people not on zero-hours contracts.

[Gregory Stafford]

In Farnham, the Nelson Arms pub uses zero-hours contracts, and it needs them. I spoke to a staff member who said that the reason he was so keen on them is that he is actually a paramedic, and between his shifts he worked at the pub. That worked for him and the pub, because it gave them both flexibility.

[Damian Hinds]

And the national health service—sorry, I am coming back to hospitality, Ms Butler. As it turns out, one of the biggest users of zero-hours contracts in the country is the national health service.

[Jayne Kirkham]

I think that the right hon. Gentleman may not have heard that I said in my speech that, on the zero-hours contract provisions in the Employment Rights Bill, there is a choice. If the employee chooses to work under a zero-hours contract, that is fine. The right is to be offered after four weeks.

[Damian Hinds]

I am coming on to that; the hon. Lady must give me space. These are forms of employment that have existed for a long time. At a certain point, I realised that my own first job in the hospitality sector was on a zero-hours contract; it is just that nobody had coined the term at that point. It is a very common type of employment. In my case, it was collecting glasses and washing dishes. Everybody who worked in that way did so on a zero-hours contract.

These kinds of contracts can work in any sector where there is fluctuation in demand and in the need for labour, and principal among those is the hospitality sector. The thing that some people struggle with—I am not saying the hon. Lady does—is the idea that they also work for individuals. It is not necessarily something that people do only because there is nothing else available. Some people choose; supply teachers choose to be supply teachers rather than full-time employed teachers. I hear from businesses, pubs and restaurants in my constituency that students whose home is in the constituency work when they are at home and can stay on the books when they go away to university or college. They might want to reduce the amount of time that they give to work when their exams are on, but they stay on the books.

I do not think that the proposals in the Employment Rights Bill are very helpful, but if the Government insist on keeping them, they could make two important changes. The first change is to the length of the 12-week reference period, which does not work in a hospitality business that has significant seasonality. It should be much longer. Secondly, they could change the requirement to make repeated offers of a guaranteed-hours contract, and instead state, as the hon. Member for Truro and Falmouth rightly said—she may even be sort of nodding in agreement—that it should be up to the individual. If the individual wants to opt in, fine, but the Government should not create the additional bureaucracy, dead-weight and cost of having to make those repeated offers if that individual does not seek them.

15:01

[Llinos Medi (Ynys Môn) (PC)]

I congratulate the hon. Member for Kingswinford and South Staffordshire (Mike Wood) on securing this debate. I declare that I am chair of the all-party parliamentary group for hospitality, events, major food and drink businesses in Wales, and a member of the all-party parliamentary group for hospitality and tourism.

A report from the Wales Tourism Alliance found that tourism and hospitality contribute £3.8 billion to the Welsh economy and employ more than 11% of people in Wales, rising to up to 20% in areas such as my constituency of Ynys Môn, where alternative employment is scarce. Recent decisions taken by this Government have hit the sector hard. The increase in national insurance has pushed up costs for local hospitality businesses in my constituency. Will the Government now look at supporting small hospitality businesses that can only afford to employ people on lower wages, by reducing the rate on earnings between £5,000 and £9,100?

Another cost to the hospitality sector has come from the changes to inheritance tax. Family-run caravan parks such as Kingsbridge, in Beaumaris on Ynys Môn, have expressed to me their concerns that these changes will have a dramatic impact on their viability. I call on the Government to listen and change course, to ensure that local businesses are protected from the damaging effects of the changes.

The current business rates system is also unfair and needs to be reviewed. At present, local hospitality businesses pay far more than major chains on the outskirts of towns. The Welsh Government recently announced a review of the business rates system, but hospitality businesses were left out. I call on the Welsh Government to go further and include this crucial sector in the review. Businesses such as pubs, restaurants and hotels have not only an economic, but a social value. They are places that unite communities and breathe life into our towns and villages. That should be reflected in the business rates system by rebalancing it in a fair way to support local bricks and mortar businesses over major retailers.

The last five years have been incredibly difficult for hospitality businesses. Food and drink inflation has been consistently higher than the main rate. The peak of food inflation was 19.2% in October 2022, while the peak of overall inflation was 11.1% in the same month. Large retailers have been much better placed to withstand these pressures than smaller businesses. For example, during covid-19, when pubs had to close their doors to keep communities safe, large retailers benefited from increased alcohol sales.

North Wales also pays some of the highest energy bills in the United Kingdom. Businesses in north Wales pay £161,000 a year for electricity—8% higher than the UK average and 13% higher than those in London, at £142,000 a year. This is because third-party charges on Welsh energy bills are higher, including grid costs. The Government’s industrial strategy said nothing about ending that disparity. We need action to address this wholly unfair situation, to ensure that Welsh businesses pay the same amount for their energy as businesses elsewhere in the UK.

Support for hospitality, which is a key sector on Ynys Môn, is vital if we want our communities to remain vibrant and work opportunities to be available to local people. I urge the Government to listen to the calls to back the industry with the support it needs to thrive.

15:05

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairship, Ms Butler. I thank the hon. Member for Kingswinford and South Staffordshire (Mike Wood) for applying for the debate and setting the scene so well. I also thank all those who have contributed.

The Northern Ireland perspective on the hospitality sector is coming up, as it always does from me and other colleagues from Northern Ireland. Hon. Members will have heard me speak repeatedly about the hospitality industry in Northern Ireland, which I am incredibly proud of. The reputation for hospitality ensures that as soon as someone comes to Northern Ireland, they feel they have come home from home. That is what we do in Northern Ireland; we make people welcome, wherever they come from, so that they want to come back again.

That is why many refer to hospitality as the backbone of our tourism industry. Hospitality Ulster outlined in recent communications that it is not widely known that in Northern Ireland, four out of five jobs in tourism-related industries are in the hospitality sector. The strategic value of the hospitality sector in Northern Ireland cannot be ignored. It supports 77,500 jobs and gives £1.9 billion to the economy. To understand that, information and communication brings in £1.6 billion, and agriculture and fisheries account for £1.3 billion. The hospitality sector makes up almost one in 10 regional jobs.

Although the increases in employer national insurance contributions and the living wage are solely under the control of Westminster, the Northern Ireland Assembly cannot escape the consequences of the refusal to pass on the Barnett consequential moneys that come to Northern Ireland, when English hospitality and retail businesses were given a rates reduction due to the cost of living crisis. That has left the Northern Ireland hospitality industry in an even worse position to deal with the fallout of the Budget.

I will explain what that means. The changes to employer NICs and the national living wage will add an additional £2,500 per person employed in the sector, based on a staff member earning the national living wage and working 38 hours a week. In Northern Ireland, 63% of jobs in accommodation and food are part time, the highest share across all sectors by a considerable margin. It is important to focus quickly on the fact that those are significant additional cost burdens on a sector that is already under huge pressure from costs, sales and profitability.

Staying in business is very challenging, as the fallout from covid continues for the sector, plus huge additional costs. Heaping on additional completely unexpected costs only fuels the journey towards crisis point for many in the hospitality sector. I say that with respect to the Minister, and reassure him that he is not responsible for all the ills of the world, but I want to outline this issue.

The UK Budget has made Northern Ireland a more expensive place than our neighbour the Republic of Ireland to employ staff. With a further reduction of VAT likely, the Republic of Ireland has a competitive advantage over Northern Ireland. That will not only drive investment from north to south but also consumers, as our hospitality businesses will not be able to compete with Republic of Ireland counterparts.

[Carla Lockhart (Upper Bann) (DUP)]

My hon. Friend is right that the hospitality sector is important to Northern Ireland. It is probably one of the most difficult sectors, with long hours, high costs and low margins. Does he agree that one of the most challenging things is the VAT disparity with the Republic of Ireland? Does he therefore agree that, if the UK Government were to do something about VAT for the hospitality sector, it would be a silver bullet?

[Jim Shannon]

My hon. Friend and colleague is right. I mentioned the clear VAT imbalance. To put it in simple equations, to explain the issue and understand it better: in the simplest example, a couple getting married in Enniskillen would find that a significantly cheaper wedding reception is just a few miles away across the border. I hope that explains the matter a wee bit better.

There is a vital need for the introduction of a reduced rate of VAT for the hospitality and tourism sector. Hospitality Ulster has flagged the creation of a new employer national insurance contribution band from £5,000 to £9,000, with a lower rate of 5%, or the implementation of an exception for lower-band taxpayers working fewer than 20 hours a week. The difference and the tight margin between viability and closure is right there for us in Northern Ireland. I look to the Minister for consideration of these proposals.

Businesses can and will thrive if supported to do so. Every pound of support sees a direct benefit for local economies. I know that support for the hospitality industry will help businesses in every corner of the UK. I know that that is the desire of every person who has contributed to this debate and of the Minister, who is an honourable person. However, we really need to take steps to ensure that all of this great United Kingdom of Great Britain and Northern Ireland can thrive. The Minister can make it happen, and I look forward to his contribution.

15:10

[Sarah Bool (South Northamptonshire) (Con)]

It is a pleasure to serve under your chairmanship, Ms Butler.

With the weather we are experiencing at the moment, topping out at 33°C here today in London, who needs to travel abroad? We can head to our bars, restaurants, tourist attractions and have a staycation in the beautiful UK. South Northamptonshire has more than 220 hospitality businesses, which employ around 3,000 people. We will experience much focus this weekend because we have the grand prix at Silverstone and I declare I am looking forward to seeing some of that racing. However, the focus goes far beyond that, because we have to think about our smaller hospitality businesses, whether that is the Plough at Shutlanger, the Red Lion in Brackley, the Red Lion in Bozeat, the White Hart in Hackleton or the Rose and Crown in Yardley Hastings—I literally have too many to name, but they are vital to our sector—

[Hon. Members]

Go on!

[Sarah Bool]

There would be at least 95 to name.

We ask all those who run these businesses to take a risk. We ask them to keep our communities together and to offer jobs, but we do not give them the environment in which to flourish. They are working so very hard, but it is a real struggle with employer national insurance increases, business energy costs remaining incredibly high and the national minimum wage increase of about 17% in little over a year. Nationally since April, 220 pubs have had to shut and more than 1,000 have shut in the last year. What are the Government going to do to turn this around? I ask the Minister to consider the measures proposed by my hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood).

We must remember—this is a word of warning—that in rural areas, we do not have the luxury, as we do in cities such as London, of being able to go to a pub or restaurant in another street. The loss of a pub, restaurant or hotel leaves a vast desert. Covid, when we all had to isolate, reminded us of the importance of social interaction and contact. I say to the Minister, “Please do not deny rural communities these opportunities through poor policy.”

15:12

[Edward Morello (West Dorset) (LD)]

It is a pleasure to serve under your chairmanship, Ms Butler. I congratulate the hon. Member for Kingswinford and South Staffordshire (Mike Wood) on securing this debate. It is unusually cruelly timed, as I feel that I have not stopped sweating in about three days and quite frankly I can think of nowhere I would rather be than on a beach in West Dorset.

I am not alone in that. Our Jurassic coast, our rivers and fields, our chocolate box villages and historical market towns attract millions of visitors each year. This landscape underpins a vital part of our economy: hospitality. Our pubs, cafés, hotels, holiday parks and B&Bs support thousands of jobs and provide livelihoods for families across West Dorset.

In West Dorset, 85% of local businesses are micro-enterprises. Those small businesses are the backbone of our tourism industry. They create jobs, keep high streets alive, and provide essential services. Rising costs driven by inflation, energy, staffing and tax are now threatening their survival.

In 2024, West Dorset recorded more than 4,200 sewage spills discharged into our rivers and seas for more than 48,000 hours. Tourists are now checking pollution alerts before they swim. In an area where tourism brings in more than £320 million and supports more than 5,000 jobs, it is unacceptable that inaction by the Government is putting our hospitality businesses at risk.

[Mike Martin (Tunbridge Wells) (LD)]

It is fascinating that the vast majority of the tourism businesses in West Dorset are microbusinesses. Can my hon. Friend think of a worse policy for those businesses than reducing the NI threshold to the level it was reduced to in the Budget? Can he think of a policy that would do more economic damage to the hospitality sector in his constituency?

[Edward Morello]

I would struggle to think of a policy that would be worse for microbusinesses.

Meanwhile, transport and parking infrastructure across rural West Dorset is stretched to breaking point, something made worse by the 42% surge in population during peak season. If visitors cannot reach our businesses or cannot park, it is local traders that will lose out. As my hon. Friend just mentioned, in April we saw a rise in national insurance contributions and an increase in business rates—that was the other thing I was struggling to think of that might be worse for small businesses. Since then, more than 220 pubs have shut down. I heard directly from The George in West Bay in my constituency, which has seen its business rates increase from £8,000 to £27,000 a year. That is basically its entire operating profit margin.

UKHospitality reports that a third of businesses in the sector are now operating at a loss. Most have had to raise prices, cut hours, lay off staff or cancel investment. As I am sure the Liberal Democrat spokesperson, my hon. Friend the Member for Richmond Park (Sarah Olney), will outline, we would replace business rates with a commercial landlord levy. We would keep the 75% business rate relief for hospitality and freeze the small business multiplier until the new system is in place.

We are also calling for a dedicated Minister of State for tourism and hospitality to give those sectors the leadership and support that they desperately need. In places such as West Dorset, hospitality is the economy. For every small business that closes, we lose part of our community. We need action. We need to stand up for hospitality businesses, because when they thrive, all of West Dorset thrives.

15:16

[Tim Farron (Westmorland and Lonsdale) (LD)]

It is a genuine pleasure to serve under your guidance this afternoon, Ms Butler. I pay tribute to the hon. Member for Kingswinford and South Staffordshire (Mike Wood) for leading this debate so incredibly well.

It is my great honour to stand here on behalf of the communities of Westmorland and Lonsdale, a huge chunk of the Lake district, much of the western part of the Yorkshire dales, beautiful parts of the Eden valley—Kirkby Stephen, Appleby and so on—that are not in the national park, and Grange and the Cartmel peninsula, which likewise are beautiful places not in a national park. The hospitality and tourism sector is the fourth biggest employer in the United Kingdom, but in Cumbria it is comfortably the biggest, with 29% of the entire workforce of our county earning their living through hospitality and tourism—some 60,000 people, with 46,000 full-time equivalents, and a value to the economy of £4.7 billion a year. Every single year, 20 million people visit the lakes and dales of Cumbria. We think that, after London, that makes us Britain’s biggest visitor destination.

Before I talk specifically about hospitality and tourism, let me say a word about the backdrop to that industry. People come to the lakes and the dales not only because our hotels and our hospitality provision are awesome, but because the backdrop is quite awesome. The Lake district has world heritage site status. It is worth pointing out that when UNESCO granted that status, it gave as much credit to the farmers for creating that landscape over the last several hundred years as it did to the glaciers that gouged them out in the first place. Let me say a word to this Government and the Minister: we need to work tirelessly to protect family farmers, so that they maintain the backdrop to that stunning environment that underpins that important industry.

We have a wonderful relationship with Cumbria Tourism, the representative body that speaks for our industry across the whole of the county. It speaks with great concern about the impact of inheritance tax changes not only on farmers, but on other small businesses. One in four people in the workforce in my constituency work for themselves, and small family businesses are the backbone of our economy. National insurance rises have negatively impacted 73% of Cumbrian tourism businesses. We have already heard about the impact of the business rates changes. In reality, we have seen businesses going from paying 25% of the business rate to 60%—more than a doubling in real terms. It is a reminder that this Government need to get their act together on business rates—and quickly—and rightly shift the burden on to the big online retailers, which pay next to nothing despite taking advantage of Britain’s public services.

[Sorcha Eastwood (Lagan Valley) (Alliance)]

Hospitality has also been hit by the apprenticeship levy. We used to have entry-level jobs in hospitality and tourism that gave our young people a chance to skill up, but those are now gone because of decisions on national insurance and the levy. Does the hon. Member agree that that needs to change?

[Tim Farron]

I totally agree that we need to be really careful about piling extra costs, including the apprenticeship levy, on to businesses. I understand why the Government felt that they needed to make the national insurance rise, to increase the tax take to plug the hole that they inherited, whatever size it may be. But if economic activity is reduced, that reduces the tax yield. It is basic economics. Not only have the Government harmed our businesses in the lakes and the dales, and I am sure in Northern Ireland as well, but they have harmed the Exchequer’s take and damaged the economy in the process. The increased costs on our businesses are undoubtedly a major issue, as is the impact of a workforce that is too small for the job it needs to do in the lakes and the dales. Some 34% of Cumbrian tourism businesses say that their inability to recruit staff is undermining their viability.

[Jamie Stone]

My hon. Friend has an honourable and proud record of talking about affordable housing in his part of the United Kingdom. Without housing for workers, hospitality businesses are in real trouble. That must be taken very seriously indeed, and not just in the rural parts of the highlands. It is extremely difficult in many parts of the UK, including perhaps in the west country. Without housing, people will not come or, like the barman I spoke about in Achiltibuie, they will leave and not come back.

[Tim Farron]

I completely agree. Given that time is running out, I will restrict my remaining remarks to the topic that my hon. Friend referred to. I have one last stat: 66% of hospitality tourism businesses in the Lake district are operating below capacity because they cannot find enough staff. The demand is there, but they are not meeting it. What a waste of potential growth.

The staff are not available for a number of reasons. The first is that it is just not a very populated part of the world: 80% of the working-age population who live in the Lake district are already working in hospitality and tourism, so there is no great reservoir of staff. A lot of that is down to the collapse of the long-term private rented sector into Airbnbs and the absolute scourge of excessive second home ownership that runs through our communities. The Government have failed to tackle that issue. They had the opportunity to bring in a change of use for short-term lets and for second homes; they failed to do either, and that is shameful. They should do that right now. They should provide more affordable housing backed with more housing grant in communities such as ours and provide socially rented homes for local people, helping them to work in all the parts of our local industries, including hospitality and tourism.

The other thing that the Government ought to do is to recognise that communities such as mine need migrant labour. They should get on with agreeing and delivering the youth mobility scheme visa, to help our young people to travel and to bring in the people who underpin our tourism economy. My final ask is simply this: the Minister should listen to the British tourism and hospitality industry. It has so much to contribute, yet it seems so rarely to be listened to.

15:22

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to serve under your chairmanship, Ms Butler. I thank the hon. Member for Kingswinford and South Staffordshire (Mike Wood) for his work in securing this important debate. It has been a real pleasure to hear from so many of my Liberal Democrat colleagues about their constituencies. That underlines the fact that Liberal Democrats represent all the best places in the UK, and that is why tourism and hospitality is a very important sector for us.

I was lucky enough last summer to do a little tour through the constituencies of Inverness, Skye and West Ross-shire; Caithness, Sutherland and Easter Ross; and Orkney and Shetland, so I can very much confirm that all three constituencies have excellent hospitality businesses that are very welcoming to visitors. This Easter, I was lucky enough to spend a few days in West Dorset in the wonderful town of Lyme Regis, and I have spent many happy family holidays in Westmorland and Lonsdale.

There are also many hospitality businesses in my constituency of Richmond Park. Just last Friday, I hosted a representative of VisitBritain, who came to see me because Kew Gardens in my constituency is second only to the Tower of London in this year’s list of the most-visited paid attractions in the UK. We had a long conversation about the issues affecting the tourism sector, and I was very interested to find that the Government have recently cut funding for efforts to promote domestic tourism. Those who are not as lucky as I am in having many colleagues who represent constituencies in such wonderful parts of the UK do not know enough about domestic tourism. I would like the Minister to comment on that.

As my many wonderful colleagues have already alluded to, the current economic landscape is really challenging for many businesses and industries. Years of dire economic mismanagement by the last Conservative Government have led to businesses facing huge challenges, ranging from recruiting and retaining good staff to soaring energy costs and the increase of trading obstacles following their botched trade agreement with the EU. However, many of those challenges are now being compounded by decisions taken by this Government.

Last autumn’s Budget hit the hospitality sector with an extra £3.4 billion of annual costs through the cumulative impact of changes to employer NICs, increases in the national living wage, and the near halving of business rates relief for retail, hospitality and leisure businesses. A recent survey conducted by UKHospitality of its members found that, since the autumn Budget, a third of hospitality businesses are now operating at a loss, with 75% having increased prices, two thirds reducing hours available to staff and six in 10 cutting jobs. Those cuts are a last-ditch attempt by many businesses to stay afloat, as they are crying out for support.

The Liberal Democrats welcomed many aspects of last week’s industrial strategy, but very little in it will alleviate the heavy burdens imposed on the hospitality sector by Labour’s tax reforms. The Liberal Democrats have called for the hospitality industry to be exempt from the hikes in NICs announced in the Budget, as we recognise the difficult position that many business owners have been in since the pandemic.

Small businesses are the beating heart of our economy and at the centre of our communities, and they create the jobs that we all rely on. We are glad that raising the employment allowance will shield the very smallest employers, but thousands of local businesses, including many in the hospitality sector, will still feel the damaging impact of many of the changes. That is why my Liberal Democrat colleagues and I have voted against the changes to employer NICs at every opportunity, and I once again urge the Government to scrap these measures.

More broadly, we will continue to call on the Government to introduce vital reform to the business rates system. In 2019, the previous Conservative Government promised a fundamental review of the business rates system, but failed to deliver it. Meanwhile, the current Government pledged in their manifesto to replace the system, but still no action has been taken. The Liberal Democrats have called for a complete overhaul of the unfair business rates system, replacing it with a commercial landowner levy, which would shift the burden of taxation from tenants to landowners.

The current system penalises manufacturers when they invest to become more productive and energy efficient. It leaves pubs and restaurants with disproportionately high tax bills and puts our high street businesses at an unfair disadvantage compared with online retail giants. In too many places, pubs, restaurants and shops are being forced to close, taking with them jobs, opportunities and treasured community spaces.

More broadly, this outdated system inhibits business investment, job creation and economic growth, holding back our national economy. It has existed for too long, and it is time that the Government took action. Our proposals for fair reform would cut tax bills, breathe new life into local economies and spur growth. Equally, they would provide long-term certainty for businesses, which is what the economy across the UK needs.

With regard to long-term planning, I am glad that the Government introduced the industrial strategy last week. I welcome this commitment to stability, and I am pleased that it will allow businesses to look and plan for the future with more certainty. As the Government unveil their strategies to bring together skills development plans and a long-term industrial strategy to ease the pressures that so many employers face, we have reservations about the cohesion between these schemes. What steps are the Government taking to ensure effective collaboration and transparency across different strategies and public bodies?

We welcome last week’s announcement in the industrial strategy that we will see a funding boost for skills and training. However, the announcement stops well short of the fundamental reform that we need to address the workforce shortages that many industries are facing. British businesses must be able to hire the people they need with the skills they need.

A key cause of workforce shortages is ill health, and to tackle the problem, the Government must invest in our NHS and social care so that people can get the healthcare they need to rejoin the workforce more quickly. We have called on the Government to fix NHS backlogs, cut ambulance waiting times and raise the minimum wage for care workers by £2 an hour to boost our social care system and get people out of hospital quicker.

Any business will tell us that the apprenticeship levy does not work. They cannot get the funding they need to train staff, and hundreds of millions of pounds go unspent. The Liberal Democrats have been calling for the apprenticeship levy to be replaced with a wider skills and training levy that will give businesses more flexibility over how they spend money to train their staff. Will the Minister accelerate the reform of apprenticeships and empower Skills England to act as a properly independent body, with employers at its heart?

Finally, as we look more broadly at factors impacting workforce shortages, I once again urge the Government to act with much more urgency in introducing their youth mobility scheme. The changes to the immigration system implemented in April 2024, increasing the minimum salary threshold for skilled worker visas, shrank the talent pool from which hospitality businesses can recruit, contributing to greater staff shortages. Around three quarters of the hospitality workforce is filled by UK citizens, but international talent has always been attracted to work in the UK due to our pedigree for hospitality and developing careers.

A 2024 survey of 1,650 employers from across a range of sectors, including hospitality, adult social care and manufacturing, found that 49% of employers with hard-to-fill vacancies said that a reduction in the availability of migrant workers was one of the main causes. At a time when recent Government decisions in the Budget have added to the overall tax burden on hospitality businesses, with many considering whether their business remains viable, we must provide the tools that hospitality needs to help businesses grow so that it can boost the wider economy, including ensuring access to global talent.

I have heard from stakeholders in the hospitality sector, including business owners and supply chain managers, who have said that they would welcome proposals that would bring more stability to the sector, allowing them to make longer-term plans as part of a more predictable and robust regulatory framework. Again, will the Minister set out a timeline for the introduction of a youth mobility experience, which would be good for our economy, easing some of the burdens that the hospitality sector is facing?

15:30

[Andrew Griffith (Arundel and South Downs) (Con)]

It is a pleasure to serve under your chairmanship, Ms Butler. As we have heard, the hospitality sector forms a cornerstone of not only our economy, but our society and community. In my beautiful Arundel and South Downs constituency—I beg to differ with the hon. Member for Richmond Park (Sarah Olney)—it binds together communities, as we come together in cafés, pubs, restaurants, hotels and even garden centres.

As we heard from my hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood), hospitality plays a disproportionate role in providing the next generation with their first step on the career ladder, offering rewarding employment and what has always been a fair and balanced offering of flexible work. It gives many people their second chance in life, as well as many people a chance to supplement their retirement.

The industry employees 3.5 million people, with the vast majority of those jobs in small and medium-sized businesses that any Government should be on the side of, and we heard wonderful examples of that from my hon. Friend the Member for South Northamptonshire (Sarah Bool). My right hon. Friend the Member for East Hampshire (Damian Hinds) discussed its impact on employment and the flexible nature of the working, and he gave his insights about the higher job satisfaction, which we also heard from others.

I look forward to the Minister’s response to the debate, and how it will no doubt obfuscate around the frankly hostile environment that this Government have created for the hospitality industry. Colleagues should listen attentively, because what it does not mention will be as revealing as that which it does. Last summer—in fact, this time last year—prospective Labour MPs toured their constituencies and the airwaves, and they promised anyone who would listen that they would not raise taxes. Just a few short months later, the Chancellor slapped a jobs tax on every single employer across the land.

Pubs, bars, restaurants and hotels now face the £3.4 billion extra cost. It was a political choice, imposed by this Government, that has almost uniquely ravaged the hospitality industry—it was a perfect storm for the industry —particularly, as we heard from many Members, through the change in the threshold from £9,100 to £5,000 a year. Apparently, that change was made capriciously by the Treasury at the last moment, when its Chancellor once again failed to get her sums to add up.

One of the UK’s leading hospitality entrepreneurs, Luke Johnson, put it best:

“It is heartbreaking that Britain’s proud record of innovation, flexibility and business success is being thrown away thanks to that old knee-jerk Labour instinct of taxing success.”

The reality is that one third of hospitality businesses are now operating at a loss because of the Chancellor’s tax on jobs. Unemployment is already rising; in fact, it is up in every one of the nine months for which Labour has been in office. Six out of 10 hospitality businesses report that they have had to take the decision that no business owner ever wants to take. We should remember that many of these are family businesses that provide employment to the local people they live and work alongside. However, 63% say they have no alternative but to reduce the hours available for staff. Kate Nicholls, the chief executive officer of UKHospitality, said that these measures

“will simply force businesses to cut jobs, freeze recruitment, cancel planned investment, reduce trading hours and, in the worst-case scenario”—

as we heard about with pubs today—

“close their doors for good.”

It is difficult to overstate the catastrophic impact that this Government are having on the hospitality industry.

Once again, I pay tribute to my hon. Friend the Member for Kingswinford and South Staffordshire for securing this important debate, to which there have been contributions from across the House. But as some Members have said, there is another iceberg on the way that this Government and this Chancellor are steering us straight towards: the trade-union written, 1970s-inspired Employment Rights Bill. No Labour Minister has ever been able to name a real business that supports it—imagine that—and I invite this Minister perhaps to do so when he winds up. The reality is that very few employers in the hospitality sector will actually be aware of the perils facing them. They will be so focused on running their business, rather than wading through 300 pages of tightly typed Whitehall speak. It is available in the Table Office right now, should anyone feel difficulty sleeping on these hot summer nights.

The Bill, just like the Chancellor’s tax measures, disproportionately impacts on the hospitality industry. It will remove the valued freedom that employers and employees have to adjust their hours flexibly. What sort of business do we think that will hit? It will hit seasonal businesses, and most hospitality businesses have a strong element of seasonality. This will force young people, the vulnerable and sometimes those with a chequered employment record out of employment.

Once again, it is even worse for pubs, because the Bill reserves a special measure for the fact that landlords, hotel owners and restaurant managers will be forced to act as banter bouncers, asking punters whose private conversations may conceivably cause any unknown offence to their staff to leave their premises. By the way, that is nothing to do with sexual harassment, which is dealt with in a separate clause, and is rightly already illegal. The outcome will be a £5 billion bill for business under the Government’s impact assessment and countless—literally tens of thousands—of job losses.

Let me be clear: even Tony Blair or Gordon Brown, a socialist in office, saw it as wise to give this sort of economic self-harm a wide berth. On top of that, if someone’s business is still surviving, and they have the temerity for it to be a private, family-owned business, they will face the family business death tax.

I do not want to pre-empt the Minister, who is a decent man. I suspect we will hear a little go a very long way. He will talk about the 40% business rate relief coming to the aid of hospitality, despite the reality that the Government have in practice more than doubled business rates bills for businesses in the sector, compared with the 75% relief on offer under the previous Government.

We may also hear about the 1p cut on beer duty—that old trope that Governments of all flavours, if we are being honest, like to trot out. But the reality—the hard truth—is that the average pub would have to sell an additional 850,000 pints a year for that 1p cut to offset the additional costs imposed on them by the Chancellor’s job tax. I do not necessarily believe that most of us are equal to that particular challenge.

We may hear of the Government’s unequivocal support for hospitality, but words are cheap. It is difficult to reconcile that premise with the Government’s actions this time last week, when they left this sector, which employs millions of people and keeps our communities and high streets alive, entirely missing in action from their industrial strategy.

The truth is that the Government have done nothing to support our hospitality businesses, which have been entirely let down and treated as cash cows by the Chancellor at No. 11. I think the Minister knows that, but he is a loyal man who is keen to keep his job at a time of rising unemployment, and it is probably being offered to many of his colleagues who are thinking of rebelling this afternoon. The truth is that the Government have removed incentives, laid out insurmountable burdens, and over-taxed our hospitality sector at every opportunity. It is a great regret, but I am glad that we have the chance, on behalf of the sector, to debate that this afternoon.

15:39

[The Parliamentary Under-Secretary of State for Business and Trade (Gareth Thomas)]

It is a pleasure to serve under your chairmanship, Ms Butler, for I think the first time, and I hope it is the first of many. I congratulate the hon. Member for Kingswinford and South Staffordshire (Mike Wood) on securing this important debate. I recognise that he has long been an enthusiast for hospitality businesses in his constituency, and I welcome the opportunity to consider the important contribution that all hospitality businesses make to our communities up and down the country. Indeed, I think of some of the great hospitality businesses in Harrow, in my constituency, such as the great Trinity pub or the wonderful Battels café.

As well as the hon. Member for Kingswinford and South Staffordshire, we heard from the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald), the right hon. Member for East Hampshire (Damian Hinds), and the hon. Members for Ynys Môn (Llinos Medi), for Strangford (Jim Shannon), for South Northamptonshire (Sarah Bool), for West Dorset (Edward Morello) and for Westmorland and Lonsdale (Tim Farron).

We also heard particularly important and strong contributions from my hon. Friends the Members for Truro and Falmouth (Jayne Kirkham) and for South East Cornwall (Anna Gelderd). They referenced the significance of the visitor economy for hospitality businesses, and I am sure that they will welcome the fact that, this autumn, the Department for Culture, Media and Sport will publish a new visitor economy strategy. That has been co-designed with the new Visitor Economy Advisory Council, which includes UKHospitality. They referenced the dynamic and creative hospitality sector in Cornwall, and I was grateful to have the chance to personally sample some of those opportunities recently. My hon. Friends also referenced the case for fair funding for Cornwall, and the significance of a partnership between Cornwall and Homes England. I will make sure that their points are heard by colleagues in the Ministry of Housing, Communities and Local Government.

The hospitality sector contributes over £50 billion to the UK economy, spread across all corners of the UK, and employs millions of people. The sector makes not just a significant economic contribution, but an important social one because, as one or two hon. Members referenced, hospitality is also an opportunity for people. Working in pubs, restaurants and bars is often a key entry point, particularly for young people who need to gain essential skills and experience to progress in life. It is also often an entry point for those being given a second chance in life. For example, the excellent Greene King is working with 65 prisons across the UK to provide inmates with hospitality training. The company aims to hire 400 prison leavers by the end of this year. The Pret Foundation does fantastic work with homeless people, and has an ambition to get 500 people who face homelessness into jobs in their stores by 2028. The hospitality sector’s unique ability to employ and train people from all walks of life makes its economic contribution so much more than just that.

Hospitality is also crucial to our communities and personal lives. Hospitality businesses such as pubs support community cohesion. They provide welcoming spaces for those who feel isolated and alone to enjoy the company of others. In short, hospitality is the backbone of our high streets, towns and villages; it is the lifeblood of all our communities.

I fully understand the significant challenges that the sector faces, many of which are a hangover from the pandemic lockdown restrictions and the cost of living crisis. Depleted cash reserves and increased debt levels have hampered the ability of many hospitality businesses to invest and grow. These challenges are sometimes not helped by a regulatory landscape that does not always function as effectively as it could, holding back growth from many hospitality operators, which simply want to grow and invest in their local communities.

Let us not forget that this Government inherited a very challenging fiscal situation, which meant the Chancellor had to take difficult decisions in relation to tax and spending. Schools, police and local hospitals in all our constituencies are set to be better funded because of the difficult decisions she had to take in the Budget last year. The investment in infrastructure, or in social and affordable housing, that all our constituents need would not be happening without the decisions the Chancellor made last October. I know that many hospitality businesses have been impacted by those tough choices, but they are important for delivering the long-term stability and growth that our country needs and that our hospitality businesses, as well as the rest of the economy, will benefit from in the long run.

We will deliver on our manifesto commitment to create a fairer business rate system that protects the high street, supports investment and is fit for the 21st century. The Chancellor has committed to reforming business rates from 2026-27, with a permanently lower multiplier for retail, leisure and hospitality businesses. For many years the hospitality sector has asked for that, and we will deliver it.

I recognise the contributions from a number of hon. Members about the situation in Scotland, where—despite having had their biggest ever increase in funding as a result of the decisions the Chancellor took last October—the Scottish Government have not chosen to extend hospitality relief in the fullest way to all hospitality businesses.

[Jamie Stone]

I am a fair-minded person, and I would not dream of laying responsibility for the lack of affordable housing at the Minister’s feet. But does he agree that a message should be sent to the Scottish Government to get going on this one? I have just seen some terrifying statistics for north-west Sutherland about young people leaving. The old monster of highland depopulation is staring us in the face in that part of the highlands.

[Gareth Thomas]

The hon. Gentleman is right to make his point. One would hope that the Scottish Government would be as committed to taking action as the Government here in the UK. I hope he and other Scottish colleagues will see a change of heart and approach from the Scottish Government.

I understand the sector’s concerns about employers’ national insurance contributions. We are protecting the smallest businesses by increasing the employment allowance to £10,500. That means 865,000 employers will pay no national insurance contributions at all, and more than half of employers will see no change or gain from the package. The majority of hospitality businesses are micro-sized, so many will benefit from the increase.

We are also committed to reducing the regulatory burdens facing the hospitality sector. We recently launched a licensing taskforce to come up with recommendations for cutting red tape and removing barriers to business growth. We have received a report from the licensing taskforce containing many extremely interesting and thoughtful proposals, and we will make an announcement on our response to the taskforce work shortly.

We have also introduced a hospitality support scheme to co-fund projects, aligned with the priorities of the Department for Business and Trade and the Hospitality Sector Council. That includes support initiatives such as Pub is the Hub, to encourage local investment in rural communities—the hon. Member for South Northamptonshire made a point about that. In addition, we are extending the growth guarantee scheme, where Government will help smaller businesses to access loans and other kinds of finance up to £2 million, by covering 70% of the potential losses for lenders.

Later this summer, we will publish our strategy to support SMEs over the long term. The paper will focus on boosting scale-ups across key policy areas, such as creating thriving high streets, making it easier to access finance, opening up overseas and domestic markets, building business capabilities and providing a strong business environment.

The SME strategy will complement the industrial strategy in helping to create the conditions for further economic growth. The industrial strategy will support the whole economy by creating an improved operating environment to create long-term stability and generate greater dynamism for new start-ups to emerge. Supporting industrial strategy sectors will have spillover benefits for the rest of the economy—from innovation pull-through to technology diffusion. As an example, growth in the creative industries will create spillover opportunities for hospitality businesses.

As we look ahead, we will continue to work closely with the hospitality industry to co-create solutions to ensure that we generate growth together. In particular, we will work with the sector to iron out the issues that are of most concern. For example, we understand the current challenges relating to dual-use packaging under the extended producer responsibility scheme. We are therefore working with hospitality businesses to develop exemptions for waste disposed of commercially through the use of agreed evidence to show that that would be highly unlikely to end up in household waste streams.

Also, as we set out our ambitious plan to raise the minimum floor of employment rights, we will strike the right balance between fairness for workers and business investment and growth. Improving employment conditions benefits economic growth. It helps to put more money in employees’ pockets, which will help all businesses, including hospitality businesses, in the long term. We will do this by working in partnership with business, including the hospitality industry, to deliver our plan to make work pay, and we will consult on key proposals such as zero-hours contract reform in the autumn.

We will of course continue to work closely with the Hospitality Sector Council to co-create solutions and achieve growth in collaboration with the industry. That includes identifying regulatory barriers to investment and growth, and addressing skills shortages. We have established Skills England. We are reforming the existing apprenticeship offer into a growth and skills levy that allows more flexibility for both employers and learners wanting to pursue the apprenticeship route. The Department for Education has said that it will explore one of the key asks of the hospitality sector—the idea of foundation apprenticeships for hospitality. We are determined to help the hospitality sector to continue to unlock innovations and improve sustainability, and in that way bring down its costs. We will also look at how the Hospitality Sector Council can help us to deliver on our priorities for wider investment and growth, and support work to reinvigorate our high streets.

We all know that hospitality businesses are fundamental. They are crucial to our economy, crucial to our communities and fundamental to our high streets. And they matter to all of us individually, to our friends and to our families. The Government recognise the role of hospitality in creating places that people want to live, to work and to invest in, and we will continue to work in partnership with the industry to deliver growth and to break down barriers to opportunity.

[Dawn Butler (in the Chair)]

For a two-minute wind-up, I call Mike Wood.

15:53

[Mike Wood]

I thank the Minister for his response, even if there was little in it that will bring much comfort to the hospitality businesses that are struggling as a result of the Chancellor’s choices. I thank all hon. and right hon. Members from across the Chamber who have made such effective contributions, underlining the importance of hospitality in all our constituencies.

This is more than an economic issue. Hospitality offers the first rung on the ladder for millions of young people, and second chances to those rebuilding their lives. It brings people together across classes, backgrounds and regions. It is the ultimate vehicle for social mobility. It gives people a chance to run their own million-pound turnover business, even if they do not have the start-up capital or the right connections. For example, the Streets Ahead programme run by McCain, one of the largest employers in my constituency, supports dozens of hospitality start-ups and trains hundreds from disadvantaged backgrounds in the hospitality sector, and the charity Only A Pavement Away helps people who are facing homelessness by offering opportunities in hospitality. That is what real social mobility looks like—not a press release, but a purpose.

Hospitality can do so much in return for so little, but it can do so only if it is given the right framework and a tax system that does not hit labour-intensive businesses disproportionately hard. Hospitality can drive the growth that we all want to see. It can create high-quality jobs and offer good opportunities in every one of our constituencies, but it needs and deserves our support. I thank hon. Members for supporting this debate, and for their continuing work to push the Government to increase their support and understanding towards this important sector.

Question put and agreed to.

Resolved,

That this House has considered Government support for the hospitality sector.

15:56

Sitting suspended.

Waterloo-Reading Line: Class 701 Trains

Tuesday 1st July 2025 Westminster Hall

15:59

[Dawn Butler (in the Chair)]

I will call Clive Jones to move the motion and then call the Minister to respond. I remind other Members—one Member—that they may make a speech only with prior permission from the Member in charge of the debate and the Minister. There will not be an opportunity for the Member in charge to wind up, as is the convention for a 30-minute debate.

[Clive Jones (Wokingham) (LD)]

I beg to move,

That this House has considered the introduction of Class 701 trains on the Waterloo-Reading line.

It is a pleasure to serve under your chairship, Ms Butler. I am honoured to have secured this debate on a matter close to the hearts and frayed nerves of many in my Wokingham constituency.

Imagine, Ms Butler, that you are one of my constituents commuting to London or Reading. You spot your train on the horizon—the all-too-familiar blue face and red shell of the class 455 train, built in 1983 and rattling along for 42 years. That sight will produce an inevitable sigh of despair from all at the train station: it will not be a comfortable journey. Hon. Members might wonder what is so bad about that rolling relic. For starters, on a day like today, when we have 34 degrees of heat, if they step inside the train, they will be treated to a delightful 45°C sauna, courtesy of no air conditioning and poor ventilation.

Despite the journey from Wokingham to Waterloo taking an hour and 12 minutes, there are no toilet facilities on board. Speed restrictions apply exclusively to the 455 on the Waterloo to Reading route, which means slower journeys and greater delays. That is why the class 455 is being replaced by the new, sleek class 701, also known as the Arterio. The Arterio train will mean air conditioning, real-time passenger information, more seating and actual toilets. However, the journey to introduce the new trains has encountered unacceptable delays, setbacks and uncertainty that go unresolved to this very day, despite the fact that they were promised nearly eight years ago.

[Adam Dance (Yeovil) (LD)]

Many feel that the railway services in Yeovil are not good enough. Does my hon. Friend agree that in rural areas we need to replace the old trains that we rely on, some of which are more than 40 years old—a lot older than I am—and improve access and staffing at railway stations so that constituents with disabilities can use trains in a safe manner?

[Clive Jones]

I completely agree with my hon. Friend; we do need to improve rolling stock. Part of our problem on the South Western Railway line, Wokingham to Waterloo, is that it is old rolling stock, which is what this debate is about. He also mentioned better access for disabled people, and I 100% agree that that is absolutely needed.

Although I am aware of a few Arterio trains running on the South Western Railway network, that is still not the case on the Waterloo to Reading line, which my constituents use every day. Numerous promises have been made by South Western Railway and the Department for Transport, but almost all of them have been broken. In 2019, the Department for Transport claimed that in the coming months new trains would be introduced on the South Western Railway network, but what has happened? Nothing. In 2020, the Arterio was destined to be first rolled out on the Waterloo to Reading line. In 2022, the South Western Railway business plan stated that SWR would

“introduce the new Arterio fleet as soon as possible”.

Two years ago, the Department for Transport stated that the trains would be in service as soon as possible in 2023. Last year, SWR stated that the roll-out of the full fleet would take up to 18 months from January 2024, and I was informed that the trains would be ready for me to travel in to Parliament by June 2025. Now, in 2025, SWR still does not have a final timeline for when my constituents will get to benefit from the new trains. Every year promises have been made, and every year promises have been broken.

With SWR nationalised, the Department for Transport must scrutinise the project relentlessly until it is properly delivered. I ask the Minister: when will the Arterio trains be in service on the Waterloo to Reading line? I would also be grateful if he would set out in detail what steps are being taken to ensure that the Department for Transport does not allow the delays to be extended any further.

I remind Members that the previous Conservative Government were completely complacent on this matter. No contractual penalties were imposed on the owning company of SWR, despite its failure to deliver with taxpayers’ cash. Did the Department for Transport consider imposing penalties when Labour was elected in July 2024? If not, why not?

On 9 June 2025, in response to a written parliamentary question tabled on 30 May 2025, the Minister stated:

“The new Managing Director of SWR is now developing a detailed plan”

for introducing the Arterio fleet. Did such a plan not exist under the previous, privatised version of SWR? When can we expect the plan to be completed, and will it be available for scrutiny by Members of this House? Finally, will the Minister extend an invitation from me to meet the Minister of State for Rail to discuss these issues in more detail?

16:07

[The Parliamentary Under-Secretary of State for Transport (Simon Lightwood)]

It is of course a pleasure to see you in the Chair, Ms Butler. I congratulate the hon. Member for Wokingham (Clive Jones) on raising this issue.

The Department is keen to provide the significant improvements to the passenger experience and capacity that travellers on the South Western Railway network deserve, and we are working with SWR to ensure the continued roll-out of the 701 Arterio trains as soon as possible. The Government are determined to turn this situation around, but we inherited, frankly, an abject mess from the previous train operating company, which, over six years, failed to get the new fleet of trains into service.

SWR entered into the class 701 rolling stock lease contracts with Alstom in 2017, and the new class 701 fleet was due to be delivered between 2019 and 2021. The delays were initially caused by manufacturing and software issues, and later by the operator seeking to agree a safe plan for driver training and platform infrastructure readiness. Prior to transfer to public ownership, the Secretary of State invited FirstGroup and MTR, the then owning groups of SWR, to an urgent meeting to discuss the issues affecting the 701’s introduction, their plans to resolve the issues, the robustness of the roll-out plan and the factors that led to such a material delay in the introduction of the fleet. At the time, officials requested an urgent plan for SWR to resolve the issues, and held SWR to account for those plans to introduce further units as soon as possible.

SWR successfully transferred into public ownership on 25 May under the leadership of the new managing director, Lawrence Bowman. This was a watershed moment in our work to return the railways to the service of passengers. Mr Bowman has written to the hon. Member for Wokingham offering a meeting, and would welcome the opportunity to expand on his emerging plans and to hear the hon. Member’s concerns.

[Adam Dance]

Will the Minister and the Government agree that it is vital to try to get more electric trains across the south-west? After meeting with the railways, I know they are concerned that they will find it hard to replace the diesel stock with electric stock down in Somerset. Can we urge them to push and look at getting more investment into electric trains?

[Simon Lightwood]

I am sure that the Rail Minister will have heard that comment.

The new managing director of the publicly owned SWR has been tasked with producing a plan to introduce the 701 fleet as quickly as possible. The delays to its introduction have happened under what I would say is a flawed franchising system, not under public ownership. While there have been significant delays as a result of manufacturing and software issues, those long-standing issues are not related to public ownership.

Out of a total of 90 units, 11 are now running daily in passenger service, and the 12th service will be introduced in the week commencing 7 July. A total of 181 drivers have also been trained. Positively, since day one of public ownership, four further 701s have been brought into passenger service. That compares to only one additional unit being introduced in the six months prior to the transfer. Passengers on the Waterloo to Reading line should hope to see class 701s gradually entering service shortly.

The 701 fleet will significantly improve performance by reducing cancellations and short formations. Other benefits of the new fleet include a 50% increased capacity compared with the 455 fleet; accessible toilets—the hon. Member for Yeovil (Adam Dance) quite rightly referenced accessibility—air conditioning, something that we can all appreciate today; charging points at every seat; real-time information screens; onboard wi-fi and walk-through carriages. Customer feedback on the 701s has been positive, with people welcoming improved on-train information screens—a 21% improved score—and a 22% improved score on cleanliness compared with the current 455 fleet in use.

The Government are pushing ahead with an ambitious programme of transfers into public ownership. Three operators’ services will have transferred by the end of 2025, at which point seven of the 14 operators for which the DFT is responsible will be publicly owned, and we expect all currently franchised services to have transferred by the end of 2027.

This Government’s bold vision for railways will see a unified and simplified rail system that relentlessly focuses on improved services for passengers and freight customers, and better value for money for taxpayers, ending years of fragmentation and waste. The Government will put passengers back at the heart of our railways and introduce new measures to protect their interests. That includes paving the way for a powerful new passenger watchdog, which will give passengers an independent voice and hold train operators to account.

The railways Bill will enable the biggest overhaul of the rail sector in a generation. It will streamline the current fragmented system by establishing Great British Railways—GBR—as a new directing mind for the industry, unifying track and train under a single public body to deliver better services for passengers and customers and, crucially, better value for money for taxpayers.

The Bill will also ensure that the benefits of a streamlined, integrated network are felt right across communities at a local level by establishing a new statutory role in governing, managing, planning and developing the rail network for devolved Governments and mayors. That means that local communities will be at the heart of decision making, ensuring that the railways work to meet their needs, connecting them to jobs and opportunities across the country.

I thank the hon. Member for Wokingham once again for securing this debate, and the hon. Member for Yeovil for attending in support.

Question put and agreed to.

16:14

Sitting suspended.

Refugee Citizenship Rights

Tuesday 1st July 2025 Westminster Hall

16:30

[Brian Leishman (Alloa and Grangemouth) (Lab)]

I beg to move.

That this House has considered refugee citizenship rights.

It is a pleasure to serve under your chairship, Ms Butler. Refugees should not be reduced to statistics. After all, refugees are human beings, and every human being deserves to be treated with dignity, respect and compassion, and with empathy for their vulnerability and their need for safety. How we treat each other is a basic measurement of us as people and of the kind of society that we live in. Every day we see prejudice, oppression and war. It would be easy to consider those issues as mere news items, but they demand a co-ordinated international response of co-operation based on humanity, social inclusion and integration.

On 10 February, the Home Office introduced significant amendments to the good character requirement guidance for British citizenship, which will have profound and lasting impacts on thousands of people who are already here in the UK and have been granted protection status following a well-founded fear of persecution or violence. They will likely be denied citizenship just because of the way in which they came to the UK, and that will include people who travelled by small boat or in other ways. We should bear in mind that those are people who have made their new home and life here, and they have been working and contributing to our economy and culture. The change was made in the back of a document, without any significant parliamentary scrutiny, and today’s debate, over five months later, will be the first time that it has been substantively discussed in this place. Given that we are elected officials and legislators, that is simply not good enough.

Under the policy, anyone who arrived in the UK via a dangerous journey or entered irregularly will normally be refused British citizenship. It will not matter how long they have lived here or how they have integrated into our society. Although there may be exceptional situations in which applications are approved, the Government have not provided clarity on how that discretion will be applied. It is understood that most applications will be rejected. Will the Minister provide clarity on how discretion will be applied?

[Pete Wishart (Perth and Kinross-shire) (SNP)]

The hon. Gentleman is making good and valid points. He is not entirely right, as I tabled a series of amendments on this very issue in Committee on the Border Security, Asylum and Immigration Bill, which were supported by the Liberals, of course. I am grateful that he has been able to bring the issue to Westminster Hall today, but the situation is worse than he says. With a lack of safe and legal routes to access the UK, migrants have no other option but to arrive irregularly, such as in the small boats that the hon. Gentleman describes. What is happening as a result of these measures is a disenfranchisement of practically everybody who comes to the UK. Surely he agrees that cannot ever be right.

[Brian Leishman]

The hon. Gentleman is a champion on this topic, and his parliamentary record stands up there with the very best—although I did not vote for him to be my MP. I thank him very much for his contribution, and I agree with him.

It looks as though refugees will have to argue for an exemption to the blanket denial of citizenship. It would make for much fairer and effective policy if all cases were treated on a case-by-case basis, rather than a blanket ban being introduced, and I would appreciate it if the Minister could also address that point in her response.

I want to talk about people’s personal experiences of the policy, and I acknowledge the Scottish Refugee Council and Together with Refugees for supplying case studies for the debate. Sabir Zazai, the chief executive officer of the Scottish Refugee Council, would not be eligible for citizenship if he were applying now. Sabir has three honorary doctorates and an OBE; it is difficult to imagine a more compelling example of integration. But because he arrived here in the back of a lorry from Afghanistan, this Government would exclude him from ever being a British citizen.

The policy does not discriminate between refugees, victims of trafficking and children. It does not consider the unique vulnerabilities and complex backgrounds of people seeking protection, many of whom have fled circumstances that we could only imagine. For example, Gulan, a refugee from Iraq, shared how she escaped torture with her young children, risking death to survive. Despite years of integration and contributing to her local community, she feels like this policy makes her a second-class member of society.

[Bambos Charalambous (Southgate and Wood Green) (Lab)]

I congratulate my hon. Friend on securing this important debate and making such a great speech. He is absolutely right that treating people differently based on how they arrived in this country affects community cohesion, which has a detrimental effect on our society. What we need are safe routes that allow people to come here legally rather than risk coming via irregular routes, which is why the policy was introduced in the first place.

[Brian Leishman]

I thank my hon. Friend for his contribution. Absolutely: more safe routes are a necessity, in the name of human decency.

British citizenship is a key building block of integration, but there are also significant pragmatic considerations. Without it, people do not have the right to vote, to stand for election to this place or to work in many government jobs, nor do they have the freedom to live in, or travel in and out of the UK without restriction. If they do manage to travel, they require access to consular services; but worst of all, they remain at risk of detention or, worse, deportation.

One example is Mohammad, a refugee from Sudan. He said that he feels like a perpetual outsider, being vulnerable to deportation despite years building his life here. We saw an extremely laissez-faire attitude to international law and obligations from the previous Government. It was damaging to the UK’s international standing and to our relationships with countries all over the world. Continuing in the same manner would be the wrong approach for the Government to take.

[Seamus Logan (Aberdeenshire North and Moray East) (SNP)]

Forgive me for interrupting the hon. Member’s excellent speech, but he will note the complete absence of Members from the official Opposition party, apart from the shadow Minister, and of Members from the Reform party. My inbox is flooded with queries about various aspects of immigration. Does the hon. Member agree that the aspect of policy to which he is referring—which affects, for example, family members disunited from the rest of their family, asylum seekers, refugees and students—demonstrates that his own party is now following a cold-house policy? Does he accept that specific and special circumstances apply in Scotland, as distinct from the rest of these islands?

[Brian Leishman]

I thank the hon. Member for his contribution; I can appreciate the political nature of what he has said. Yes, Scotland is a nation, and it has its own unique needs. This is something that both Governments need to collaborate on, to try to thrash out something for the benefit of Scotland.

The United Nations High Commissioner for Refugees has expressed serious concerns about the UK’s updated guidance on the good character requirement for citizenship. It has been clear that the policy risks breaching article 31 of the 1951 refugee convention, which prohibits penalising refugees for irregular entry when fleeing persecution. The lack of clarity from the Government and the presumption of refusal may deter eligible refugees and stateless individuals from even applying for citizenship, especially given the exorbitant cost of applying—British citizenship applications are non-refundable and cost £1,630.

The refugee convention also explicitly requires states to facilitate, as far as possible, the naturalisation of refugees and stateless persons. That is a particularly interesting article, because not only is the UK a signatory to the treaty, but the British Government of the day are widely credited with incorporating the article into the convention. Not only are we abandoning our international obligations; we are abandoning the very international obligations for which the UK historically advocated.

This policy change undermines the very values of cohesion, unity and fairness that the UK aspires to uphold. It denies people who have sought protection from us the dignity and security of citizenship. I want to see a system that welcomes refugees not as second-class residents but as full members of our society, with the rights and recognition they deserve as human beings. Before my final questions to the Minister, here are the thoughts and feelings of a young man with refugee status in Glasgow:

“I have lived in Glasgow since 2017, after gaining refugee status the same year. I work and study civil and environmental engineering full time at Strathclyde University. I’ve had indefinite leave to remain since 2022 and was about to apply for citizenship, having already passed the UK life test and English language assessment. These are my thoughts:

Denying people the right to gain British citizenship after waiting for the legally required amount of time and upon gaining indefinite leave to remain is modern-day segregation. It splits people into different classes by keeping some stuck as second-class citizens. Not having the right to be a UK citizen stops me from being equal with my local community. People who have already the UK had no idea that they one day would not be allowed to become a citizen because they were claiming asylum—it feels like you have been targeted.

Throughout my journey, other countries rejected me—Italy gave 48 hours to leave the country, France gave 72 hours to leave the country. Coming to the UK is not necessarily something you can control yourself; it was my only option. However, fulfilling the good character requirements, which are things you can control yourself after entering the UK, should remain important.

This policy completely erases the point of people showing they have good character, and instead rejects us based only on something that I could not control. This new guidance does not encourage contribution to the community, if you are not one day going to be a proper part of the community by being a full and equal citizen.”

I put it to the Government that they should reconsider their stance, in the light of Lords amendment 186 to the Border Security, Asylum and Immigration Bill. First, it would ensure that the good character requirement is not applied in a manner contrary to the UK’s international legal obligations. Secondly, it would uphold the best interests of children by prohibiting the consideration of a child’s irregular entry or arrival. Thirdly, it would remove retrospectivity, to further uphold the rule of law.

An adult’s irregular entry or arrival may be taken into account only to the extent specified in guidance that was published when they entered or arrived in the UK. Previously, the guidance permitted a person to acquire citizenship so long as 10 years had passed since their irregular entry. At present, the guidance applies to someone whether they arrive two months or two decades ago. It cannot serve as a deterrent to people who are already here. It serves only as a penalty and a scarlet letter.

[Dawn Butler (in the Chair)]

Order. I remind hon. Members that they should bob if they wish to speak.

16:42

[Tim Farron (Westmorland and Lonsdale) (LD)]

It is a pleasure to serve under your guidance again this afternoon, Ms Butler, and a great pleasure to follow the hon. Member for Alloa and Grangemouth (Brian Leishman), who made a stunning and impressive speech on a matter he clearly cares about, as do I. I draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests, for the support I get from the Refugee, Asylum, Migration and Policy Project for a part-time member of staff in my office. I take that support because I care passionately about this issue.

To give the Government some credit, in the Border Security, Asylum and Immigration Bill, they are repealing the legislative ban imposed by the previous Government on people applying for and gaining citizenship if they arrived irregularly. I commend the use of the word “irregular” rather than “illegal”. No one is an illegal asylum seeker; they have a right to do it.

Although I commend the Government for that, that is as far as I can get. The guidance mentioned by the hon. Gentleman, which was issued in February, creates a situation where we change the good character requirement, so that someone who arrives here irregularly

“will typically be refused citizenship regardless of the time elapsed since entry.”

That is wrong; the guidance contains no clear exception for refugees, stateless persons, victims of trafficking or children. It applies retrospectively, to people who arrived in the United Kingdom before the change was introduced. The Government say that people can apply for citizenship; indeed, they are encouraged to test to see whether the policy applies to them. However, for a family of four there is a non-refundable charge of £5,898 for that test—a rather expensive, cruel and prohibitive one.

I can think of one man I met in Barrow not long ago who was being processed—he had been an interpreter for UK and US forces in Afghanistan. We had left him behind. He found his way, by hook or by crook and through appalling personal experiences, to this country by an irregular route. He would not be allowed now: he would not get through. He could test whether the rules or guidance applied to him, but it is extremely unlikely that it would. He would be left outside.

I can think of so many other people, as other hon. Members could as well, whose lives will be affected by this deeply and unjustly. It is not a deterrent, either. The possibility of being denied citizenship and maintained on indefinite leave to remain is hardly a calculation that a 17-year-old young man in Eritrea makes when deciding to flee in the middle of the night, knowing that within the next 48 hours he will otherwise be conscripted to murder his own people. That is not the kind of calculation anyone would make—it is a far-off, future consideration. It will not be any kind of deterrent, but instead will simply be a penalty based on the means by which someone got here.

There would be a case for this—maybe, just maybe—if the Government allowed safe routes for these people, but in real terms there are no safe routes for people from Iran, Eritrea or Sudan. People will do dangerous things in order to escape despicable, awful experiences. I would say that competence is the best deterrent. I commend this Government for doing better than their predecessor when it comes to removing people who have not been successful through the asylum process, but the people we are talking about here have been successful. This Government have decided that they are refugees, so why are we denying them the ability to settle here as full citizens?

This is all part of, and a consequence of, an awful, toxic debate. It feels like this Government are not the generators of that toxicity, but are scared of it, and cannot stand up to those who would demonise people who have fled from persecution, in fear of their lives. We know that 85% of refugees stay in the place next door to the one from which they fled. We know that, if we were to be put back into the European Union—if we were, we would be able to control our borders a whole lot better—we would be the 17th out of 28 in the league table of countries taking refugees.

It is a dishonest debate we are having nationally, and in this place we should be honest. We should not be scared of being vaguely humane and decent. This guidance works against integration and creates a divided society. Encouraging citizenship is a good thing, because it creates stability, a sense of belonging and inclusion. It offers hope to those who come to us for sanctuary. It is a decent thing for us to do—we should do it. This guidance should be scrapped.

16:47

[Warinder Juss (Wolverhampton West) (Lab)]

It is a pleasure to serve under your chairship, Ms Butler. First, I thank my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) for securing this important debate.

I speak today as a member of the Citizenship Network, which was launched by Citizens UK last year. It is a cross-party group that brings together parliamentarians, policy experts and those with lived experience of the citizenship and settlement process, with the shared goal of exploring how we can improve our pathway to citizenship to ensure fairness and efficiency.

Last week, I co-hosted an event in Parliament alongside the Citizenship Network, where we were joined by my constituents from Wolverhampton West and community leaders from across the country. It was so inspiring to see those passionate individuals come to this place and speak about how they have benefited from our immigration system.

I was not born in this country; I was born in east Africa and came to Wolverhampton at the age of four. I believe that, by being a citizen of this country, I have been able to contribute to it in the way that I hope others will be able to as well. We heard stories from people who, although entitled to be in this country, are now facing barriers in their journeys to citizenship. The stories they told brought home the human cost of our current system and the urgent need for reform.

The reality is that, instead of helping people to thrive, our current system too often creates unnecessary barriers to opportunity and to a sense of belonging and a dignity, which is so needed by those who are entitled to be in this country. Many people in my constituency of Wolverhampton West have called the UK their home for years. They have worked here, raised their families here, and have contributed to our economy and society. Despite that and their deep ties to this country, they continue to face challenges in securing British citizenship, often spending huge amounts of money and time and then waiting for years just to be able to get citizenship.

Let me be clear: border security is important. Every country has the right, and indeed the responsibility, to protect its borders and ensure the integrity of its immigration system. However, this must not come at the expense of fairness, compassion or humanity. A truly effective system is one that balances security with justice, ensuring that we treat people not just as cases or numbers, but as human beings who bring their own stories about their families and futures. We must move away from a system that is overly complex, prohibitively expensive and riddled with delays and inconsistencies. The current system is not only failing individuals but is failing our country.

I accept that settlement is a privilege and not a right, but we must have an immigration system that offers real protection to those who are fleeing persecution. We must have a clear, achievable and affordable pathway to settlement and citizenship for those who have chosen to make the UK their home, so that they can enrich not only their lives but the lives of others and properly contribute to our country as citizens.

16:51

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairship, Ms Butler, for what I think is the second time today. It is, and always will be, a pleasure.

I thank the hon. Member for Alloa and Grangemouth (Brian Leishman). In the short time that he has been here, he has made a reputation for himself as a fighter and a person who speaks up for his constituents. I sit straight across the Chamber from him and I am always impressed by him. We do not agree on everything but today, on this subject matter, he and I agree. This is one thing we can definitely agree on, and well done to him.

I am grateful to address this House on an issue that tests not only our policies but our principles, and that is how we treat those who come seeking refuge and hope. Today I speak on refugee and citizen rights in the United Kingdom, a subject of both legal importance and moral imperative. This March, the Government imposed a blanket ban on citizenship for individuals who entered the UK irregularly, even if they have been granted asylum and have lived here for years. The Refugee Council estimates that some 71,000 refugees who have already been granted asylum may now be blocked from ever obtaining British citizenship. I ask the Minister, who as she knows I respect immensely, to answer the question of those 71,000 who have lived here for a number of years: will they have the opportunity of getting British citizenship?

This week, Parliament will be considering crucial legislation, including the Universal Credit and Personal Independence Payment Bill and the ongoing Border Security, Asylum and Immigration Bill. This moment offers a real opportunity to safeguard the future of those who have made the UK their home. I love the diversity that I have in Newtownards. It is not as big as in London, but there are people from Nigeria, India, Pakistan, Bangladesh, Ukraine and all over eastern Europe. They bring history, culture, friendship and social engagement and they enrich us as a society. I believe we should try to maintain that.

The UK has a long history of standing shoulder to shoulder with those fleeing conflict, persecution and violence. We have honoured our international obligations under the refugee convention and the European convention on human rights. Yet recent policy changes may have the unintended consequence—I believe it would be unintended; I do not believe it is a policy of Government—of leaving some recognised refugees without a clear pathway to fully participate in society. I want to see them having that right. It is vital that we ensure that those who have been granted asylum are not left in long-term uncertainty.

A clear and fair pathway to citizenship is an important part of helping individuals to put down roots, contribute fully and feel a genuine sense of belonging in the communities that they now call home. Citizenship is more than just paperwork; it represents civic responsibility, stability and inclusion. As Parliament continues to examine the Border Security, Asylum and Immigration Bill, we must be mindful of our humanitarian responsibilities. That includes ensuring timely decisions on asylum claims, restoring service standards that offer clarity and dignity, and protecting the right to family reunion, which means so much to all of us here. Such steps are not just compassionate; they are also practical and necessary for social cohesion.

Furthermore, we must take care to ensure that assessments of good character do not rest solely on whether someone arrived through irregular routes, which is often a last resort for those fleeing persecution. Each case should be looked at individually, with a recognition of context and care, not with a one-size-fits-all approach that risks deepening hardship for those already in vulnerable situations.

As chair of the all-party parliamentary group for international freedom of religion or belief, I see the consequences of exclusion every day—not because I am better than anybody else, but because I focus on that and I see more of it happening. That is why it is important to me. Forced statelessness or permanent limbo adversely affect mental health, community cohesion and integration. We must speak not with condemnation, but with compassion and reason. The hon. Member for Westmorland and Lonsdale (Tim Farron) and I share those personal beliefs.

I always try to leave these things with a Bible quotation. The Bible reminds us in Hebrews 13:2:

“Be not forgetful to entertain strangers: for thereby some have entertained angels unawares.”

That verse speaks to the heart of our shared humanity. It is a reminder that how we treat the stranger, the refugee and the vulnerable reflects the depth of our national character as individuals. This House has long stood as a voice for those in need, and we must continue in that tradition. Let us show leadership not only in lawmaking, but in compassion. Let us ensure that our policies uphold both justice and mercy, and let us do so with humility, conviction and care. In defending the rights of refugees, we reaffirm the values that have long made the United Kingdom of Great Britain and Northern Ireland a place of refuge, opportunity and hope.

16:57

[Tulip Siddiq (Hampstead and Highgate) (Lab)]

It is a pleasure to serve under your chairship, Ms Butler. I thank my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) for bringing this important debate to the House; I am sure his constituents are very proud of the powerful speech that he made here today. I know that there are brilliant grassroots charities in his constituency offering sanctuary and support to new Scots from Syria, South Sudan and Ukraine.

Our constituencies are hundreds of miles apart from each other, but we are united in the belief that we have to give refugees our compassion and support. I wanted to speak in today’s debate because my constituency of Hampstead and Highgate has had a proud history of supporting refugees for years and years. During the first world war, 250,000 Belgians fled to England to escape the invading Germans. It was in Kilburn in my constituency that synagogues, churches and homes opened their doors to families who faced persecution.

I should say that Kilburn—or County Kilburn, as it is often called—was also a place of refuge for those fleeing the Irish famine in the mid-1800s. I am delighted to say that in Kilburn we now have the largest Irish community living in London. In Highgate, a new part of my constituency, Camden council provided refuge to families escaping the Taliban in Afghanistan. These are people who risked their lives and are now in Camden—our doctors, nurses, translators and civil servants.

My constituency of Hampstead and Highgate has a proud legacy of welcoming refugees, and I intend to continue supporting that legacy. For many of us in this room, watching what is happening in Gaza, the war in Ukraine, and of course the violence between Israel and Iran, it feels like the world is in disarray. The unfortunate truth is that it is innocent civilians who often suffer the consequences of conflict.

Of course we have to have an immigration system that is controlled, well managed and fair. I think everyone in this room would want that. However, we cannot lose the compassion that our country and my party prides itself on, and has done for many years. I am proud to represent constituents who made that dangerous journey to Britain, who claimed asylum and are now British citizens. I know they are of good character: they have made an incredible contribution to our country, to the constituency, to public life and to culture. One does not have to look too far to find them in my constituency.

I want to talk about my friend Camron Aref-Adib, who you may know, Ms Butler. His family was forced to flee from Iran on foot in the dead of night after an arrest warrant was issued for his father because of his political affiliations. Their journey to Camden was marked by constant distress, fear and uncertainty, as they were smuggled from Turkey to Yugoslavia and eventually western Europe.

Throughout that time, no safe and legal routes were available, but since reaching the UK Camron, his parents and sisters have given back more than 100 years of combined service to the NHS. I am pleased to say that Camron now serves as a Labour party councillor in Camden as well. These are the kinds of characters who have made Britain their home and who give so much back to our community.

I wrote to the Immigration Minister about my concerns and was assured that, when assessing good character, immigration breaches are likely to be disregarded if the journey was outside the applicant’s control. That is likely to be the case if, for example, they were a child when they made the dangerous crossing to the UK. I thank the Department for that assurance. However, I believe that a person’s access to safe and legal rules is also out of the applicant’s control.

Given the recent escalation of conflict in the middle east, Camron’s family story feels more pertinent than ever. I have heard directly from the Iranian community in Hampstead. They told me that they are frightened for their family members who are still in their country of origin. They also told me that they feel forgotten about and dehumanised by the lack of asylum routes available to them.

On behalf of families such as Camron’s, I ask the Minister: when the Department is assessing asylum applications on a case-by-case basis, will the insufficient provision of safe and legal routes be considered as a compelling or mitigating circumstance? I thank the Minister in advance for her response and the time she will take to address this debate. As a House and a country, we need to think deeply about the fact that these refugees are people; they are not just statistics.

17:02

[Chris Murray (Edinburgh East and Musselburgh) (Lab)]

It is a pleasure to serve under your chairpersonship, Ms Butler. I congratulate my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) on securing this really important debate. Before we begin, I declare an interest: my office receives support from the Refugee, Asylum and Migration Policy Project, or RAMP.

I would like to make a couple of points about refugee citizenship. First, it is important to set out that there has been no concrete change in the way we treat refugees. The change was made because the Government repealed sections of the Nationality and Borders Act 2022 and the Safety of Rwanda (Asylum and Immigration) Act 2024. Those are two of the most regressive and pernicious pieces of immigration legislation. They totally distorted—indeed, almost collapsed—the asylum and refugee system in this country. Good riddance to them.

It was right that one of the first things that the Government did on immigration policy when elected was to get rid of those two pieces of legislation. That meant that the citizenship rules had to be altered to align them with the status quo ante, which is what happened, but that does not mean that we should not have a wider debate about citizenship for refugees, as well as all migrants. I was pleased to see that the Government’s White Paper on immigration has kicked that discussion off.

It is also great to hear many Members extol the virtues of refugees and champion them in their communities. I add my name to that list: Edinburgh has a long history of welcoming people, whether they are Ukrainians recently or English refugees hundreds of years ago—although it has been a while since then.

I also want to make a couple of points about citizenship specifically, and the actual concrete meaning of “citizenship” in Britain today. Our citizenship rules developed haphazardly and organically, basically from the empire onwards. There are four pathways to British citizenship: Commonwealth, European, refugee and for people from the rest of the world. In each pathway, people acquire rights and entitlements at various points in the process.

We need to be clear that there is no bright, clear line of distinction between the rights of a citizen and the rights of a settled person in Britain, refugee or not. The rights to benefits, to work, to integrate and even to vote, are not contingent on citizenship. People make full contributions to our society long before they naturalise, and some choose not to naturalise at all—whether because their home country forbids dual citizenship or because they simply do not want to. People who are not citizens are still full, participating members of British society, and refugees with settled status are fully within that category.

Of course, that is not to say that citizenship does not have value. Obviously, it has very specific benefits: it gives a person a passport, protects them from deportation, as my hon. Friend the Member for Alloa and Grangemouth said, and gives them consular protection. But it is not a prerequisite for a meaningful life in Britain. Citizenship has political and social value—it shows that a person is one of us, and that they have made a commitment to the country—but I would argue that we have essentially erased the distinction between citizenship and settlement. The distinction now is simply one of time, as the person has to wait a year or two after settlement, and of money, as they have to pay a whopping great fee. Those are the only distinctions in people’s lived reality.

[Pete Wishart]

I think the hon. Gentleman is sort of saying that citizenship is a good thing and a bad thing, but it is a central aspect of life within our society—an entitlement to so many things that he and I take for granted. If his citizenship were ever taken away from him, God forbid, he would feel it in a minute. Another thing: this is perhaps the most profound change to the good character requirement that I have ever seen—it has gone from lapsing after 10 years to not at all. He should recognise that that is an appalling new change to our immigration system.

[Chris Murray]

The hon. Gentleman and I have debated this issue a lot. I was not debating whether citizenship is a good or a bad thing—I fully believe it is a good thing. My point was that citizens do not get many more rights and entitlements in Britain today than people who are settled. We could have a wider debate about whether that is fine—I think we should—but a lot of things, such as applying to institutions, colleges or universities, or entitlement to benefits, to housing or to vote, are contingent not on citizenship, but on settlement. The distinction on voting depends on whether the person is a Commonwealth citizen or not. My argument is that in Britain, unlike other countries, we do not make a clear distinction between settlement and citizenship. The distinction between citizenship and indefinite leave to remain—settlement—makes little material difference for refugees living in our communities.

That brings me to my second point. There is clearly a case for citizenship reform in this country. It has been decades since we seriously looked at the issue. I welcome the fact that we are having the debate and that the immigration White Paper has kicked off a discussion about the distinction. The system should be managed, controlled and fair. As I said, the real distinction with citizenship is whether the person has been here an extra year or two and whether they can pay the fee. That is how they get citizenship.

However, some people come to this country and work hard, obey the rules, pay loads of tax, volunteer, do good in their communities and make a huge contribution. Some go on to score goals and win medals for us. Other people come here and do not do any of those things. They do not commit a huge offence, but they do not do any of those things. Is it right that the system treats those people just the same? I would argue that we should differentiate between them.

Madeleine Albright’s family fled the Nazis. They came first to Britain, and the question they were asked was, “Okay, you are refugees and are welcome here, but how long until you leave?” Then they went to the US—

[Dawn Butler (in the Chair)]

Order. I would also like to give Brian Leishman two minutes to wind up.

17:09

[Mr Will Forster (Woking) (LD)]

It is a pleasure to serve under your chairmanship, Ms Butler. I start by complimenting the hon. Member for Alloa and Grangemouth (Brian Leishman) not only on securing the debate but on how he introduced it; his speech was excellent.

I am proud to represent Woking for many reasons, and one is our long history as a constituency of supporting and welcoming refugees. Ockenden International, originally Ockenden Venture, one of the first refugee organisations set up after the second world war, started in Woking. I used to live on the road where it once existed. We have since welcomed Afghans, Syrians and Ukrainians. One of the former MPs for Woking, a Conservative, set up the immigration advice service that a lot of my constituents, and I imagine others, have used. Where has that moderate, compassionate conservatism gone? I fear that the Labour party is going the same way.

The Liberal Democrats are strongly critical of the Government’s move to permanently bar refugees who have arrived here by irregular routes from ever obtaining British citizenship. Giving a hard, bureaucratic “no” to people in such situations, which are incredibly varied and complex, is wrong. It means, in effect, that refugees who have fled persecution and sought sanctuary are condemned to live as second-class citizens for the rest of their lives—never truly able to belong, assimilate or become British.

Earlier this year, the Liberal Democrats tabled a new clause to the Border Security, Asylum and Immigration Bill that would have required the Home Secretary to change the Home Office guidance. That guidance currently states that anyone who entered the UK illegally, no matter how long ago or what the circumstances, will normally be refused citizenship if they apply after 10 February 2025. Our amendment would have ensured that illegal entry was disregarded as a factor when assessing whether someone meets the so-called good character requirement for naturalisation. We believe that to be fair and reasonable: human beings should be judged on their merit, not their status. Refugees are not criminals because of the way they arrive. They are often in desperate situations, fleeing torture, conflict or persecution. Many are fleeing death.

We have heard that this new Government wish to preserve the rule of international law in making policy decisions. That is why, they say, they made the Chagos Islands decision: to uphold such claims. Let us acknowledge that international law is fundamental to refugees. Those seeking asylum who have no choice but to enter a country irregularly should not be punished: that is what the 1951 refugee convention says. We are at risk of falling foul of that international law.

Many refugees who have been granted citizenship describe it as one of the proudest moments of their lives—a hugely amazing moment that they share with their friends and family. Yet we risk depriving them of that opportunity. If we strip away that possibility, we risk deepening divisions in our society, effectively telling thousands of our newest residents and constituents that they do not and will never fully belong. That is not the Britain that I know and love or the one I want to represent in Parliament.

Instead, we should have a fair and effective asylum system that upholds our obligations and treats people with dignity. Banning refugees from citizenship is not one of those things. The Liberal Democrats urge the Government to think again, change their approach and show that Britain is still great at standing up for the values of compassion, fairness and the rule of law.

17:13

[Matt Vickers (Stockton West) (Con)]

It is a pleasure, as always, to serve under your chairmanship, Ms Butler. I congratulate the hon. Member for Alloa and Grangemouth (Brian Leishman) on bringing forward his interesting debate, although I am sure it will come as no surprise that my view is very different from his.

Britain is a compassionate and caring country. We have shown support and welcomed those from Ukraine, Afghanistan and Hong Kong as well as others in desperate need. In fact, our compassion and care are without limits. But the reality is that our resources are limited, as we have seen from the pressure on housing, public services, public finances and, yes, our criminal justice system.

The promise of citizenship for those who arrive illegally will only incentivise yet more people to cross by small boat. Uncontrolled migration has real consequences. What would Members proposing such a promise say to the youngster struggling to get on the housing ladder, to the person who has been waiting months for an operation or to the victim of crime who has just seen their attacker released from prison early? What is being discussed today is not those who have been welcomed, but those who have come to this country illegally.

Citizenship is a privilege, and we should not grant it to those who have broken our laws to enter the country. I listened to the proposals of the SNP and the Liberal Democrats in the Border Security, Asylum and Immigration Bill Committee, and I have listened to those of the comrades of the Socialist Campaign Group in this debate, and the idea of disregarding that restriction is simply preposterous. How can we possibly say that lawbreaking should not be considered when assessing whether someone is of good character? The problem with the Government is that they fall between two stools: they want to appease the madness within their own party, but they also recognise the public’s desire to secure our borders.

The consequences of the Government’s inability to take strong action have been clearly demonstrated. Before the election, progress was being made on reducing the number of crossings, the number staying in hotels was going down and the proportion of those being removed was going up, but everyone understood that much, much more needed to be done. However, since the election, we have seen the number of arrivals increase by more than 38%. Yes, we are only in July, but already we have reached a record level of small boat arrivals this year. The number staying in hotels is up, and the number of those who have arrived illegally and been removed is at a record low. However it is measured, that is a failure on the part of the Government. It has left the Government’s pledge to “smash the gangs” in tatters, exposing it as the façade it always was.

We can all see that the problem is greater than the gangs. The heinous criminals who organise the crossings are responding to demand. There is a market for people wanting to cross the channel from a safe third country. A truly compassionate response would be to put in place a system that completely deters crossings by removing those who have come here illegally, yet the Government cancelled that plan before it even began. To deport anyone who comes to this country illegally is the fair option, and it would send a clear message. It is the right thing for those who go on the boats in extreme danger, it is the fair thing for the women and children refugees whom we cannot help while we lack control of our borders, and it is the fair thing for the British people who are picking up the tab, yet the Government baulk at such proposals.

Now it appears that the Government’s policy rests on the French Government riding out to the rescue. Relying on the French to save Britain seems about as likely to succeed as relying on them to look out for the interests of our British fishermen—it is technically possible but characteristically implausible. Ultimately, the Government are right to keep the guidance. However, the best approach would be to reverse the failures, implement a proper policy that ensures that those who come here illegally do not remain here and avoid the conversation about citizenship for illegal immigrants altogether.

17:17

[The Parliamentary Under-Secretary of State for the Home Department (Seema Malhotra)]

It is a pleasure to serve under your chairmanship, Ms Butler, and to respond to the debate.

First, I will respond to some of the points made by the Opposition spokesperson, the hon. Member for Stockton West (Matt Vickers). I feel as though, once again, the Conservative party is in a state of amnesia. The Conservatives completely avoid talking about their own record, yet they know—we all know—that there were 800 people arriving by boats in 2018. The Conservative Government completely lost control of our immigration and borders system and allowed criminal gangs to get embedded across our border. They should apologise for that rather than continuing to pass the buck.

[Matt Vickers]

Will the Minister give way?

[Seema Malhotra]

I will not, actually, because I want to respond to all the points that have been made in the debate. I also remind the hon. Gentleman that, of the 30,000 returns made between the election and the middle of May, almost 8,000 were enforced returns. That is a staggering 23% increase in enforced returns compared with the same period 12 months previously.

I congratulate my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) on securing this important debate. We have had a number of discussions on this issue in the House, but, notwithstanding that, I know that this is an important debate here and in the other place and I am grateful for the opportunity to make these remarks.

My hon. Friend and other Members spoke about our long and proud history of offering sanctuary to those who are fleeing persecution, conflict and tyranny, as well as our responsibility towards refugees, which we must take very seriously. Our country is an interconnected and outward-facing nation, and I am incredibly proud of that. Our history and geography mean that for generations British people have travelled overseas to live and work, but also that people have come to the UK to work, study, invest, join families or seek sanctuary. British citizens draw on heritage from all over the world, and that has made us the country that we are today.

However, there is another backdrop to the debate, which is that immigration must be controlled and managed. I think we all know that the last Government completely lost control of our borders and we saw net migration reach record highs. It is important, for public confidence and our nation’s security, that we are able to control our borders and who comes to our country.

We have heard about the importance of making sure that we continue our compassion and support for those who are fleeing persecution, war or other risks to their lives. We should be incredibly proud of the support that we provide to refugees and displaced people, whether it is through our UK resettlement scheme, the Afghan resettlement programme, our route for Hong Kong British nationals or our Homes for Ukraine sponsorship scheme. It is testament to those efforts that the UK is the sixth largest recipient of refugees referred from the United Nations High Commissioner for Refugees, and the third largest in Europe.

Since 2015, some 674,000 individuals have been offered a route into the UK, with just under 30,000 resettled through resettlement schemes and over 34,000 through our Afghan schemes. The invasion of Ukraine, in particular, is an issue close to the hearts of people up and down our country, and I acknowledge the particular welcome that people from Ukraine have received in Scotland, which has its super sponsor scheme, which I was able to discuss on my visit to Scotland in February.

The Government recognise the contribution that people arriving through such schemes make to our economy and our society. The immigration White Paper sets out our intention to review resettlement and community sponsorship models, allowing businesses, universities and communities to sponsor refugees to live, work and study in the UK. Those schemes deliver better outcomes for both refugees and the communities that welcome them. We are taking this approach because we believe in supporting refugees to integrate into British society fully, and we have been clear that every active working-age person with the right to work in our country should be able to work and contribute to the growth of our economy. It is not just the right thing to do; it is in our national interest.

Refugees and displaced people who have had to leave their home country because of persecution often lack the opportunities to apply for jobs or to work in the UK, even where they have the talent and the training to do so. That is why, in the immigration White Paper, we talk about looking to new safe and legal routes—for example, drawing on the experience of the displaced talent mobility pilot—and we will be exploring reforms to allow a limited pool of UNHCR-recognised refugees and displaced people overseas to apply to come to the UK through skilled worker visas and existing sponsor routes where they have the skills to do so, giving them an opportunity to contribute to the UK and rebuild their lives.

In the few minutes remaining, I want to address some of the questions that have been raised, in particular regarding the changes to strengthen the good character guidance. There are already rules that can prevent those who arrive illegally from gaining citizenship. Indeed, from 10 February 2025, anyone who enters the UK illegally, including via dangerous journeys such as small boat crossings, faces having their citizenship application refused. As I have said, the UK must always play its part in supporting those fleeing persecution, but we are also clear that we must do all we can to prevent people from making dangerous small boat crossings, risking their lives as criminal gangs with no thought for their safety profit.

As has been mentioned, British citizenship is a privilege and not a right. The requirement for an individual to be of good character is a statutory one—one that is considered reasonable and proportionate when assessing whether to grant them British citizenship. The good character policy is compliant with our international obligations, including those under the refugee convention. It is important to note that the guidance on the policy is clear that decision makers have the ability to exercise discretion on a case-by-case basis. That includes the ability to disregard immigration breaches if it is accepted that they were outside the applicant’s control—for example, if the person was a victim of modern slavery or trafficking, or if they entered illegally when they were a child.

It is important to say in response, in particular, to the contribution by my hon. Friend the Member for Edinburgh East and Musselburgh (Chris Murray) that we will be looking at new thinking and new models around earned settlement and earned citizenship in the consultation that we will launch later this year.

It is important to recognise that these issues concerning those who come to our country via irregular routes are an international problem, and they require an international solution. Any UK Government—it is disappointing that the previous Government did not do this enough—must work with our international partners to make sure that we have solutions and alternatives for those who seek to come to the UK in this way. The Government are determined to restore order to the immigration system so that every part of it—border security, case processing, appeals and returns—operates swiftly and effectively. That is a necessity for our national security and also a moral imperative.

17:28

[Brian Leishman]

I thank the Minister for her comprehensive response and many hon. Members present for their wonderful contributions. Refugees are victims of war, famine, oppression and environmental catastrophes. The previous Government failed in their international obligations to refugees, and to allow people to exercise their right to seek asylum. I have to say that I found the speech by the Conservative shadow Minister, the hon. Member for Stockton West (Matt Vickers), equal parts insulting, distasteful, xenophobic and, frankly, classist. However, I respect his right to air his views—that is free speech, after all.

I also respect my hon. Friend the Member for Edinburgh East and Musselburgh (Chris Murray) and have a lot of time for him personally, but I fundamentally disagree with this sort of hierarchy of humanity. Personally, I do not care whether someone is an Olympic athlete or does a perceived lesser job—or, in fact, no job at all. As the Labour party in government, we have to combat the 14 years of austerity, division and classism that have ripped this country apart. Now that we are in government, we have to do better on a whole raft of issues, and everything that we do should always have basic, core humanity at its heart.

Question put and agreed to.

Resolved,

That this House has considered refugee citizenship rights.

17:29

Sitting adjourned.